WELCOME CONGRESSMAN SHAYS: SCENESETTER FOR CODEL

UNCLAS SECTION 01 OF 03 ANKARA 001977

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PINS PREL PTER ECON ENRG OREP AM IZ TU
SUBJECT: WELCOME CONGRESSMAN SHAYS: SCENESETTER FOR CODEL
BAIRD (SHAYS/PALARINO),AUGUST 7-9, 2007


1. (SBU) Summary: Your visit to Turkey comes as the
recently elected parliament prepares to approve a new
government and elect the country's next president. Terrorism
and Iraq remain key issues, and the return of pro-Kurdish
representatives to parliament after 14 years may offer a
chance for improved dialogue on both. Turkey continues to be
an essential partner in Iraq, supporting coalition forces by
allowing the use of its territory as a logistical hub. It
has over 1,000 troops in Afghanistan and has twice led
international forces there. The single biggest obstacle to
bilateral relations is PKK terrorism. Turkey is frustrated
with U.S. and Iraqi failure to act against PKK terrorists in
northern Iraq and has threatened to strike PKK targets across
the border if the U.S. or Iraq does not act. House passage
of an Armenian genocide resolution would likely jeopardize
U.S. national security interests in Turkey and Iraq,
complicate the security environment for U.S. citizens and USG
personnel, and work against those in Turkey calling for open
discussion on the tragedies of 1915. End summary.

PKK TERRORISM AND IRAQ
--------------


2. (SBU) Turkey has consistently demonstrated strong
security cooperation in the global war on terror as a key
U.S. ally and the only democracy and NATO member bordering
Iraq, Iran, and Syria. Turkey broadly agrees with U.S. goals
in Iraq and tangibly supports our military efforts there.
However, Turkish concerns about Iraq's stability and future,
as well as PKK terrorist attacks launched from northern Iraq,
complicate our relationship.


3. (SBU) Since 1984, the PKK terrorist campaign has resulted
in approximately 37,000 deaths. After ending its
self-imposed five-year cease-fire in 2004, the PKK has
conducted attacks against Turkey from strongholds in northern
Iraq, killing over 600 Turkish civilians and military and
foreigners in 2006 alone, and nearly 100 in 2007 to date.
The increased violence prompted the government and military
to threaten possible cross-border operations targeting the
PKK in Iraq. The USG has strongly discouraged this, citing
Iraqi sovereignty and the risk of increased instability. The
U.S. has been Turkey's closest ally in the fight against the
PKK, securing EU agreement to place the PKK on its list of
terrorist organizations; spear-heading Europe-wide efforts to
close PKK financial, logistical, and media support outlets
there; and leading a trilateral (US/TU/IZ) process to stop
the threat emanating from northern Iraq. We are also
encouraging dialogue between the GOT and Iraqi and Kurdish
Regional Government authorities.


4. (SBU) Turkey worries about increasing instability in
Iraq, growing Iranian influence in the region, and the
potential for Iraq to splinter along sectarian or ethnic
lines. The GOT is also concerned about Iraqi Kurdish
ambitions to expand their territory to include oil-rich
Kirkuk. The prospect of a referendum this year on Kirkuk's
future status exacerbates Turkish fears that Kurdish
annexation of the province will lead to massive
inter-communal violence, and, ultimately, the dissolution of
Iraq. Turkish political leaders have sought to reinforce
Iraq's unity and territorial integrity; Turkey has been among
the most active in the Iraq Neighbors Process.


5. (SBU) Turkey's agreement to use of its territory as a
logistical hub has been a combat multiplier for our Iraq
operations. Approximately 3 million gallons per day of
gasoline and diesel fuel for the Iraqi people and 25 percent
of sustainment fuel for coalition forces crosses into Iraq
through the Ground Line of Communication at Habur Border
Gate. Since May 2005 when Turkey approved the use of
Incirlik Air Base as a cargo hub to support coalition
operations in Iraq, over 152 million pounds of equipment have
been shipped to U.S. troops. Over fifty percent of all air
cargo into Iraq has transited the Incirlik cargo hub.

TURKISH CONTRIBUTIONS TO AFGHANISTAN
--------------


6. (SBU) Turkey has been a solid contributor to the NATO
Allies' effort in Afghanistan. It has over 1,000 troops on
the ground, and has twice led the International Security

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Assistance Force for Afghanistan (ISAF). It recently took
over command of the ISAF Kabul region in April, and donated
24 155mm howitzers to the Afghan National Army, along with a
training package. In addition to military support, Turkey
operates a PRT in Wardak Province and has committed 100
million dollars in long-term development support to
Afghanistan, which has been used primarily for the
construction of hospitals and schools. Turkey is also
engaged in a strong diplomatic effort to promote dialogue
between Afghan President Karzai and Pakistani President
Musharraf. On April 29, 2007, in Ankara, the leaders signed
their first joint declaration, committing the two sides to
foster improved cooperation on intelligence sharing,
counter-terrorism, counter-narcotics and economic
development. The leaders commissioned a joint working group
to monitor implementation of the Ankara Declaration.

TURKISH INVESTMENT AND TRADE IN NORTHERN IRAQ
--------------


7. (SBU) Turkey's exports to Iraq are substantial -- about
$2.5 billion dollars in 2006 and $1.3 billion through June
2007, according to the Turkish Foreign Trade Undersecretariat
(FTU). While greater competition has reduced Turkey's share
in Iraq's market, Turkish businesses are still active in oil
exploration, service businesses, and construction. Some
325-380 Turkish businesses reportedly control 95 percent of
the $2.8 billion reconstruction market in northern Iraq,
including subsidiaries of OYAK, the Armed Forces Pension
Fund, and Nursoy, a company founded by a former Nationalist
Action Party (MHP) provincial chairman. Turkish businesses
have won projects such as the $300 million Irbil airport, the
$260 million Suleimaniye University, and the $65 million
Kurdish Democratic Party (KDP) headquarters. These projects
depend primarily on Turkish imports of construction and other
material. In the oil business, Turkey's Genel Enerji is
exploring around Kirkuk.


8. (SBU) Several factors have contributed to declines in
daily truck traffic through the Habur Gate from 2,500-3,000
pre-invasion to 500-750 today. Better enforcement has
reduced fuel smuggling into Turkey. Iraq,s State Oil
Marketing Organization no longer takes commercial fuel
deliveries from Turkey, which accounted for up to 100 trucks
per day. Moreover, the KDP reportedly demands fees of
$300-400 from Turkish drivers. The risk of a cross border
operation (CBO) reportedly led numerous companies to leave
northern Iraq. Official trade numbers from the FTU also show
a slackening in growth of Turkish exports to Iraq, running
against the trend of Turkey's steady export growth. In a
July 19 meeting, however, the Chairman of the Turkey-Iraq
Business Council said that the GOT continues to push
commercial engagement on the ground, adding that he was
confident the business community would get advance warning of
a major CBO.

ELECTION RESULTS
--------------


9. (U) Turkey's ruling Justice and Development Party (AKP)
scored a significant victory in July 22 parliamentary
elections, returning to power with 46.6% of the vote, up from
34% in the 2002 election. Two other parties crossed the ten
percent election threshold required to enter parliament,
along with 26 independent candidates, creating a fractious if
more representative legislature. AKP appears set to form
another single-party government, with 341 of parliament's 550
seats, but returns with a reduced majority and short of the
367 seats needed to elect the next president or amend
Turkey's military-drafted constitution. The opposition
Republican People's Party (CHP),with 20% of the vote, lost
seats in several of its strongholds. Commentators view the
results as the opposition's failure as much as AKP's success.
The new parliament will convene August 4, with election of a
Speaker, formation of a new government and election of
Turkey's next president topping the agenda.


10. (U) AKP now has a mandate to pursue its economic
development and modernization policies, EU membership and
political reform for another term. Erdogan was magnanimous
in an acceptance speech that stressed unity, democracy,
stability. His first real test will be choosing a

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presidential candidate who can bridge the divide between a
shattered left and jubilant AKP supporters.

HOUSE RESOLUTION ON ARMENIAN GENOCIDE
--------------


11. (SBU) The USG has worked hard to encourage a candid
discussion in Turkey of the tragedy suffered by ethnic
Armenians during World War I. The Turkish and Armenian
governments have discussed establishing joint commissions of
academics and historians to establish the facts, in parallel
with efforts to establish official bilateral relations. The
January 2007 murder of Turkish Armenian journalist Hrant Dink
has contributed to growing calls for changes to Penal Code
Article 301, which criminalizes insulting "Turkishness," and
stifles Turks, ability to discuss fully the events of 1915.
A U.S. Congressional resolution labeling this tragedy a
"genocide" would trigger an intensely negative and
nationalist response, and would work against those in Turkey
calling for a comprehensive review of the events and for
normalizing bilateral relations with Armenia.


12. (SBU) A resolution would also have negative consequences
for U.S. national security interests in Iraq and elsewhere.
Supply routes into Iraq that are crucial to supporting U.S.
troops, military overflights and use of Turkish bases that
support U.S. military operations in Iraq and Afghanistan
could be jeopardized. Additionally, major defense
procurement contracts with U.S. manufacturers (with expected
and potential sales exceeding $10 billion) could be scrapped.
Agricultural purchases might also be canceled and consumer
boycotts could ensue. Anti-Americanism -- already high --
would likely intensify, increasing the threat level for U.S.
citizens and USG personnel living and working in Turkey.

MISSION TURKEY
--------------


13. (SBU) Mission Turkey consists of four posts: Embassy
Ankara, Consulate General Istanbul, Consulate Adana, and a
two-person Consular Agency in Izmir. Country-wide, there are
currently about 300 American positions and almost 700 locally
employed staff (LES) working for over 20 agencies throughout
the Mission. The Mission's FY 2007 operating budget was $30
million. Mission Turkey is scheduled for a New Embassy
Compound (NEC),with construction set to begin in 2010.

Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/

MCELDOWNEY