US embassy cable - 04ANKARA1511

UNCLAS SECTION 01 OF 02 ANKARA 001511 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, EB/IFD, AND EUR/SE 
TREASURY FOR OASIA - JLEICHTER AND MMILLS 
NSC FOR MBRYZA AND TMCKIBBEN 
 
 
E.O. 12958: N/A 
TAGS: EINV, EFIN, ECON, PREL, PGOV, TU 
SUBJECT: AMBASSADOR'S MEETING WITH MINISTER OF FINANCE: 
ECONOMIC REFORM AND INVESTMENT ISSUES 
 
 
1. (Sbu) Summary: At a lunch meeting at the residence March 
9, Finance Minister Unakitan discussed U.S. investment 
disputes in Turkey, said the Uzans' cell phone company has a 
potential buyer who is in touch with Motorola, and asserted 
both GOT ownership of the economic reform program and a GOT 
desire to maintain ties with the IMF after 2004.   End 
Summary. 
 
 
Investment Disputes: 
------------------- 
 
 
2. (Sbu) The Ambassador pointed out that the Cargill zoning 
problem had still not been resolved.  The Minister said 
Industry Minister Coskun told him that the law for the zoning 
problem was ready, and he recommended the Ambassador meet 
again with Minister Coskun to discuss the matter. 
 
 
3. (Sbu) The Ambassador noted press reports of Deputy PM 
Sener saying the Savings Deposit Insurance Fund (SDIF) had 
met with the Uzan Group on a possible debt-restructuring 
plan, and requested that any debt-restructuring plan should 
also take into account Motorola's claims on the Uzans' Telsim 
cell phone company.  Minister Unakitan did not comment on the 
debt restructuring proposal, but said that it was easy to 
sell Telsim, and that any group ) foreign or domestic ) 
that is interested in Telsim, should first meet the Motorola. 
He also confided that there was a group interested in buying 
Telsim, and that this potential buyer was also in touch with 
Motorola. 
 
 
4. (Sbu) The Ambassador urged the GOT to implement data 
exclusivity, pointing out that it was necessary not only for 
the U.S. but to comply with Turkey's EU Customs Union 
agreement.   Unakitan said he was aware of the fact, and that 
Prime Minister Erdogan was also following the issue and had 
requested that both generic and R&D companies to meet to 
resolve the issue.  According to the Minister, PM Erdogan 
also instructed the related offices to prepare a report for 
him.   The Minister himself had met with the generic 
companies, and  Faruk Yoneyman, Chairman of the Foreign 
Investors Association. He was convinced that the sector 
representatives were willing to meet with the other side to 
find a solution.  The Ambassador raised research-based 
companies, concern about the lack of transparency in the 
Health Ministry,s decision-making process, whereas it is 
transparent for domestic Turkish generic producers.  The 
Minister recommended the Ambassador meet the Health Minister 
again.  As Minister of Finance, Unakitan is not directly 
involved with data exclusivity, but offered his help if 
needed. 
 
 
Economic Reform: 
--------------- 
 
 
5. (Sbu) The Ambassador noted reports that the IMF's 7th 
review mission was on the verge of completion, and asked 
about the &quality8 of future reviews and the banking 
sector restructuring. Where, he said, there could be some 
risk.  The Minister said that the GOT saw the program as its 
own program, and that is why it was able to complete the 7th 
review discussions so quickly. He claimed that the GOT took 
the necessary measures before the IMF asked for them. 
Comment: Though the GOT proposed the 10 percent 
across-the-board spending cut to Parliament before working 
out its fiscal package with the Fund Staff, this measure only 
went part way to close the fiscal gap, and Unakitan's claim 
is exaggerated. End Comment.  Unakitan said he was convinced 
that the GOT would continue with fiscal austerity, as they 
believed in benefits of the program. 
 
 
6. (Sbu) The Ambassador asked Unakitan from which specific 
off-budget account the GOT had agreed to transfer TL 500 
trillion ($385 million) into the Budget as one of the 
measures to close the fiscal gap. Unakitan said the amount 
would come from more than one fund, and the IMF and the 
Ministry were still working on the details.  He added that 
with the Public Financial Management and Control Law all the 
off-budget funds would be included in the Budget as of 2005. 
 
 
 
 
7. (Sbu) The Minister said the GOT would discuss post-2004 
relations with the IMF in July, and both sides mutually 
agreed not to make public comments about future of the 
relationship after the current program ends at the end of 
2004.  In July, the GOT and the IMF will decide on the 
details of the post-program relationship, but Unakitan said 
the GOT wanted to maintain ties with the IMF, claiming that 
under their government the IMF had become popular. 
 
 
8. (Sbu) Unakitan said the GOT was working with the IMF and 
the World Bank on banking sector issues, and they were 
working on a new draft law to prevent future cases like the 
Imar Bank collapse. 
 
 
Broader Foreign Policy Issues: 
----------------------------- 
 
 
9. (Sbu) At the Minister's request, the Ambassador also 
briefed him on Iraq and the Greater Middle East Initiative. 
The Ambassador also raised terrorism finance and 
non-proliferation issues (reported septel). 
 
 
EDELMAN