US embassy cable - 03ANKARA4424

UNCLAS ANKARA 004424 
 
SIPDIS 
 
 
DEPT FOR E, EUR/SE AND EB 
DEPT PASS USTR FOR LERRION 
TREASURY FOR OASIA - MILLS AND LEICHTER 
 
 
SENSITIVE 
 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, EINV, PREL, TU 
SUBJECT:  Ambassador's Meeting with DPM Sener on Economic 
Reform and Investment Climate Issues 
 
1. (SBU) Summary:  In his farewell call on Deputy Prime 
Minister Sener on July 10, the Ambassador encouraged the GOT 
to stick with the economic reform program, emphasizing anti- 
corruption and other measures which would help boost foreign 
direct investment.  The Ambassador also highlighted the 
negative effect of the ongoing Motorola dispute on investor 
sentiment toward Turkey.  Sener reaffirmed Turkey's 
commitment to the reform program and to efforts to improve 
the investment environment.  End summary. 
 
 
Economic overview 
----------------- 
 
 
2. (SBU) DPM Sener acknowledged some negative economic 
developments, including a recent increase in interest rates. 
The strength of the lira has not thus far negatively 
impacted foreign trade, but a continued strong lira could 
prompt concern in the markets if it causes the current 
account deficit to increase. 
 
 
3. (SBU) Sener reaffirmed Turkey's commitment to the IMF 
program, while admitting to problems and delays in 
implementation.    He continued that the delay in the fifth 
review was a mistake, partially attributable to parliament's 
internal regulations, which delayed consideration of some 
draft legislation. 
 
 
Investment Climate 
------------------ 
 
 
4. (SBU) The Ambassador mentioned that Motorola officials 
were in Ankara to meet GOT officials on their pending 
receivables from Telsim, owned by the Uzan family.   He 
emphasized that a positive resolution of this case would 
improve investor sentiment toward Turkey and reinforce the 
GOT's commitment to the rule of law.  Sener responded the 
Uzans have been in conflict not only with other companies, 
but also with Turkish state. 
 
 
5. (SBU) The Ambassador urged Sener to undertake anti- 
corruption activities and other measures to enhance the 
investment environment for domestic and foreign companies 
alike.  He pointed out that Turkey is attracting as little 
as 10 percent of its foreign direct investment potential, 
despite an educated and hard-working labor force. 
 
 
6. (SBU) Sener responded that combating corruption was 
important to gaining the trust of the citizenry, which would 
in turn help efforts to improve tax compliance.  He also 
said that the GOT Coordination Board to Improve the 
Investment Climate Environment, headed by State Minister 
Babacan, was working to cut bureaucratic hurdles for the 
private sector and to provide a secure legal environment and 
economic stability. 
Pearson