AMBASSADOR MEETS WITH TURKISH SPECIAL ENVOY TO IRAQ

1. (C) SUMMARY: On January 18, Ambassador Crocker met with
Turkish Special Envoy to Iraq Murat Ozcelik, and discussed
Turkey's relations with the KRG, including the issue of
energy contracts. On hydrocarbons, Ozcelik complained that
Turkey had waited too long to reach such agreements with the
KRG and now other companies had grabbed the opportunities.
Ambassador said the more Kurds were seen as pursuing an
independent course regarding hydrocarbons, the harder it
would ultimately be to get hydrocarbon legislation passed.
Ozcelik also described a recent visit to the KRG and his
meetings with KRG President Barzani, saying Turkey wants to
work more closely with Iraqi Kurds. He spoke of the need to
separate reconcilable PKK members from the irreconcilables.
Ozcelik said no official amnesty is likely in the near future
for PKK in Turkey. He also discussed the 400 KRG villages
damaged by Turkish bombardment and offered to rebuild them
with the Kurds. END SUMMARY



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UNILATERAL CONTRACTS WITH THE KRG FOR GAS AND OIL


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2. (C) At a January 18 meeting with Turkish Special Envoy to
Iraq Murat Ozcelik, the Ambassador (accompanied by Ambassador
Satterfield, PMIN and Pol-MilOff) addressed the major review
of the oil and gas sector about to be undertaken by DPM
Barham Salih due to concerns about decreasing production and
the need to accelerate international engagement in the
sector. Commenting that Salih's review may impact the
commercial attractiveness of fossil fuel agreements, the
Ambassador advised that he warns all contacts against
unilateral engagement with the KRG (to the exclusion of the
GoI's central government) lest they become blacklisted by the
GoI. The Ambassador told Ozcelik that such agreements "push
in the wrong direction," countering efforts to bring the
federal government and the regional governments together.



3. (C) The Ambassador asked Ozcelik about the GOT's
intentions regarding energy contracts. Ozcelik said he
believes that PM Maliki is "dragging his feet" due to a lack
of knowledge. He complained that Turkey had waited too long
and other companies stepped in to sign lucrative deals with
the KRG that, in his view, would later be retroactively
approved by the GoI. The gas, he said, would end up being be
exported to Turkey anyway. "Now is the time," Ozcelik said.
"If others discuss this with the KRG, then I tell my
government we should discuss it as well. There has to be
balance."



4. (C) Ozcelik told the Ambassador that Turkey "doesn't want
(Minister of Oil) Shahristani's face on every contract.
Sometimes it is easier to negotiate with the Kurds than with
others." The usually composed Ozcelik said with some
apparent frustration: "People know we can't get gas from
Turkmenistan and Iran is playing around. Therefore, it must
be Iraq. Erbil has a pipeline. So why shouldn't I get the
pipeline to go to Turkey? And why shouldn't I get involved
in the production sharing side of it? The Kurds are asking,
'Are we going to make a deal?' They don't mention the
central government. You can only get these guys to work
together if they know they take a share."



5. (C) The Ambassador pointed out that Ozcelik had precisely
Q5. (C) The Ambassador pointed out that Ozcelik had precisely
identified the rub: the more the Kurds are seen as pursuing
an independent course regarding hydrocarbons, the harder it
would ultimately be to get hydrocarbon legislation passed,
and this legislation is the key to moving forward with
large-scale commercial development. Ozcelik said there is a
limit to Turkey's ability to wait. He said "the people of
this region only come to their senses when they see a
threat," and if he were to warn the PM or Minister
Shahristani that if the GOI did not act more quickly, he
would deal directly with the Kurds, they might be more likely
to act. Ambassador Crocker asked Ozcelik if Turkey had any
discussions with the central government of Iraq on oil
issues, to which Ozcelik responded in the negative, saying
Minister of Oil Shahristani "doesn't discuss much with
anyone."



6. (C) Ozcelik said that Turkey wants to work more closely
with Iraqi Kurds, including on energy issues, and said the
Turks understand the mindset of both the Kurds and of Oil
Minister Shahristani. "We'll watch to see who signs
contracts. We know this fight will go on for a while, but we

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have to position ourselves," Ozcelik said. He also offered
that Turkey had signed a memorandum of understanding (MOU)
with Shell Oil Company and said it would cooperate with
British Petroleum and some Japanese companies as well.



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A NEW WAY TO DEAL WITH THE KURDS AGAINST THE PKK


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7. (C) Ozcelik told the Ambassador that after his recent
visit to the KRG, things in Turkey were changing regarding
Kurdish issues. While in Erbil and Sulaymaniyah, he met
twice with KRG President Masoud Barzani. At the second
meeting, which he said went into the early hours of the
morning, Ozcelik said they discussed only PKK-related issues,
and that both sides agreed they need to develop a reasonable
approach. "We're watching the effectiveness of the
bombardments," he said, adding that both Turkey and the KRG
need to make the Kurdish people realize that the PKK is not
working in their interests. Ozcelik discussed an upcoming
conference that Barzani was planning to hold in the KRG, but
quickly added that Barzani should not appear to carry the
banner of the PKK, lest he confuse the message to the Kurdish
people.



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SEPARATING OUT THE IRRECONCILABLES


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8. (C) Throughout the meeting, Ozcelik discussed the need to
separate reconcilable PKK members from the irreconcilables.
Those who wish to walk away from the PKK, he said, need to
know that they can do so safely. For this reason, Ozcelik
said he opposes the hard-liners in Turkey who want to focus
efforts on cutting all PKK supply lines. Doing so, he
feared, would only harden fighters who may otherwise be open
to reconciliation.



9. (S) Ambassador Crocker asked if the GoT is considering an
amnesty for PKK members who break away, to which Ozcelik
stated "no one in Turkey can say that word," but he hinted
that there are ways to apply a virtual amnesty (under section
221 of the penal code) without calling it such. According to
recent intelligence reports, Ozcelik said, the PKK had
restructured itself into smaller, dispersed groups; and,
therefore, Turkey needs to change the manner with which it
responds to the organization. He said he discussed with
Barzani rebuilding 400 KRG villages damaged by Turkish
bombardment. "Let's rebuild those together, so the people
can see Turks and Kurds working together for the good of the
Kurdish people," Ozcelik said he told Barzani.



10. (C) Citing the Iraq-Turkey-U.S. trilateral security
dialogue, Ozcelik said that Turkey would soon open an office
in Erbil to deal with security issues. The first step will
be to encourage PKK members to leave the organization and
return home. He said he was certain that the Kurds did not
want to give sensitive information to Baghdad.



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COMMENT


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11. (C) While we are heartened by Ankara's more pragmatic and
positive approach to working with the KRG, as far as
hydrocarbons are concerned, we need to continue to send a
consistent message to the Turks, and others, that they are
best served by working in the first instance through Baghdad.
When we met Ozcelik on January 9, he had indicated that the
Turkish military was more hopeful that the KRG is serious
about clamping down on the PKK and the Turkish General Staff
had wanted him to step up his engagement with the KRG.
Qhad wanted him to step up his engagement with the KRG.
Ozcelik's comment that he knows the KRG does not want to
share sensitive information with Baghdad in the battle
against the PKK reminds of the distrust that persists in all
KRG-GoI relations. We will continue to use the tripartite
security dialogue (Ref B) and to seek out opportunities to
foster better Turkey-Iraq relations and better relations
between the KRG and the GOI as well.



12. (C) (Comment continued) On January 9, Ozcelik had
complained to us about Prime Minister Maliki and the slowness
with which the Iraqi administration operates. His
willingness to push forward quickly with the Kurds probably
reflects some of that frustration with the government in
Baghdad, especially on energy issues. Ozcelik also had
advice for us at the January 9 meeting. He urged that the
American administration keep working closely with the Turkish
Foreign Ministry on issues such as Iraq and not depend too

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much on political party advisors such as Davutoglu. End
Comment.
CROCKER