US embassy cable - 03ADANA137

UNCLAS SECTION 01 OF 02 ADANA 0137 
 
SIPDIS 
 
 
SENSITIVE 
 
 
DEPARTMENT FOR EUR/SE AND NEA/NGA AND PRM 
 
 
E.O. 12958: N/A 
TAGS: PGOV, PREL, PHUM, TU, ADANA 
SUBJECT:  SE TURKEY HOPES FOR ECONOMIC TURNAROUND 
FOLLOWING COALITION VICTORY IN IRAQ 
 
 
This cable is sensitive but unclassified; please 
protect accordingly. 
 
 
1. (SBU)  Summary: Prominent Adana and Mersin 
businessmen are optimistic for increased 
economic opportunities relating to the 
Coalition victory in Operation Iraqi Freedom. 
They also are hoping to take advantage of the 
SARS outbreak to export more textiles to 
Europe.  While they believe there may be 
openings in Iraq for Turkish companies and that 
trade will soon resume with Iraq, they caution 
that without significant steps by the GOT and 
strong relations with the United States, Turkey 
"has no chance" to improve its economic 
situation.  End summary. 
 
 
--------------------------------------------- --- 
Hopeful for business alliances with Iraq 
--------------------------------------------- --- 
 
 
2. (SBU)  Prior to the beginning of Operation 
Iraqi Freedom, southeastern Turkish businesses 
were proving to be stagnant as the uncertainty 
of the war, and its effects, loomed. 
Businesses, mainly exporters, were finding 
their international clients looking for 
alternate suppliers in case Turkish companies 
could not fulfill their orders.  However, 
according to local business owners, while 
Turkey remains in a deep economic crisis, the 
war did not produce any direct negative 
economic ramifications.  Rather, the 
Coalition's victory in Iraq has the potential 
to open many economic opportunities for Turkey; 
"Iraq can, in the long term, buy services and 
products from Turkey using its oil revenue." 
 
 
3. (SBU) However, according to our contacts, the 
re-establishment of Iraq as a major trading 
partner depends upon the United States' 
willingness to encourage the new Iraqi 
government to work with the Turks.  The failure 
of Turkey to play a significant role in the war 
may have denied Turkey an opportunity to 
quickly improve its economic situation with 
contracts in post-war Iraq and with the US 
economic package.  Nonetheless, according to 
some sources, the failure of the February 2003 
motion to allow US troops in Turkey did provide 
two abstract economic benefits: (1) problems 
with Turkey's neighbors who did not support the 
Coalition did not materialize allowing Turkey 
the opportunity to maintain, perhaps even 
strengthen, these relationships; and (2) money 
that would have been received from the USA 
would have gone directly to the politicians and 
not to the businesses and people who most need 
it requiring the Turkish private sector to 
continue to work hard to overcome the current 
economic crisis.  Whether or not these 
intangible "benefits" are true, many of our 
contacts fear the strains caused by the 
motion's failure in the US-Turkish relationship 
will cause the US to `overlook' Turkey in post- 
war Iraq. 
 
 
-------------------------------------------- 
Blaming the USG and GOT for a Weak Turkish 
Economy 
-------------------------------------------- 
 
 
 
 
4.  (SBU)  Some of our contacts expressed strong 
anger towards the United States for 
"sidelining" Turkey economically.  According to 
these sources, the US's failure to lift all 
textile quotas for Turkey, the US's 
unwillingness to permit Turkey to play a vital 
role in the reconstruction of Iraq, and the 
US's failure to "live up to its promises" after 
the end of the first Gulf War, produced a 
strain on the US-Turkey relationship.  "Now, as 
the GOT does everything it can to relieve 
Turkey of its economic problems, the US, our 
supposed ally, does not show her support (i.e., 
in the form of waived quotas, guaranteed 
contracts, et al)." 
 
 
5. (SBU) "While it is easy to blame the 
Americans," most businessmen believe Turkey's 
current economic situation can only be resolved 
if the GOT takes meaningful steps to streamline 
its costs and improve the financial climate in 
Turkey.  "Many Turks are frustrated because 
while Turkey has the resources, people, and 
knowledge it takes to improve the country, the 
government has consistently failed to do so." 
 
 
6. (SBU) According to our sources, four tasks must 
be achieved by GOT to put Turkey on the road to 
economic recovery: privatization, population 
control, smaller government and streamlined 
government spending, and improved foreign 
investment policies.  Our contacts have 
consistently stated that privatization would 
allow for redundant governmental positions to 
be eliminated and streamlined programs to be 
implemented.  Population control, especially a 
problem in the Southeast where low education 
and high birth rates abound, could be achieved 
with targeted education campaigns.   A more 
manageable population would, in turn, produce 
less strain on already strained governmental 
programs.  Frustrated businessmen argue current 
government practices to continue hiring people 
in an effort to slow unemployment have created 
false statistics and excessive government 
spending.  Finally, prevailing GOT foreign 
investment policies must be improved to reflect 
willingness and desire to have foreign 
investors in Turkey.  Currently bureaucratic 
procedures involved in investing and 
establishing foreign companies in Turkey 
strongly deters would-be investors. 
 
 
 
 
------------------------------- 
SARS: An Interesting Side Note 
------------------------------- 
 
 
7. (SBU)  Our contacts also believe the SARS 
outbreak will drive more contracts to Turkey as 
people begin to turn away from the Far East in 
fear of the disease.  According to Free Zone 
leaders, while many Turkish businessmen have 
sought out these types of contracts, many 
textile contracts have sought out Turkey as a 
future supplier. 
HOLTZ