US embassy cable - 03ANKARA1005

S E C R E T SECTION 01 OF 02 ANKARA 001005 
 
SIPDIS 
 
 
STATE FOR P, PM-AT, NEA/NGA, EUR/SE, AND L; OSD FOR ISA, 
ISP AND LEGAL; JCS FOR J3, J5 AND LEGAL; EUCOM FOR J3, J4, 
J5, POLAD AND LEGAL; CENTCOM FOR J3, J5 AND POLAD; 
 
 
E.O. 12958: DECL: 01/31/2013 
TAGS: PREL, MARR, MOPS, TU, Iraq 
SUBJECT: IRAQ: USG-GOT SIGN MOU ON SITE PREPARATIONS 
 
 
REF: A) STATE 36584 B) ANKARA 995 
 
 
(u) Classified by Ambassador W. Robert Pearson.  Reasons: 
1.5 (B and D) 
 
 
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SUMMARY 
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1. (S) The USG and GOT negotiating teams signed a Memorandum 
of Understanding late February 8 after the GOT accepted the 
USG position on the last remaining issue -- taxation.  The 
GOT negotiator expressed surprise and noticeable frustration 
that the USG requested tax exception for a possible operation 
that, in the GOT's eyes, would "create a heavy economic 
burden" and carry political implications for Turkey.  The GOT 
negotiating team also threatened that Turkey's reluctant 
agreement to the USG position on taxation was a one-time deal 
and would not/not apply to the MOU that still needs to be 
negotiated to cover a possible operation against Iraq.  In 
addition, the GOT team leader repeated several times that 
Turkey's government would "deal with" the 1954 bilateral 
agreement exempting US forces from taxation. The signature of 
the MOU, however, does not mean US forces can flow to Turkey 
in order to begin site preparations.  For the MOU to go into 
effect and permit site preparations to begin, the GOT 
requires the two sides to exchange notes confirming that all 
internal procedures have been completed.  The Embassy 
submitted the USG note late February 8 to the MFA, and is 
pressing the GOT to expedite its internal processing in order 
allow site surveys to begin.  The Prime Minister's foreign 
policy advisor told the DCM after the signing of the MOU that 
the PM had every intention of completing the process rapidly, 
but he did not commit to completing the process in a specific 
timeperiod.  The MFA Americas Department subsequently told 
Deputy Pol-Mil Counselor that the MFA would provide all of 
the required documents to the PM's office late February 8. 
The two sides agreed on the importance of beginning intensive 
mil-to-mil discussions on the annexes that are to be part of 
the operations-related MOU, and TGS said it would be ready to 
begin discussions with EUCOM on Monday, February 10.  The GOT 
indicated its intention to complete work on the operations 
MOU by February 17. End summary. 
 
 
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MOU: GOT RELUCTANTLY ACCEPTS USG POSITION ON TAXATION 
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2. (S)  The Turkish delegation summoned the USG team to the 
MFA at 1900 on February 8 to continue discussions on the 
Memoramdun of Understanding (MOU) for site preparations. 
Turkish Ambassador Deniz Bolukbasi opened the session by 
saying the GOT was surprised that the USG was requesting tax 
relief for such an important operation that was certain to 
have significant economic and political implications for 
Turkey.  He waved a copy of the latest USG offer for an 
economic MOU and said by comparison to the "heavy burden" 
Turkey would be forced to bear, the US was offering mere 
waivers on taxes for figs and apricots. He said that the 1954 
tax law applied only to NATO operations for the common 
defense. The GOT did not believe it applied to an operation 
of this magnitude, and noted that the tax law did not have 
either a duration or termination clause.  Bolukbasi said the 
1954 tax law would impose unilateral damages on Turkey 
without any cost for the USG. Furthermore, in no way could 
the USG requests related to a possible operation against Iraq 
have been envisoned in the era of the tax agreement. 
Bolukbais asked Ambassador Lino what would be the position of 
the USG on tax relief if the 1954 tax agreement did not 
exist.  Lino responded that it was a matter of international 
practice that soverign states did not tax each other, and 
added that if the tax agreement did not exist we would be 
seeking tax relief in any case through the MOU or another 
form of agreement.  The USG, she noted, enjoys tax relief 
under agreement with many countries, as it is common 
international practice for nations not to tax each other. 
She also pointed out that the tax relief provisions applied 
to offical government purchases, not to the private 
transactions that soldiers and civilians would make.  The 
official USG purchases would primarily benefit Turkish firms, 
create jobs for Turkish workers and benefit the Turkish 
economy. 
 
 
3. (S)  Bolukbasi noted the US comments, accepted the change, 
but repeatedly made the point that this change applied to 
only the MOU for site prep and "could not be applied in the 
future, ever."  He further noted that if the USG insisted on 
incorporating the tax relief provision into the site prep 
MOU, the Turkish Government "would take care" of the 1954 tax 
agreement, clearly implying some attempt to terminate it.  In 
numerous discussions of the follow-on MOU for operations, 
Bolukbasi has stated that the MOU for operations will be 
essentially the same as the MOU for site prep. In this 
session, he noted the MOU for site prep would have to have 
some "deletions," setting the stage for reopening the tax 
issue and perhaps other agreed provisions. 
 
 
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MOU NEEDS DIP NOTE EXCHANGE TO COME INTO FORCE 
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4. (S)  The signature of the MOU is the first step in 
bringing this agreement into force.  The text provides for an 
exchange of diplomatic notes once both sides internal legal 
requirements have been met.  The Embassy provided the MFA 
with our note late on February 8, and is pressing the GOT to 
complete its internal processing in order to allow site 
preparation to begin.  Bolukbasi told the US team the MOU and 
documentation would be forwarded to the Prime Ministry the 
same evening and then a decision would be taken on how it 
would be processed.  He noted there were two possibilities: 
that the cabinet could be required to give a final approval 
or the Prime Minister could approve it by decree under his 
own authority.  Later the same evening, the Prime Minister's 
foreign policy advisor told the DCM that the PM had every 
intention of completing the process rapidly, but did not 
commit to completing the process in a specific timeperiod. 
 
 
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NEXT STEPS 
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5. (S)  The two teams agreed that EUCOM and TGS officers of 
appropriate and authoritative rank would begin meeting at TGS 
on Monday morning, February 10, to begin the process of 
completing the negotiations on the remaining annexes for the 
MOU on operations.  Five annexes remain to be completed: 
communications, intelligence, logistics, operations and 
public affairs.  The logistics and operations annexes have 
one appendix each. 
 
 
6. (S)  Bolukbasi also indicated that the intention of the 
GOT is to have the MOU for operations and its annexes 
complete by Feb. 17 so it could be presented to Parliament 
(Parliament will come back into session on Feb. 18).  He 
implied that progress on the operations MOU would depend on 
progress on the economic package and the political 
declaration. 
 
 
PEARSON