US embassy cable - 05ANKARA4880

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 004880 
 
SIPDIS 
 
E.O. 12958: DECL: 08/05/2010 
TAGS: ECIN, EPET, ETRD, PREL, IZ, TU 
SUBJECT: TURKEY WORKING TO EXPEDITE FUEL EXPORT TO IRAQ, 
BUT HARBUR GATE REMAINS BOTTLENECK 
 
REF: A. ANKARA 4609 
 
     B. ANKARA 4367 
 
Classified By: Economic Counselor Thomas Goldberger for reasons 1.4 (b) 
 and (d) 
 
1.  (C) Summary: The GOT seems to be doing its best to 
maximize truck traffic at Habur Gate, but shipping flow 
through the gate will remain an on-going problem for a 
variety of reasons, particularly because the single gate will 
remain a bottleneck and because civilian and military needs 
in Iraq appear set to continue to grow.  Late payments to 
Turkish petroleum product shippers from SOMO will also 
continue to be a problem that could threaten to interrupt 
civilian supplies.  While there will be a modest expansion of 
capacity at Habur in a year or so, the only long-term 
solution is construction of a second border crossing, which 
remains stymied by Turkish and Iraqi inability to agree on a 
location and supporting road network.  End Summary. 
 
Urging Turkish Customs to Maximize Throughput at Habur: 
--------------------------------------------- --------- 
 
2.  (C) Following Ref A's reports of severe tightness in fuel 
supplies in Iraq, post continued to engage the GOT to urge 
that every possible measure be taken to maximize throughput 
of fuel supplies at the congested Habur Gate.  Charge relayed 
this message by phone and diplomatic note to MFA Deputy Under 
Secretary Ender Arat.  MFA subsequently informed Embassy that 
 
SIPDIS 
it had "issued instructions to alleviate the situation" and 
there did appear to be an improvement on the ground.  Customs 
Director General Sezai Ucarmak and Habur Gate Director Rostem 
assured Econ Counselor on August 8 that the GOT was doing its 
best to facilitate truck processing.  They provided figures 
that showed an increase in processing, and - in any event - 
asserted that they were surpassing their perceived informal 
quota of 1000 daily tankers southbound (as well as 
prioritizing tankers over freight).  They admitted that there 
had been some changes in personnel, but asserted that the 
gate was open 24/7 for truck processing.  The customs 
officials noted that fewer trucks chose to use night-time 
hours (during a recent trip to Habur, ODC logistics officer 
learned that semi-official processing facilitators did not 
work at night, so truckers would have to "get all the boxes 
checked" on their own).  They asserted that the gate was 
therefore operating at maximum physical capacity, and 
additional staffing would not alleviate the situation.  The 
customs officials complained that the Iraqis batched convoys 
of trucks, and would sometimes not accept trucks from the 
Turkish side (this has not been confirmed by other sources). 
Contrary to previous reporting (Ref B), the gate director 
said that the waiting line was about 7 km (vice what he said 
was erroneous reports of 70 km; the relatively short line was 
corroborated by ODC Officer on the ground.) 
 
3.  (SBU) In an August 10 meeting with Econ Counselor, 
Customs Under Secretary Cihat Ancin corroborated these 
assertions.  He said that with increased security and 
cooperation on the Iraqi side, two-way processing could 
increase from current 5,300 to 6,000 trucks.  Both 
interlocutors stressed near term projects to expand 
processing capacity at the gate. 
 
Measures to Ease Habur Gate Congestion: 
-------------------------------------- 
 
4.  (SBU) Aside from building a second crossing (Per Ref A, 
still stymied by disagreements about location), two other 
initiatives are in the works to expand existing capacity; 
however, neither will be completed quickly and neither is 
likely to fully solve the bottle neck.  The Union of Turkish 
Chambers of Commerce (TOBB) has a contract on a 
Build-Operate-Transfer basis from the Turkish State to 
rehabilitate and expand the Habur Gate.  According to Under 
Secretary Ancin, the processing capacity would increase by 
 
SIPDIS 
30%.  He expects construction to take 15 months, but gate 
capacity could be reduced by as much as 50% during this 
period, although Turkish officials are making strenuous 
efforts to avoid and minimize disruptions.  Ancin said, for 
example, that the Sirnak Governor's Office will set apart 
additional areas to relieve accumulation at the gate (ODC 
Officer saw this area.)  Note: We have received assurances 
that the construction would be phased to minimize disruption, 
but assume that in reality there will be some periodic 
reduction of flow.  End Note. 
5.  (SBU) Another initiative is to create a pipeline across 
the border.  State-owned Turkish Petroleum International Co. 
(TPIC) Vice President Sadi Gungor described its project to 
Energy Officer on August 11.  He said that TPIC has completed 
the Turkish portion of the 15 km pipeline, but is waiting for 
SOMO to arrange Iraqi approval and to coordinate setting up 
receiving and measuring mechanisms.  TPIC aimed to pump up to 
1500 tons per day, the equivalent of 100 tankers.  The TPIC 
rep stressed their willingness to help improve the situation 
in Iraq, including partnering with and representing U.S. 
firms.  He expressed extreme frustration with the challenges 
of working with the Iraqi side.  Gungor described TPIC's 
efforts to establish a rail connection for shipping fuel via 
Syria (again for 1500 tons per day or 100 tanker equivalent); 
he said that unfortunately this scheme had been dropped 
because of unreasonable demands from Syria and security 
problems. 
 
 
SOMO Late Payments a Threat to the System: 
----------------------------------------- 
 
6.  (SBU) The TPIC rep said that as of the week of August 15, 
TPIC had stopped shipping gasoline to SOMO, because SOMO 
non-payment and/or arrears had breached $1 billion (of which 
TPIC held $200 million as the major shipper from Turkey).  He 
said that this amount was beyond any reasonable limit; 
moreover, he asserted that it was a conscious financing 
mechanism on the part of the ITG.  This number exceeded the 
then estimate from MFA of $600 million overdue (with another 
$300 million reportedly on the verge of becoming arrears). 
 
7.  (C) MFA officials subsequently told Econ Counselor that 
SOMO then paid $230 million on August 17, bringing total due 
from SOMO to Turkish companies to $600 million, of which $520 
million was in arrears.  SOMO promised another payment of 
$150 million by August 19.  MFA pointed out that SOMO had 
doubled its orders from Turkish companies as of July 1, 
increasing Turkish companies involved to 30 from 16, as an 
explanation for the growth in arrears. 
 
8.  (C) Comment: Although Post believes that the Turks have 
made sincere short term efforts to facilitate fuel shipments 
to Iraq, Habur Gate will remain a troublesome bottleneck, 
creating episodic problems requiring intervention by U.S. 
military logistics officers in the areas, as well as by the 
Embassy.  GOT Customs appears to be effectively balancing the 
demands of tankers and freighters, in the face of hot 
temperatures and tempers and periodic lines.  GOT has put in 
place a number of initiatives to increase processing 
capacity, but the vexing problem of scarce resource capacity 
will endure as long as there is just one gate.  TPIC's claim 
that it has stopped shipping fuel to SOMO (without any effect 
on sustainment shipping) is difficult to measure on the 
ground, but corroborates our fears that the pervasive issue 
of SOMO non-payment is not sustainable.  Large private 
companies had already exited the business and state company 
TPIC appears to have reached its limit on exposure to SOMO in 
the face of no collateral or guarantees.  End Comment. 
MCELDOWNEY