US embassy cable - 05ANKARA3194

UNCLAS SECTION 01 OF 03 ANKARA 003194 
 
SIPDIS 
 
SENSITIVE 
 
TREASURY FOR MMILLS, CPLANTIER, AND RLEBENSON 
FINCEN FOR MELANCON 
NSC FOR BRYZA AND MCKIBBEN 
H FOR SENATORS SHELBY AND CORNYN, AND REPRESENTATIVE CRAMER 
 
E.O. 12958: N/A 
TAGS: KTFN, EFIN, PREL, OVIP, TU, IZ 
SUBJECT: CODEL SHELBY FOCUSES ON TERROR FINANCE 
 
REF: ANKARA 2916 
 
This is a joint Embassy Ankara/Congen Istanbul cable. 
 
This is an action request. See para 5. 
 
1. (SBU) Summary: In its meetings in Turkey, Codel Shelby 
advanced the bilateral terrorism finance agenda, 
securing Turkish Ministers' agreement to sending U.S. 
terror finance experts to work with their Turkish 
counterparts.  Minister of Finance Unakitan confirmed 
that the new law restructuring the Turkish financial 
crime agency was currently under consideration in 
parliament.  Unakitan also sought U.S. help regarding 
an alleged counterfeit cigarette factory in Northern 
Iraq.  End Summary. 
 
Terrorism Finance: 
----------------- 
 
2. (SBU) Senators Richard Shelby and John Cornyn, and 
Representative Bud Cramer, emphasized cooperation in 
the fight against the financing of terrorism in their 
meetings in Turkey.  The Codel met Minister of Finance Kemal 
Unakitan and Minister of Justice Cemil Cicek, and in both 
cases pressed for close cooperation to cut off the flow of 
funds to terrorists.  Both Cicek and Unakitan reciprocated 
the Codel's desire for close cooperation and were open to 
the Codel's proposal to send U.S. experts to meet with 
their Turkish counterparts.  Unakitan said his instructions 
to agencies were to maximize information-sharing with the 
U.S. and other governments.  Cicek was aware of the 
Department 
of Justice-sponsored seminar in December on prosecuting 
terror 
finance cases and viewed this kind of cooperation favorably. 
 
3. (SBU) Minister Unakitan said that Turkey was working to 
strengthen its regime (see reftel on weaknesses of current 
regime), 
including through proposing a new law to restructure the 
anti-financial crime agency, MASAK.  Unakitan confirmed 
that the draft law had been approved in the Council of 
Ministers and sent to parliament for consideration. 
He said that the MASAK law would make the financing of 
terrorism a crime, that it would allow MASAK expanded 
powers in investigations, and that there would be stiffer 
penalties for financial institutions--not only banks--that 
failed to file suspicious transaction reports. 
Unakitan said the law required reporting of all 
transactions exceeding 8,000 New Turkish Lira ($5,900). 
MASAK would also expand its database of financial 
transactions.  Unakitan was aware of Turkey's upcoming FATF 
review. 
 
4. (SBU) When Representative Cramer asked how many terror 
finance cases were being prosecuted, Cicek said he was not 
aware of any.  (Comment: We are not aware of any such cases. 
Terrorist financiers assets have been frozen in Turkey, and 
MFA officials have told us they are worried these 
financiers, 
legal appeals of the GOT,s administrative actions may 
overturn the blocking of their assets. Cicek did not mention 
this issue. End Comment.)  Representative Cramer also asked 
Finance Minister Unakitan about the number of cases MASAK 
had successfully pursued and made the point that it was 
important not only to change laws, but to ensure effective 
enforcement of the laws. 
 
5. (SBU) Cicek, characterizing terrorism as a crime against 
all humanity, said that Turkey suffered from three types: 
left-wing terrorism, religious-based terrorism, and 
ethnically-based terrorism, read PKK.  Saying the PKK 
financed itself from drug and human 
trafficking, Cicek lamented European countries' 
unhelpfulness in cracking down on PKK financing coming from 
"charities" in Western European countries. 
 
 
Counterfeit Cigarettes from Northern Iraq: 
----------------------------------------- 
 
6. (SBU) Unakitan asked for U.S. help 
to counter what he described as a growing problem in 
Turkey: imports of counterfeit products from Northern Iraq, 
especially cigarettes. Unakitan asserted there was a 
factory in Northern Iraq, owned by a "cousin of 
Barzani's," which was producing counterfeits of 
international brands, such as those of Philip Morris.  The 
cigarettes are smuggled into Turkey, causing 
substantial lost tax revenues.  Unakitan said the GOT had 
raised the issue with Prime Minister Jafari and Finance 
Minister Allawi during their recent visit to Turkey. 
Unakitan praised Jafari and Allawi and said the GOT wanted 
to support them to help stabilize Iraq.   Unakitan 
implied that Jafari and Allawi might not have the ability 
to take action against the counterfeit cigarette factory in 
Northern Iraq and suggested that the earnings from the 
factory could go to terrorist activity, i.e. PKK.  Post 
requests any information Department and Embassy Baghdad 
might have on this issue, and recommends adding this topic 
to the agenda for trilateral talks. 
 
Meeting with Foreign Minister: 
----------------------------- 
 
7. (SBU) In all meetings, Senator Shelby emphasized his 
longstanding commitment to strong US-Turkish ties.  Foreign 
Minister Gul agreed on the importance of the relationship, 
and acted as though he wished to downplay any 
differences.  Representative Cramer urged Turkey to be 
cautious in its relations with Syria, noting that the U.S. 
and Turkey "had been through too much together." Citing 
Syria's proximity to Turkey and the 800-kilometer border, 
Gul said, "we need to bring them into the system and they 
will learn from us."  Gul claimed that Turkish officials 
had warned Syria against extending the Lebanese President's 
mandate, and reiterated GOT claims that President Assad 
needed to be helped to combat "old guys who want to 
continue the old ways."  Gul asserted that in the meeting 
of Iraq neighbors that Turkey hosted, Turkey had not 
allowed the Syrians to say certain things.   Gul also 
thanked the U.S. for its support of Turkey's EU candidacy. 
Gul and Senator Shelby agreed on the need to attack the 
roots of terrorism by combating poverty and 
hopelessness. 
 
Meeting with Central Bank Governor: 
--------------------------------- 
 
8. (SBU) Codel Shelby congratulated Governor Serdengecti on 
his success in combating inflation and agreed on the 
importance of central bank independence.   When the Codel 
raised terror finance, Serdengecti said he understood the 
importance of the issue, but noted that the Finance Minister 
and the bank regulator, which is separate from the Central 
Bank, 
have the lead on this issue.  When asked about privatization 
and the problem of state banks competing against private 
banks, 
Serdengecti was sympathetic, and pointed out that progress on 
state bank privatization was in Turkey's IMF program. 
 
Istanbul Meetings: 
----------------- 
 
9. (SBU) In Istanbul, Codel Shelby attended part of the 
Turkish-U.S. Business Council,s 20th Year Conference, 
participated in a roundtable discussion with Turkish opinion 
leaders, met with the President and board members of the 
American Business Forum in Turkey (ABFT), and met with the 
President 
of the Istanbul Stock Exchange.   In the roundtable 
discussion, 
the Turkish opinion leaders (all from outside the Government) 
urged the U.S. to take more action against the PKK in Iraq. 
The ABFT outlined problems and prospects in the business 
climate in Turkey. 
 
Comment: 
------- 
 
10. (SBU) Post is grateful for Codel Shelby,s help in 
advancing 
the terrorism finance agenda which we have pushed at all 
levels. 
As reftel points out, both the legal and enforcement regimes 
are 
inadequate and senior officials have not made it a priority 
to fix 
them.  The Codel,s meetings, especially with Cicek and 
Unakitan 
helped, we hope, focus these senior ministers on the 
importance 
the U.S. Congress places on this subject.  We look forward to 
following up with Treasury Undersecretary Levey during his 
visit 
later this month. 
 
Codel Shelby did not have the opportunity to clear this 
message. 
 
Baghdad Minimize considered. 
 
 
MOORE 
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