CYPRUS: TURKISH CYPRIOTS CALL EARLY ELECTIONS

C O N F I D E N T I A L SECTION 01 OF 03 NICOSIA 000017

SIPDIS

DEPT FOR EUR/SE

E.O. 12958: DECL: 01/14/2019
TAGS: PREL PGOV TR CY

SUBJECT: CYPRUS: TURKISH CYPRIOTS CALL EARLY ELECTIONS

REF: A. NICOSIA 558

B. NICOSIA 650

C. NICOSIA 929

D. NICOSIA 981

Classified By: Ambassador Frank C. Urbancic for reasons 1.4 (b) and 1.4
(d)

1.(C) The "TRNC's" "ruling" Republican Turkish Party (CTP) on
January 5 announced early "parliamentary" elections for April
19, 2009, a bump-up of ten months in the electoral calendar.
The decision was triggered by an unsustainable budget crunch
in the "Turkish Republic of Northern Cyprus" and the absence
of extraordinary aid from Turkey. The pro-solution CTP plans
to highlight its CYPROB stewardship during the campaign,
while tarring the main opposition and solution-skeptical
National Unity Party (UBP) as a retrograde nationalist force
whose unrealistic hard-line will further isolate Turkish
Cypriots. The opposition, which has long been clamoring for
early elections, cheered the decision, given the worsening
economy in the north. A UBP victory would not spell the end
of the UN-brokered peace process, which is led by Turkish
Cypriot leader and "TRNC President" Mehmet Ali Talat,whose
position would not be affected by "parliamentary" elections.
Nevertheless, a UBP victory may usher in a stormy
cohabitation with Talat. Whichever party can harness
undecided voters, comprising over thirty percent of the
electorate, will ultimately prevail in April. End Summary.

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Deteriorating "State" Finances Forces Early Elections
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2. (C) On January 5, CTP leader and "TRNC PM" Ferdi Sabit
Soyer set April 19 as the date for early "parliamentary"
elections (Soyer on December 26 had announced his intention
to move up the calendar.) The long-expected decision was
primarily the result of a worsening budget crisis exacerbated
by a bloated state sector, and Ankara's refusal -- or
inability -- to come to the rescue as long as CTP refused to
conduct serious economic reform (reftels). "Parliament" is
expected to confirm Soyer's decision in a January vote, upon
which the "High Election Council" will set the polling
timetable. By "law," active campaigning will begin one month
before the actual elections.


3. (C) Teberruken Ulucay, a CTP "MP," told us on January 7
that, barring the present economic difficulties, the party
would not have called early elections given its command in
the 50-member "parliament" (CTP holds 25 seats, and coalition
partner "Freedom and Reform" Party (ORP) has five.) However,
the economy has slowed dramatically over the past 18 months,
with a virtual collapse in the property market and
precipitous decline in tourist arrivals. Meanwhile state
expenses have been expanding by more than 20 percent annually
while tax revenue has been flat. The CTP decided to call
elections for April before it ran out of money to pay public
servant salaries.

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Turkey: No more extra cash
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4. (C) Unal Findik, another CTP insider, complained to Poloff
on December 29 that Turkey's AKP government simply could not
(or would not) provide the additional budget support needed
-- on top of the 25 percent of the 2009 budget Turkey already
provided -- to keep things going until February 2010.
Turkey's position was cemented, he said, by CTP's refusal to
carry out serious belt-tightening demanded by Turkey.
"Ankara simply has its own problems," Findik said, ticking
off Turkey's economic downturn, ongoing negotiations with the
IMF, and municipal elections planned for March 2009. Ulucay
told us, however, that before announcing early elections, CTP
had secured Ankara's promise to provide enough money to make
payroll until early elections came. (On January 7, a CTP
delegation headed to Ankara, ostensibly to secure
post-election support in the event of a first-place finish.)

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Talat and CTP Firmly Pro-Solution
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5. (U) CTP will pitch a pro-solution election message during
the campaign. In his January 5 announcement, Soyer conjured
up past CTP achievements in attempting to reunify the island
(all falling in April, coincidentally): the 2003 opening of
the Green Line checkpoints, the 2004 Turkish Cypriot Annan

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"Yes" vote, and the 2005 election of former CTP leader Mehmet
Ali Talat as "TRNC President." Further, he argued that CTP's
pro-solution stance had brought the party a resounding
victory in February 2005 "parliamentary elections," with a
record 44.5 percent of the vote versus 31.7 percent for UBP.
(Note: The only other two parties that crossed the
five-percent election barrier were the center-right Democrat
Party (DP) with 13.5 percent, and the center-left Social
Democratic Party (TDP) with around six percent. ORP was
formed in September 2006 by renegade UBP and DP deputies. End
Note)


6. (C) Findik claimed that only a Cyprus Problem solution
would eliminate the two main issues troubling Turkish
Cypriots: political uncertainty and their "state's" lack of
international recognition. UBP, he charged, was led by
CYPROB hawks whose hard line during EU accession talks in the
1990s and in the early stages of the Annan Plan had hurt
Turkish Cypriots and would now scuttle the ongoing
UN-brokered process. Sami Ozuslu, a CTP insider and
columnist for party mouthpiece "Yeni Duzen," told us on
January 6 that, while unemployment and a lagging economy were
indeed important issues for T/Cs, they tended to support
pro-solution parties during periods of active negotiation.
Hasan Hasturer, in the January 8 edition of the mass T/C
daily "Kibris," wrote that CTP's ability to spin the Cyprus
Problem would be crucial to its election fortunes.

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Lackluster UBP Leadership
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7. (C) Both Findik and Ulucay were contemptuous of the
November 2008 return of 70-year old Dervish Eroglu as UBP
party leader. Eroglu had led the party for over two decades
before his short-lived departure in 2006, and served as "TRNC
PM" for almost as long. Eroglu, they argued, was "detested
by most people" outside of UBP and would only hurt the party.
Findik even boasted that "we have no opponent," given
Eroglu's purportedly negative approval ratings. Others
outside CTP share this view. Serdar Denktash, leader of the
center-right Democrat Party (DP),told us on December 16 that
the return of Eroglu was the "best thing" to help DP's
chances given the UBP leader's tired image. Even Tahsin
Ertugruloglu, the former UBP chairman whom Eroglu ousted in
an ugly campaign, told Embassy officers in November that the
party would suffer if its former boss returned.

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Opposition: "Obligatory, not Early Elections"
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8. (C) In a December 17 meeting with the Ambassador, Eroglu
had predicted early elections and a UBP victory -- despite
the recent leadership battle -- given CTP's ham-handed
administration and the recent economic slowdown. Opposition
parties predictably voiced elation upon CTP's decision,
dubbing the early elections "obligatory, not early" given the
meltdown of public sector finances. UBP Secretary General
Nazim Cavusoglu subsequently told us that Eroglu was already
on the campaign trail, while Denktash said that DP would do
well in the elections and was ready with a free-market reform
plan. On the left, Sami Dayioglu of the pro-solution Social
Democratic Party (TDP),which stands the best chance of
peeling off disaffected CTP voters, told us on January 6 that
TDP hoped to emerge as the number-three party after UBP and
CTP.

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ORP: New Faces
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9. (C) ORP, CTP's coalition partner of convenience and
rumored favorite of Turkey's AKP,also publicly welcomed early
elections. Party leader and "FM" Turgay Avci said that ORP
had become a "party of the masses" and was ready to go to the
polls. Rasih Resat, one of Avci's top aides, told us in
November that ORP welcomed early elections, given T/C voters'
growing disgruntlement with traditional Turkish Cypriot
parties, including CTP. Resat said the party planned to run
new faces, including "TRNC" citizens originally from Turkey
or their children. (Note: ORP mouths pro-solution rhetoric
as part of the present CTP-led coalition, but its ideology
lies closer to UBP's.)

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Talat: New "government" must support solution process
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10. (C) Mehmet Ali Talat's Chief of Staff, Asim Akansoy, told
us January 6 that Talat supported the election decision and
was optimistic over his party's chances. A CTP victory would
also provide a vote of confidence for his own negotiating
efforts, Talat thought. On a January 13 T/C talk show, Talat
called on any new government to support his solution efforts;
otherwise, he warned, "chaos will ensue." Akansoy shared this
worry. He feared that a possible UBP victory would mean a
rocky cohabitation between Talat and Dervish Eroglu, who
presumably would run the "government" as "Prime Minister" and
is highly critical of the present Cyprus settlement process.
Akansoy may have reason for concern. In response to the
Ambassador's question during their December 17 meeting,
Eroglu, who favors a loose confederation over a bizonal,
bicommunal federation, said that if elected as "PM," he would
support the ongoing negotiations provided there was
"cooperation" between himself and Talat.

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Comment
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11. (C) Ankara (or it's purse strings) seems the force behind
Soyer's decision to call early elections. It is unclear,
however, whether the GOT wants to get rid of, or at least
chasten, the pro-solution CTP "government," or rather aims to
spur the same belt-tightening on the profligate Turkish
Cypriots that Turks are enduring themselves. We lean to the
latter explanation. Whoever wins on April 19 will need both a
cash infusion and political support from Turkey to carry out
painful "public sector" reforms.


12. (C) We expect only the five parties presently in
"parliament" -- CTP, UBP, DP, TDP, and ORP -- to pass the
five-percent barrier, with CTP suffering a noticeable drop in
support and UBP surpassing it or coming close. The outcome
will depend on undecided voters, a full third of the
electorate. While CTP might win some of them back with its
pro-solution promises, there is wide-scale pessimism among
Turkish Cypriots, dissatisfaction with the party, and few
achievements thus far at the negotiating table to highlight.


13. (C) UBP's Eroglu, for many the architect of the present
bloated and inefficient "civil service" system, will not be
able to lure many of the undecided, however. TDP will pick
up some disgruntled CTP voters, though perhaps not enough to
become the third-ranking force or coalition kingmaker. DP
will cash in on the Denktash name, but its appeal may not go
farther than that. And ORP should do well with the Turkish
settler vote, though may scare off Turkish Cypriots,
especially if it runs a large number of settler candidates.
Urbancic