US embassy cable - 03ANKARA2914

UNCLAS SECTION 01 OF 02 ANKARA 002914 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, EB/IFD/OMA, AND EUR/SE 
TREAUSRY FOR OASIA - MILLS AND LEICHTER 
STATE PASS USTR - NOVELLI AND BIRDSEY 
 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, EINV, PGOV, TU 
SUBJECT: AK REVIVES PLANS TO SELL STATE LANDS, 
IN SEARCH OF NEW REVENUE SOURCES 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET 
DISTRIBUTION. 
 
 
1. (SBU) SUMMARY:  PM ERDOGAN ANNOUNCED RECENTLY THAT 
THE GOT IS PLANNING TO REALIZE BETWEEN $25-30 BILLION 
IN NEW REVENUE FROM THE SALE OF STATE-OWNED "FOREST 
LAND," MUCH OF IT TREELESS SUBURBAN SQUATTER 
SETTLEMENTS.  THE OPPOSITION CHP AND SEVERAL NGOS 
CRITICIZED THE PROPOSAL, AND PRESIDENT SEZER HAS VETOED 
THE CONSTITUTIONAL AMENDMENT THAT WOULD ALLOW THE SALE. 
THE GOT PLANS TO PUT IT THROUGH PARLIAMENT A SECOND 
TIME, AND IS ALSO PLANNING TO SELL OTHER, NON-FOREST 
STATE LAND (WHICH WON'T REQUIRE A CONSTITUTIONAL 
AMENDMENT.)   MANY DEVELOPMENT ECONOMISTS PROMOTE 
LEGALIZING SQUATTERS' OWNERSHIP OF STATE LAND AS A WAY 
OF GETTING POOR PEOPLE ACCESS TO CAPITAL, AND THE 
PROJECT WILL ALSO HELP TO REGULARIZE LAND OWNERSHIP. 
HOWEVER, GOT CLAIMS THAT THESE SALES WILL SOLVE ITS 
SHORT-TERM BUDGET FINANCING PROBLEMS ARE UNREALISTIC. 
CYNICAL OBSERVORS, AND THE POLITICAL OPPOSITION, SEE IT 
AS SIMPLY A WAY OF REWARDING REAL ESTATE DEVELOPER 
CRONIES.  END SUMMARY. 
 
 
2. (SBU) PRIME MINISTER TAYYIP ERDOGAN AND FORESTRY 
MINISTER OSMAN PEPE HAVE RECENTLY REVIVED LONG-STANDING 
PLANS TO SELL TENS OF THOUSANDS OF ACRES OF STATE-OWNED 
LAND CATEGORIZED AS "FOREST LAND" (MUCH OF IT 
TREELESS).   PM ERDOGAN HAS SAID THE PLAN IS TO SELL 
SUBURBAN "FOREST LAND" TO CURRENT SQUATTER RESIDENTS, 
AND THAT THE GOT EXPECTS $25 - 30 BILLION IN REVENUE 
FROM SUCH SALES.  MINISTER PEPE CLAIMED DURING A SPEECH 
TO PARLIAMENT APRIL 1 THAT SUCH PRIVATE SECTOR 
INVOLVEMENT IN THE MANAGEMENT OF "FOREST LAND" WOULD 
HELP DEVELOP FORESTS.  THE GOT PLANS TO SPEND 20% OF 
THE REVENUE IT RECEIVES FROM THIS SALE ON IMPROVING THE 
CONDITIONS IN SQUATTER COMMUNITIES. 
 
 
3. (SBU) SUCH A PLAN WOULD HELP REGULARIZE TURKEY'S 
INCOMPLETE LAND REGISTRY SYSTEM.  HOWEVER, THE 
OPPOSITION PARTY CHP AND SEVERAL NGOS CRITICIZED THIS 
ATTEMPT TO SELL THE "FOREST" AREAS.  MOST OF THE 
CRITICISM FOCUSED ON THE DEFINITION OF "FOREST" AND THE 
LACK OF CLARITY REGARDING THE POTENTIAL BUYERS OF THESE 
LANDS.  BEHIND THIS TECHNICAL CRITICISM LIES THE 
SUSPICION THAT THIS AKP INITIATIVE IS INTENDED TO 
PROVIDE PARTY SUPPORTERS, INCLUDING REAL ESTATE 
DEVELOPERS, WITH CHEAP (NEARLY FREE) LAND.  THE 
OPPOSING PARTIES ALSO CLAIMED THAT THE GOT'S REVENUE 
TARGET FROM THESE LANDS WAS EXAGGERATED, AND ANY 
SIGNIFICANT REVENUE FROM SUCH SALES WOULD ONLY BE 
REALIZED OVER A PERIOD OF YEARS. 
 
 
4. (SBU) TURKEY'S CONSTITUTION POSES ANOTHER HURDLE TO 
THIS PLAN.  ARTICLE 169 STATES THAT "STATE FORESTS ARE 
MANAGED AND EXPLOITED BY THE STATE IN ACCORDANCE WITH 
THE LAW."  THUS THE PROJECT TO SELL FOREST LAND 
REQUIRES A CONSTITUTIONAL AMENDMENT TO ENABLE THE GOT 
TO LEASE, SELL OR TRANSFER OWNERSHIP RIGHTS OF THESE 
AREAS.  THE GOT PUT THE CONSTITUTIONAL AMENDMENT TO A 
PARLIAMENTARY VOTE ON APR 4, 2003, BUT NARROWLY FAILED 
TO OBTAIN THE NECESSARY TWO THIRDS MAJORITY.  THE GOT 
PLANS A SECOND PARLIAMENTARY VOTE ON THE PROPOSAL SOON, 
ACCORDING TO LOCAL PRESS. 
 
 
5. (SBU) THE AK GOVERNMENT IS ALSO PLANNING TO SELL 
OTHER STATE LAND THAT IS NOT CATEGORIZED AS "FOREST 
AREAS."  SUCH "NON-FOREST" STATE LAND COULD BE SOLD 
WITHOUT AMENDING THE CONSTITUTION, AND A DRAFT COUNCIL 
OF MINISTERS DECREE AUTHORIZING SUCH SALES IS CURRENTLY 
CIRCULATING FOR SIGNATURE.  REFERRING TO THIS DRAFT 
CABINET DECREE, GOT SPOKESMAN CICEK RECENTLY ANNOUNCED 
A "SQUATTERS PEACE," THROUGH WHICH THE GOT WILL SELL 
NON-FOREST STATE LANDS TO THEIR EXISTING UNOFFICIAL 
RESIDENTS. 
 
 
6. (SBU) COMMENT: LEGALIZING SQUATTER FAMILIES' 
OWNERSHIP OF STATE LAND IS GENERALLY A GOOD IDEA. 
PERUVIAN ECONOMIST HERNANDO DE SOTO SEES THIS AS A STEP 
TOWARDS GIVING POOR PEOPLE IN UNDERDEVELOPED COUNTRIES 
ACCESS TO CAPITAL (SINCE THEY CAN BORROW AGAINST LAND 
THEY LEGALLY OWN).  BUT SUCCESSIVE TURKISH GOVERNMENTS 
HAVE TREATED THE IDEA AS A MAGIC SOLUTION TO THE GOT'S 
BUDGET FINANCING PROBLEMS (ANOTHER SUCH PHANTOM 
SOLUTION IS PM ERDOGAN'S CALL FOR EACH CITIZEN TO 
DONATE $100 TO THE GOT.)  IT IS HARD TO IMAGINE 
SQUATTERS PAYING BILLIONS OF DOLLARS TO THE STATE FOR 
THIS LAND.   CYNICS HERE BELIEVE THE PROJECT IS MOSTLY 
ABOUT GIVING SWEET DEALS TO REAL ESTATE DEVELOPER 
CRONIES, AND ONLY COLLATERALLY HELPING AK CONSTITUENTS 
IN THE SUBURBAN SQUATTER SETTLEMENTS. 
PEARSON