US embassy cable - 03ANKARA7444

C O N F I D E N T I A L SECTION 01 OF 04 ANKARA 007444 
 
SIPDIS 
 
 
E.O. 12958: DECL: 12/01/2013 
TAGS: PREL, ETRD, ETTC, PTER, TU, IZ 
SUBJECT: IRAQ: TURKS AGREE TO IMPROVE EFFICIENCY AT HABUR 
BORDER CROSSING, SEEK PREFERENTIAL TRADE AND OIL 
ARRANGEMENTS 
 
REF: ANKARA 7253 
 
 
Classified by DCM Robert Deutsch.  Reasons 1.5 b and d. 
 
 
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Summary 
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1. (C) Iraqi Minister of Interior Nuri Badran led an 
interagency Iraqi/CPA delegation to Ankara Nov. 30-Dec. 2 to 
discuss with Turkish authorities improving the efficiency of 
operations at the Habur border crossing so that bulk fuels 
flow smoothly and regularly through the winter months.  The 
agenda of the Turkish side was much broader, something the 
Iraqi/CPA delegation only learned during the first session. 
The Turks sought to engage in detail on the aspects of the 
agreement reached with Jalal Talabani and the IGC delegation 
on Nov. 21 (Reftel).  The talks produced signed agreed 
minutes (text at para 5) that dealt with a broad range of 
trade, transportation and oil issues in addition to improving 
conditions and working for more throughput at Habur.  The 
Turks repeatedly insisted that Habur was operating at full 
capacity 24 hours/day seven days/week and that there were no 
lines of trucks there.  In the end, they conceded that the 
bridge has fewer than 2,800 trucks per day crossing and has a 
capacity of 4,000 (this figure is also suspect), but that 
goal would be impossible to reach in the short term.  The 
Turks, and State Minister for Foreign Trade Kursad Tuzmen in 
particular, were insistent that Iraq afford Turkey 
preferential treatment, from assuring Turkey that at least 
one of the six foreign bank licenses available in Iraq be 
granted to a Turkish bank, to granting Turkey below-market 
prices for Iraqi crude oil, to assuring that all Turkish 
contracts approved and funded by the UN under Oil-for-Food be 
prioritized for completion.  The Iraqi side resisted making 
commitments, but agreed to continue talks on these issues in 
the months ahead.  End Summary. 
 
 
2. (C) Iraqi Interior Minister Badran, accompanied by Deputy 
Trade Minister Fakhreddin Rashaan, CPA Deputy Administrator 
Amb. Richard Jones, SOMO head of shipping Fatin Fatohi, MFA 
Amb. Sabah Omran, CPA advisors to the Interior, Trade and Oil 
Ministries, a representative from Iraqi Customs, 
representatives from the 101st Airborne and KBR, and Charge 
and Embassy staff met with Turkish MFA, Trade, Customs and 
Interior officials in Ankara Nov. 30 and December 1.  The 
Iraqi side had asked to discuss Habur Bridge and issues 
related to ensuring the smooth flow of bulk fuels for the 
winter months.  Tuzmen, in the opening session Dec. 1 said 
that in addition to solving the Habur problems (which he 
seemed to blame on changing and unpredictable fees for 
importing goods on the Iraqi side), Turkey needed the talks 
to address: 1) a second border crossing; 2) a new agreement 
between SOMO and TPIC/TPAO on oil sales; and 3) entry into a 
new phase of the Turkey-Iraq border trade agreement.  He 
concluded his opening statement by saying "we need trade 
privileges from you.  We are unique as a democracy in the 
neighborhood.  I do not want equal treatment.  I want special 
treatment for Turkey." 
 
 
3. (C) In the three subcommittees that met separately on Dec. 
1 (customs, trade and oil) the tone was similar, with the 
Turkish side pressing hard for agreements to be signed that 
day that would grant Turkey special status in its trade with 
Iraq.  The Iraqis did not make commitments but agreed to 
consider Turkish proposals.  On the Habur issues in the 
Customs group, the Turks agreed to put additional customs 
personnel at the Habur facility, to reorganize their customs 
procedures and to strengthen the cooperation of the various 
Turkish authorities working at the facility with a goal of 
processing 1850 trucks/day in each direction by the end of 
2003.  (Comment: Monitoring implementation of this commitment 
will be critical.)  In the trade subcommittee, the Turks said 
that they were prepared to immediately consider sending fuel 
products to Iraq through Syria via rail (and possibly by 
truck) to reduce the pressure/reliance on Habur, and wanted 
to begin the technical work on a second gate in early 2004. 
They said that the road work alone required on the Turkish 
side for that project will take eight months to complete, 
making this a medium-term alternative to Habur at best.  In 
the oil group, after unsuccessfully seeking from SOMO a 
preferential pricing agreement for crude in the context of 
the border trade agreement, the Turks agreed to move kerosene 
by train through Syria within two weeks under an existing 
contract and agreed on price for other refined products.  The 
two sides agreed to initiate negotiations concerning details 
and modalities of new crude contracts. 
 
 
4. (C)  In the final session, Tuzmen reiterated his 
expectation of preferential treatment, and sought commitments 
that Iraq would honor all Turkish OFF contracts that had been 
approved and funded whether or not they had been selected for 
prioritization and a guarantee that a Turkish bank would 
receive one of the six available licenses for foreign banks 
to operate in Iraq.  When the Iraqi side was unwilling to 
make such commitments, Tuzmen grew animated and said that he 
would understand Iraqi support as an expression of political 
will in Iraq toward Turkey.  The Iraqis and CPA advisors 
assured him that Turkey had Iraq's support, but that the 
commitments he sought were beyond the competence of the 
delegation. 
 
 
5. (U) Text of Minutes of Meeting as signed in Ankara, Dec. 2: 
 
 
Begin text: 
 
 
MINUTES OF MEETING 
 
 
The Turkish and Iraqi Delegations met in Ankara on December 
1-2, 2003, to activate the Agreed Minutes signed on November 
21, 2003 in Ankara and agreed on the following; 
 
 
1.    The two Sides agreed to exert every possible effort to 
further promote and diversify bilateral trade to a higher 
level corresponding to their potentials on a mutually 
beneficial basis. 
 
 
2.    The Turkish Side submitted a draft agreement on 
Preferential Trade to be implemented between the two 
countries and a note on the concept of the Border Trade 
Centers to be established on the Turkish-Iraqi border. 
The two Sides decided to meet during January 2004, in Ankara 
with the aim to conclude the above-mentioned agreements. 
 
 
3.    The two Sides noted with satisfaction the execution of 
the existing contracts of the Turkish companies within the 
framework of the Border Trade Arrangement. 
 
 
The two Sides agreed on the following payment mechanism for 
the deliveries of the Turkish companies starting from the 
date of the signing of this Minutes of Meeting. 
 
 
a. The concerned Ministry of the Iraqi importer will submit 
the certificate of acceptance to the Ministry of Trade after 
ten (10) working days from the date of the arrival of the 
goods to the warehouses of the first party in compliance with 
the relevant contracts. 
 
 
b. The Ministry of Trade, following the confirmation of the 
senior advisor of the Ministry of Trade CPA, will submit 
these documents directly to the Office of the Commercial 
Counselor of the Turkish Embassy within five (5) days. 
 
 
c. the Undersecretariat of Foreign Trade will give the 
necessary instruction for the completion of the procedure. 
 
 
The two Sides agreed to hold technical meetings 
simultaneously with the negotiations of BTC and PTA, with the 
aim to determine the implementation of the &contracts funded 
and partially shipped8 as well as &contracts funded but not 
shipped.8 
 
 
The two Sides also agreed to conclude a new contract between 
TPIC and SOMO for the purchase of crude oil from Iraq within 
the framework of border trade. To this end, TPIC of Turkey 
submitted its proposals to the Iraqi Side for consideration. 
The two Sides agreed to initiate the negotiations concerning 
details and modalities of the new contracts. 
 
 
4.    The two Sides, considering the existing congestion 
observed in the Habur Border Gate and referring to the 
Article 10 of the Agreed Minutes dated November 21, 2003, 
decided to start the negotiations for opening a second border 
crossing point during December 2003, in Silopi. 
 
 
5.    The two Sides expressed that the 
Nusaybin-Qamishly-Mosul railway should be utilized within 
full capacity. To this end, the two Sides agreed to take 
initiatives to organize a trilateral meeting among the TCDD, 
IRR and CFS authorities under the coordination of the 
Undersecretariat of Foreign Trade of Turkey and the Ministry 
of Trade of Iraq during December 2003, in Turkey. 
 
 
6.    The two Sides noted with satisfaction the new suggested 
contracts between TPIC and SOMO for trading of petroleum 
products including gasoline, gas oil and kerosene via 
Nusaybin-Qamishly-Mosul railway, and by trucks via 
Habur-Zakho or any other established routes. 
 
 
The Turkish Side stated that the kerosene exportation to Iraq 
via the Nusaybin-Qamishly-Mosul railway would start in two 
weeks. 
 
 
7.    The Turkish Side submitted to the Iraqi Side the list 
of the contracts, including the construction of National 
Center for Diabetic and Endocrinology Diseases and light 
commercial vehicles and cars which were signed by Turkish 
companies with the Iraqi state companies within the framework 
of Oil for Food Program and requested the assistance of the 
Iraqi Side for their prioritization. 
 
 
The Iraqi Side agreed to extend necessary assistance and 
support for these contracts. 
 
 
8.    The two Sides expressed that Kirkuk-Yumurtalik Pipeline 
and its functioning constitutes an important and strategic 
element in the bilateral commercial and economic relations 
between Turkey and Iraq. In this framework, the Iraqi Side 
undertook to take all necessary measures for the proper 
functioning and protection of the Pipeline. 
 
 
9.  In order to fully benefit both countries' potential, the 
two Sides agreed that the existing situation at the 
Turkey-Iraq border crossing needs to be improved.  In that 
respect they agreed as follows: 
 
 
a. To form a joint committee of customs officials at the 
border, which would meet at least weekly to improve 
efficiency and coordinate anti-smuggling operations. The 
first meeting will be held no later than December 10th 2003. 
Representatives from each side will be approved by their 
respective authorities and agreed to by both parties. 
 
 
b. To increase information exchange, including establishing a 
hot line between customs posts on both sides of the border 
and exchanging statistics about the flow of traffic going 
both ways across the border. 
 
 
c. To increase significantly the number of national customs 
officials at their respective customs posts so that they 
maintain full capacity operations 24 hours a day 7 days a 
week to reach a goal of 1850 trucks per day in each direction 
by the end of 2003. 
 
 
d. To focus their efforts at improving efficiency of 
operations so that the number of trucks waiting to enter 
their respective countries immediately begins to decrease 
with a goal of significantly reducing average driver waiting 
time on both sides of the border aiming at no more than 24 
hours by the end of 2003. 
 
 
The respective authorities of the two Sides will meet again 
to review the implementation and impact of these agreed 
customs actions no later than January 15th 2004. 
 
 
10. The two Sides agreed to organize the visits of Turkish 
contractors and bankers to Iraq during January 2004. 
 
 
11. The two Sides agreed to conclude an &Action Plan8 for 
further promoting and consolidating commercial and economic 
relations between the two countries. 
 
 
12. The two Sides decided to hold the 15th Session of the 
Turkish-Iraqi Joint Economic Committee in April 2004, in 
Ankara. 
 
 
Done and signed in Ankara on December 2, 2003, in two 
originals in the English language, both texts being equally 
authentic. 
On Behalf of the Turkish Side                 On Behalf of 
the Iraqi Side 
Tuncer Kayalar                                Fakhreddin 
Rashaan 
Undersecretary for Foreign Trade              Deputy Minister 
of Trade 
 
 
End text of minutes. 
 
 
6. (U) Amb. Jones has cleared this message. 
 
 
7. (U) Baghdad minimize considered. 
EDELMAN