US embassy cable - 03ANKARA404

S E C R E T SECTION 01 OF 05 ANKARA 000404 
 
SIPDIS 
 
 
NOFORN 
 
 
E.O. 12958: DECL: 01/16/2013 
TAGS: PREL, ECON, MARR, MOPS, IZ, TU 
SUBJECT: SCENESETTER FOR GENERAL RICHARD MYERS, CHAIRMAN, 
JOINT CHIEFS OF STAFF VISIT TO TURKEY:  DOMESTIC AND 
REGIONAL POLITICAL ISSUES, ECONOMIC SITUATION, AND SECURITY 
ASSISTANCE 
 
(U) Classified by Ambassador Pearson, reason 1.5b/d. 
 
 
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Summary 
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1.  (S/NF) Your visit comes at a critical time in preparing 
for potential Iraqi operations.  Site surveys began on 14 Jan 
03.  EUCOM/TGS military-to-military consultations reconvened 
on 3 and 13 Jan 03 respectively.  Based on a 14 Jan 03 TGS 
request, a small CENTCOM/EUCOM planning team will soon arrive 
in Ankara to begin preplanning for land force operations with 
two US brigades.  We have reported that the TGS and MFA are 
working to speed site preparation tasks by finding a way to 
approve these tasks without Parliamentary vote.  Asked about 
possible Turkish support for a US-led Iraq operation, most 
Turks oppose.  However, most Turkish observers feel Turkey 
will have to support its strategic partner, but fear war will 
have heavy economic consequences for Turkey and would split 
up Iraq or at least lead to instability.  Your discussion 
with the CHOD can express appreciation for recent positive 
indicators as well as reinforce the need to make timely 
government decisions for Turkish commitment to support US 
military operations, if required.  The Turkish political 
landscape has changed significantly as a result of national 
elections, but in ways that likely do not portend serious 
change in Turkey,s commitment to our bilateral relationship. 
Market and public opinion have treated the sweeping AKP 
victory on 3 Nov 02 with guarded optimism, seeing it as an 
opportunity to overcome years of weak coalitions, entrenched 
party interests, and economic mismanagement.  In terms of 
foreign policy, Turkey remains committed to broad strategic 
partnership with the US and other NATO allies, and remains a 
strong supporter in the Global War on Terror.  Turkey is 
completing its well executed ISAF command, and is in 
multilateral talks to complete final agreements on leadership 
transition for ISAF III (combined German-Dutch effort). 
There is concern in Turkey about the 12 Dec 02 European Union 
summit membership decision, and the resultant delay for 
Turkish accession.  Likewise, the certain EU accession offer 
to Cyprus causes great concern in Turkey, which sees itself 
as the guarantor of the Turkish-speaking population on 
Cyprus.  We are continuing our effort to produce agreement in 
a fair settlement, but TGS reportedly has some security 
concerns.  There have been positive developments on the 
economic front, especially in reducing the inflation rate and 
beginning to stimulate growth, but the economy remains weak 
and Turkey's huge debt burden is a source of great 
vulnerability.  We are trying to reinforce with all our 
senior counterparts the need for Turkey to stick to its 
economic reform path.  The combined economic weakness and 
potential military operations in Iraq have produced an 
expectation that the US will guarantee the survival of the 
Turkish economy and work to meet Turkey,s perceived military 
modernization needs by providing a large assistance package. 
Your visit provides the opportunity to underline the breadth 
of our relationship, at the same time focusing on ways to 
resolve mutual concerns on several major operational 
challenges.  End summary. 
 
 
---------------------------- 
Political Overview - The Domestic Scene 
---------------------------- 
 
 
2. (C) Ruling AK Party has been able to pass constitutional 
and legal changes to strengthen democracy and restore AK 
leader Erdogan's political rights (stripped by the courts in 
1999 for his alleged criminal incitement of racial/religious 
enmity -- a move widely understood as a political effort to 
keep Erdogan on the sidelines) and allow him to become prime 
minister this spring.  With a Parliamentary majority of 363 
of 550 seats, AK is determined to press for fundamental and 
much-needed changes in the way political and economic life is 
conducted and ordered in Turkey.  Under the formal leadership 
of PM Abdullah Gul, both a democratic reformer and devout 
Muslim, the AK Government has made Turkey's EU membership bid 
and economic reform its top priorities.  The new GOT is also 
insisting on democratizing changes designed to accord 
official respect not only to secularist elites, but also to 
more conservative and other heretofore "undesirable" elements 
(i.e., the religiously pious) long relegated to the 
political, social, and economic sidelines. 
 
 
---------------------------- 
Political Overview -- The Regional Scene 
---------------------------- 
 
 
3.  (S) Several pillars of Turkish regional policy in recent 
years--close strategic ties to Israel, working relationships 
with the KDP and PUK in northern Iraq, and resistance to a 
breakthrough on Cyprus negotiations, have come under stress 
in the last twelve months.  Continuing bloodshed in Israel 
and the Palestinian Authority has frayed the edges of the 
Israeli-Turkish strategic partnership somewhat, without 
forcing a fundamental shift of policy.  Concern over 
increasing autonomy and institutionalization of Iraq,s 
northern Kurdish forces led to very sharp exchanges between 
KDP leader Barzani and Turkish officials, and GOT relations 
with the KDP were tense, although Barzani,s 3 Jan 03 visit 
here re-established cooperative tone to the relationship. 
Turkish relations with the PUK are relatively good.  Anxiety 
over the prospective acceptance of Cyprus into the EU--with 
or without a settlement with Turkish Cypriots--had led to 
talk (now dropped) of Turkey,s annexing northern Cyprus, a 
move which would create a serious divide not just with Greece 
and the Greek-controlled Cypriot government, but with the EU 
itself.  The new UNSYG proposal for Cyprus, submitted to both 
sides on 11 Nov 02, calls for two states with one 
international identity; this has generated significant 
interest.  We are continuing to work to produce a settlement, 
and many Turks tells us we have never been closer.  The TGS 
can help get a deal if they are satisfied on security 
questions.  Continuing conflict in northern Georgia is 
another source of regional concern, with both US and Russian 
military activities in or near Georgia dramatically 
increasing in the past year.  Relationships with Iran and 
Syria, though generally less tense than during the 1990,s 
due in large part to the decline of the PKK, remain cool; 
Turkish leaders are wary of Iranian attempts to undermine 
secular rule and Syrian positions on water rights, among 
other issues. 
 
 
-------- 
Iraq 
-------- 
 
 
4. (S)  Site survey modus operandi was signed on 10 Jan 03, 
site survey teams arrived in Turkey and started site survey 
operations on 13 and 14 Jan 03 respectively.  Recent 
EUCOM/CENTCOM meetings with TGS to conduct mil-to-mil 
planning consultations for Iraq operations have taken place 
on 3 and 13 Jan 03 respectively.  Given we are just beginning 
site survey operations, progress continues to be made on many 
operational issues, with the significant exception of land 
forces operations.  However, as a result of continuous 
political and military consultations, the TGS J3 told us on 
14 Jan 03 that the CHOD Gen Ozkok had been authorized by 
Prime Minister Gul to have the TGS J3 receive a small (3-6 
person) US planning team to come to Ankara to do 
&preplanning of land operations with two US brigades.8  TGS 
J3 emphasized that this must be an integrated operational 
planning effort by US land, US SOF, and Turkish land forces 
(Turkish forces deployed to prevent mass migration) that 
would operate in Northern Iraq.  (EUCOM HQ is working this 
tasking, and we expect a CENTCOM/EUCOM team to arrive in 
Ankara soon.)  Additionally, we received strong reporting on 
14 Jan 03 that the TGS and MFA are working on a way to 
expedite site preparations that would not/not require 
Parliamentary approval. 
 
 
5. (S) With respect to requests for coalition operations, 
there has been no change in TGS/GOT position that only US 
forces will be allowed in Turkey.  In particular, TGS 
leadership reiterated during 14 Jan 03 mil-to-mil that UK 
forces (including air and SOF forces) would not be allowed in 
Turkey.  Question was asked about UK over flight (thinking in 
terms of air support originating outside of Turkey) and 
received the same negative reply.  UK MOD and permanent MOD 
Under-Secretary visit with TGS last week reportedly did not 
go well.  Although UK MOD reportedly is in the process of 
formally requesting to begin bilateral UK/TU mil-to-mil 
consultations, our sense is that this request will not be 
approved anytime soon. 
 
 
6. (S) Gen Ozkok leaned hard on compensation during his 
Washington meetings in November 2002.  He saw this as the key 
to selling full cooperation to the politicians, who will need 
to convince the people that cooperation will not harm 
Turkey,s interests as much as non-cooperation.  There have 
been several high level US/TU economic meetings to discuss 
size and structure of economic assistance, stressing that the 
purpose of any US assistance would be to get Turkey over an 
economic shock caused by any operation.  With full Turkish 
support, that shock will hopefully be brief and take us into 
a situation with much brighter prospects for Turkey, 
including reconstruction contracts and increased trade with a 
friendlier administration in Baghdad, increased long-term 
tourism, and the prospect of lower oil costs.  The Turkish 
government continues to negotiate for the largest possible 
economic support package available.  You are likely to hear 
again from the CHOD on this issue. 
 
 
7. (S) The MFA has outlined a key dilemma for the Turkish 
decision-makers.  On the one hand, they agree with us that 
the best chance for avoiding war is to demonstrate coalition 
preparedness to disarm Saddam forcibly if he does not do it 
on his own.  That argues for allowing US (and possibly other 
coalition) forces into Turkey to send a strong signal to the 
Baghdad regime.  On the other hand, if this approach succeeds 
and Saddam,s &change of heart8 constitutes a change of 
regime and he is allowed to stay in power, Turkey foresees a 
possible sharp downturn in relations with Iraq as well as 
much of the Arab world. 
 
 
8. (S) Nevertheless, at the end of the day, most Turks, 
official and ordinary, realize that Turkey really has no 
choice.  Turkey will have to cooperate to some extent with 
the Americans ) with or without another UNSCR.  The 
alternative would not only put them on the other side of the 
fence from their key strategic partner, but they would also 
be surrendering US economic protection and protection of 
their &red lines8 (no Kurdish state, no Kurdish funny 
business (seizing Kirkuk and Mosul), no refugees, no 
subjugation of the Turkmen, and no ability of the PKK to take 
advantage of the war) to foreigners.  Turkey wants to work 
with the US to shape Iraq and the Middle East, and they 
realize that if you don,t play the game, you don,t make the 
rules.  In the end, the GOT will have to use this 
&nationalist8 argument to gain parliamentary approval for 
full support.  The PM assured Amb Pearson that he and the AK 
Party leadership were not the problem.  The PM told the 
Ambassador that he needed at least two more weeks to prove to 
his constituency that he had done all he could to stop the 
possibility of war.  Once he could show that war was 
inevitable, he would be able to deliver support for the US. 
He claimed that on his recent Middle East trip he told his 
Arab interlocutors "if there is war, we should all join the 
coalition."  The PM said he was "shocked" to read reports of 
US frustration and anger with Turkey, and explained that he 
needed time to persuade the Turkish Parliament to support the 
US requests. 
 
 
------------------- 
Economic Overview 
------------------- 
 
 
9.  (C) Although 18 months of economic reform have laid much 
of the foundation for greater financial stability and growth, 
Turkey's enormous debt burden and structural weaknesses mean 
the economy remains extremely vulnerable.  The incoming 
government has an opportunity to move Turkey away from the 
financial precipice on which it has been perched for the past 
two years, but to do so it must move quickly to bolster 
market confidence, support the battle against inflation, and 
implement further reforms needed to generate growth. 
10.  (C) Financial markets' initial reaction to the AK 
election victory has been extremely positive, with interest 
rates on treasury bills falling from 65 to 53 percent and the 
stock market picking up huge gains.  This reaction is based 
on the market hope that (a) a one-party government will be 
able to move much more aggressively to implement reforms, and 
(b) AK means it when it says it will continue to work with 
the IMF to implement sound economic policies.  This initial 
positive view has been fading, and the markets, IMF and we 
are seeking renewed implementation of reforms because there 
are signals AK is reverting to the old way of doing business. 
 
 
11.  (C) Turkey believes that we cannot divorce the security 
cooperation program from broader concepts of economic 
support/strategic alliance.  The Turkish view is that 
modernization and related programs are not just business, but 
are critical investments in the common strategic interest. 
Turkish expectations about US economic support remain high. 
In addition to continued financing, many Turks expect the US 
to open its textile markets, direct more US investment to 
Turkey, and promote American tourism to Turkey.  Through the 
Economic Partnership Commission, we have offered Qualifying 
Industrial Zones (still needs congressional approval), and 
have been pressing hard for improvements in the investment 
environment.  We also continue to stress our strong support 
for the Baku-Tbilisi-Ceyhan and Shah Deniz pipelines, key 
elements of the US-Turkish effort to promote an East-West 
energy corridor through Turkey.  Turks worry that a US 
operation in Iraq would hurt their already-weak economy, 
particularly if it affects the summer tourism season, and 
will expect significant US economic support/compensation 
 
 
12.  (C) The consistent message that the U.S., EU, IMF, and 
World Bank are giving the AK government is: further economic 
assistance depends on your complete implementation of the 
economic reform program.  The Turks face billions of dollars 
of debt service payments each month, and raising new debt to 
pay off this debt service depends completely on market 
confidence.  Markets want to see the reforms continue.  Thus, 
if AK doesn't follow through with reforms, no amount of aid 
from us, IMF, World Bank or EU will help the Turks escape the 
specter of a debt "event."  The Turks received a recent scare 
with weak market demand for their 7 Jan 03 debt auctions, but 
continual reminder of full implementation of economic reforms 
is still needed. 
 
 
----------------- 
FMF Debt Relief 
----------------- 
 
 
13.  (C) FMF debt relief (and re-initiating of an annual FMF 
program) remains a top TGS priority and TGS officials may 
raise the issue within the context of ways in which the USG 
can assist Turkey. 
 
 
---------------------------- 
Security Assistance/Direct Commercial Sales 
---------------------------- 
 
 
14.  (C) Overview: The continued flux in the economic 
situation has severely affected the long-range acquisition of 
many of the major defense procurement priorities.  Although 
there has been recent success regarding the AEW&C aircraft, 
the result on many programs is that timelines have been 
extended and decisions forestalled due to the negative 
political impact major arms acquisitions may present.  Among 
the most important programs still in the balance is the ATAK 
helicopter sale. 
 
 
15.  (C) Boeing and AEW&C: On 4 Jun 02, Boeing and Turkey 
signed a USD 1 billion contract to provide Turkey four 737 
Airborne Early Warning and Control aircraft.  Boeing worked 
hard with SSM, the Government of Turkey,s acquisition 
agency, to meet all contract provisos to achieve a 4 Dec 02 
contract effectivity date; however, the lack of approval of 
certain contract provisos caused delay.  TGS, the 
Undersecretariat of Defense Industries (SSM) and the TUAF are 
concerned about recent provisos that were placed on Boeing,s 
export licenses.  DSCA chief, Lt Gen Walters, got an earful 
from TAFC, TGS and SSM during his Nov 02 visit here and 
promised to get back to the Turks on how quickly the USG 
could decide on the provisos.  We expect USG response on 
provisos by end of Jan 03.  Meanwhile Boeing and SSM have 
extended the 4 Dec effectivity date to 4 Feb 03.  US 
Electronic Systems Center, provided SSM a letter of offer and 
acceptance 9 Aug 02 for the $27 million dollar government 
furnished equipment FMS case supporting Boeing,s contract. 
ESC and SSM worked all LOA points until 10 Oct 02.  SSM 
completed evaluation of the LOA and signed on 11 Nov 02. 
 
 
16.  (U) ATAK Helicopter:  The ATAK Helicopter Modernization 
Program is currently TGS, #1 security assistance priority. 
In Oct 02 TGS expressed significant disenchantment with Bell 
Textron,s pricing submissions.  The pricing effort is 
considered high risk from Bell,s perspective due to 
technology transfer, integration risk, Turkish work share, 
and local content (terms and conditions).  SSM has requested 
a new revised price submission and has also started active 
price negotiations with a Kamov (Russia)/IAI (Israeli) 
consortium.  During the week of 18-22 Nov 02, Lt Gen Walters 
from DSCA, Navy IPO, and Bell Helicopter presented TGS with 
two FMS and two DCS options for consideration.  TGS, MND, and 
SSM continue to analyze these proposals.  TGS J5 indicated in 
a 30 Dec 02 meeting that operational issues have precluded 
presentation of these proposals to TGS leadership. 
 
 
17.  (C) EX-IM Bank Helicopter Guarantee:  Senior MFA and TGS 
officials have been disappointed with Congress' decision not 
to support an extension of the EX-IM loan program to enable 
the Turkish Navy to purchase additional Sikorsky helicopters. 
 Extending the program is one of TGS's highest priorities 
(after FMF debt forgiveness and reinstatement of FMF 
financing) and the Turks are still looking to the USG to 
deliver on its pledge to support an extension of the program 
as voiced at the High-Level Defense Group (HLDG) meeting in 
Istanbul (Apr 02). According to recent information, the EX-IM 
board will now vote on extending the loan program on 16 Jan 
03, and we may have a positive resolution on this issue by 
the time you arrive. 
 
 
18.  (C) JSF:  Turkey and SSM signed an MOU on the JSF 
program in Washington 11 Jul 02. The identification and 
accompanying official announcement of Turkey,s JSF National 
Deputy to the JSF Program Office in the US will continue to 
facilitate Turkish participation in JSF program.  If the 
subject comes up in the your meetings with TGS officials, we 
recommend that you congratulate Turkey on its decision to 
become a level-three partner and reiterate our commitment to 
working closely with Turkey over the years to develop this 
new stage of our strategic partnership. 
 
 
19.  (C) UAV:  Unmanned Aerial Vehicle.  SSM has received the 
responses to the initial request for proposal from both 
General Atomics Aviation Systems Incorporated (GA ASI) and 
Israeli Aviation Industries (IAI).  These proposals are 
currently under evaluation and down-selection was initially 
expected to occur by the end of Nov 03.  The actual selection 
process will not occur until early in 03.  Export licensing 
and technology transfer for local content and work share 
opportunities are key variables in their selection process. 
 
 
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Closing 
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20.  (U)  We look forward to your visit, and would be glad to 
answer any other questions you might have after review of the 
issues. 
PEARSON