Identifier
Created
Classification
Origin
07ANKARA221
2007-02-02 06:16:00
CONFIDENTIAL
Embassy Ankara
Cable title:
TURKEY-IRAQ: SOMO CRISIS ABATES, FOR NOW
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C O N F I D E N T I A L ANKARA 000221
SIPDIS
SIPDIS
E.O. 12958: DECL: 01/31/2017
TAGS: ETRD EPET PREL TU IZ
SUBJECT: TURKEY-IRAQ: SOMO CRISIS ABATES, FOR NOW
REF: A. STATE 12518
B. ANKARA 174
Classified By: DEP/ECON/C ANDY SNOW FOR REASONS 1.5 B AND D
C O N F I D E N T I A L ANKARA 000221
SIPDIS
SIPDIS
E.O. 12958: DECL: 01/31/2017
TAGS: ETRD EPET PREL TU IZ
SUBJECT: TURKEY-IRAQ: SOMO CRISIS ABATES, FOR NOW
REF: A. STATE 12518
B. ANKARA 174
Classified By: DEP/ECON/C ANDY SNOW FOR REASONS 1.5 B AND D
1. (C) SUMMARY: The trade crisis unleashed when SOMO advised
Turkish fuel product suppliers seeking to renew 2006
contracts to deal with the KRG (as opposed to the central
GOI) seems to have abated. Contacts confirm press accounts
that the GOI has assured the GOT that its suppliers should
continue to deal with the central government and that SOMO
intends to apply past agreements. SOMO has failed to
implement past agreements and the current "solution" is
another short term extension, so SOMO trade will continue to
be problematic. End Summary.
2. (C) On January 26 the Turkish Foreign Trade
Undersecretariat (FTU) told us that SOMO trade stopped after
Turkish fuel product suppliers received a letter advising
them to make contact with the KRG for future business (REF
B). (30-40 % of petroleum products imported by SOMO come
from Turkey.) Trade Minister Tuzmen made combative
statements, trumpeted in the press, emphasizing that Turkey's
interlocutor for this special transit business was Baghdad,
not the KRG. There were reports in the press that Turkey
might retaliate by stopping its electricity exports to Iraq.
3. (C) On January 31, FTU informed us that high level
officials had communicated and resolved the issue by SOMO
reaffirming that Baghdad was Turkey's interlocutor for this
business and attesting to the validity of old agreements.
The U.S. military liaison officer at the border reported good
negotiations at the border customs meeting Jan. 31, with the
expectation that some of the Turkish contracts would be
extended through February. The press broadly reported the
agreement and the solution to the crisis on February 1. Some
press reports stated that SOMO extended Turkish companies'
contracts until February 18.
--------------
COMMENT- SHORT TERM SOLUTION, BUT...
--------------
4. (C) The crisis erupted amid frustrations about
unsuccessful extension of short-term contracts with SOMO. We
do not know all the details of the proximate problem or the
supposed solution. It appears to be another short-term
solution and at some point in February, problems will likely
surface again. Although Turkish suppliers have persevered in
seeking to do business, there is no lack of bad blood between
the two sides, primarily from the long history of payment
problems and smuggling investigations. Now, SOMO appears to
be seeking to reduce its reliance on Turkey, as well as
keeping its contracts on a short leash.
5. (C) Comment Continued: Turkey is struggling with how to
align its significant economic interdependence with northern
Iraq with the poor GOT-KRG political relationship. The ill
will is related to the PKK and Kirkuk issues, as well as
concern that Iraqi Kurdistan will seek independence. Turkey
would consider Kurdish independence as an existential threat,
and worries that the Kurds, significant autonomy is a step
in this direction. Negative rhetoric between Turkey and the
Iraqi Kurds ) in particular from and directed at KRG
President Masoud Barzani ) has added fuel to this fire. To
have forced the GOT to make oil deals now with the KRG would
have been extremely difficult.
Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/
WILSON
SIPDIS
SIPDIS
E.O. 12958: DECL: 01/31/2017
TAGS: ETRD EPET PREL TU IZ
SUBJECT: TURKEY-IRAQ: SOMO CRISIS ABATES, FOR NOW
REF: A. STATE 12518
B. ANKARA 174
Classified By: DEP/ECON/C ANDY SNOW FOR REASONS 1.5 B AND D
1. (C) SUMMARY: The trade crisis unleashed when SOMO advised
Turkish fuel product suppliers seeking to renew 2006
contracts to deal with the KRG (as opposed to the central
GOI) seems to have abated. Contacts confirm press accounts
that the GOI has assured the GOT that its suppliers should
continue to deal with the central government and that SOMO
intends to apply past agreements. SOMO has failed to
implement past agreements and the current "solution" is
another short term extension, so SOMO trade will continue to
be problematic. End Summary.
2. (C) On January 26 the Turkish Foreign Trade
Undersecretariat (FTU) told us that SOMO trade stopped after
Turkish fuel product suppliers received a letter advising
them to make contact with the KRG for future business (REF
B). (30-40 % of petroleum products imported by SOMO come
from Turkey.) Trade Minister Tuzmen made combative
statements, trumpeted in the press, emphasizing that Turkey's
interlocutor for this special transit business was Baghdad,
not the KRG. There were reports in the press that Turkey
might retaliate by stopping its electricity exports to Iraq.
3. (C) On January 31, FTU informed us that high level
officials had communicated and resolved the issue by SOMO
reaffirming that Baghdad was Turkey's interlocutor for this
business and attesting to the validity of old agreements.
The U.S. military liaison officer at the border reported good
negotiations at the border customs meeting Jan. 31, with the
expectation that some of the Turkish contracts would be
extended through February. The press broadly reported the
agreement and the solution to the crisis on February 1. Some
press reports stated that SOMO extended Turkish companies'
contracts until February 18.
--------------
COMMENT- SHORT TERM SOLUTION, BUT...
--------------
4. (C) The crisis erupted amid frustrations about
unsuccessful extension of short-term contracts with SOMO. We
do not know all the details of the proximate problem or the
supposed solution. It appears to be another short-term
solution and at some point in February, problems will likely
surface again. Although Turkish suppliers have persevered in
seeking to do business, there is no lack of bad blood between
the two sides, primarily from the long history of payment
problems and smuggling investigations. Now, SOMO appears to
be seeking to reduce its reliance on Turkey, as well as
keeping its contracts on a short leash.
5. (C) Comment Continued: Turkey is struggling with how to
align its significant economic interdependence with northern
Iraq with the poor GOT-KRG political relationship. The ill
will is related to the PKK and Kirkuk issues, as well as
concern that Iraqi Kurdistan will seek independence. Turkey
would consider Kurdish independence as an existential threat,
and worries that the Kurds, significant autonomy is a step
in this direction. Negative rhetoric between Turkey and the
Iraqi Kurds ) in particular from and directed at KRG
President Masoud Barzani ) has added fuel to this fire. To
have forced the GOT to make oil deals now with the KRG would
have been extremely difficult.
Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/
WILSON