US embassy cable - 04ANKARA4421

C O N F I D E N T I A L SECTION 01 OF 03 ANKARA 004421 
 
SIPDIS 
 
E.O. 12958: DECL: 08/05/2014 
TAGS: ENRG, EPET, IR, IZ, KNNP, PREL, PTER, TU 
SUBJECT: TURKISH PM ERDOGAN'S JULY 27-29 VISIT TO IRAN 
 
Classified by CDA Robert Deutsch, E.O. 12958, reasons 1.4 (b) 
and (d). 
 
1.  (C) Summary:  According to MFA and ruling AKP contacts, 
PM Erdogan urged the Iranians to cooperate with IAEA on their 
nuclear program.  The visit failed to produce an agreement on 
an expanded project to transship Iranian natural gas: the 
Turks sought a price reduction on their 1996 gas deal with 
Iran, but the Iranians conditioned reduction on Turkish 
agreement to ship Iranian gas to Europe, which the Turks 
declined.  The two sides will continue to negotiate on 
Iranian gas, with the AKP government more inclined to deal 
than the bureaucracy.  The Iranians linked other commercial 
and economic deals to a gas agreement; when it fell through, 
so did they.  End Summary. 
 
Erdogan Depicts Visit as Part of Effort to Reach Out to 
Neighbors 
 
2.  (C) PM Erdogan's July 27-29 visit to Iran was the first 
by a Turkish PM in 11 years.  Erdogan met with President 
Khatami, First VP Aref, former President Rafsanjani, Islamic 
Advisory Council President Adel, FM Kharazi, and the 
Ministers of Defense and Oil.  We spoke with AKP Vice Chair 
for Foreign Affairs Saban Disli, PM Erdogan Senior Foreign 
Policy Adviser Ahmet Davutoglu, and MFA DDG for South Asia 
Ergin Soner.  While Disli spun the visit as a success, Soner 
dubbed it unsuccessful because of the failure to reach a gas 
agreement; Soner said the Turks' expectations for the visit 
were too high. 
 
3.  (C) Erdogan adviser Davutoglu downplayed the notion that 
the visit was extraordinary.  He asserted it was instead a 
"normal" part of Erdogan's ongoing effort to reach out to 
Turkey's neighbors.  This was Erdogan's public line on the 
visit.  Davutoglu said the GOT set aside May through 
September as a time to focus on relations with its neighbors, 
pointing out that in that period Erdogan has also visited 
Bulgaria, Greece and Romania; he is scheduled to visit 
Georgia soon. 
 
Gas Deal Falls Through... 
 
4.  (C) Erdogan and his delegation pressed the Iranians hard 
to reduce gas prices under Turkey's 1996 agreement with Iran. 
 According to Soner, the Turks initially asked for an 18% 
decrease, later lowering their request to 6%.  The Iranians 
refused to consider any reduction unless Turkey agreed to a 
50-year deal to export Iranian gas to Europe.  Soner said the 
Turks estimate the deal the Iranians proposed would give Iran 
$150 billion in sales revenue; in return, the Iranians only 
proposed to give the Turks a "modest" transit fee.  MFA 
Deputy U/S for Economics Alev Kilic said that such a deal 
would require significant infrastructure development and 
compete with the transit commitments for the Shah Deniz 
pipeline.  Soner said the Iranians surprised the Turks by 
presenting them with a draft agreement for the deal. 
 
5.  (C) Soner said that Erdogan initially told the Iranians 
an agreement of this magnitude would take years to negotiate 
and he could not agree to it during this visit.  However, as 
the visit progressed, Erdogan himself appeared to lean more 
toward signing the deal.  In the end, Soner said, Erdogan was 
talked out of it both by MFA officials and his other 
advisers.  Energy Minister Guler affirmed this account, 
telling us before the visit that he was fighting hard against 
Gul and Erdogan's interest in the deal and noting afterwards 
that he had expended maximal effort in Tehran to keep Erdogan 
from caving. In a last-ditch effort to reach agreement, 
Erdogan delayed his scheduled departure over five hours, but 
to no avail. 
 
6.  (C) Both Soner and Disli (who accompanied Erdogan) 
expressed displeasure at the Iranians' negotiating style on 
the gas question.  Disli described  the Iranians as "very 
stubborn" and "asking terrible things" during negotiations. 
Soner, who was not present but claimed to have been 
extensively briefed and read into the visit, characterized 
the Iranians as "maximalist" and "not pleasant." 
 
7.  (C) However, according to Soner, one Iranian official 
hinted that their delegation was not empowered to agree to 
anything absent a deal on gas to Europe, even though ongoing 
international arbitration on gas prices could result in a 
more substantial reduction than the Turks were asking.  Soner 
interprets this a a sign that other Iranian officials behind 
the scenes dictated the Iranian negotiating position. 
 
8.  (C) Davutoglu told us Turkey and Iran will continue to 
negotiate on gas.  Soner views the pipeline proposal as not 
in Turkey's interest because it undermines demand for gas 
from Turkey's Central Asian allies; is opposed by the U.S.; 
and could result in surplus gas supply which Turkey could not 
sell.  Soner implied this is the MFA view, but told us the AK 
government does not share this view.  Indeed, despite the 
failure to reach a deal, Disli asserted to us a pipeline will 
give Turkey "influence" over Iran.  Davutoglu said Turkey 
will rely on the Shah Deniz pipeline and Central Asia for 
transiting gas to Europe, but he added that Turkey needs to 
diversify domestic gas supply sources. 
... And So Do Other Ventures 
 
9.  (C) According to Disli and Soner, the Iranians linked 
other economic and commercial issues, including better access 
to Iran for Turkish companies, to agreement on gas export to 
Europe.  The Turks opposed this approach and sought to 
negotiate each issue separately.  Absent a gas deal, the 
Iranians refused to reconsider allowing the Turkish-Austrian 
consortium TAV to operate Khomeini International Airport.  A 
July 29 Tehran press report quoted Iranian Deputy Security 
Minister Ahmadi as saying that Iran would not sign a security 
deal absent a gas agreement, although the GOI later backed 
off and signed. 
 
Iran's Nuclear Program 
 
10.  (C) Soner said the Turkish side "extensively" discussed 
Iran's nuclear program during the visit; Disli claimed 
Erdogan talked about it with every interlocutor.  Although 
the Iranian press spun Erdogan's message as support for 
Iran's nuclear program, Disli, Soner and Davutoglu all told 
us that Erdogan's message was that the Iranians should work 
with the IAEA and EU-3.  Erdogan told the Iranians pressure, 
including from the U.S., and resulting tensions, could 
escalate if the Iranians did not take the IAEA seriously. 
According to Soner, Erdogan encouraged the Iranians to make 
"complete" disclosures to the IAEA about their nuclear 
program.  Davutoglu said Erdogan told the Iranians the Middle 
East should be a "nuclear free zone."  The Iranians gave 
their stock reply that they are only developing nuclear power 
for peaceful energy purposes.  Asked why a country rich in 
petroleum resources would want to do so, the reply was that 
Iran wants to use its petroleum resources for export revenue. 
 
11.  (C) Soner claimed the MFA bureaucracy and the TGS are 
convinced Iran is working to develop nuclear weapons, is 
playing for time, and that this is a serious problem for 
Turkey.  However, Soner sees the AKP government as not 
sharing these concerns.  Indeed, PM adviser Davutoglu told 
CDA that the nuclear issue affects Turkey only "indirectly" 
and asserted it is not a "hot bilateral issue" for Turkey. 
When CDA asked whether Davutoglu believes Iranian assertions 
that they are only developing nuclear energy for peaceful 
purposes, Davutoglu avoided the question, saying "it is 
difficult to believe anyone" on the nuclear issue, and turned 
the conversation toward Israel's nuclear capability. 
Davutoglu said there needs to be "stronger evidence" of 
Iran's intentions (alluding to the Iraq WMD allegations) and 
for now does not see it as Turkey's role to challenge the 
Iranian claim.  Davutoglu added, without explanation, that 
"the IAEA needs to do more." 
 
Security Agreement 
 
12.  (C) The two sides signed a anti-terrorism agreement. 
The Iranians promised to prevent PKK members from transiting 
or operating in Iran, to share intelligence on the PKK, and 
to turn over PKK members to Turkey.  Turkey promised to do 
the same with MEK members.  The agreement does not give the 
Turks the right of hot pursuit of PKK members fleeing into 
Iran.  Davutoglu and Disli portrayed the agreement as the 
most important achievement of the trip, but according to 
Soner, the two sides actually reached this agreement on the 
technical level in Ankara two weeks before Erdogan's visit. 
 
13.  (C) Soner estimated there are currently 1000-2000 PKK 
members in Iran.  Both he and Disli attributed Iran's 
willingness to reach agreement on the PKK to the Iranians' 
professed recent problems with the PKK, including reported 
clashes between the PKK and Iranian security forces. 
Davutoglu said the absence of action against PKK/Kongra Gel 
facilities in Iraq makes cooperation with Iran and Syria 
essential to preventing infiltration of fighters into Turkey. 
 
Iranian Internal Politics 
 
14.  (C) Both Soner and Disli said the Turks' observations 
during the visit convinced them that conservatives are 
gaining the upper hand in government while Iranian society as 
a whole is becoming more liberal.  Soner claimed the GOT 
intended the visit as support for "reformists" like Khatami. 
According to Soner, Khatami will visit Turkey at the end of 
September "this time for sure."  He claimed Erdogan turned 
down an Iranian proposal that Supreme Leader Khamenei visit 
Turkey. 
 
15.  (C) Soner said Erdogan reiterated the need for reform, 
democracy, transparency and accountability in government, but 
the Iranian response was "weak."  Khatami told Erdogan he has 
no base of support in the Iranian Parliament, which the Turks 
interpret as a sign that he is in a poor position to make 
reforms. 
 
Iraq 
 
16.  (C) On Iraq, both sides expressed support for Iraq's 
territorial integrity and equal distribution of resources, 
and support for the IIG's efforts to prepare the country for 
elections.  Erdogan expressed concern for the situation in 
Kirkuk.  Erdogan did not raise Iran's attempts at undue 
influence or questionable activities in Iraq.  According to 
Davutoglu, Erdogan stressed that no county should have any 
ambitions in Iraq that would affect a peaceful transition to 
an elected government.  However, Davutoglu expressed 
skepticism about Iranian sincerity on Iraq, adding his 
assessment that Iran believes it stands to benefit from 
internal chaos. 
 
17.  Minimize Considered.  DEUTSCH