AMBASSADOR DISCUSSES BOEING SALE WITH

C O N F I D E N T I A L ANKARA 000074 SIPDIS DEPT FOR EEB/FO, EEB/CBA, EEB/TRA/OTP, EUR/SE PARIS FOR FAA TRICIA STACEY COMMERCE FOR ITA/MAC CHERIE RUSNAK AND KRISTIN NAJDI NSC FOR BRIDGET BRINK E.O. 12958: DECL: 01/14/2020 TAGS: BEXP ETRD EAIR PREL TSPA TU SUBJECT: AMBASSADOR DISCUSSES BOEING SALE WITH TRANSPORTATION MINISTER REF: ISTANBUL 17 Classified By: Ambassador James Jeffrey for reasons 1.4 (b) and (d). ¶1. (C) Summary. Minister of Transportation Binali Yildirim confirmed to Ambassador Jeffrey that price is now the main sticking point in the prospective purchase of Boeing aircraft by Turkish Airlines (THY). Yildirim stressed, however, that price is not the only consideration and that THY is looking at the (vague) associated conditions for evidence of a long-term partnership and commitment. He added that the GOT is also hoping for a heightened level of civil aviation cooperation with the FAA, and that progress on that front would improve the environment for Boeing as well. Finally, he repeated President Gul's request to President Obama for assistance in sending a Turkish astronaut into space, and hinted that this was tied into Turkey's consideration of commercial deals. The Ambassador highlighted Boeing's long history of cooperation with and investment in Turkey, not only through partnerships with local firms but also via direct investment in the community through its corporate social responsibility programs. He also promised to discuss the possibilities for cooperation with FAA and investigate whether NASA could help facilitate the Turkish space program. End summary. ¶2. (SBU) Ambassador Jeffrey, accompanied by Commercial Counselor and Econoff, met with Minister of Transportation Binali Yildirim on January 14 to advocate on behalf of Boeing in the ongoing procurement of new airplanes for the THY fleet. THY recently announced that it would be purchasing 20 Airbus single-aisle aircraft with an option for 10 more. Negotiations with Boeing for a similar number of 737s are ongoing (see reftel). The value of this deal is approximately USD 3.4 billion. ¶3. (C) The Ambassador, alluding to the discussions between President Obama and Prime Minister Erdogan, noted his understanding that the main sticking point in the negotiations now seems to be on price (as was expressed by THY CEO to CG Wiener in reftel). Yildirim confirmed that price is the most important outstanding issue and observed that haggling over price is a normal part of any business negotiation. He went on to say, however, that price is not the only consideration, and that THY and the GOT are looking at the offer carefully with an eye toward after-sale service and long-term partnership. Ambassador Jeffrey highlighted Boeing's longstanding commitment to Turkey, its history of cooperative production with local manufacturers, its world-class corporate social responsibility programs, and the superior quality of its products. ¶4. (C) Yildirim added that the GOT is evaluating the Boeing offer in the context of Turkey's overall civil aviation cooperation with the United States, especially in terms of cooperation between the Ministry and the FAA. He noted that Turkey needs to strengthen both its technical infrastructure and its human capacity to meet the growing demand for aviation services, and expressed hope that the FAA could provide assistance on all these fronts. Cooperation in this area will create the right environment for commercial deals, he said, without going into specifics on what type of assistance is necessary. A frustrated Ambassador observed that FAA has a solid history of collaboration with the Civil Aviation Directorate General and promised to investigate how the USG might best lend assistance. ¶5. (C) In addition to FAA assistance, Yildirim hinted obliquely that Turkey's desire to send an astronaut into space -- expressed in a letter from President Gul to President Obama -- is also tied into its consideration of commercial deals, and that NASA assistance to help stand up Turkey's nascent space program would be viewed positively. Ambassador Jeffrey noted that scheduling a Turkish astronaut on an upcoming mission would be extremely difficult, but that other technical assistance from NASA in establishing Turkey's space program might be a possibility. ¶6. (C) Comment: Yildirim's conflation of USG-GOT interactions and what is ostensibly a commercial sale between private firms suggests an unwelcome, but unsurprising, degree of political influence in this transaction. His comments may also explain the confusing mention of offsets by Prime Minister Erdogan in his meeting with the President - if the GOT is truly evaluating the sale as a "U.S." offer rather a Boeing offer, then the desired "offsets" may have been from the USG rather than Boeing. While there should not be a link between this deal and FAA/NASA assistance in developing Turkey's aviation and aerospace agencies, such assistance in and of itself could be mutually beneficial and merits further study. We probably cannot put a Turkish astronaut in orbit, but there are programs we could undertake to strengthen Turkey's capacity in this area that would meet our own goals for improved aviation safety in the region. In any case, we must/must show some response to the Minister's vague requests if we want to maximize chances for the sale. End comment. Jeffrey