US embassy cable - 05ANKARA5986

UNCLAS SECTION 01 OF 02 ANKARA 005986 
 
SIPDIS 
 
SENSITIVE 
 
TREASURY FOR INTERNATIONAL AFFAIRS - CPLANTIER 
NSC FOR MCKIBBEN 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, ECIN, TU, EU Accession 
SUBJECT: TURKISH BUSINESS RELIEVED OVER START OF EU 
ACCESSION TALKS 
 
REF: A. ANKARA 5978 
     B. ANKARA 5932 
 
1. (SBU) Summary: As expected, the business community 
breathed a collective sigh of relief over the start of EU 
accession talks, though many claimed they had always been 
confident of the outcome.  The business community has been 
among a key constituency in support of EU accession, however, 
their comments reflect that they were not immune to the 
national frustration with perceived EU obstructionism. 
Business leaders also tend to be more aware than most Turks 
of the difficulties that lie ahead.  In private, business 
contacts take a more positive tone, recognizing the value of 
the EU accession process--rather than just the end result--as 
a pro-reform stabilizing force that allows businesses, both 
domestic and foreign, to invest and plan for a longer time 
horizon.  End Summary. 
 
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Business Breathes a Sigh of Relief: 
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2. (SBU) Though many businesspeople insisted they never had 
any doubt the EU talks would go forward, Turkish business 
leaders breathed a collective sigh of relief over the 
long-awaited start of EU accession talks.  A taste of what 
was in store had the talks not started was the market 
sell-off Monday morning in reaction to the negative news flow 
(ref b).  Once the news flow turned around in the middle of 
the day on Monday, Turkish financial markets embarked on an 
extended rally--so much so that the Central Bank intervened 
in the foreign exchange market on Tuesday to brake the 
appreciation of the lira.  Rifat Hisarciklioglu, the 
President of the Union of Turkish Chambers of Commerce (TOBB) 
spoke for the entire business community when he congratulated 
the GOT on this "historic" moment. 
 
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Business Leaders Not Immune to National Frustration: 
--------------------------------------------- ------ 
 
3. (SBU) In their public comments, a number of businessmen 
tended to reflect the national mood of wounded pride and 
frustration with perceived EU obstructionism.  Over the 
weekend, perhaps out of a desire to show solidarity with the 
Government position and maintain pressure on the EU, TUSIAD, 
the Istanbul-based association of leading industrialists, 
publicly said it supported the Government's unwillingness to 
cross its "red lines."  Oguz Satici, the President of the 
Exporters' Union said the the negotiations were "a test for 
the EU not for us.  If the negotiations had not begun it 
would damage the interests of the EU worse than those of 
Turkey." Ankara Chamber of Industry Chariman Zafer Caglayan 
said the EU had tested Turkey's patience and that "the EU is 
a road having many bends; it has 35 open drainage ditches." 
Most extreme of all--and not representative--was the anti-EU 
position of Ankara Chamber of Commerce Chairman Sinan Aygun 
who likened the EU process to the notorious Sevres treaty 
after World War I, which to the Turkish mind symbolizes 
humiliation and subjugation by the western powers. 
 
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Market Analysts Accentuate the Positive: 
--------------------------------------- 
 
4. (SBU) Market analysts in Istanbul, who speak to a more 
financial--and more international--audience than the business 
leaders, were uniformly positive on the EU news. Analysts 
such as Baturalp Candemir of EFG Istanbul Securities or 
Tevfik Aksoy of Deutsche Bank point to the stabilizing impact 
of the "EU anchor."  Candemir noted that the EU accession 
process will "make it difficult for Turkish governments to 
abandon the implementation of sound economic policies and 
reverse reforms."  Echoing a widely-held view among 
economists and the business community, Candemir expects a 
"positive impact on growth rates, privatization and capital 
inflows." 
 
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EU Improves Investment Outlook: 
------------------------------ 
 
5. (SBU) A number of analysts and business leaders commented 
on the favorable impact on investment, including foreign 
investment.  Privately, many contacts have told us that the 
start of the EU accession process allows businesses to invest 
and plan with a longer time horizon.  Mustafa Alper of the 
Foreign Investors' Association (YASED) said the EU decision 
was extremely positive for foreign investment, expecting a 
pick-up in the pace of FDI.   Aclan Acer, of the Dogus Group, 
told Istanbul econoff that he expects large inflows of 
investment during the accession preriod. 
 
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Realism About the Road Ahead: 
---------------------------- 
 
6. (SBU) Several business leaders noted that the way ahead 
would not be easy.  Former Istanbul Chamber of Industry 
Husamettin Kavi said the accession period would be extremely 
difficult for Turkey, particularly with regard to services, 
agriculture and environment.  Guler Sabanci, CEO of the giant 
Sabanci conglomerate, though overall very positive in tone, 
noted there would be difficulties from now on. 
 
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Comment: 
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7. (SBU) The mixed statements by many business leaders 
probably reflect a combination of realism about the 
difficulties ahead and their frustration as Turkish citizens 
over perceived EU goalpost-moving.  On the other hand, the 
market reaction--a huge rally--is probably a more meaningful 
indicator of what the EU accession really means for Turkish 
business prospects than the public posturing of the leaders 
of business associations.  Turkish business had pushed hard 
for the GOT to get to October 3 and will clearly reap huge 
benefits from Turkey's new status as an accession country, as 
well as from the stabilizing and reformist accession process 
itself. 
 
 
 
 
 
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MCELDOWNEY