YEREVAN WORLD BANK AND EU REPS BULLISH ON

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000833 SIPDIS E.O. 12958: DECL: 11/24/2029 TAGS: ECON ETRD EFIN PGOV PREL AM TU EU SUBJECT: YEREVAN WORLD BANK AND EU REPS BULLISH ON TURKEY-ARMENIA REF: YEREVAN 825 Classified By: AMB Marie L. Yovanovitch, reasons 1.4 (b,d). SUMMARY -------------- ¶1. (C) The top World Bank and the European Union representatives in Armenia say their organizations are moving ahead with projects to support Turkey-Armenia reconciliation, and that their contacts in Turkey seem confident Ankara will ratify the Turkey-Armenia Protocols. End summary. EU AND WB HEAR OPTIMISM IN TURKEY -------------- ¶2. (C) At a November 24 meeting with the Ambassador and USAID Mission Director, Ambassador Raul de Lutzenberger, Head of Delegation of the EU mission in Armenia, and Aristomenes Varoudakis, World Bank Country Manager for Armenia, both reported that they have heard encouraging comments from their contacts in Turkey regarding prospects for Turkish ratification of the Protocols. De Luzenberger said Turkish officials had told their EU counterparts that ratification "will happen" and Parliament would approve the Protocols after considerable debate. He believed that pressure from EU member states and the U.S., including the possibility that failure to reconcile with Armenia would strengthen various national calls for "genocide resolutions," would counter pressure from Azerbaijan not to ratify. Varoudakis agreed, saying he has been getting a similar message from Turkey, and noting that the Kurdish issue was the greater controversy in Turkey, to the benefit of the Protocols with Armenia. On the invitation of the World Bank office in Ankara, Varoudakis was planning December consultations in Turkey to coordinate World Bank support for the border opening. NEEDS ASSESSMENTS AND ECONOMIC ANALYSIS -------------- ¶3. (C) Varoudakis and de Lutzenberger spoke of the projects their respective organizations are preparing in anticipation of Turkey-Armenia reconciliation and border opening. Acknowledging the risk that the Protocols signed by Turkey and Armenia October 10 might fall short of ratification and the border remain closed, both indicated that they are moving ahead with preparatory work. ¶4. (C) Varoudakis said that at the request of the GOAM, the World Bank would conduct an assessment of needed investment and infrastructure and an economic analysis of the likely effects of an open border. He said the needs assessment would cover such areas as transport and customs, IT and telecommunications, electricity sales, product standards (e.g., whether Armenian products meet EU standards Turkey has already adopted),and social infrastructure ranging from potable water to education. He said the assessment could begin as early as mid-December, and based on the WB's experience conducting a similar assessment in Georgia after the war with Russia, should take about a month and a half. The results could potentially serve as input to a donors' conference should the border be opened. ¶5. (C) The economic analysis, Varoudakis said, would be carried out jointly with a think tank (yet to be chosen),and would ideally cover the effects of an open border not only on Armenia but also on Turkey and possibly Georgia as well. He added that he would travel to Turkey soon in preparation for the study, which would begin with taking stock of previous cross-border economic studies and proceed to additional research as needed. Varoukadis also remarked that an open border with Turkey would improve Armenia's creditworthiness and therefore increase the maximum amount Yerevan could borrow from the WB. ¶6. (C) De Lutzenberger said Armenia had approached the EU about providing advisers to various working groups the GOAM is setting up to look at operationalizing the Protocols. He said he could not make promises about EU participation at this stage, but added thatthe EU was likely to help in technical areas while avoiding any role that might be seen as "mediating" between Ankara and Yerevan. In particular, the EU would not want to be involved in the proposed historical commission. He cited customs as an area where the EU would expect to play a role, because Turkey is already a member of the EU Customs Union. Since Armenia is a WTO member, de Lutzenberger said, establishing trade and customs procedures should not be too difficult. He was not as sanguine, however, as the Armenian Minister of Justice, who had told the Ambassador that no changes at all to Armenian law YEREVAN 00000833 002 OF 002 were required in order to open the border and begin direct trade (Reftel). De Lutzenberger believed that in order for Armenia to obtain maximum benefit from trade, there would need to be at least some revisions to legislation. YOVANOVITCH YOVANOVITCH