US embassy cable - 03ISTANBUL162

UNCLAS SECTION 01 OF 03 ISTANBUL 000162 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, EB/IFD/OMA AND EUR/SE 
TREASURY FOR OASIA - MILLS AND LEICHTER 
STATE PASS USTR - NOVELLI AND BIRDSEY 
USDOC FOR 3133/USFCS/010/EUR AND 4212/MAC/OEURA/DEFALCO 
 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, PREL, TU, Istanbul 
SUBJECT: TURKEY ALPHABET SOUP: ISTANBUL'S MYRIAD BUSINESS 
ORGANIZATIONS 
 
Sensitive but Unclassified - not for internet distribution. 
 
 
1.  (SBU) Summary: Istanbul, Turkey's economic, commercial 
and cultural capital, hosts a rich diversity of business 
voices, all seeking to influence both government policy and 
international perceptions of Turkey.  Leader of the pack is 
the venerable TUSIAD-- Turkish Industrialists and 
Businessmen's Association-- now in its fourth decade, which 
has won widespread respect (and occasional government pique) 
for its cogent policy critiques.  In recent years, a host of 
other organizations has emerged.  Tellingly, for a country 
and society still grappling with the proper boundaries of 
religion and a secular order, many of them are more avowedly 
religious.  Young business leaders have also stepped forward, 
establishing groups to encourage entrepreneurship and to 
enable them to step out from their elders' shadow.  End 
Sumary. 
 
 
2. (SBU) Running the gamut: Business associations in Istanbul 
come in a wide variety, beginning with those quasi-public 
organizations used to organize the business sector, 
continuing on to mixed organizations which seek to advance 
such national goals as international trade and exports, to 
the purely private and voluntary organizations that now crowd 
the city scene.  Numerically, quasi-public organizations, and 
particularly the local Chambers of Commerce and Industry, 
still hold pride of place.  But given that membership is 
compulsory (in that it is necessary for registration as a new 
business entity), they have tended to have less of a lobbying 
role.  Only in recent years has the umbrella (and 
Ankara-based) Union of Chambers of Commerce (TOBB) begun to 
make its voice heard.  Similarly, mixed organizations (such 
as the Foreign Economic Relations Board and its affiliated 
business councils) have focused on specific policy goals and 
remained relatively uncontroversial.  Not so the private 
organizations.  As exemplified by TUSIAD's recent 
confrontation with the Gul government over both Iraq policy 
and pursuit of economic reform, they have waded into the 
thick of policy debates, and played an important role in 
national politics.  Their importance is not new (some ascribe 
the fall of one of Bulent Ecevit's early governments in the 
late 1970s to TUSIAD's opposition).  But in an environment 
where many perceive a lack of (or lackluster) political 
opposition, they have assumed increasing importance.  "The 
markets are the government's opposition," one leading 
investment analyst told us recently, and by extension these 
organizations play a similar role.  Inspired by TUSIAD's 
success, the range of organizations has widened dramatically 
in the last decade, and now encompasses "young" business 
leaders, "independent" business leaders, and more avowedly 
"religious" business leaders. 
 
 
3. (SBU) The Heavyweight-- TUSIAD: If it has spawned a slew 
of imitators, until TOBB recently began to take a more active 
role, TUSIAD has had no serious challenger for the title of 
Turkey's most influential business association.  Founded in 
1971, its 471 members represent over 1300 of Turkey's largest 
companies, producing 47 percent of the value added in Turkish 
production and a similar percentage of Turkey's exports.  As 
the numbers suggest, these members include the country's 
largest industrial holdings.  Past chairmen have included a 
number of Kocs and Sabancis, and other members of Turkey's 
most exclusive business elite.  Once known as the "Bosphorus 
Billionaires' Club," the organization has evolved with the 
times, incorporating both representatives of foreign 
companies and the professional managers who have assumed the 
reins of many Turkish companies from their original founders. 
 Currently headed by Tuncay Ozilhan, who recently reluctantly 
agreed to extend his two-year tenure for a third year, TUSIAD 
eschews partisanship but is politically active in lobbying 
for business interests.  Recently it has focused on full 
implementation of Turkey's ongoing economic reform program 
and advancement of Turkey's candidacy for EU membership. 
Based in Istanbul, the organization maintains permanent 
offices in Brussels and Washington. 
 
 
4. (SBU) While non-partisan, TUSIAD does not pull its 
punches, as Ozilhan's mid-January critique of government 
policy on both Iraq and reform showed.  Though both sides 
drew back from confrontation (and privately many TUSIAD 
members argue the media blew the dispute up out of 
proportion), Ozilhan succeeded in laying down a clear marker 
of the importance to Turkey's business community of both 
continued economic reform and cooperation with the U.S. 
Beyond its policy advocacy in Ankara and abroad (before 
Copenhagen, TUSIAD delegations inundated European capitals), 
TUSIAD also publishes academic and other papers on essential 
political and economc issues.  A recent study on inflation 
and growth dynamics, for instance, highlighted the economic 
cost of the macro instability Turkey has experienced in 
recent decades. 
 
 
5. (SBU) The Flatterers-- MUSIAD: If imitation is the 
sincerest form of flattery, TUSIAD has many admirers.  Its 
success has spawned a slew of similar groups, though 
organized around different operating principles.  Chief among 
these groups is the Independent Industrialists' and 
Businessmen's Association (MUSIAD), which groups many 
mid-rank companies, and is known for more of a "Muslim" 
identity.  Founded in 1990, it currently has 3000 members, 
divided among 30 branches throughout the country.  It 
organizes regular international and local trade fairs and 
trade missions, providing a key mechanism for companies that 
are new to international markets to make a first foray into 
them.  A less developed and structured organization than 
TUSIAD, it consequently relies more on its leadership and its 
views.  The current MUSIAD President, Ali Bayramoglu, has 
adopted a high public profile, commenting on pending economic 
and political issues.  Reflecting his constituency, however, 
he has been less inclined to support the IMF consensus, and 
more given to advocate populist measures.  Given a congruence 
of views, MUSIAD has close ties with the AK party, and a 
dozen organization members were elected to parliament in the 
November elections. 
 
 
6. (SBU) Other groups include the Young Entrepreneurs 
Association (GYIAD) and the Young Turkish Businessmen's 
Association (TUGIAD), which both group the younger generation 
of Turkish entrepreneurs.  Both groups have participated in 
USG-organized programs, as has the Business Life Cooperation 
Association (ISHAD).  The latter has taken part in several 
trade missions to the United States, as well as a Public 
Affairs organized Voluntary Visitor Program.  Like Musiad, 
its members come from small to medium-sized enterprises and 
are  Islamic influenced, though they follow modern business 
practices, and do not circumscribe their business activities 
for religious reasons. 
 
 
7. (SBU) The Specialist-- YASED: While TUSIAD effectively 
represents Turkey's largest economic actors, over the last 
quarter-century the Foreign Investors Association (YASED) has 
been similarly active in promoting the interests of foreign 
companies in Turkey.  With 315 members representing 211 
companies, YASED has fought to improve Turkey's business 
environment, focusing both on streamlining the torturous 
procedures for approval of foreign investments and assisting 
its members in their dealings with the Turkish government and 
regulatory bodies.  Reorganized in 1998, YASED developed a 
committee system to address specific sectoral and regulatory 
needs.  It has played a leading role in efforts to draft a 
new investment code and associated regulations and thereby 
improve the investment climate in Turkey.  In a recent 
meeting it reported significant progress, noting that while 
serious issues remained, Turkey's new AK government has 
proved much more receptive to its proposals than were its 
predecessors.  (septel). 
 
 
8. (SBU) The Hybrid-- DEIK: If most Turkish business 
organizations are private, the current key actor in 
developing and encouraging international trade had a mixed 
character at its outset.  In its early years the Foreign 
Economic Relations Board (DEIK) received state funding, from 
which it has now graduated.  Instead it is financed 
exclusively by its members and founding organizations, which 
include TUSIAD and TOBB (TOBB's Chairman is always the 
titular head of DEIK).   DEIK seeks to encourage 
international trade through bilateral business councils with 
Turkey's leading trade partners.  The current 66 councils 
include 1134 representatives of 478 companies.  Generally, 
participating companies have undertaken business activity 
with the target country, or plan to do so.  DEIK essentially 
acts as an intermediary between the public and private 
sectors, due to its close working relations with both 
government bodies and private sector institutions in Turkey. 
It aims to encourage business development, to improve 
conditions for bilateral trade, and to provide a forum for 
delibersations on new avenues and forms of bilateral and 
multilateral cooperation. 
 
 
9. (SBU) TUSBC: For the U.S., the key subset of DEIK (and the 
first council formed) is the Turkish-U.S. Business Council, 
which functions as the counterpart to the American Turkish 
Council (ATC).  Founded in 1985, at the personal urging of 
Turgut Ozal, TUSBC currently has around 100 members.  In 
addition to the major international Washington Conference it 
organizes each March with the ATC, TUSBC also organizes other 
programs, including investment and business seminars 
throughout the U.S. and Turkey visits for American business 
and political leaders.  At its 2003 meeting, it adopted an 
action plan to further strengthen its activities by creating 
a consulting center and reinvigorating its sectoral 
committees. 
 
 
10. (SBU) TABA Amcham: While TUSBC is the American-Turkish 
Council's counterpart, the U.S. Chamber of Commerce's 
officially certified partner is the Turkish-American Business 
Association (TABA), which was founded at almost the same time 
(1986).  Currently boasting 1000 (mostly Turkish) members in 
7 chapters throughout the country, TABA has also sought to 
enhance business relations and promote investment between the 
two countries.  It has also focused in particular on 
encouraging cooperation in the Caucasus region.  It focuses 
on five sectors-- energy, telecommunication, transportation, 
tourism, and environmental protection-- but has generally 
been less active than its DEIK-affiliated counterpart. 
Recognizing the complications and difficulties resulting from 
the bifurcated organizational structure of Turkish-U.S. 
business relations, some TABA members have recently 
encouraged greater cooperation with TUSBC. 
 
 
11. (SBU) Comment: Istanbul's diversity of business voices 
provides a valuable resource to the Consulate, both in 
seeking to advance U.S. business interests and in gleaning 
business attitudes to issues of the day.  However, the 
multiplicity of voices can also be confusing, and the mission 
has encouraged greater unity and cooperation among the 
various organizations. Turkey's major independent policy 
voices seem determined to use their influence to fill the 
void left by the perceived absence of an effective opposition 
to the majority AK government.  While both sides will no 
doubt try to avoid the heated clash of mid-February, there is 
no doubt that TUSIAD and its counterparts will continue to 
push their message at every opportunity.  End Comment. 
ARNETT