US embassy cable - 03ANKARA5314

UNCLAS SECTION 01 OF 02 ANKARA 005314 
 
SIPDIS 
 
 
SENSITIVE 
 
FOR E, EB AND EUR/SE 
 
 
E.O. 12958: N/A 
TAGS: ETRD, EINV, PREL, ENRG, TU 
SUBJECT: GETTING THE MOST OUT OF THE ECONOMIC PARTNERSHIP 
COMMISSION MEETING 
 
 
1.  (SBU) Summary:  Embassy recommends an ambitious agenda 
for the next Economic Partnership Commission meeting, 
tentatively slated for October, as a way to advance our 
economic agenda with Turkey and bolster the broader bilateral 
relationship.  We suggest sessions on economic reform, 
foreign direct investment (with private sector 
participation), trade, and regional cooperation, to include 
Iraq, Afghanistan and energy issues.  The best prospects for 
achieving concrete results lie in the investment and regional 
cooperation arenas.  We should, for example, shoot for 
concrete steps to resolve some of our long-pending investment 
problems, in return for which we could offer the Ambassador's 
participation in an FDI roadshow.  We also might consider a 
session -- ideally with Iraqi participation -- to promote 
Turkish-Iraqi trade and move forward on some of Turkey's 
reconstruction proposals.  End Summary. 
 
 
2.  (SBU)  Embassy will discuss with the Foreign Ministry 
this week the idea of holding the next EPC meeting in 
Washington in early October. Assuming the meeting goes 
forward, one of our most pressing challenges will be in 
shaping Turkish expectations.  The Turks saw the first EPC 
meeting in February 2002 in terms of what the U.S. could do 
for Turkey, and they will be inclined to view this one the 
same way, despite the changes in the relationship.  We will 
need to work hard to make clear that this meeting is about 
building a partnership, not offering one-way benefits. 
 
 
3.  (SBU) Embassy recommends an ambitious agenda for the 
meeting, both to advance our full economic agenda and to 
provide the best opportunity to achieve tangible results that 
will boost bilateral relations.  We suggest sessions on the 
key aspects of the economic relationship highlighted in U/S 
Larson's June 26 speech:  economic reform, trade, foreign 
direct investment, and regional cooperation, with the latter 
including Iraq, Afghanistan, and regional energy issues. 
Such an ambitious agenda might require more than one full day. 
 
 
4.  (SBU) We could use the economic reform session to remind 
Turks that the key to enhancing bilateral trade and 
investment is for Turkey to continue to implement the reforms 
needed to stabilize the economy and improve the foreign 
investment environment.  If the meeting roughly coincides 
with the release of the first disbursement under the new U.S. 
financial assistance package, we could think about announcing 
the disbursement at the EPC, though we note this could work 
against our goal of shifting the EPC's focus from unilateral 
benefits to bilateral partnership. 
 
 
5. (SBU) On trade, we will want to note our concerns on 
market access, especially in agriculture, but also want to 
try to move the trade discussion off the textile/agriculture 
talking points that both sides have used, with few results, 
for the past several years.  Options to consider include 
initiating a dialogue on how to manage the trade (and 
investment) relationship during Turkey's movement toward EU 
accession, or exploring ways to enhance cooperation in the 
WTO.  The latter would fit nicely with our desire to focus 
more on regional and global cooperation.  We also should 
decide whether to proceed with or kill the QIZ initiative. 
 
 
6.  (SBU) We expect the investment and regional cooperation 
sessions to offer the best prospects for concrete results. 
Private sector participation could be particularly helpful in 
the investment session.  We recommend inviting 
representatives from U.S. companies with investments in 
Turkey, and asking the GOT to invite executives from Turkish 
companies with investments in the U.S. or which are working 
with U.S. investors here (eg. Koc, Enka).  Together, these 
executives could discuss the keys to successful investments. 
We also will want to urge the GOT to take action to resolve 
long-pending problems, including those affecting U.S. 
companies in the pharmaceutical, power, cola, and corn-based 
sweetener industries.  We could offer the GOT, in return for 
concrete progress on some or all of these issues, the 
Ambassador's participation in a Turkish FDI roadshow in the 
U.S. 
 
 
7.  (SBU) The regional cooperation session could begin with a 
discussion of the East-West energy corridor, with the goal of 
deciding on next steps in bringing surplus natural gas to 
Europe.  From that, we could segue into a discussion of 
Iraq-Turkey energy questions -- if there are any pressing 
issues -- and then discuss Iraq reconstruction/trade. 
Embassy suggests two possible goals:  implementation of one 
or more of the Turkish reconstruction proposals discussed 
during FM Gul's recent visit; and holding a separate session 
-- preferably with Iraqi participation -- on Turkish-Iraqi 
trade, possibly as a first step toward some kind of customs 
arrangement to facilitate cross-border trade. 
 
 
 
 
 
 
EDELMAN