TURKISH PM ERDOGAN ON ECONOMY AND POLITICS

C O N F I D E N T I A L LONDON 000811

SIPDIS

E.O. 12958: DECL: 04/04/2019
TAGS: PREL PINS EU NATO TY DA FR RS IZ IS AJ JA
SP, SW, UK
SUBJECT: TURKISH PM ERDOGAN ON ECONOMY AND POLITICS

REF: A. LONDON 0781

B. ANKARA 0485

Classified By: Political Minister Counselor Greg Berry for reasons 1.4
(b) and (d).


1. (SBU) Turkish PM Erdogan spoke at a Chatham House event
April 3, in which he commented on the accomplishments of the
London Economic Summit, Turkey's economic progress, and his
party's recent election "success." In response to questions
from the audience, he was vague on Turkey's relations with
Israel, condemned the continuing assertion of an Armenian
genocide as a impediment to peace between Turkey, Armenia and
Azerbaijan, and ruled out a Kurdish state in Iraq. He also
made it clear that Turkey would not support the Danish PM's
candidacy for the Secretary Generalship (SYG) of NATO. End
Summary.

World Economic Crisis is Advanced Countries' Fault
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2. (SBU) Erdogan's prepared remarks focused exclusively on
the London Economic Summit and Turkey's position. He began
by blaming the crisis on the U.S. and other advanced
countries in Europe and the Far East, and complained that the
developing countries have to "pay for the mistakes of the
advanced countries." He claimed that in Turkey for instance,
the "advanced countries' crisis" had slowed several years of
economic growth, during which the average income in Turkey
had grown from 3,300 USD when his party came to power to
11,400 USD at the end of 2008; the downturn had also returned
unemployment in Turkey to 10 percent after years of
improvements in employment. Erdogan said that in the U.S.
and the UK, "everyone was opening investment banks like
grocery stores." A lot of "illegal" activities were funded
by these banks who were "rashly" permitted to operate, he
charged.

G20 to the Rescue
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3. (SBU) Erdogan praised President Obama's decision to
intervene in the U.S. economy, saying the President "had no
choice" and agreeing with the president that "the problem was
global and required global solutions." Erdogan also praised
the G20 for putting an end to these "illegal" banks. Erdogan
was confident that the measures agreed at the London summit
would produce "positive results." He said he looked forward
to attending the follow-up summit in November 2009 where any
"adjustments" deemed necessary could be negotiated.

Turkey Well Placed to Face Crisis
--------------


4. (SBU) Erdogan claimed that Turkey was "better prepared"
to weather the economic crisis because Turkey had been making
many changes to its economy both as a result of its own
crisis in 2003-2005, and as part of its reforms to meet the
EU accession requirements. Social Security, labor law,
banking and investment reforms have all contributed to
Ankara's economy being "stronger" and less likely to be
impacted by the "advanced countries' economic crisis." He
cited a variety of economic statistics to argue how
successful the Turkish economy was in comparison to
"advanced" economies like Spain, Sweden and Japan. Turkey's
10 per cent unemployment was less than Spain's 15 per cent he
noted, while Sweden and Japan had seen greater contraction of
their industrial productions than Turkey's 21 percent. He
announced that Turkey will pay struggling companies 50
percent of their total wages to forestall layoffs for the
next year, after which the GOT will revisit this program.

Turkey Still Open for Business - "Guarantees" Investments
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5. (C) The Prime Minister said his country has continued to
see growth during the period of the crisis, although it has
slowed. He said Turkey has taken steps to strengthen
confidence including offering loans to small to medium-sized
enterprises (SMEs),and targeted tax reductions to encourage
investments. He said the GOT "is there to guarantee that
foreign investors ... have no fears" about investing in
Turkey. Erdogan said that privatization would continue,
despite criticism that his government was "selling Turkey to
the highest bidder." He also said, in reference to growing
doubts about the Islamicization of his government (ref A)
that his government, party, and he himself, saw the economy
as having no religion. "Money is like mercury" he said "it
goes where it can."

Recent AKP "Victory" Shows Erdogan Government has Mandate
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6. (C) Erdogan then turned to his Justice and Development
Party (AKP)'s recent electoral "success" in local and
regional elections, and which he claimed set the stage for a
general election victory in 2011. While acknowledging that
his party lost "a little" of the overall vote, he pointed out
that his party still garnered more votes than his two nearest
opposition parties combined (ref B). And while he also
admitted losing "one or two municipalities," his party still
controlled 10 of the 11 largest cities and 39 smaller cities.
He blamed the economy for the few losses his party did
suffer. He added that while "all the governments of Europe
are on shaky ground" because of the economy, his government
was strong and will still be in power because the people
continue to support stability, reform, EU accession and the
democratic process.

EU Should Recognize Turkey's Efforts / International Standing
-------------- --------------


7. (C) Erdogan lashed out at the EU, claiming the EU had
made "unprecedented" demands on Turkey for accession, but
Turkey had cooperated "fully" and worked diligently and
constantly on many areas of Turkish society. Turkey has a
"justified expectation that the EU recognize this progress."
He stated that Turkey was a growing power which takes its
international responsibilities seriously, and which is taken
seriously, as exemplified by its election to the UNSC. He
then offered a laundry list of Turkey's active and
responsible international engagement, including mediation in
the Israeli-Syrian negotiations, peace talks in the Caucasus,
the Balkans, and in energy talks. Given all of this, the
EU's continued skepticism about Turkey's membership in the EU
is "unjustified," he said. Erdogan ended his remarks with a
veiled accusation: "(Unlike European countries) Turkey is a
strong, young and vibrant nation, that is well-poised to be
successful after the world economic crisis abates. The EU
should consider its position, recognize this and move
appropriately."

Armenia and Azerbaijan
--------------


8. (SBU) After his prepared remarks, Erdogan turned to a
variety of questions posed by the audience. On Armenia, he
blamed the Armenian Diaspora's continued insistence on
"talking about a Genocide that did not happen" as interfering
in what could be a settlement of almost all problems between
Turkey and Armenia. The other hurdle to relations is
Nagorno-Karabakh, which Erdogan said was the responsibility
of the "troika" of France, Russia and the U.S. to resolve.
Erdogan said the three governments have not been taking their
responsibilities seriously. He said that the "troika" should
accelerate their work to find a peaceful solution.

No Kurdish State - Iraq "Sad"
--------------


9. (C) Erdogan said that Turkey "has no understanding" of a
so-called Kurdish state. Iraq, he said, is a country with no
religious or ethnic identity. If there were to be a Kurdish
state, there could also be a Shi'a state and an Arab state
and a Sunni state - "but there would definitely also be a
civil war." He then called the condition of Iraq "sad" and
blamed the "last seven years" on the destruction of its
infrastructure as well as "inability of the authorities" to
rebuild despite "billions of dollars invested." Erdogan said
that Turkey wants to see a "happy" Iraq and that it is not
"happy, but sad." He hoped that measures to improve Iraq
would be accelerated.

GOT Willing to Work with Israel
--------------


10. (C) Asked whether the GOT would have difficulty working
with the new Israeli government given recent statements by
the new Israeli Foreign Minister, Erdogan skirted the issue,
saying only that Turkey has "no problem" with any of its
neighbors. He said that Turkey had worked hard as the
mediator of the Israeli-Syrian peace talks and were in the
fifth session when the Gaza fighting "ended that." He said
Turkey was ready to act as mediator again if both countries
asked for such mediation.

Denmark Unforgiven - Rasmussen Will NOT Have Turkey's Vote
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11. (C) Finally, Erdogan was asked by a Danish journalist if
Turkey would support Danish PM Rasmussen's candidacy for the
SYG of NATO. Erdogan replied that the SYG of NATO must show
strength, not weakness, and Denmark has been "weak" in
failing to silence a terrorist radio station in Denmark.
(Embassy note. He is referring to a radio station run by a
Kurdish group which Denmark refuses to label as a terrorist
organization. End note.) NATO also stands for peace, and
Denmark has incited conflict by its tolerance of anti-Islamic
cartoons. GOT would, therefore, not be able to support
Rasmussen's bid.

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