US embassy cable - 04ANKARA3234

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 003234 
 
SIPDIS 
 
 
STATE FOR E, EB/CBA, INL/C/CP, EB/ESC/TFS, S/CT AND EUR/SE 
TREASURY FOR OASIA/ADKINS AND MILLS, AND OFAD DIRECTOR 
NSC FOR GPETERS, MBRYZA, AND TMCKIBBEN 
 
 
E.O. 12958: DECL: 06/09/2014 
TAGS: EFIN, PTER, EINV, ETRD, TU 
SUBJECT: AMBASSADOR, FINANCE MINISTER DISCUSS TERROR 
FINANCE, IMF, INVESTMENT AND BOEING 
 
REF: A. (A) ANKARA 1510 
     B. (B) ANKARA 1232 
 
 
(U) Classified by Ambassador Eric Edelman.  Reasons: 1.4(b,d) 
 
 
 
 
 
 
1.  (C) Summary:  In a June 9 meeting to discuss USG 
recommendations aimed at strenghthening Turkey's regime to 
combat terrorist finance, Finance Minister Unakitan stressed 
the importance that his government attaches to the issue, but 
unfortunately turned for discussion of the details to MASAK 
President Yarasli.  Yarasli played down the problems 
highlighted in the USG report and argued that most of its 
recommendations were either being addressed or were not 
relevant.  Ambassador stressed the importance of Unakitan 
staying personally involved, and won the Minister's 
commitment to a follow-on meeting after July's Fincen visit. 
Ambassador also stressed the need for further economic 
reform, made a strong pitch for the GOT to resolve 
outstanding problems affecting U.S. investors, and inquired 
about future relations with the IMF and potential Boeing 
aircraft sales.  Unakitan said the GOT would continue to work 
with the Fund and to resolve investment issues, but was 
non-committal on Boeing.  End Summary. 
 
 
2.  (C) Finance Minister Kemal Unakitan asked to see 
Ambassador June 9 to discuss terrorist finance, in response 
to the Ambassador's May 27 letter forwarding the executive 
summary of the report of the U.S. Financial Systems 
Assessment Team.  That report had recommended several 
measures to strengthen Turkey's regime to combat terrorist 
financing, including improved legislation, efforts to 
strengthen Turkey's Financial Crimes Investigative Unit 
(MASAK), training of judges and prosecutors, and inclusion of 
alternative remittance systems in Turkey's control regime. 
 
 
3.  (C)  Unakitan said the GOT attached great importance to 
combatting terrorist finance and to passage of new 
legislation designed to strengthen MASAK.  Unfortunately, he 
then asked MASAK President Yarasli, whose weakness is a big 
part of the problem on this issue, to respond to the 
executive summary in more detail.  Yarasli played down the 
problems highlighted in the executive summary, and argued 
that MASAK was fully capable of carrying out its 
responsibilities.  He said pending legislation would define 
terrorism as a criminal offense, and otherwise would fully 
comply with FATF recommendations.  He denied that there were 
"alternative remittance systems" in Turkey, said the 
government already was undertaking needed training of judges 
and prosecutors, and questioned the need for an "Intermittent 
Legal Advisor" from the Justice Department. 
 
 
4.  (C) Ambassador reiterated the importance of Unakitan 
making this issue a personal priority and of Turkey working 
with the international community to strengthen its regime. 
He proposed that, following this summer's visit by a Fincen 
team, he and the Minister meet again to discuss progress to 
date as well as ways to enhance bilateral cooperation. 
Yarasli interjected that MASAK would stay in touch with the 
Embassy, but Unakitan agreed to a follow-on meeting with the 
Ambassador (much to Yarasli's chagrin). 
 
 
5.  (SBU) Turning to the broader economy, Ambassador 
expressed disappointment over the GOT's inability to solve 
any of the outstanding disputes and problems affecting U.S. 
investors.  He noted that, since their last discussion, a 
U.S. company (Dillingham Construction) had decided to pull 
out of Turkey because Turkish courts had refused to apply an 
international arbitral award in its favor.  Such judicial 
decisions, the Ambassador continued, were a major deterrent 
to U.S. investors.  He again stressed how useful it would be 
for Turkey if it could resolve at least 1-2 of the 
outstanding investment problems ahead of the President's 
visit.  Unakitan took the point, and noted that the GOT had 
just sent to Parliament a zoning law designed to address the 
Cargill issue. 
 
 
6.  (SBU) Ambassador said it would also be good if the GOT 
could clarify how it plans to move forward on privatization, 
in the aftermath of failures on Tekel, Petkim and, most 
recently, Tupras.  Similarly, investors wanted to know what 
Turkey's future relationship with the IMF would be.  Markets 
had rallied based in large part on prudent fiscal and 
(independently-set) monetary policy, and would view the GOT's 
decision vis-a-vis the IMF as an important indicator of its 
intention to continue such policies. 
 
 
7.  (SBU) On privatization, Unakitan -- referring to the 
Tupras issue - noted that the courts were independent, adding 
that many judges were opposed to privatization and did not 
understand markets.  He noted that the Justice Ministry is 
undertaking efforts to improve the effectiveness of the 
judicial system, an effort that would be greatly enhanced by 
the EU accession process.  On the IMF, Unakitan said he would 
meet with the Fund mission the following day, and would make 
clear that the GOT was determined to continue to work with 
the IMF.  He noted that the Prime Minister had said the same 
thing over the weekend.  (Comment;  Actually, the Prime 
Minister has made conflicting remarks, and even Unakitan did 
not clarify what he meant by "work with" the Fund.  End 
Comment) 
 
 
8.  (SBU) Ambassador concluded by asking about Boeing's 
proposed sale of aircraft to Turkish Airlines.  The Minister 
said he had had a good meeting with Boeing in the U.S., and 
looked forward to another meeting with the company in Turkey 
shortly.  He was, however, non-committal. 
 
 
 
 
EDELMAN