US embassy cable - 05ANKARA3842

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 003842 
 
SIPDIS 
 
E.O. 12958: DECL: 07/02/2010 
TAGS: ELTN, ETRD, IZ, PREL, TU 
SUBJECT: SOMO DRAWS DOWN ARREARS TO TURKISH COMPANIES, 
PROGRESS ON TRUCKER SECURITY ISSUES 
 
REF: A. BAGHDAD 2688 
     B. ADANA 129 
     C. ANKARA 3180 
 
Classified By: CDA Nancy McEldowney.  Reasons 1.5 (b) and (d) 
 
1.  (C)  Summary.  Iraq's State Oil Marketing Organization, 
SOMO, has made progress in drawing down arrears to Turkish 
oil products suppliers and has signed new contracts for 4.9 
million tons of oil products to be delivered during the 
second half of this year.  The Turks and Iraqis are also 
actively discussing and making progress on trucker security 
issues, with an agreement to hold technical meetings this 
month on communications and second border gate issues.  The 
U.S. has played a useful role synergizing Iraqi-Turkish 
communication on these important issues and post would see 
little benefit from more direct U.S. intervention at this 
time.  End Summary. 
 
------------------------ 
Progress on SOMO Arrears 
------------------------ 
 
2.  (SBU)  MFA officials responsible for economic relations 
with Iraq told Charge and ECON/C in separate June 30 meetings 
that SOMO had reduced its arrears to its Turkish suppliers of 
oil products by $453 million in recent weeks.  They had 
confirmed this information with the Turkish companies.  The 
officials said this left a total $500 million due from SOMO 
to Turkish companies, but they did not know how much of this 
was arrears (or new arrears since the $840 million total 
reported in ref c). 
 
3.  (SBU)  The MFA also confirmed that SOMO's new Director 
General signed contracts June 24 in Istanbul with 36 Turkish 
companies for an additional 4.9 million tons of oil products 
to be delivered between July and December 2005.  As part of 
the agreement, SOMO agreed with the companies to clear all 
remaining arrears by end-July.  MFA was impressed by the size 
of SOMO's requirements (800,000 tons per month), but was 
skeptical on SOMO's ability to keep current on payments. 
They noted that the financial situation of some of the 
Turkish companies remains precarious due to the earlier 
arrears. 
 
---------------------------------- 
Bilateral Trucker Security Meeting 
---------------------------------- 
 
4.  (C)  The MFA economic department also passed on a readout 
of June 22-23 Iraq-Turkey meetings on trucker security held 
in Ankara.  They said the initiative to hold a new meeting 
had come from the Iraqis and was a follow-up to the bilateral 
meetings in November and December.  The Iraqi delegation was 
led by the ambassador to Ankara and included representatives 
of the ministries of oil, transportation, interior, defense, 
foreign affairs, and customs officers from the Ibrahim Khalil 
border station (counterpart of Habur).  The Turkish 
delegation was led by MFA and included a range of technical 
agencies. 
 
5.  (C)  Secure Parking Facilities:  The two sides agreed to 
shelve an earlier Iraqi request that Turkey build secure 
parking facilities on the "alternative route" from the border 
to Baghdad (Habur-Dohuk-Irbil-Altinkopru- 
Kerkuk-Khalis-Baghdad).  According to MFA, Turkish truckers 
said they would avoid such sites for security reasons, and 
Turkish contractors were not ready to take the security risk 
of building them. 
 
6.  (C)  Increased Security on Main Route:  The Turks 
requested that security be increased on the main southbound 
route (Habur-Dohuk-Mosul-Baghdad) by building new observation 
posts and strengthening existing ones, as well as by 
increasing the number of escorts and patrols.  The Iraqis 
said they would do as much as they could, but cautioned that 
the alternative route, which avoids Mosul, was currently 
safer. 
 
7.  (C)  Communications System:  This was the most important 
topic for the Turks.  The two sides discussed the possibility 
of Turk Telecom operating GSM towers in Iraq with Iraqi 
security and "roaming" agreements linking Turkish and Iraqi 
cell networks.  The Iraqis promised to get back to the Turks 
and agreed to hold an experts meeting "as soon as possible" 
(Turks hope for July). 
 
8.  (C)  Insurance Documentation:  The Turks renewed their 
request for Iraqi contact points able to provide official 
documentation needed for insurance purposes when Turkish 
vehicles were lost or damaged in Iraq. 
9.  (C)  Second Gate:  MFA said there was "one sentence" in 
the minutes of the meeting referring to the need for a second 
border crossing.  However, there was an agreement to hold an 
experts meeting "soon" (again, hopefully in July) to identify 
and break down the issues involved.  Charge and ECON/C noted 
that Iraq had formally told us it would welcome a U.S. 
financed feasibility study, but the MFA officials said they 
were still only willing to consider the Ovakoy route.  In the 
meeting with Charge, Deputy Under Secretary Ender Arat 
identified "Barzani" as the main obstacle to agreement on 
this route and reiterated willingness to compensate him for 
any revenues lost by a new route from Ovakoy, part of which 
would still pass through KDP territory. 
 
------- 
Comment 
------- 
 
10.  (C)  The MFA appreciated the "proactive" assistance from 
the United States, but tempered the good news on SOMO arrears 
and new orders with skepticism that the company would follow 
through on its promise to pay the $500 million remaining due 
by the end of July.  The two sides seem to be communicating 
well on trucker security issues.  It seems to post that 
unless requested by the two sides, a second trilateral 
meeting including the U.S. would add little to this ongoing 
process. 
MCELDOWNEY