TURKEY: SENATOR LUGAR DISCUSSES GEORGIA AND ENERGY

UNCLAS SECTION 01 OF 03 ANKARA 001560

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ENRG EPET IZ PREL TU
SUBJECT: TURKEY: SENATOR LUGAR DISCUSSES GEORGIA AND ENERGY


1. (SBU) Summary. On August 26, Senator Lugar and
delegation discussed the situation in Georgia, Caspian
energy issues including Nabucco, Turkey's EU accession and
other issues with President Gul, Foreign Minister Babacan
and Energy Minister Guler. The Senator also hosted a
dinner for representatives from BP, Shell, Statoil and
other energy experts to discuss similar matters. All
interlocutors warmly welcomed Lugar's visit. Gul and
Babacan emphasized the shared agenda and common approach
the U.S. and Turkey share on key regional issues. Gul and
Babacan stated their support for Georgia's unity and
territorial integrity. They told Lugar that Nabucco
continues to be a top foreign policy priority and that the
GOT is working with Azerbaijan, Turkmenistan and Iraq to
help secure gas supplies for the project. Gul said
skeptics calling Nabucco a "pipe dream" will be proven
wrong. Babacan emphasized Turkey's commitment to the EU
accession process, which benefits Turkey even if it does
not ultimately lead to membership. End summary.

Georgia
--------------


2. (SBU) President Gul expressed surprise by the August 26
vote of the Russian Duma supporting Abkazia and South
Ossetia independence although added the potential for such
an action had long existed. He told Senator Lugar he had
spoken twice to Georgian President Saakashvili about this
issue and expressed his strong support for maintaining
Georgia's territorial integrity. Lugar expressed gratitude
to the President and FM for Turkey's humanitarian
assistance to Georgia. Energy Minister Guler speculated that
the situation in Georgia may force the EU to make critical
decisions about its future energy
supply. Guler added that U.S. decisions will be
equally important for the development of the Caspian energy
corridor.


3. (U) In his press availability at the Foreign Ministry
and in a television interview, Senator Lugar said he
appreciated Turkey's leadership in Iraq and Afghanistan and
in providing humanitarian aid to Georgia. He described as
unhelpful Russia's recognition of Abkhaz and South Ossetian
independence and underscored the U.S. commitment to
Georgia's territorial integrity. Asked about Turkey's
"Caucasus Stability and Cooperation Platform" concept, he
said he reserved judgment and noted that the U.S. had not
been consulted before its announcement. He suggested
further discussion of the idea be postponed until Russia
has withdrawn its troops to the status quo ante

Nabucco a Top Priority
--------------


4. (SBU) Gul and Babacan said enhancing the energy security
of
Turkey and its European allies is a key policy goal. Turkey
has consequently given priority to the Nabucco project to
diversify and increase gas supply to both Turkey and Europe.
Gul
bemoaned rumors in some EU circles that Turkey has "lost
interest" in Nabucco and asked Lugar to convey to European
interlocutors Turkey's commitment to the project. (Note:
Lugar will travel to Bucharest,
Budapest, Berlin and Brussels.) Guler echoed Gul's
sentiments on Turkish support for Nabucco and suggested
slow progress could be attributed to European attention to
"other projects" (comment: a likely allusion to South
Stream).

Caspian and Iraq Gas Needed for Nabucco
--------------


5. (SBU) Gul said developing new gas resources is key to
Nabucco's success. Turkey has spent considerable effort
discussing this with Azerbaijan, Turkmenistan, and other
Central Asian countries. Turkey has worked hard to help
build confidence between Turkmenistan and Azerbaijan and
Gul claimed credit for the May 19 visit of Turkmen
President Berdimuhamedov to Baku. Guler said he would
visit Baku, Ashgabat and Astana in the next few weeks to
continue the dialogue. Lugar praised in each of his
meetings Turkey's leadership and cooperation with

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Azerbaijan on BTC. He said that he used a recent meeting
with Azerbaijan President Aliyev to urge patience in
finding a solution to meet the needs of both Turkey and
Europe.


6. (SBU) Gul and Guler noted Iraq as a potentially
important source of gas for Nabucco. PM Erdogan's recent
visit to Iraq focused on energy issues and Gul hoped there
would soon be another US-Turkey-Iraq trilateral working group
on natural gas. Gul hoped the improvement in security in
Iraq would lead to progress on energy issues. Gul
underscored the need for passage of
an Iraqi hydrocarbon law and Guler called for USG
assistance in expediting its passage.


7. (SBU) Lugar expressed appreciation for Turkey's
continued leadership on energy issues. Lugar praised BTC
but also noted that its security remains a concern.
Lugar asked Gul to speak more openly and frankly with
Azerbaijan President
Aliyev. He added that Aliyev, in a recent conversation,
Saiad that Turkey wanted to buy such large
volumes of Shah Deniz Phase II gas that Azerbaijan's
ambitions to sell gas to Europe could be dashed. Lugar
said Aliyev told him that without a route to Europe, Aliyev
would consider selling gas to Russia.

Private Sector Views on Energy
--------------


8. (SBU) Representatives from BP, Shell, Statoil and other
energy experts discussed the policy and commercial dilemmas
created by competition between Turkey,s growing energy needs
and its desire to be a gas transit hub to Europe. These
experts said the key to improved Turkish and European energy
security is developing new gas sources. All agreed that
Nabucco partners, the EU and the US should intensify
efforts to make deals with Turkmenistan and Iraq.
Participants unanimously see Iraq as a short to medium term
solution due to its huge reserves and lack of Russian
political influence. While acknowledging current U.S.
policy toward Iran, one expert argued that Turkey and Europe
can not afford
to overlook Iranian resources, the second largest gas
reserves in the world. Another expert quipped that
negotiations with Iran are impossible, even without U.S.
opposition and international sanctions. On Georgia, some
noted that, since the Russian invastion, the risk premium and
therefore cost of building a new pipeline transiting Georgia
will be greater, but no one saw this as the key determining
factor as to whether the pipeline goes forward.

Renewable Energy and Conservation
--------------


9. (SBU) Guler said Turkey has set a goal of reducing by
half its natural gas consumption by substituting solar, wind,
and
nuclear power and implementing energy efficiency and energy
conservation programs. Guler accused "some countries" of
using natural gas as a political weapon and likened this to
a military threat. For Turkey, which currently generates
half its electricity with natural gas and imports almost
100% of its gas, this is a dangerous situation. Guler said
he welcomes U.S. investment in further developing Turkey's
renewable sector and specifically called for cooperation
and technology sharing on solar energy which he believes
holds huge potential in Turkey. Additionally, Guler said
Turkey could benefit from U.S. experience in nuclear power
and expressed his hope that an American firm would bid for
the September 24 tender to build Turkey's first nuclear
power plant. Lugar welcomed the opportunity to share
experience and deepen cooperation on these issues, and
re-emphasized the point with FM Babacan.

EU Accession
--------------


10. (SBU) FM Babacan told the Senator the Turkish economy
has been aided by the EU accession process and the
predictability it affords. Turkey is institutionalizing
its democracy through this process, improving itself in
areas such as food safety and environment. Turkey is not

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desperate for EU accession. When the process is complete,
it believes EU members will see Turkey as an asset, but
Turkey will have achieved Western standards either way.
Babacan mused that five years ago, European concerns were
that Turkey was too poor. Then he heard that Turkey was
culturally too different. The fear in Europe
now is that Turkey will be "too influential." If Europeans
want Europe to be a relevant, global power, they will
admit Turkey. Lugar expressed U.S. support for
Turkey's EU accession process and said he would convey
Babacan's vision and commitment to the EU process during
his upcoming meetings in Brussels.

The Global Food Crisis
--------------


11. (SBU) Senator Lugar discussed with FM Babacan the
global food crisis and the need for innovation to address
these issues. He cited "GMO" seeds and noted how his own
farm's productivity has grown three-fold, due to advanced
farming techniques, since his father,s generation. The
Senator bemoaned trade barriers being erected around the
world to secure national
food supplies and suggested that the U.S. and Turkey could
cooperate on promoting sound food policies. Babacan said
Turkey needs to improve its agricultural
productivity and welcomed the opportunity to partner with
the U.S. on agricultural issues.


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Visit Ankara's Classified Web Site at
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WILSON