TURKEY: GOT REQUESTS USG SUPPORT ON "TRNC"

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SIPDIS

SIPDIS

DEPT. FOR EUR/SE

E.O. 12958: DECL: 04/03/2018
TAGS: PREL ECON CY TU
SUBJECT: TURKEY: GOT REQUESTS USG SUPPORT ON "TRNC"
ANTI-MONEY LAUNDERING EFFORTS

Classified By: PolCouns Janice G. Weiner for reasons 1.4(b) and (d)


1. (C) SUMMARY: The GOT is concerned that Greek Cypriot
efforts to block engagement of Turkish Cypriot Authorities by
the OECD's Financial Action Task Force (FATF) of Turkish
Cypriot authorities under the guise of "recognition" concerns
threatens to further isolate economically and financially the
"TRNC." MFA officials note "TRNC President" Talat and his
administration take seriously their responsibilities to
counter money laundering and have prepared legislation that
further addresses concerns outlined by the FATF regarding
banking, off-shore banking, and casinos. However, ROC
officials have, according to Turkish MFA, weighed in via the
Greek Cypriot Vice President of MONEYVAL to block FATF
efforts to further investigate or otherwise engage with
"TRNC" officials. At the same time, the FATF released a
public warning to financial institutions doing business with
counterparts in northern Cyprus due to deficient anti-money
laundering and counter terrorist finance efforts. GOT
officials fear the ROC will seek to continue to support this
deadlock as a means to pressure and further isolate the
Turkish Cypriot half of the island. Aside from the FATF
issue, GOT officials are pleased about the April 3 opening of
the Ledra Street crossing, encouraged by the positive remarks
by UN Under Secretary General Pascoe regarding the
willingness of both sides in Cyprus to resume serious
comprehensive settlement negotiations, and look forward to
Pascoe's April 8 visit to Ankara. Separately, MFA U/S Apakan
expressed concerns regarding Cyprus negotiations that, for
him, call into question prospects for the process. He
nevertheless looks forward to Pascoe's impending visit and
said the GOT remains intent on staying fully engaged in the
effort to achieve a comprehensive settlement. END SUMMARY


2. (C) MFA Deputy Director General for Cyprus and Greece
Kerim Uras convoked us April 3 to convey concerns regarding
the Department's human rights report on Greece (septel) and
regarding the stalled FATF investigation of the "TRNC." Uras
said "TRNC President" Talat takes seriously the criticisms of
the OECD and others in the international community of T/C
oversight of its financial sector with regard to money
laundering and terrorism financing. For that reason, Talat's
administration had adopted legislation in October 2007 to
bring "TRNC" practices into line with the international
community's expectations and had prepared additional
legislation to further address concerns about the banking,
offshore banking, and casino industries in northern Cyprus.


3. (C) In a two-page document given to us (scanned and
conveyed to EUR/SE and Embassy Nicosia),Uras noted the
investigation initiated by the FATF in February 2007 had been
stopped as a result of action taken during a meeting of the
FATF's International Cooperation Review Group held February
25-29, 2008 in Paris. As described by the GOT, during that
meeting, a MONEYVAL representative contested the European
Commission's approach of working cooperatively with the
"TRNC" on the issue, noting that references made in the
Turkish Cypriot Action Plan to ministries, assembly, etc.
improperly implied indirect recognition of an illegal regime.
As a result, the FATF investigation was stopped at the
suggestion of French and British representatives.


4. (C) FATF decided at the same meeting to issue a public
statement warning the international financial community to
exercise caution in its dealings with financial institutions
in northern Cyprus which may not be applying appropriate
anti-money laundering and counter terrorist financing
measures. Uras expressed concern that Greek Cypriot
officials may continue efforts to block FATF engagement with
"TRNC" officials to prolong Turkish Cypriots' economic
isolation. He called on all FATF members to "adopt a more
fair and objective approach in the coming plenary of the FATF
to be held in June." He emphasized that the GOT hopes the
USG especially will be more supportive of efforts of the FATF
to engage with "TRNC" authorities on the issue.


5. (C) Aside from the FATF issue, Uras said the GOT is
pleased about the opening of the Ledra Street crossing
earlier the morning of April 3. He does not expect any other
confidence building measures to be implemented between now
and the beginning of comprehensive settlement negotiations
later this summer, but the GOT hopes those negotiations will
begin according to the agreement between Christofias and
Talat. Uras said it appeared UN Under Secretary General for
Political Affairs Lynn Pascoe had been favorably impressed by
the expressed intent by leaders on both sides of the island
to engage seriously in comprehensive settlement talks. GOT
officials look forward to Pascoe's April 8 visit to Ankara,

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which falls between his stops in Athens and Moscow. Although
recent statements by Christofias alluding to the Greek
Cypriots wanting to find "a Cypriot Solution" and not wanting
"too much UN involvement" in the negotiations were troubling,
Uras said it remains clear successful talks will require
heavy lifting by the UN and others in the international
community. He added the GOT looks forward to learning who
the USG may nominate as its special envoy once the process
starts in earnest. The GOT hopes the U.S. will be able to
bring some pressure to bear on the ROC to ensure the Greek
Cypriots remain engaged seriously in the process now that the
EU has effectively surrendered its ability positively to
influence Greek Cypriot behavior.


6. (C) As the parties prepare to engage again in settlement
talks, Uras said the GOT is concerned that important players
assume the objective and even-handed roles they have played
in the past. He referred to a statement made in February by
Department spokesman Sean McCormack that made reference to
"President Christofias and "TRNC" leader Talat which had
caused some concern in Ankara because of the asymmetrical
treatment. He asked that we adhere to prior practice in UN
documents that refer to them as "the 2 leaders" or "Mr.
Christofias and Mr. Talat."


7. (C) In a separate meeting on April 2, MFA U/S Apakan
shared with Ambassador three concerns he has regarding Cyprus
negotiations at the moment:

- The papers provided by the G/C side on establishing
technical committees and working groups for the three-month
negotiations under the Gambari/July 8, or as the Turks are
calling it the "March 21", process are exactly the same as
those last provided under the Papadopoulos administration
which caused Talat and the Turkish Cypriots problems. G/C
negotiator Iacovou reportedly said he had told assistants in
his office to "revise them" but it had not happened. Apakan
was dubious.

- The GOT and Turkish Cypriots do not want to lose entirely
the progress that has been achieved in UN-brokered
negotiations over the past three decades. Apakan said the
way Iacovou has spoken recently, the Greek Cypriots appear to
want to go back to the state of play when negotiations were
initiated in 1977-78, disregarding the subsequent 30 years of
talks.

- The Turks are aggravated about P-5 work on Cyprus in
Nicosia, believing some P-5 ambassadors there provide
unhelpful guidance to SRSG Moller. According to Apakan, at
play is the good offices of the UN Secretary General, not of
the UN Security Council. Apakan's remarks focused on the
Russian and French ambassadors, not the US or UK. It was not
clear if he included the Chinese in the former or latter.

The sum total of these calls into question for Apakan the
real prospects for the negotiating process in coming months.
Nonetheless, Apakan said the GOT looks forward to Pascoe's
visit and intends to remain fully engaged in seeking a
comprehensive settlement.

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WILSON