TURKEY: HATAY BUSINESS LEADERS SANGUINE ON INCREASING

UNCLAS SECTION 01 OF 02 ADANA 000048 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON ETRD PREL SY SUBJECT: TURKEY: HATAY BUSINESS LEADERS SANGUINE ON INCREASING TURKISH-SYRIAN TRADE AND CONTACTS ¶1. (U) SUMMARY. Prominent members of Hatay's business community are hopeful about increasing trade and commerce with Syria through the province's two border gates. Syria's recent reduction of a border fuel tax augers well for improved trade conditions for Turkish transporters, although truck convoy rules still impede what could be a steadier flow of Turkish goods over the border. Women's business associations are also growing stronger, with a Turkish-Syria Women's Fair in the works for May ¶2009. Through AKP's diplomatic initiatives and more positive media portrayals of Syria, Turks have warmed to their southern neighbor. END SUMMARY. -------------- -------------- -------------- BUSINESS WITH SYRIA STILL BRISK FOR HATAY TRUCKERS -------------- -------------- -------------- ¶2. (U) Business leaders in Hatay province (flanked by Syria on the east and the Mediterranean sea on the west) hope that Turkey-Syria trade volume will reach $5 billion annually by 2012, up from $1.2 billion recorded in 2007. While regionally Gaziantep enjoys a large piece of that figure ($103 million in the first 9 months of 2008),Antakya Chamber of Commerce President Hikmet Cincin said Hatay has the second largest truck fleet in Turkey and is poised to take greater advantage of the Turkey-Syria Free Trade Agreement that came into force in 2006. Suleyman Ustun, owner of a local ground transportation company, told us despite the global financial crisis, business was booming for him. Ustun said his firm trucks over the province's two border gates products such as cotton and synthetic yarns, chemicals, cement and soil products, vegetable oils, machinery, and spare parts. His vehicles come back largely empty, however, save for the maximum 200 liters of diesel drivers can purchase in Syria as the country has little in the way of exports suited for Turkey. Ustun said while the idea of importing more fuel for resale in Turkey is attractive, Syrian law offers a stiff penalty of six years imprisonment designed to deter would-be violators. -------------- -------------- SYRIAN FUEL LEVY RECENTLY REDUCED -------------- -------------- ¶3. (SBU) Ustun said up until a few weeks ago, business was dampened by the Syrian-imposed "diesel fuel tax" of $400-600 that truckers paid per vehicle at the gate. This fuel tax was levied to prevent trucks from taking advantage of the heavily subsidized and cheaper fuel rates in Syria -- some 85% cheaper for diesel. This tax was recently lowered to $100-200 to promote brisker business. According to Ustun, the warm relationship between PM Erdogan and Syrian President Bashar al-Assad can't be discounted in the recent adjustment in the border tax. He believes during their recent vacation together in the Turkish resort of Bodrum, Erdogan likely conveyed complaints of Turkish business owners and al-Assad obliged him with the quick reduction. Although this particular hasty development was positive, Ustun communicated the frustrations of doing business with a dictatorship in which rules changes as quickly as the wind, with no warning or phased-in introduction. -------------- -------------- -------------- CONVOY REQUIREMENT HAMPERS BUSINESS -------------- -------------- -------------- ¶4. (SBU) Pointing to another vestige of a paranoiac totalitarian regime, Ustun said there is a convey requirement for Turkish truckers. That is to say, Turkish trucks are allowed through Hatay's two border gates (Cilvegozu and Yayladagi) with Syria only in a convoy grouping twice a day - a two-hour window in the afternoon followed by a two-hour window at night. This allows the vehicles to be trailed by Syrian intelligence for the balance of their business dealings in the ADANA 00000048 002 OF 002 country. Timing and logistics take on a new importance because of this constraint, said Ustun. Cincin pointed out how cumbersome this obligation was and said truckers who miss the time window must spend another 18 hours at the gate or waste expensive fuel motoring back to their hubs. -------------- -------------- THE HATAY-GAZIANTEP SHOW-DOWN -------------- -------------- ¶5. (SBU) Since Syria doesn't export much in the way of goods (mostly confections to Russian and olive oil to France),Cincin said their main challenge is promotion of Hatay province to attract Syrian tourists. Cincin believes Syria's diverse populations should be attracted to Antakya with its historical convergence of three religions, Judaism, Christianity, and Islam. Their main rival, however, is Gaziantep, a bustling commercial hub with the greatest percentage of export goods to Syria and the site of the country's only Syrian Consulate. Gaziantep vendors also display rugs bearing the visage of al-Assad, hoping to appeal to patriotic Syrian tourists. Cincin said his Chamber had recently applied to the Turkish Ministry of Transportation for a no-visa system between Hatay province and the Syrian cities of Lattakia and Aleppo, akin to the arrangement between Trabzon and Batumi, Georgia. -------------- -------------- NEIGHBORLY EXCHANGES WARMING -------------- -------------- ¶6. (SBU) Over the past year, news reports in southeast Turkish media have highlighted the ongoing cultural and business exchanges between Turks and Syrians. The Aleppo symphony comes frequently to Turkey, and the Antakya choir has performed there; business conferences are held in Gaziantep and Mersin; Syrians seek medical treatment in Gaziantep and vacation in the eastern Mediterranean. Recently the Women Entrepreneurs Association of Hatay, led by President Yasemin Mistikoglu, sent a group of 54 Turkish businesswomen to Syria for bilateral talks. Mistikoglu said Turkish and Syrian businesswomen have a lot of experience to share because they live in neighboring countries. Right now the dialogue is just starting, she said, but plans are underway to hold a Turkish-Syria Women's Business Fair in Ankara in May 2009 that will focus on textiles and jewelry. -------------- COMMENT -------------- ¶7. (SBU) Turkish officials and business leaders with whom we've spoken are optimistic about the opportunities Syria offers in traditional export sectors as well as alternative energy and construction. Conspicuously absent is the guarded, slightly condescending and arms-length attitude that infused conversations about their southern Arab neighbors only a decade ago. No doubt increasingly positive media portrayals have played a role in changing public perceptions, as have personal diplomacy initiatives under the AKP government. But, where money is to be made, the spirit of Turkish entrepreneurship will closely follow. END COMMENT. GREEN