US embassy cable - 05ANKARA1558

UNCLAS SECTION 01 OF 02 ANKARA 001558 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/SE, EB/EPD, AND EB/TPP/ABT 
DEPT PLEASE PASS USTR FOR NOVELLI, LERRION 
USDA FOR FAS FOR ITP/LEIER, DLP/SHNITZLER, DRENNAN 
USDOC FOR DEFALCO 
VIENNA FOR APHIS 
 
E.O. 12958: N/A 
TAGS: ETRD, EAGR, PGOV, TU 
SUBJECT: Mersin's Transit Trade for U.S. Poultry to Iraq 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET DISTRIBUTION. 
 
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SUMMARY 
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1.  (U) OVER THE PAST TWO YEARS, TURKEY, AND IN PARTICULAR 
THE PORT OF MERSIN, HAS BECOME A MAJOR TRANSIT POINT FOR 
COMMERCIAL SALES OF U.S. POULTRY MEAT TO IRAQ AND COUNTRIES 
IN THE REGION.  TURKEY CREATED A FREE-TRADE ZONE IN MERSIN 
IN 1987, WHICH HAS EXCELLENT PORT FACILITIES AND AMPLE COLD 
STORAGE.  TRADERS ARE HOPEFUL THAT TRADE WILL CONTINUE TO 
GROW.  TRADERS FACE A NUMBER OF CHALLENGES IN SHIPPING TO 
THE REGION, WHICH THREATENS THE TRADE.  END SUMMARY. 
 
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TRADE STOPS IN AUGUST 2004 
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2.  (U) IN AUGUST 2004, NORTHERN IRAQI OFFICIALS BEGAN 
REFUSING TO ACCEPT U.S. HEALTH CERTIFICATES FOR POULTRY MEAT 
OSTENSIBLY BECAUSE OF AN OUTBREAK OF AVIAN INFLUENZA IN 
SEVERAL U.S. STATES.  ALTHOUGH THE OUTBREAK HAD ALREADY BEEN 
BROUGHT UNDER CONTROL WITH MOST COUNTRIES LIFTING THEIR 
TEMPORARY BAN, REGIONAL IRAQI OFFICIALS UNEXPECTEDLY BEGAN 
STOPPING U.S. SHIPMENTS.  THE POULTRY MEAT WAS ALLOWED TO 
CROSS THE TURKISH-IRAQI BORDER, BUT STOPPED INLAND. 
EVENTUALLY, THE BAN WAS LIFTED AND TRADE RESUMED. 
 
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GROWING TRADE 
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3. (U) FROM MARCH 8 - 11, AGCOUNSELOR MET WITH A NUMBER OF 
TURKISH COMPANIES IN ADANA AND MERSIN, WHICH ARE CURRENTLY 
INVOLVED IN COMMERCIAL AGRICULTURE AND FOOD TRADE WITH IRAQ. 
SEVERAL COMPANIES IN THE FREE TRADE ZONE INDICATED RECENTLY 
THAT THEY ARE SHIPPING OR LOOKING TO SHIP FROZEN POULTRY TO 
IRAQ, ESPECIALLY U.S. POULTRY.  ONE EXPORTER IS CURRENTLY 
SHIPPING APPROXIMATELY 4-5000 TONS A MONTH TO PRIVATE BUYERS 
IN IRAQ.  THE HEAD OF THE COMPANY INDICATED THAT THIS TOTAL 
COULD EASILY REACH 80,000 TONS IN 2005.  IN ADDITION TO 
IRAQ, THE COMPANY IS SHIPPING 12 TMT OF POULTRY A MONTH TO 
AFGHANISTAN AND 6 TMT TO AZERBAIJAN.  OTHER COMPANIES ARE 
SELLING LESS TO IRAQ, BUT BELIEVE MARKET DEMAND COULD 
INCREASE, ESPECIALLY IF THE SECURITY SITUATION STABILIZES. 
IN GENERAL, THE UNITED STATES, BRAZIL AND CHINA ARE SHIPPING 
POULTRY TO IRAQ. 
 
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PROBLEMS ABOUND 
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4.  (U) WHILE EXPORTS HAVE INCREASED SO HAVE THE 
DIFFICULTIES ASSOCIATED WITH IT.  TRADERS FACE SECURITY 
CONCERNS, SHIPPING AND PAYMENT DELAYS, AS WELL AS PROBLEMS 
WITH DOCUMENTATION ON A DAILY BASIS. 
 
5. (SBU) SECURITY CONCERNS ARE, OF COURSE, A PRIORITY.  MANY 
TRADERS AVOID RISK BY TRANSFERRING PRODUCT TO KURDISH OR 
ARAB TRUCK BEFORE SENDING TO THE SOUTH.  NONE OF THE 
EXPORTERS NOTED ANY RECENT PROBLEMS WITH SECURITY.  HOWEVER, 
ONE REPORTED THAT THEY HAD A DRIVER KIDNAPPED ABOUT A YEAR 
AGO.  THE INITIAL RANSOM REQUEST WAS FOR $100,000.  HOWEVER, 
WORKING THROUGH CONTACTS, THE RANSOM WAS REDUCED TO $26,000. 
 
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BORDER DELAYS 
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6.  (SBU) FOLLOWING SECURITY, MOST EXPORTERS WERE CONCERNED 
ABOUT DELAYS AT THE IRAQ-TURKISH BORDER, WHERE, ACCORDING TO 
ONE EXPORTER, LINES CAN REACH UP TO 85 KM.  SOME TRADERS ARE 
NOW TRANSFERRING PRODUCT ON THE TURKISH SIDE ONTO TRUCKS 
FROM CIZRE AND SILOPI.  ACCORDING TO TRADER, TRUCKS FROM 
THOSE TURKISH CITIES ARE GIVEN PRIORITY TREATMENT AND WAIT 
LESS TIME AT THE BORDER. 
 
7.  (SBU) ONCE IN IRAQ, SHIPMENTS ARE TRANSFERRED TO EITHER 
ARAB OR KURDISH-OWNED TRUCKS FOR DELIVERY TO THE SOUTH.  ONE 
MERCHANT WHO HAS COLD STORAGE FACILITIES IN MOSUL AND ZAKHO 
INDICATED THAT THE SITUATION SEEMED TO BE IMPROVING IN 
MOSUL.  HE HAD STOPPED SHIPMENTS IN AUGUST TO THE SOUTH BUT 
WAS HOPING TO RESUME THEM SHORTLY.  ACCORDING TO ONE 
EXPORTER, THE DELAYS AT THE TURKISH-IRAQI BORDER WERE 
FORCING TRADERS TO SEEK ALTERNATIVE ROUTES.  TURKISH TRUCKS 
TRANSITING SYRIA, HOWEVER, ARE BEING CHARGED A $500 A TRUCK 
SURCHARGE. SOME TRADERS INSTEAD ARE TRANSFERRING CARGO ONTO 
SYRIAN VESSELS, OFFLOADING IN LATTAKIA AND THEN SHIPPING ON 
SYRIAN TRUCKS TO IRAQ.  SOME INDICATED THAT SHOULD THE 
DELAYS AT THE TURKISH-IRAQI BORDER NOT IMPROVE, THEY WOULD 
USE THE SYRIAN ROUTE.  THIS OPTION HAS BEEN HAS BEEN 
DISPUTED BY OTHERS, HOWEVER. 
 
8.  (U) SEVERAL TRADERS REPORTED THAT IRAQI BORDER OFFICIALS 
HAVE ESTABLISHED DIRECT COMMUNICATIONS WITH THEIR TURKISH 
COUNTERPARTS.  RECENTLY, WHEN THE BORDER CLOSED, IRAQI 
OFFICIALS REQUESTED THAT TURKISH OFFICIALS AT THE FREE TRADE 
ZONE STOP ISSUING CERTIFICATES ALLOWING SHIPMENTS OUT OF THE 
ZONE.   ALTHOUGH SOME EXPORTERS COMPLAINED, THIS PROBABLY 
PREVENTED UNNECESSARY DELAYS AT THE BORDER. 
 
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SUITCASE CHECKING 
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9.  (SBU)    THE ABSENCE OF A RELIABLE BANKING SYSTEM MEANS 
THAT MOST TRANSACTIONS ARE MADE IN CASH WITH IMPORTERS OFTEN 
DELIVERING PAYMENTS WITH SUITCASES FILLED WITH MONEY. ONE 
TRADER FELT THAT NOT ONLY IS THIS DANGEROUS BUT IT 
CONTRIBUTES TO THE GROWTH OF BLACK-MARKET TRADE.  MOST 
TURKISH TRADERS COMPLAINED THAT IRAQI BUYERS USE ANY EXCUSE 
NOT TO MAKE PAYMENTS.  OTHERS INDICATED THAT THEIR SUCCESS 
DEPENDED EXCLUSIVELY ON THE STRENGTH OF THEIR COUNTERPARTS 
IN IRAQ.  ONE POULTRY EXPORTER, WHO HAS BEEN OPERATING IN 
IRAQ SINCE THE MID 1990S, WORKS EXCLUSIVELY WITH THREE 
WEALTHY COUNTERPARTS WHO, IN HIS WORDS, HAVE INFLUENCE IN 
THE REGION. 
 
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HEALTH CERTIFICATES COULD BE A PROBLEM 
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10.  (U) ACCORDING TO ONE TRADER, IRAQI OFFICIALS ACCEPT 
HEALTH CERTIFICATES ISSUED FOR AZERBAIJAN, TURKMENISTAN AND 
UZBEKISTAN, WHICH NORMALLY ACCOMPANY U.S. SHIPMENTS.  THIS 
COULD BE PROBLEMATIC IN THE FUTURE UNLESS A NEW U.S.-IRAQI 
HEALTH CERTIFICATE IS NEGOTIATED. 
 
11.  BAGHDAD MINIMIZE CONSIDERED. 
 
EDELMAN