US embassy cable - 03ADANA109

MERSIN BUSINESS ELITE GLAD FOR REGIME CHANGE IN IRAQ

Identifier: 03ADANA109
Wikileaks: View 03ADANA109 at Wikileaks.org
Origin: Consulate Adana
Created: 2003-04-16 13:44:00
Classification: UNCLASSIFIED
Tags: ECON ETRD EWWT PHUM PGOV TU SY JO IZ ADANA
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 ADANA 0109 
 
SIPDIS 
 
 
DEPARTMENT FOR EUR/SE AND NEA/NGA 
AND NEA/ARN 
 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, EWWT, PHUM, PGOV, TU, SY, JO, IZ, ADANA 
SUBJECT:  MERSIN BUSINESS ELITE GLAD FOR REGIME 
          CHANGE IN IRAQ 
 
1.  (SBU)  Summary:  Mersin, one of the largest 
ports in the Eastern Mediterranean, suffered 
years of downturn after the first Gulf War. 
Mersin's business leaders are optimistic they 
will benefit from new opportunities in the new 
Iraq.  They do worry, however, the U.S. might 
seek to "punish" Turkey for insufficient wartime 
support, including perhaps the demise of the QIZ 
idea. End summary. 
 
 
2.  (SBU)  On April 11 we called on leading 
businessmen in Mersin to get their take on the 
new dawn in Iraq.   Mersin (Icel Province) on the 
south central coast is Turkey's third largest 
port, after Istanbul and Izmir.  It is also a 
major shipping hub in the Eastern Mediterranean. 
The city - with its estimated population of 
600,000 putting it among Turkey's top ten - is 
also home to a reasonably diversified economy. 
 
 
3.  (SBU)  Mersin was a good example of the 
persisting negative economic impact of the first 
Gulf War on Turkey.  That war and subsequent 
sanctions on Iraq deprived Mersin of a 
significant export market, deprived Mersin port 
and shippers of transport trade revenue, and 
arguably stunted Mersin's ambitions to expand its 
tourism industry.  All of that, however, is 
yesterday's news, say Mersin's hopeful business 
leaders. 
 
 
What It Was Like With Saddam 
::::::::::::::::::::::::::::::::::::::::::::: : 
 
 
4.  (SBU)  Mahmut and Huseyin Arslan are brothers 
who run the ARBEL company, a major trader and 
exporter of foodstuffs based in Mersin.  The 
elder brother, Mahmut, is also a major figure in 
both Turkish and international associations of 
food exporters.  The ARBEL company had 
considerable experience supplying Iraq under the 
UN's oil-for-food program. 
 
 
5.  (SBU)  Mahmut Arslan was in the habit of 
visiting Iraq every couple of months during the 
past six years, i.e. during the era of the UN 
oil-for-food program.  Arbel was a regular 
supplier under the program; it accounted for 
approximately six percent of the firm's export 
volume. 
 
 
6.  (SBU)  In recalling the oil-for-food program, 
Mahmut Arslan recounted how it was a politicized 
exercise, on various fronts.  For one, he claimed 
that there were Turkish-nationalist 
parliamentarians (MHP party) in Ankara who 
expressed their displeasure that ARBEL was 
getting the business.  (Note:  The Arslans are 
Kurdish.  End note.)  For another, he claimed it 
was clear the Iraqis played favorites with 
suppliers on the basis of nationality.  The 
French and the Russians got the sweet deals. 
Arslan recalled going to Moscow to clinch part of 
an oil-for-food contract and meeting there with a 
Russian businesswoman whose firm was in on the 
deal; the woman, looking at samples of the ARBEL 
merchandise that were to be shipped via her 
company, could not correctly identify the samples 
for what they were: chickpeas and lentils. 
Finally, he told yet another story about how the 
Iraqis themselves tried to freeze ARBEL out at 
one point in the six-year program -- accusing 
ARBEL of dealing with Israel.  It took a while to 
demonstrate to the Iraqi authorities that the 
ARBEL shipments in question had actually gone via 
Israel to UNRWA - the Palestinian refugee camps 
run by the UN - at which point ARBEL got back 
into the game. 
 
 
7.  (SBU)  Now that a new day has dawned in Iraq, 
the Arslan brothers are optimistic their company 
and others like it in Mersin and in Turkey stand 
to benefit.  They say Turkish businessmen 
traditionally have been well received in Iraq. 
In fact, Mahmut Arslan went out of his way to 
compliment Trade Minister Tuzmen for his flesh- 
pressing skills with the old regime Baghdad; 
Turkish firms benefited from his efforts.  With 
the sanctions gone, Turkish firms are poised to 
do even better.  Furthermore, and most 
importantly, the Arslans believe Turkey will 
indeed be very competitive in the Iraqi market in 
certain sectors.  They specifically mentioned 
foodstuffs and construction.  As for petroleum 
and related services, the brothers smiled and 
commented that it would seem that other countries 
have something of a leg up. 
 
 
8.  (SBU)  Turning from the specifics of their 
own export and trading business to the more 
general question of how Mersin might benefit from 
the opening up of Iraq, the Arslan brothers were 
quick to point out that Mersin's port is a 
natural gateway for exporters to Iraq.  The port 
of Mersin is modern and large and is already used 
by shippers as a major hub in the Eastern 
Mediterranean.  The Turkish  port to Mersin's 
east  - Iskenderun - does not have the facilities 
for container-cargo that Mersin does.  Iskenderun 
is also quite a bit smaller than Mersin as a 
port.  That said, Iskenderun's port does have a 
deep draught, which makes it more suitable for 
bulk cargo vessels.  Therefore, Iskenderun, too, 
could do well from a ramped-up flow of goods into 
Iraq for the simple reason that the entire 
indigenous port capacity of Iraq (i.e. Umm Qasr) 
is too small to handle it alone.  There should be 
plenty for everybody, in other words.  The 
Arslans recalled that it was the Jordanians who 
had benefited when Mersin and other Turkish 
entrepots lost the Iraq trade after the first 
Gulf War.  Now, they say, it is time for Turkey 
to get some of that back.  And when it does, 
Mersin - like port cities everywhere - will 
inevitably see the positive economic ripple 
effects from the increased activity of ships and 
cranes and trucks. 
 
 
The Chamber of Commerce & Industry: "What's with 
the QIZ?" 
::::::::::::::::::::::::::::::::::::::::::::: :::: 
::::::::::::::::::::::::::::::::::::::::::: 
 
 
9.  (SBU)  In our meeting with representatives 
from the Mersin Chamber of Commerce and Industry, 
we were probed about the status of Mersin's 
application to be a QIZ.  Their question had a 
follow-up: given the "rough patch" that Turkey 
and the U.S. went through because of Iraq, was 
the whole QIZ concept now dead? 
 
 
10.  (SBU)  This anxiety on the part of the 
Chamber members was a sub-set of a more general 
uneasiness that the US perhaps was going to seek 
"retribution" against Turkey for failing to 
support the war in Iraq.  A couple of 
participants in the meeting told us stories about 
how they had done deals in anticipation of  the 
U.S. troop presence in Turkey, only to have the 
contracts cancelled when the troops never came. 
For this they fundamentally blame the Turkish 
parliament, but they know that at the micro-level 
some Turkish  businessmen took a hit. 
 
 
11.  (SBU)  The Chamber members described Mersin 
as having a reasonably balanced distribution of 
economic activity across shipping/transport, 
manufacturing, agriculture, and services.  There 
is also an NGO - largely funded by the Chamber - 
which is working specifically on economic 
development.  This NGO admits, though, it is 
still at the beginning in the laborious process 
of getting relevant actors (business, government, 
labor, universities) to understand and buy into 
the concept.  They have high hopes, but realistic 
expectations. 
 
 
12.  (SBU)  On the down side, the Mersin Chamber 
members immediately acknowledged as their biggest 
problem the very same thing we heard from every 
other single interlocutor we spoke to in Mersin: 
the flood of poor and uneducated rural folk into 
the city.  The strain is evident everywhere: in 
the labor market, in the educational system, in 
the criminal justice system.  We were told, for 
example, that Mersin used to have a per capita 
income that was three times the Turkish national 
figure.  Now, apparently, Mersin's figure has 
fallen to match the national one. 
 
 
The View from the Top 
::::::::::::::::::::::::::::::::: 
 
 
13.  (SBU)  Mersin has gone from a population of 
30-40,000 to roughly 600,00 in a matter of a few 
decades.   It is estimated that more than half of 
the current population consists of new arrivals 
from southeastern Turkey, i.e. Kurds.  This 
massive migration has not only challenged the 
economic infrastructure of the city, but also the 
Mersin elite's image of its city.  Mersin was an 
unimportant town in Ottoman times, until - oddly 
enough - the American Civil War.  It was at that 
time that the Confederate States turned to the 
Ottoman Sultan for cotton, in the wake of Great 
Britain's boycott.  The Ottomans brought to 
Mersin some Francophone cotton traders from Egypt 
and the Levant to establish the business. 
Therefore, starting in the middle of the 19th 
century, Mersin grew up with a somewhat more 
cosmopolitan feel than many other Anatolian 
cities.  In fact, it is still a point of pride 
among some in Mersin that the city has the only 
Ottoman-era cemetery in Turkey in which Muslims 
and Christians and Jews were buried together, 
rather than in separate sections.  This kind of 
quaintness or quirkiness is now basically being 
buried under the weight of migration from the 
southeast, it appears. 
 
 
14.  (SBU)  This civic history was transmitted to 
us by Cihat Lokmanoglu and Atahan Cukurova, 
president and general secretary respectively of 
the Mersin Maritime Chamber of Commerce.  These 
two men - born in Mersin, graduates of Tarsus 
American College, and then U.S. universities - 
represent the pro-American social and business 
elite of Mersin.  Like the Arslan brothers and 
like the Mersin Chamber of Commerce & Industry, 
they also are optimistic that both their own 
businesses and the fortunes of Mersin in general 
are due for an upturn in the wake of Saddam's 
overthrow. 
 
 
15.  (SBU)  The only cloud they see on the 
horizon is, again, the possibility that the US 
might devalue its partnership with Turkey, either 
out of spite for Turkey's failure to support the 
war or out of Turkey's diminished strategic value 
in the region.  What they find particularly 
galling is the possibility that a possible 
"tipping" factor for US-Turkish relations might 
be northern Iraq.  Having fought and won its own 
war against the PKK - costing 30,000 lives over 
15 years --  and having done so with the tacit 
blessing of the US, it would be bitterly ironic 
if the US and Turkey were to have a major falling 
out over Kurds in another country.  Both 
Lokmanoglu and Cukurova lamented the failure of 
the March 1 vote in the Turkish parliament, 
attributing it to the "parochialism" of neophyte 
AK Party politicians. 
 
 
16.  (SBU)   Given their long experience in 
maritime trade, Lokmanoglu and Cukurova can look 
back on not only the bad years of the economic 
embargo against Saddam's Iraq but also headier 
days from Saddam's "first" war.  Looking at each 
other and laughing, the two men swapped tales 
from era of the Iran-Iraq war, during which time 
Mersin did a nifty business in cargo bound for 
both sides.  Indeed, they said, during that 
conflict there even were ships that came to 
Mersin laden 50-50: half for the Iraqis, half for 
the Iranians.  "Do you remember," one of them 
said, "the time that there was that mix-up, and a 
load of Iranian military uniforms got sent to 
Iraq and the Iraqi uniforms went to Iran?" 
 
 
17.  (SBU)  Comment:  In Mersin, as in other 
parts of Turkey, we are now seeing optimism about 
the economic consequences to flow from the change 
of regime in Iraq, albeit tinged with some 
concerns specific to the US-Turkey partnership, 
including the status of the QIZ legislative 
proposal.  End comment. 
HOLTZ 

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