US embassy cable - 04ADANA171

UNCLAS SECTION 01 OF 03 ADANA 000171 
 
SIPDIS 
 
SENSITIVE 
 
EUCOM FOR J-4 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, ELAB, ELTN, IZ, TU, ADANA 
SUBJECT: TURKISH TRUCKER STRIKE AGAINST SOMO IN STALEMATE 
 
REF: BAGHDAD 2282 
 
 
1.(SBU) This cable is not for internet distribution and contains 
commercially sensitive information.  Embassy Baghdad pass REO 
Mosul. 
 
2.(SBU)  Summary:  The Turkish transport union wildcat strike 
against Iraqi SOMO, which started on Dec. 6, continues.  This 
strike is also affecting two of the three categories of fuel 
that Turkish companies can ship to Iraq for MNF-I sustainment. 
The most important sustainment fuel, JP-8, continues to flow, 
but at lower rates than desired.  Separate discussions with 
Turkish supply companies and transport unions on December 23 
indicate that this strike turns on desired wage increases by the 
driver transport unions, who seem to indicate a wish that any 
trucker carrying a load to Iraq receive the same wage per metric 
ton delivered.  Turkish petroleum supply companies say that 
their infrequent contacts with SOMO indicate SOMO is unwilling 
to raise its rates to them and only urges them to deliver their 
contracted loads because of "shortages in Iraq and higher 
seasonal consumption."  These companies also report total SOMO 
arrears to them in the range of $75-100 million for periods 
ranging from the last 15 to 80 days, although they say that SOMO 
payment practices have been improving almost across the board in 
the last 30 days.  Facing this perceived squeeze on what they 
claim are their already slim profit margins, the Turkish 
petroleum supply companies servicing SOMO intend to wait out the 
strike by insisting that the drivers accept current wage scales, 
hoping that drivers soon will feel the pinch of a lack of cash 
flow. End Summary. 
 
SOMO strike continues, now affecting sustainment, too 
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2.(SBU)  AMCON Adana and MJLC contacted several of the larger 
Turkish petroleum supply companies contracted to SOMO and/or 
DESC on December 23 to determine the status of their 
deliberations on the ongoing trucker strike against SOMO.   MJLC 
reported that the strike is also affecting two of the three 
categories of fuel (MOGAS and diesel) that Turkish companies can 
ship to Iraq for MNF-I sustainment.  Efforts to ship these two 
categories of fuels in the last eight days have resulted in no 
successful cross-border delivery, with 27 tankers currently in 
limbo in southeast Turkey near the Habur border gate, allegedly 
prevented from proceeding to the border crossing by drivers' 
union threats against their families.  An effort by MJLC to 
secure Jandarma's involvement in this problem was frustrated by 
the threatened drivers' unwillingness to make a statement to the 
Jandarma and subsequent explanation to their aprent company that 
they did not consider the Jandarma able to protect them or their 
families from the alleged threats.  However, the most important 
sustainment fuel, JP-8, continues to flow, but at lower rates 
than desired (average 45 versus 60 desired loads daily).  The 
largest Turkish oil supply company for sustainment, Petrol 
Ofisi, is seeking to decouple sustainment fuels from the 
pressures of the SOMO strike through a side deal and to test 
that arrangement with a second 75-tanker delivery  of MOGAS and 
diesel starting on December 24, but declined to predict to AMCON 
ADANA whether their gambit would bear fruit. 
 
Strikers want 100% increase 
----------------------------------------- 
 
3.(SBU)  The Turkish petroleum supply companies independently 
commented that the drivers' unions with which they 
intermittently are discussing the strike have demanded an almost 
100 percent increase in wages per metric ton delivered.  A 
December 23 AMCON ADANA discussion with a local Turkish truckers 
union representative confirmed that this is what driver supply 
companies desire, even though some Trucker union association 
group "elders" have recommended a lower starting bid and 
readiness to negotiate to a lower point.  The trucker union 
representative said that the truckers recall that they were paid 
higher rates last year for similar loads when contracted by the 
U.S. for humanitarian deliveries through KBR and at least want a 
return to those wage levels.  They also claim that drivers 
represent that their costs per delivery exceed the SOMO contract 
wage rates.  (Note: an important cost element here about which 
they claim irritation is over a hundred dollars per load in 
Peshmerga collected fees and additional alleged Peshmerga 
solicitation of bribes in return for Peshmerga under-reporting 
of load under-delivery at the northern Iraqi oil depots.  End 
Note.) 
 
Turkish oil supply companies: SOMO not budging, so neither will 
we 
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--------------------------------------- 
 
4.(SBU) The Turkish petroleum supply companies say that their 
contacts with SOMO have been limited recently, but even these 
limited contacts (a few e-mails and phone calls, they say) 
indicate SOMO is unwilling to raise its rates to them.  In fact 
the largest of the contractors, OPET, said it even received a 
draft 2005 contract from SOMO recently insisting that wages 
would be unchanged.  Both large Turkish petroleum supply 
companies that AMCON Adana contacted independently said that 
SOMO has limited its replies to their strike reports to "urging 
us to deliver their contracted loads because of shortages in 
Iraq and higher seasonal consumption.  They just tell us to do 
the best we can and avoid any discussion of how we might rework 
our contract with them to meet some of the strikers' demands." 
 
5.(SBU)   These companies also report SOMO arrears to them in 
the range of $75-100 million for periods ranging from the last 
15 to 80 days, although they say that SOMO payment practices 
have been improving almost across the board in the last 30 days. 
 They say that in the last several months SOMO has shifted to 
paying its contract through wire transfer, but that their levels 
of accounts receivable are still "uncomfortably high" for some 
of the larger suppliers and this risk, in part along with the 
one-sided strike dialogue, is undermining their confidence in 
developing a joint strike reaction position with SOMO. 
 
We will wait the drivers out, oil suppliers say 
--------------------------------------------- ------------------- 
 
6.(SBU)  Facing this perceived squeeze on what they claim are 
their already slim profit margins, the Turkish oil supply 
companies servicing SOMO intend to wait out the strike by 
insisting that the drivers accept current wage scales, hoping 
that drivers soon will feel the pinch of a lack of cash flow. 
This determined stance is strengthened by their perception of 
driver disorganization.  They point out that the drivers' union 
is fragmented among almost 50 local representatives, some of 
whom bicker publicly in front of the petroleum supply company 
representatives on the few occasions they have met.  (Comment: 
AMCON Adana and MJLC witnessed such driver disorganization in a 
chance encounter in Iskenderun last week, at which different 
local agha's acting as union representatives argued in front of 
Petrol Ofisi representatives and us about whose drivers were 
losing more and therefore in more relative distress caused by 
SOMO's alleged low wages.  End Comment.) 
 
Why are there different driver wage scales? 
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7.(SBU)  Turkish supply companies indicate that wage 
differentials for different Iraq contracts do exist, but for 
what they consider sound market reasons.   They say that MNF-I 
sustainment loads receive the highest per load wages because the 
U.S. government, through DESC, will payer higher rates than 
SOMO.  Additionally, the sustainment drivers face higher risks 
of being attacked and can make fewer round trips per month 
because of their more distant destinations in Iraq and security 
constraints on their travel.  In short, SOMO drivers on average 
can make 3 round trips to Iraq monthly while their sustainment 
counterparts can only make 1-2, depending on convoy availability 
within Iraq and threat posture. 
 
What do drivers and oil supply companies say will happen? 
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------------------------- 
 
8.(SBU)  Drivers' union representatives, per discussions with 
AMCON ADANA, MJLC, DESC or the oil supply companies, seem to 
believe they have leverage over their Iraqi purchaser and 
profess that they will wait until higher wages are offered. 
They also claim that their individual drivers are leaving 
vehicles either in northern Iraq, if awaiting return clearance 
at the border, or in southeastern Turkey depots, and heading 
home to southeastern Turkey villages for New Year's 
celebrations.  (Note: we would welcome any reporting on whether 
this is occurring in northern Iraq and will seek confirmation in 
southeast Turkey.  End Note).  On the other hand, Turkish oil 
supply companies feel that the individual drivers soon will 
exhaust any on-hand cash to which they have access and have to 
return to work at no increase in wage levels.  In the meantime, 
dialogue between the oil supply companies and different layers 
of drivers' representatives is reported as sporadic, fragmented 
and inconclusive by both sides. 
 
9.(SBU)  Comment:  This situation seems to be stuck in a 
stalemate among Turkish parties.  Absent a new catalyst in the 
supply company-driver dynamic, near-term progress seems 
unlikely.  It also seems prudent to bear in mind that, should a 
SOMO strike resolution materialize, there still will be a 
delivery bottleneck at the Habur gate if it maintains its 
current customs inspection process.  Additionally, should SOMO 
drivers receive higher wages, there is the possibility of a 
synergistic negative effect on the sustainment Turkish driver 
pool based on para. 7 observations.  End Comment. 
 
10.(SBU) Baghdad minimize considered. 
 
 
REID