US embassy cable - 03ANKARA476

C O N F I D E N T I A L ANKARA 000476 
 
SIPDIS 
 
 
E.O. 12958: DECL: 01/17/2013 
TAGS: PREL, PGOV, ECON, EFIN, TU 
SUBJECT: AMBASSADOR'S MEETING WITH AK PARTY LEADER ERDOGAN: 
CONCERNS ABOUT GOT ECONOMIC POLICY AND REFORMS 
 
(U) Classified by Ambassador W.R. Pearson; reasons: 1.5 (b,d). 
 
 
1. (C) Summary: Noting loss of market confidence, Ambassador 
pressed AK party chairman Erdogan to use his influence 
clearly to affirm that the GOT will hew to its IMF-supported 
economic program.  Erdogan professed that there are no 
differences between the GOT and IMF on goals; he averred that 
the social support measures the GOT must take are not in 
conflict with GOT intentions to stay on the program.  End 
summary. 
 
 
2. (C) Calling on Erdogan Jan. 19 to discuss several 
subjects, Ambassador recalled how Erdogan had projected 
dynamism and hope during the fall 2002 general election 
campaign.  Erdogan had also laid out his vision of Turkey as 
a prosperous, democratic, Muslim model for President Bush at 
the White House Dec. 10.  However, initial enthusiastic 
market reaction to Erdogan's approach has waned in the face 
of uncertainty about the AK government's performance and 
intentions.  The U.S. now hopes Erdogan will take advantage 
of his considerable credibility among the voters to deliver a 
clearer and more concrete affirmation of AK's adherence to 
its IMF-backed economic program. 
 
 
3. (C) Ambassador suggested that the AK government could take 
better advantage of two World Bank-financed social services 
and agricultural support programs.  One program would finance 
subsidies for fuel bills and textbook expenses for poorer 
strata.  In the other case, the World Bank could help 
expedite direct support payments to farmers which are now 
being seriously delayed.  Use of World Bank facilities would 
avoid the negative impact on the primary surplus from any GOT 
use of budgetary resources to fix these problems. 
 
 
4. (C) Ambassador added that the USG is reviewing the whole 
range of possible steps the U.S. could take to broaden trade 
relations in a way useful to the AK government.  Summing up, 
Ambassador reiterated the role Erdogan could play to help 
convince markets that the GOT remains committed to its 
program. 
 
 
5. (C) In response Erdogan asserted that there are no 
problems between the GOT and IMF on basic principles and 
goals.  Indeed, growth was up significantly in 2002.  But the 
GOT cannot ignore the stark poverty among a significant 
proportion of Turkish society and has to take steps to meet 
social needs.  In any event, the steps to reduce poverty are 
not in contradiction with the IMF program, he averred. 
PEARSON