US embassy cable - 03ANKARA6482

C O N F I D E N T I A L ANKARA 006482 
 
SIPDIS 
 
 
E.O. 12958: DECL: 10/15/2013 
TAGS: PREL, MARR, MOPS, ETRD, ETTC, TU, IZ 
SUBJECT: IRAQ-TURKEY TRADE: HOW CAN TURKISH MERCHANTS GET 
PROCEEDS HOME FROM IRAQ? 
 
Classified by A/DCM Scot Marciel.  Reasons 1.5 B and D. 
Action Request at para 1. 
 
 
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SUMMARY AND ACTION REQUEST 
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1. (C) CPA regulations prohibiting any cash over USD 10,000 
from entering or leaving Iraq, coupled with the absence of a 
fully functioning banking system is problematic for merchants 
doing large-scale business in Iraq.  The Turkish MFA informed 
Embassy this week that Turkish merchants are increasingly 
complaining about US military personnel preventing them from 
moving cash across the border after having sold their wares. 
The Turks point out that some of the trade is being conducted 
with the US military.  ACTION REQUEST:  Request Washington 
and CPA explore possibilities to either establish an 
exemption for bona fide merchants and their trucker agents 
from the USD 10,000 limit, or establish a simple and 
accessible means of international transfer they could use to 
get their money from Iraq to their home countries.  If such a 
facility that can be used by Turkish merchants and truckers 
already exists, please advise soonest. End summary and action 
request. 
 
 
2. (C) MFA Economics Department Head Akif Ayhan contacted 
PolMilOff Oct. 15 to say increasing numbers of Turkish 
merchants were complaining that US military officials on the 
Iraqi side of the Habur border crossing were preventing 
Turkish merchants from bringing the cash they had earned in 
Iraq back to Turkey.  In the absence of a fully functioning 
banking system, Ayhan noted, the merchants had no alternative 
but to carry cash, as they had been doing for years.  He 
asked that we look into the complaints and if true, offer a 
solution that the GOT could pass on to the Turkish merchants. 
 
 
3. (C) Comment: We ascertained via contact with the 101st 
Airborne that they have been enforcing the CPA regulation 
prohibiting any cash over USD 10,000 from entering or leaving 
Iraq, and that on Oct. 13, more than USD 300,000 was 
confiscated by Iraqi customs police at the border.  The cash 
had not been declared and was hidden under bags of produce. 
The siezure of this money may have generated the recent 
complaints Ayhan reported to us.  End Comment. 
 
 
4. (C) Ayhan asked PolMilOff to come see him Oct. 16. 
PolMilOff explained the CPA regulation and confirmed that 
authorities at the border were enforcing the regulation. 
Ayhan said that Turkey understood the practice of limiting 
cash movements across international borders for anti-money 
laundering purposes, but under the current circumstances, 
some solution needed to be found for Turkish merchants and 
truckers.  Whatever new system gets implemented, he said, it 
should be simple.  Ayhan then said that the restrictions run 
counter to the desire on the US, Turkish and Iraqi sides to 
increase trade.  The terms of trade across the Iraq-Turkey 
border have been on a cash basis for many years.  To change 
that now could lead to the end of Turkish exports to Iraq, he 
warned.  Ayhan also pointed out that Turkey has been a main 
artery for humanitarian aid to Iraq which could also be 
jeopardized.  The problem, he underscored, must be solved 
immediately. 
 
 
5. (C) Ayhan noted that Turkey's Ak Bank was already part of 
the Iraqi Trade Bank, but he did not think that Turkish 
truckers or small merchants would be able to avail themselves 
of its use.  He suggested that Zirat Bank, which wants to 
open branch offices in Iraq, might be able to do so quickly 
and provide transfer service from Mosul or Zakho. 
 
 
6. (C) Ayhan also asked if there was any USG response to 
Turkey's request to have a meeting with US and CPA officials 
in Ankara to discuss opening a second border gate.  He added 
that the GOT would also be prepared to include Iraqi MFA and 
MOI reps.  However, he stressed, such a meeting should not 
take place at Habur where local officials were not in a 
position to engage on the substance. 
 
 
7. (U)  Baghdad minimize considered. 
EDELMAN