US embassy cable - 04ANKARA7040

UNCLAS ANKARA 007040 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/SE, NEA, AND EB/IFD/OMA 
TREASURY FOR INTERNATIONAL AFFAIRS - SDONOVAN, MMILLS AND 
RADKINS 
NSC FOR MCKIBBEN AND BRYZA 
 
E.O. 12958: N/A 
TAGS: EFIN, TU, IZ 
SUBJECT: DEBT REDUCTION FOR IRAQ - FOLLOW UP WITH TURKEY 
 
REF: A. SECSTATE 261021 
     B. ANKARA 6646 
 
 1. (SBU) Summary: Visiting Treasury DAS Loevinger pressed 
both the Turkish 
Treasury Undersecretary and the Central Bank Governor on the 
Iraq debt issue. 
The Governor resisted and the Undersecretary asked for more 
information. 
Separately, the DCM delivered ref A talking points to Foreign 
Ministry Deputy 
Undersecretary for Economic Affairs.  The Deputy 
Undersecretary said the GOT has 
not yet taken a decision on this issue.  End Summary. 
 
Treasury DAS Presses Treasury and Central Bank: 
--------------------------------------------- - 
 
2.(SBU) In his December 13 meetings in Ankara, Treasury DAS 
Loevinger pressed Turkish 
officials to provide comparable treatment for Turkish claims 
on Iraq now that the Paris Club deal 
is done.  Central Bank Governor Serdengecti pushed back, 
arguing that since Iraq's oil resources 
gave it the potential to once again surpass Turkey in terms 
of per capita income it was not right to 
xpect Turkey to forgive its claims.  He preferred a long-term 
rescheduling that would allow the 
Central Bank (which holds $1.3 billion of the $1.6 billion in 
Turkish claims) eventually to recover 
its principal.  Turkish Treasury Under Secretary Canakci, on 
the other hand, was more conciliatory. 
Suggesting that Turkey was prepared to continue examining 
forgiveness, he asked for detailed 
information on the financial terms of the Paris Club 
agreement as well as specifics about claims 
of other non-Paris Club creditors. 
 
DCM Demarches MFA: 
------------------------------- 
 
3. (SBU) Deputy Chief of Mission also delivered ref A talking 
points and fact sheet to MFA Deputy 
Undersecretary for Economic Affairs Ender Arat.  Stressing 
Turkey's interest in Iraq's economic revival 
and the link to a debt restructuring, the DCM encouraged 
Turkey to look at the big picture.  Arat said 
the GOT had not yet reached a decision, and claimed that the 
Treasury and Foreign Trade Undersecretariats 
would have a bigger role in the decision than the Foreign 
Ministry.  He said for now, Turkey is keeping 
silent on the issue, and that Turkey would take into account 
the realities in Iraq.  He noted that Turkey is 
not pressing for debt servicing to be resumed.  The DCM also 
raised the issue in separate meetings with 
MFA Director General for Middle East Affairs, Oguz Celikkol. 
 
Baghdad Minimize Considered. 
EDELMAN