CODEL SHAYS CONFRONTS SKEPTICAL BUSINESSMEN IN

C O N F I D E N T I A L SECTION 01 OF 02 ISTANBUL 001046

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/06/2017
TAGS: PGOV PREL PTER ETRD TU IZ
SUBJECT: CODEL SHAYS CONFRONTS SKEPTICAL BUSINESSMEN IN
ISTANBUL

REF: A. ANKARA 2885

B. ANKARA 2867

Classified By: Consul General Sharon A. Wiener for reasons 1.4 (b) and
(d).


1. (C) Summary. Codel Shays' November 29 meetings in
Istanbul underlined contrasts in Turkish thinking on Iraq,
the PKK and the U.S. image in Turkey. President of Karadeniz
Holding Orhan Karadeniz told Congressman Shays Iraq remains a
mess, despite military accomplishments. Turkey is very
sensitive to any news on PKK-related topics due to the loss
of 40 soldiers in the last two months to PKK activity; Turkey
has done nothing wrong respecting the Kurdish minority in
Turkey. Codel Shays' also met with Delta Petrol Chairman
Mehmet Habbab who, unlike Karadeniz, said his company was not
trading in Iraqi oil due to the slow-down of traffic at the
Habur Gate. Habbab told Shays his November 28 visit to the
southeast of Turkey was sure to have been viewed with
suspicion by "the bureaucracy," which would suspect Shays of
meeting with the PKK. More troubling is the perception that
until very recently, the U.S. has done nothing to fight PKK
activity in Turkey. Codel Shays concluded meetings in
Istanbul with a visit to the family of a victim of PKK
terrorism. End summary.

HABUR GATE DELAYS MAKE NO DIFFERENCE TO ONE BUSINESSMAN
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2. (C) Orhan Karadeniz is the President of Karadeniz
Holding. Representative Shays' goal in meeting with
Karadeniz was to get his measure of progress in Iraq.
Karadeniz said the Iraqi government is not functioning; the
military situation is improved, which is good, but expected
and therefore not impressive. Inertia makes it very
difficult to break the cycle of poor Iraqi government
decision making. Routine government actions proceed well but
anything requiring original or new decision making is
thwarted by conflicting interests; even cabinet ministers are
afraid to initiate new programs or propose new solutions.


3. (C) Shays asked Karadeniz about the wait at Habur Gate
for trucks passing in either direction. Karadeniz repeatedly
maintained this was no problem for his company. Families
were very large in the southeast, multiple families owned one
truck and the many drivers had plenty of time while rotating
driving responsibility. Karadeniz said it didn't matter if
trucks made the roundtrip to Iraq for oil twice a month or
ten times a month.


4. (C) Karadeniz' felt Turks hold a grudge against the U.S.
because of the situation in Iraq. His solution for public
image difficulties was "better marketing." Shays suggested
Turkey did not value diversity in its population, citing a
Syriac priest he had met the day before that said he was
treated like a second class citizen. Karadeniz said the
discussion was only about Kurds and asked why Kurdish
Regional Government (KRG) leaders hadn't labeled the PKK a
terrorist organization. The U.S. could be a stronger player
in Turkey, despite the great sensitivity in the country
toward the U.S. caused by the recent deaths of some 40
Turkish soldiers through PKK terrorist activity. Better
marketing could help both Turkey and the U.S. -- Turkey with
respect to the place of minorities in the society and America
with respect to Iraq and the PKK.

BUT DELTA PETROL CAN'T MAKE MONEY; SIDELINED FOR NOW
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5. (C) Chairman Mehmet Habbab of Delta Petrol told
Representative Shays his company is currently on the
sidelines in the oil trade with Iraq precisely because the
delays at Habur Gate wiped out any price advantage. In 2005,
Habbab claimed 3500 to 4000 trucks transited the border
crossing into Turkey from Iraq each day; 2000 returned empty.
During the reconstruction upgrade of the gate in 2005, 1700
to 1800 trucks passed each day. The count is now on average
800 per day. Habbab's explanation: bureaucracy. The Iraqi
system is chaotic and requires complete revamping. Employees
are chosen on the basis of religious affiliation, not
competence, he said. He acknowledged delays were similar on
both sides of the gate.


6. (C) If the transit delays were not economically
prohibitive, Delta would be involved in the Iraq oil trade.
Investors today receive 25% of the oil revenue from Iraqi

ISTANBUL 00001046 002 OF 002


oil. Absent other problems, that is a sufficient margin,
with a 15- to 25-year contract, to undertake the risk. In
normal circumstances, however, investors receive 55 to 60% of
oil revenues, the balance going to the state. Lack of
coordination among Iraqi government entities is the reason
for the decreased revenue percentage for investors, according
to Habbab. Currently, Northern Iraq continues to produce
some oil but cannot export product legally. A "small amount"
smuggled to Syria keeps a refinery there in operation. This
smuggled product has no documentation and is sold for USD
30-40 per barrel.


7. (C) Addressing Congressman Shays' experience on November
28 in Turkey's southeast (ref A),Habbab told Shays he was
not surprised by MFA suspicion of his visit to the region.
Cultural differences affect the way such a visit is viewed.
In addition, he explained, the GOT would have been afraid
that had Shays gone on his own, he would have met with the
PKK. A deeper problem at the moment was that until very
recently the U.S. had "done nothing" with respect to the PKK
threat. The U.S. was now coordinating with Turkey to enable
attacks against the PKK.

MEETING WITH A FAMILY VICTIMIZED BY PKK TERRORISM
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8. (C) Shays completed the visit to Istanbul with a call on
the family of slain Jandarma conscript Nesimi Akyar. Akyar
was killed in 2004 in Tunceli Province when his convoy was
attacked by the PKK. He had survived the attack and asked
compatriots to keep the extent of his wounds from his mother
in initial reports. His friends complied but he subsequently
died. Shortly before being attacked, Akyar had phoned his
mother to tell her how much he loved her. Akyar, though
engaged, had decided against marriage until completion of his
military service. He was survived by his parents and three
sisters, including a set of twins still at home. The
one-half hour visit, though discussing unhappy events, was
relaxed and attended only by the immediate family, Codel and
Codel's police escort.


9. (U) Codel Shays did not clear this cable.
WIENER