CYPRUS: T/C "PM" PRAISES ERDOGAN, BASHES TURKISH

C O N F I D E N T I A L SECTION 01 OF 02 NICOSIA 000045 SIPDIS DEPT FOR EUR/SE E.O. 12958: DECL: 01/22/2019 TAGS: PGOV PREL TR CY SUBJECT: CYPRUS: T/C "PM" PRAISES ERDOGAN, BASHES TURKISH MFA REF: A. NICOSIA 0017 ¶B. 08 NICOSIA 558 ¶C. 08 NICOSIA 650 ¶D. 08 NICOSIA 929 ¶E. 08 NICOSIA 981 Classified By: AMBASSADOR FRANK C. URBANCIC FOR REASONS 1.4 (b),(d) ¶1. (C) Summary: "I can solve problems with Turkish Prime Minister Erdogan," "governing" Republican Turkish Party (CTP) leader and "TRNC PM" Ferdi Sabit Soyer told the Ambassador during a January 20 meeting. Soyer voiced strong confidence in the Turkish PM's pro-solution stance and full support for Turkish Cypriot leader Mehmet Ali Talat. He complained, however, that his "government" had not obtained the requisite budget support from Ankara -- purportedly because of misinformation by the Turkish Embassy here -- and still faced a cash shortfall in the run-up to April "parliamentary" elections. Soyer dubbed the UN-brokered negotiations difficult, but said the Turkish Cypriots were ready to grant the federal government more competencies provided the T/Cs had a greater voice in it. On domestic issues, Soyer said that the main opposition National Unity Party (UBP) would suffer at the polls thanks to its hawkish leadership, but CTP nevertheless faced a tough slog. The CTP leader promised that the "law" on casinos, vital in improving the north's standing with Financial Action Task Force (FATF),would pass by the end of the month. Last, he noted that oversight for the renovation of the Apostolos Andreas Monastery in the Karpass region had been transferred from Talat's office to the Evkaf Foundation. End Summary. Erdogan: Continued Support for Talat ¶2. (C) In a January 20 meeting with the Ambassador, Republican Turkish Party (CTP) leader and "TRNC8 PM Ferdi Sabit Soyer said that Turkish PM Erdogan T/C leader had voiced full support for the negotiating efforts of Turkish Cypriot leader Mehmet Ali Talat during the January 16 meeting between the two in Ankara. Soyer also said that the AKP government was "hopeful" regarding the UN-brokered talks. Furthermore, Erdogan and AKP are planning, according to Soyer, to revitalize Turkey's EU accession bid after March municipal elections (presumably in the event of an AKP victory) to ease a settlement on the island. The Ambassador replied that DAS Matt Bryza had received a similarly positive message during his recent trip to Ankara. Turkish Embassy: No Friend of CTP &Government8 ¶3. (C) Soyer was less pleased, however, with the Turkish Embassy in Nicosia. He hinted that it fed disinformation to the AKP government regarding the perilous state of T/C "public" finances in order to block extraordinary Turkish budget support to his CTP-led "government," which in December was forced to call early elections for April 2009 in the wake of a serious economic slowdown and concomitant budget crunch. Without directly naming the Turkish Embassy, he confided to the Ambassador that the "classified reports they send" -- which he claimed to have seen while in Ankara -- are "lies." ¶4. (C) Erdogan, Soyer added, had voiced "surprise" to Talat about the extent of the economic and budgetary crisis in the north, but assured him that Ankara was not trying "destroy CTP" in response to Talat's direct question. That said, Soyer complained that his "government" still faced a TL 50 million (approximately USD 30 million) shortfall as April elections approached. Turkey in December had only transferred 50 million of TL 80 million due under a bilateral aid protocol, thus causing the "government" to delay payment of "public sector" wages until January. He claimed that staff were "working on the problem with Erdogan," without going into details. (Note: Other CTP contacts report that, while Ankara has agreed to provide funds for "public sector" salaries up through the election, it still has not agreed to financial support for citrus growers or the moribund tourism sector. End note). Negotiations: T/Cs will trade stronger Federal government for a greater role in it ¶5. (C) In a refrain heard earlier from T/C leader Talat, Soyer said that the Turkish Cypriots would consider a stronger role for the federal government at the expense of the constituent states provided that they had a greater role in it, ideally a four-to-three ratio of Greek to Turkish Cypriots in high-level structures. Such an arrangement, he NICOSIA 00000045 002 OF 002 argued, would diminish a widespread T/C fear that the federal government will be dominated by G/Cs, as well as debunk a deeply held G/C belief that the constituent states only benefit Turkish Cypriots and are inherently separatist. (Note: An UNFICYP member involved in the talks told us on January 22 that he had not heard of such a ratio or offer from the Turkish Cypriots. End Note). Soyer, while admitting difficulties in the negotiations, said that the "atmosphere" was still good. Early Elections: Main opposition weakening, but no cakewalk for CTP ¶6. (C) Soyer told the Ambassador that the main opposition, right-wing National Unity Party (UBP),was "weakening" after the November 2008 return as party leader of long-time UBP boss and former "TRNC PM" Dervis Eroglu. In response the Ambassador's query regarding the effect of a UBP victory on the settlement process, Soyer said that the hard-line Eroglu wanted to conduct talks on the unrealistic basis of "state-to-state" negotiations, a position clearly at odds with the AKP government's acceptance of the present UN-parameters. Soyer alleged that Eroglu had vowed in his recent campaigning to close the crossing points if elected. Nevertheless, despite all of Eroglu's negatives, Soyer admitted that CTP would have to work hard to come out on top in the early elections. Casino Law: To be passed by end of January ¶7. (C) Soyer assured the Ambassador that "parliament" would pass a law regulating casinos by the end of the month. The Ambassador reminded him that passage could help remove north Cyprus from a FATF money-laundering watch list, as well as reassure governments that had worked with the Turkish Cypriots on anti-money laundering efforts, such as the UK and the US, of T/Cs' seriousness. In an unrelated matter, Soyer said that oversight for the planned renovation of the Apostolos Andreas Monastery in Karpass -- which has not commenced for reasons unclear to the Embassy despite the purported buy-in of both sides to a restoration plan -- has been transferred from Mr. Talat's office to the parastatal Evkaf Foundation. (Note: The largest landowner in the north and second largest in the south, Evkaf is a "parastatal" T/C entity that regulates property, including many religious and historical sites, in the public interest. End Note) ¶8. (C) Comment: Soyer covered little new ground in the meeting. He echoed what many progressive T/Cs claim -- that on the Cyprus question, the "good," pro-solution PM Erdogan continues to grapple with the "hard-line" Turkish Foreign Ministry and state apparatus. On Ankara's desires for urgent "public sector" reform in north Cyprus, however, little daylight shines between the positions of the two Turkish camps. Urbancic