US embassy cable - 05ANKARA4366

UNCLAS SECTION 01 OF 03 ANKARA 004366 
 
SIPDIS 
 
STATE FOR EUR/SE AND NEA 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EPET, ETRD, MOPS, PREL, TU, IZ, Iraq 
SUBJECT: FUEL SUPPLY CHAIN INTO IRAQ BACKED UP; RISK OF 
TRUCKER STRIKE FOR SUSTAINMENT FUELS 
 
REF: Ankara 4166 
 
This is an action request. See paragraphs 9 and 10. 
 
1.(SBU) Summary:  Trucks carrying fuel from Turkey to 
Iraq-both to supply coalition forces and for civilian 
use-are backed up to about 70 kilometers from the border. 
The overwhelming majority of these trucks are contracted by 
SOMO for civilian use but sustainment trucks are reportedly 
experiencing problems getting priority treatment.  The surge 
in the backlog is probably due to some combination of: a) a 
revival of shipping following SOMO's partial clean-up of 
arrears; b) increased demand from end-users in Iraq; and c) 
efficiency problems at Habur Gate.  Meanwhile, drivers for 
the sustainment trucks are reportedly threatening to go on 
strike if they do not receive a substantial raise.  End 
Summary. 
 
Big back-up on Turkish side of Border: 
--------------------------------------------- - 
 
2. (SBU) Adana PO, on the road from Mardin to Cizre near the 
Turkey-Iraq border, called into Embassy Ankara July 27 to 
report that trucks are backed up approximately 70 kilometers 
from the border crossing at Habur Gate.  Given that the 
trucks are not allowed to park near villages, PO estimates 
that the line is probably about 50 to 55 kilometers long, 
which he estimated very roughly to represent something on 
the order of 2500 trucks.  The trucks are overwhelmingly 
carrying supplies contracted by Iraqi state oil company 
SOMO, and the PO believed almost all (perhaps 99%) of these 
trucks were carrying either benzene or diesel.   Only four 
days earlier, when the Army Attache drove the same road, the 
backlog was only about 16 kilometers. 
 
3. (SBU) Though post does not yet have hard information, the 
most likely causes of this sharp increase in the backlog are 
some combination of the following: a) a revival of shipping 
following a partial clean-up of arrears by SOMO; b) 
increased demand from end-users in Iraq prompting increased 
orders from SOMO; and c) a slight decrease in efficiency of 
processing at Habur, possibly relating to the transition to 
the Turkish Chamber of Commerce (TOBB) taking over operation 
of the gate.   Construction is expected to start in the 
coming weeks on improvements on the Turkish side, which 
could lead to further slowdown.  The U.S. Military liaison 
officer at the border reports that at night the rate of 
processing on the Turkish side slows down.  SOMO's current 
needs are reportedly for 1000 trucks per day.  In the most 
recent 24-hour period for which we have information, 1700 
total trucks were processed.  However, since the U.S. 
Military tracking unit at the border no longer tracks SOMO 
trucks (see para 9 below), it is impossible to know how many 
of the 1700 were SOMO trucks. 
 
Sustainment Trucks Have Trouble Getting Priority. 
--------------------------------------------- --------------- 
- 
 
4. (SBU) Probably as a result of the intense pressure on the 
gate from the backlog, DESC (Defense Energy Supply Command), 
tell us the sustainment trucks are having difficulty getting 
priority treatment to pass through the border and supply 
coalition forces.  DESC has requested Embassy assistance in 
requesting the GOT return to its prior practice of according 
sustainment trucks priority passage. 
 
.and Sustainment Truck Drivers Threaten to Go on Strike: 
--------------------------------------------- --------------- 
----------- 
 
5. (SBU) Adana PO further reports that the MJLC unit at 
Incirlik received a call from SHG, the overall contractor 
for sustainment fuels, passing on that SHG's drivers are 
threatening to go on strike July 28.  The drivers are 
reportedly pressing for a raise to match a recent raise 
provided to drivers supplying SOMO, and to compensate for 
the current conditions (backlog, intense heat, no 
facilities).  SHG has reportedly offered a raise but the 
drivers say it is insufficient. 
 
Even if the Backlog is Worked Through, SOMO Payment Issues 
Still a Problem: 
--------------------------------------------- --------------- 
------------------------------------ 
 
6. (SBU) As reported reftel, SOMO came through in late June 
and early July with $603 million of payments, leaving about 
$200 million of arrears to Turkish petroleum product supply 
companies outstanding.  However, more recently, Turkish MFA 
officials said the arrears had crept back up to about $250 
million. 
 
7. (SBU) On July 27, Econ specialist spoke with an official 
at TPIC, a leading supplier, and, as a state-owned company, 
the supplier the GOT is best able to pressure into keeping 
supplies flowing despite arrears.  The TPIC official said 
SOMO currently owes about $1 billion in accounts receivable 
(vice arrears) to Turkish suppliers, of which about $200 
million is to TPIC.  The GOT and TPIC are trying to be 
helpful to Iraq, but he warned that the current slowness of 
payments from SOMO cannot continue for an extended period. 
Several suppliers have stopped shipping to SOMO for this 
reason.  The suppliers pay cash for the product but sell to 
SOMO not knowing when they will actually get paid.  Sooner 
or later, even TPIC will not be able to keep selling on this 
basis, and he specifically asked us to pass this message to 
Baghdad. 
 
A Longer-Term Project: Border Pipeline: 
--------------------------------------------- --- 
 
8. (SBU) The TPIC official also briefed Econ Specialist on 
its plans to establish a 15- 16 km long pipeline through the 
Habur border gate, in order to partially resolve the backlog 
of trucks at the border and to expedite humanitarian (SOMO) 
fuel transport to Iraq.  They have a warehouse in a secure 
area in Habur, and will be able to pump 1,000- 1,500 tons 
fuel through the pipeline daily.  This amount is small 
compared to their total daily fuel export to Iraq, which is 
currently at 5,000 tons.  They had to contact several 
agencies in Turkey and Iraq for approval--all of which were 
very receptive.  TPIC got official approval from GOT and 
even sent the pipes to the area, but is waiting for SOMO's 
official response to start construction.  SOMO will need to 
construct the Iraqi side of the pipeline, so they need to 
take quick action.  The official pointed out the slow 
decision- making process in Iraq, and said USG support on 
expediting a decision on this issue would be appreciated 
 
Sustainment Remaining the USG Priority: 
--------------------------------------------- --- 
 
9. (SBU) Action Request: Post will seek the MFA's take on 
these issues, and a readout of the second round of bilateral 
border gate discussions with the ITG scheduled for this week 
in Ankara.  Unless instructed otherwise by the Department, 
post will reiterate past USG requests that sustainment fuels 
be given priority treatment. 
 
Need for Revived Tracking of SOMO Trucks by U.S. Military 
Border Tracking Unit: 
--------------------------------------------- --------------- 
----------------------------------------- 
 
10. (SBU) Action Request, cont.: Until early July, the U.S. 
military's Movement Control Team at the Habur Gate counted 
SOMO trucks as they crossed the border into Iraq; this 
report also noted the number of trucks as a percentage of 
the daily SOMO requirement for different fuels (benzene, 
diesel, etc.).  We have learned, however, that 917 CSG and 
484 MCB Commander have ordered that the MCT cease counting 
SOMO trucks.  This reporting provided us with an excellent 
early warning system when SOMO shipments slowed down for any 
number of reasons.  These have included trucker strikes, 
Turkish oil companies being compelled to stop shipping for 
SOMO due to large arrears, and Turkish government decisions 
to change the traffic flow at Habur.  Since the MCT no 
longer reports on SOMO trucking, we were unaware of the 
current growing backup of fuel trucks on the Turkish side of 
the border until AmConsul Adana PO actually saw it on an 
official trip to the border area.  Given the importance of 
providing humanitarian fuels to the Iraqi people (two-thirds 
of which flow over the Habur Gate), we request that this 
decision be reversed. 
 
11. (U) Iraq REOs minimize considered. 
 
McEldowney