US embassy cable - 03ANKARA886

C O N F I D E N T I A L ANKARA 000886 
 
SIPDIS 
 
 
TREASURY FOR U/S TAYLOR FROM AMBASSADOR 
STATE ALSO FOR E, EB, AND EUR 
STATE PASS USTR FOR NOVELLI AND BIRDSEY 
 
 
E.O. 12958: DECL: 02/04/2013 
TAGS: EFIN, ETRD, PREL, TU 
SUBJECT: SCENESETTER FOR TREASURY U/S TAYLOR'S VISIT TO 
TURKEY 
 
 
(U) Classified by Ambassador W. Robert Pearson.  Reasons: 
1.5 (b,d) 
 
 
1.  (C) You will arrive one day ahead of the Turkish 
Parliament's debate over deployment of a number of U.S. 
troops for site preparation, and less than two weeks before 
Parliament's expected debate on deployment of U.S. combat 
troops.  Your visit can help us achieve the best possible 
outcome in Parliament by producing agreement on a bilateral 
financial assistance package and outlining significant new 
U.S. steps on trade. 
 
 
2.  (C)  On financial assistance, we will need to push hard 
to reach agreement on numbers and basic structure.  The Turks 
have said they want to conclude an MOU or other "letter or 
intent" demonstrating that agreement.  In our view, that will 
require maximum flexibility on numbers from our side.  You 
will also want to stress the military and economic conditions 
attached to our assistance. 
 
 
3.  (C) On trade, it is critical that you be able to present 
a substantial package, including a commitment to submit 
"clean" QIZ legislation to Congress, the most forward-leaning 
language possible on additional GSP benefits (including a 
firm commitment on gold jewelry), and textile quota shifts, 
as well as the 807/809 program.  It would also be useful to 
reiterate our willingness to consider an FTA if the GOT 
confirms it is willing and able to pursue a comprehensive 
agreement within the parameters of its Customs Union with the 
EU.  Offering something substantive on trade is essential in 
the Turkish political context. 
 
 
4.  (C) I hope you will also be able to give the Turks a 
status report on the other elements of our economic package: 
procurement and oil.  I understand there has been little 
progress on the latter, but it would be useful to emphasize 
to the GOT that rapid decisions on site preparation, troop 
deployment and opening the border to humanitarian NGOs would 
enable the USG to begin spending significant sums of money in 
Turkey. 
 
 
5.  (C) On economic reform, the government has taken some 
positive fiscal measures recently, in response to strong 
IFI/USG pressure and concern in the markets.  Still, the 
program remains off-track, and the government has yet to 
convince us, the IMF, or the markets that it is serious about 
reform (though the markets remain somewhat buoyed by the 
expectation of bilateral U.S. asssitance).  The IMF and the 
GOT are at loggerheads, with the Fund unhappy with many of 
the government's economic decisions and its failure to 
consult with Fund staff.  The Fund and the GOT are far apart 
on the budget (IMF ResRep advised today that they see a gap 
equal to 2 percent of GNP), on resolution of Yapi Kredi and 
Pamukbank, and on several structural reform measures.  We are 
seeking meetings for you with the Prime Minister, Deputy PM 
Sener, and other top economic officials, which will be 
opportunities for you to reiterate the importance of reform 
and the link between our assistance package and 
implementation of the IMF-backed program. 
PEARSON