Cyprus-Forum.com

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(C) Basbug next turned to Cyprus. He affirmed Turkish
armed forces' support for EU membership but worried that the
Cyprus issue could be a serious obstacle. The general
understood that the status quo could not continue forever and
that a solution must be found, but finding one after Cyprus
joins the EU would be very difficult. A lasting solution, he
thought, must preserve the bi-zonal system because there is
currently a lack of confidence between the two communities.
He also thought the guarantee powers system should be
preserved with some military presence, although "the numbers
are not important," he said. He thought the lifting of the
trade embargo on northern Cyprus would "help the situation."
Although he claimed not to be opposed to the Annan Plan (or
any plan) per se, he thought recommendations should be tied
to events. He said he agreed with FM Gul that a new approach
should be found. The Ambassador responded that the period
between the December northern Cypriot elections and Cyprus's
May 2004 EU accession would be the best opportunity to reach
a settlement. It was clear that the people on both sides
want a settlement and that the Annan Plan was the best
available for a quick solution. The US had already set aside
funds to help deal with the resettlement problem. Basbug
picked up on the last point to lament the huge problem
resettlement will pose, with 100,000 families moving, costing
up to $5 billion. The Ambassador argued that the price tag
may be a bit inflated, and noted that he hoped Special
Negotiator Weston would visit Ankara in the near future where
this issue could be further explored.


¶10. (C) The Ambassador asked whether Turkey could follow
last year's precedent of canceling its annual fall exercise
with Cyprus if the Greek side did the same. Basbug did not
respond. (Note: The Ambassador had raised this same subject
with DefMin Gonul on October 1. Gonul understood the
importance of the issue, but he was not prepared to respond
at that time.)

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C O N F I D E N T I A L ANKARA 006395

SIPDIS


E.O. 12958: DECL: 10/09/2013
TAGS: PREL TU CY GR
SUBJECT: AMBASSADOR EDELMAN RAISES CONCERNS ABOUT CYPRUS
ELECTIONS WITH U/S ZIYAL


REF: STATE 280568


(U) Classified by Ambassador Eric Edelman, E.O. 12958,
reasons 1.5 (b) and (d).


(C) Ambassador delivered reftel points to Turkish MFA U/S
Ziyal on October 9 in a one-on-one session. Ziyal agreed on
the need for transparency in the elections. Ziyal said he
believed Denktas would win the elections and said that as a
result it was even "more important to leave no room to cast
doubt on the results." Ziyal said that Minister Gul had
passed appropriate instructions to the Ministry and that
Ziyal planed to call in the Turkish Cypriot "Ambassador" on
October 10 to discuss bringing international observers to
Cyprus for the elections.
EDELMAN

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C O N F I D E N T I A L ANKARA 006619

SIPDIS


E.O. 12958: DECL: 10/21/2013
TAGS: PREL PGOV PHUM TU
SUBJECT: MFA DEPUTY U/S BOZKIR OPTIMISTIC ABOUT TURKEY'S EU
CHANCES BUT ADMITS CYPRUS STILL AN OBSTACLE

(U) Classified by Ambassador Eric Edelman. Reason: 1.5 (b,d).


¶1. (C) Summary: In a Oct. 20 courtesy call, MFA Deputy U/S
for EU affairs Bozkir told the Ambassador that he is
optimistic about Turkey's EU prospects. The GOT has passed
the necessary laws related to the Copenhagen Criteria.
Bozkir admitted that Cyprus is a looming problem but added
that a positive EU progress report next month could build on
pro-EU public sentiment to spur a solution on the island. End
Summary.


¶2. (C) In his initial Oct. 20 call on MFA Deputy Under
Secretary Volkan Bozkir, who is responsible for relations

SIPDIS
with the EU, Ambassador reiterated strong U.S. support for
Turkey's EU candidacy. While applauding GOT efforts to pass
EU-related legislation, Ambassador stressed that
implementation will be important. He noted that Turkey's
chances of becoming a full EU member could be hurt a solution
if not found for Cyprus by next spring.


¶3. (C) Bozkir said that there has been a change in psychology
in Turkey since the end of the PKK threat in 1999. Turks at
all levels understand that achieving EU membership will be
beneficial for all of Turkey. Firm GOT support has helped to
get the message out. Even the bureaucracy does not want to
be an obstacle to membership anymore, he claimed.


¶4. (C) Bozkir asserted that legally, Turkey has "achieved
critical mass" with regard to the Copenhagen Criteria.
Bozkir acknowledged that implementation is really only now
beginning but said that the legal framework for
implementation is in place. Bozkir said he is optimistic
concerning the EU progress report, which will be released at
the beginning of November. At the moment, EU countries are
giving Turkey a consistent message: Turkey has done well;
focus on implementation; and work to solve Cyprus.


¶5. (C) A positive progress report, he said, will boost public
support for the EU and could give the GOT room to work on
more difficult issues, such as Cyprus. Bozkir claimed,
however, that even with a positive report, the GOT may not
make progress on Cyprus because of Turkish local elections in
March 2004. Noting that his office only peripherally deals
with Cyprus, Bozkir argued that the EU Commission needs to be
more flexible on Cyprus and that lifting the economic embargo
against the "TRNC" would be a helpful gesture.


¶6. (C) Bozkir said that in addition to maintaining in close
contact with his counterparts in Italy, which currently holds
the EU Presidency, he has had consultations with the Irish,
who will hold the Presidency the first half of 2004, and the
Netherlands. The Netherlands will hold the Presidency during
the crucial Dec. 2004 EU summit where EU members will decide
whether Turkey is to begin negotiations. Bozkir acknowledged
that the Netherlands is concerned about the prospect of
Turkey's EU membership but said that the new Dutch government
appears to be more flexible.
EDELMAN

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O N F I D E N T I A L ANKARA 006695

SIPDIS


DEPARTMENT FOR EUR/SE


E.O. 12958: DECL: 10/24/2008
TAGS: PGOV PREL PHUM TU
SUBJECT: EU REPORT ON TURKEY WILL PRAISE REFORMS, CRITICIZE
IMPLEMENTATION


REF: A. ANKARA 5566
¶B. ANKARA 6570 AND PREVIOUS


(U) Classified by Polcouns John Kunstadter; reasons 1.5 b and
d.


¶1. (SBU) Summary: The upcoming EU report on Turkey will
praise GOT human rights reforms while criticizing the slow
pace of implementation. Ankara-based contacts from EU states
agree that Turkey's candidacy is progressing, but could be
derailed by a failure to reach a Cyprus settlement. End
Summary.


------------------------------------
EU Report Will Mix Praise, Criticism
------------------------------------


¶2. (C) The EU Commission on November 5 will release its
Regular Report on Turkey, illustrating where Turkey stands in
its progress toward EU accession. An Ankara-based EU
official, who saw an early draft of the report in Brussels,
told us the EU will offer strong praise for the GOT's
"impressive" human rights-related legislative reforms, but
will also note that implementation of the reforms has been
slow (reftel A). She said the report will probably not make
a specific recommendation concerning whether Turkey is
prepared to begin accession talks, since the EU has postponed
until the December 2004 Summit a decision on whether to set a
date for talks with Turkey. But observers will carefully
scrutinize the "General Evaluation" section of the report for
clues to the Commission's thinking. Our contact said
Commission members are still haggling over the tone of this
section. Everyone knows the report will mix praise with
criticism; whether it pleases Turkey supporters or opponents
will depend on precisely how it strikes this balance.


¶3. (SBU) We raised the upcoming report and Turkey's EU
candidacy at a representational event with French, Danish,
Dutch, British, and German diplomats. The diplomats differed
on the GOT's human rights reforms -- the French and Germans
were skeptical, the others more supportive -- but all agreed
the report, despite criticisms, will reflect Turkey's
progress toward EU membership. The report will highlight a
number of specific problem areas. It will criticize, for
example, the State's conduct of the retrial of Leyla Zana and
three other Kurdish former MPs (reftel B), which is widely
viewed as an example of pro-prosecution bias in the Turkish
judicial system. But our contacts said none of these
examples reflect problems that could derail Turkey's
candidacy.


-----------------------------------------
Cyprus: The "Way Out" for Turkey Skeptics
-----------------------------------------


¶4. (SBU) There is, however, one potential showstopper --
Cyprus. The diplomats agreed that failure to reach a Cyprus
settlement before the December 2004 Summit could doom
Turkey's chances to be offered a date for accession talks.
Our French contact initially opined that Turkey has a "100
percent chance" of being offered a date, but changed her mind
and threw up her hands when someone mentioned Cyprus. Our
German contact, a noted Turkey skeptic, half jokingly
referred to Cyprus as "the only way out" for the EU.

EDELMAN

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C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 006844

SIPDIS


E.O. 12958: DECL: 11/03/2013
TAGS: CY GR PGOV PHUM PREL TU
SUBJECT: TURKISH CYPRIOT ELECTION CONCERNS: ROUND FOUR:
DEMARCHE DELIVERED


REF: STATE 303498


(U) Classified by DCM Robert Deutsch, E.O. 12958, reasons 1.5
(b) and (d).


¶1. (C) Summary: In response to reftel demarche, MFA DirGen
for Northeastern Mediterranean Affairs to Ertugrul Apakan
asserted that GOT intervention with the Turkish Cypriot "High
Election Board" (HEB) would be improper. However, he would
convey the demarche to higher levels of the MFA; in his
opinion it could be conveyed to "TRNC" political authorities.
Apakan accused U.S. representatives of manipulating the
December 14 elections. End Summary.


GOT: We Warned TRNC About New Citizens....


¶2. (C) In an October 31 call to deliver reftel demarche, DCM
emphasized the importance of fair elections and USG concern
with new "TRNC citizens" being added to voter rolls. The USG
thought the best solution to concerns about voter rolls would
be to limit them to persons registered to vote in the 2002
elections and persons newly eligible to vote by virtue of
having turned 18. The USG hoped that the GOT shared this
perspective and would tell Turkish Cypriot authorities this
was the solution the GOT thought best.


¶3. (C) Apakan asserted that the GOT wanted the December
elections to be free and fair. He claimed the GOT had
"warned" the "TRNC" about the new grants of citizenship,
telling them this was the wrong time to grant them. Denktash
had opposed the new citizenship grants and government parties
had lost 4-5% in the polls because of the issue. However,
Apakan claimed the new citizenships were the result of a
processing backlog; according to "TRNC" law the applicants
were entitled to citizenship.


GOT Will Talk to TRNC, But Not to HEB


¶4. (C) Apakan disagreed that Turkey should be "blamed" for
non-democratic practices in the "TRNC." "TRNC" officials
acted independently from Turkey, Turkey did not interfere
with the "TRNC," and would not "interfere" with the "HEB," he
averred. His "first reaction" to the demarche was that it
was a request to interfere with "HEB judges." He said he
would convey the demarche to higher levels of the MFA, adding
that his opinion was that it could be conveyed to "TRNC
political authorities," but not to the "HEB." MFA Cyprus
Department head Levent Bilman, also present at the meeting,
worried that the demarche request could be perceived as GOT
support for the CTP, which had filed the suit asking that
voter lists be limited to previous voters and those who had
turned 18.


¶5. (C) DCM noted there was a broad perception that some
Turkish institutions and individuals had taken a role in the
"TRNC" elections and the GOT needed to make its position
clear on the voter list issue. Moreover, whether Turkey
agreed or not, many in the international community would hold
Turkey responsible for events in the "TRNC."


MFA Claims U.S. Manipulating Elections


¶6. (C) Apakan replied that "you are telling us some groups
are manipulating the elections. You are doing the same." He
claimed there was "an impression in Ankara" that U.S.
representatives were trying to influence elections. U.S.
representatives were going to villages, discussing the Annan
Plan, and giving advice. DCM replied that discussing the
Annan Plan did not constitute interference or manipulation,
and that U.S. officials would continue to do so.


Citizenship Numbers, According to the MFA


¶7. (C) Apakan said the "TRNC" normally granted 1500-1800 new
citizenships annually. According to the MFA, the "TRNC" had
granted about 53,000 citizenships from 1973 through the
beginning of 2003; it had granted 1904 citizenships so far in
¶2003. In January and February, there were 30-plus new
citizenship grants each month; in October there were
130-plus. Bilman claimed that the difference between 2002
and expectations of normal growth to the 2003 voter rolls
amounted to only about 2500 new citizens, which he argued was
not a significant departure from the normal trend line of new
citizenships.
EDELMAN

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C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 007451

SIPDIS


E.O. 12958: DECL: 12/04/2013
TAGS: CY PGOV PREL TU
SUBJECT: TURKEY MFA CYPRUS DEPARTMENT HEAD ON UPCOMING
CYPRUS INITIATIVE, ELECTIONS

REF: STATE 327579


(U) Classified by Political Counselor John Kunstadter, E.O.
12958, reasons 1.5 (b) and (d).


¶1. (C) Summary. MFA Cyprus Department Head Levent Bilman
worries that despite its planned initiative for a Cyprus
settlement, Turkey will be unfairly blamed for future
breakdowns in negotiations. He claims Turkey's initiative
will be prepared in line with the SYG's requirements and
said, without giving details, that the GOT will prepare
public opinion for the concessions necessary for final
settlement. He requested U.S. intervention with the SYG once
Turkey's proposal is submitted and with the Greek Cypriots to
reach an agreement. End Summary.


Turkey's Upcoming Initiative


¶2. (C) Calling in poloff on December 4, Bilman handed over
copies of recent media interviews of Cypriot President
Papadopoulos and former President Clerides. He pointed out
Clerides' quotes to the effect that "we had to put blame on
the Turkish side for the failure of negotiations, while not
accepting anything or making any concession during the
negotiations." He particularly emphasized Papadopoulos'
statements that he had no intention of signing the Annan Plan
in Hague.


¶3. (C) According to Bilman, these showed that Turkey had
been unfairly blamed for breakdown of Annan Plan
negotiations. He worried this would happen again if there
were a breakdown when Turkey offered its new Cyprus
initiative after the elections. "If we're going to get
blamed, what's the point?" he asked rhetorically. Bilman
quickly added that the GOT was still committed to going
forward with its initiative, but was concerned about what the
response would be.


¶4. (C) Poloff replied these quotes demonstrated the
importance of Turkey framing its initiative in Annan Plan
terms, both procedurally and substantively, in order not to
leave room for anyone to claim Turkey had not done its part.
If it did not agree to Annan Plan procedures, or if it
contained substantive non-starters that re-opened basic
principles, Turkey's initiative would be rejected and Turkey
would again be blamed for the impasse.


¶5. (C) Bilman claimed Turkey was preparing its initiative in
line with the SYG's requirements. However, he worried that
in evaluating the proposal, the SYG, although
well-intentioned, would rely on advisors who would take a
harsh view of the initiative. He said Turkey would need help
with "access" to the SYG.


¶6. (C) Bilman asked for examples of non-starters; poloff
cited insistence on pre-settlement recognition of the "TRNC"
(reftel). Asked whether the GOT had thought about how to
prepare Turkish public opinion for the concessions necessary
to reach final settlement, Bilman replied the GOT had thought
about this, but he offered no details. He said PM Erdogan's
December 3 statements that there were "two different states,
two different religions, two different languages" on Cyprus,
fit with the Annan Plan's bicommunality provisions. He was
confident the public would accept a final agreement.


¶7. (C) Bilman predicted that even if an ostensible agreement
were reached, Greek Cypriots would use the Russians to block
approval in the Security Council. The Russians, he pointed
out, voted with the Greek Cypriots in the COE against the
recent Loizidou settlement proposal. He said the Greek
Cypriot side needed to be pressured in order for real
agreement to be reached; he asked for U.S. help in doing
this. Even if Turkey did everything in its power to reach
agreement, the Greek Cypriots would not have sufficient
pressure on them and felt they would suffer no consequences
for failing to respond. Poloff responded that leverage with
the Greek Cypriots would be highest prior to Cyprus' May 1 EU
accession.


December 14 Elections


¶8. (C) On elections, Bilman noted that voters lists were
complete; he claimed the "TRNC High Election Board" ("HEB")
had received 1232 objections and had stricken 921 names from
voter rolls due to insufficient proof of residency. He
claimed the "HEB" had received no additional objections to
the voter lists outside those in pending court cases.
Despite opposition claims to unequal time on local
television, Bilman said "reports from the island" suggested
these were untrue. He said the "Speaker" of the "TRNC
Parliament" had invited COE and OSCE observers to the island,
but none had come. Europe, he complained, had prejudged the
results and would recognize an opposition victory, but not a
victory but the current government parties.
EDELMAN

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S E C R E T SECTION 01 OF 02 ANKARA 007767

SIPDIS


E.O. 12958: DECL: 12/17/2013
TAGS: CY PGOV PREL TU
SUBJECT: TURKEY REACTS TO THE ELECTIONS IN NORTHERN CYPRUS


REF: ANKARA 7662


(U) Classified by DCM Robert Deutsch, E.O. 12958, reasons 1.5
(b) and (d).


¶1. (C) Summary: Close results in northern Cyprus' December
14 elections have unleashed a wave of speculation about their
meaning and possible coalitions on both sides in Turkey's
Cyprus debate. However, amid the media hype there is a clear
sense that all eyes are now on Ankara. Ankara's EU diplomats
are still digesting the results and have no post-election
action plan to engage the Turks. MFA officials expressed to
visiting UK officials hope for a broad-based coalition
government with which the GOT could negotiate without
worrying about being accused of a sellout. As it had with
Ambassadors Edelman and Westmacott on the eve of the
elections, the MFA sketchily outlined its plans to move
forward to re-start negotiations. End Summary.


Election Results Fodder for Both Sides


¶2. (U) The election results have prodded both the pro- and
anti-Denktash media to think harder about Cyprus than in the
past. Consistently pro-Denktash leftist-nationalist
Cumhuriyet, under the banner headline "Peace Offensive from
Denktash", called the elections a "lesson in democracy."
However, even Cumhuriyet's hard-core socialist-nationalist
columnist Hikmet Cetinkaya hinted at the question of poverty
and corruption under Denktash in his Dec. 17 column. A range
of columnists in other papers, including establishmentarians
like Murat Yetkin in Radikal, are urging the GOT to take
advantage of the opening to solve the Cyprus question. Most
pro-settlement columnists believe that the election results
have created more maneuvering space for the GOT to reach a
settlement and increased GOT leverage on the "TRNC." The
Turkish press has also picked up on the dramatic increase in
opposition votes over the last election as a signal of
dissatisfaction with the Denktash status quo. The media is
awash in speculation about the possible permutations for
coalitions and the effects upon a possible solution. But
while media predictions vary wildly, there is a clear sense
that all eyes are on Ankara.


No EU Post-Election Action Plan on Turkey


¶3. (C) With the exception of the UK, Ankara's EU diplomats
are still digesting the election results and, like the media,
are caught up in speculation about possible coalitions. Seen
from Ankara, there is no EU plan for engaging the Turks on
Cyprus. Asked what the EU's action plan is, the Dutch DCM
shook his head and wished the EU had one; the German
political counselor said the EU does not need an action plan
-- Cyprus is Turkey's problem.


¶4. (C) Ankara's EU diplomats are uncertain about the effect
of Cyprus settlement to Turkey's accession hopes. Most agree
that lack of a settlement will be fatal. However, the Irish
DCM claimed Turkey could still receive a date to begin
accession negotiations without settlement on Cyprus, although
he admitted it would be difficult. Several others speculated
that concern about Cyprus would get lost in December 2004
amid concerns about an EU Constitution and the recent
admission of 10 new members. Nor is there unanimity among
Ankara's EU diplomats on the criteria the EU will use in
December 2004 to determine whether Turkey's performance on
Cyprus is satisfactory. Several recognized that, because the
Cyprus question is not formally part of the political
criteria, EU language on Cyprus is vague. However, they
agreed that once the settlement process appears
"irreversible", Turkey will have cleared the EU's Cyprus bar.


MFA Election Readout


¶5. (C) According to the UK Political Counselor, Turkish MFA
U/S Ziyal and Deputy U/S Ilkin gave their election readouts
to visiting UK Foreign Office Permanent U/S Jay on December
¶15. MFA spent much of the meeting asserting that the
election in the North were free and fair. Ziyal averred that
he had personally instructed Turkey's "Embassy" in the "TRNC"
and Turkish military on the island not to interfere. The
British side noted that NGOs had raised questions about
fairness; the Turks charged that the NGOs were biased against
the government parties and had given money to the opposition.




¶6. (C) Ziyal and Ilkin said they hope for a broad-based
coalition government that will avoid past divisions. The GOT
wants to be able to come to a solution without worrying about
accusations of a sellout (of Denktash and Turkish honor) from
important, disgruntled factions outside the AK government.
U/S Ziyal interpreted the elections as showing that Turkish
Cypriots are ready for a settlement, but not at any price.
Turkey's Parliament will not settle for just anything, and
the opposition Republican People's Party (CHP) will ratchet
up its rhetoric, he predicted. The government will have to
expend much political capital to get a settlement approved.
Another MFA official added that the AK government's
calculations could be influenced by Turkey's March 28 local
elections; according to the UK political counselor, the other
Turkish officials quickly cut him off.


GOT Timeline for a Settlement

¶7. (S) Ilkin reviewed the GOT's envisioned timeline, as he
had with Ambassadors Edelman and Westmacott on December 12
(reftel): the GOT will begin talks with Denktash in January,
with an eye toward opening talks with the Greek Cypriots in
the beginning of February. The GOT hopes for an agreed
statement of basic principles and a basic government
structure in place by late April. The GOT does not think it
can finalize all aspects of the negotiations by May 1, but
thinks it can have the basic settlement outline in place,
Ilkin asserted. The GOT is amenable in principle to a
referendum on the results of negotiations, but will not agree
to a referendum without knowing what the text will be. Ilkin
appealed to the British for help in pressuring the Greek
Cypriot side once Turkey tables its proposal.


¶8. (C) Comment: Despite the clear sense that the ball is
now in Ankara's court to make the next move toward a
settlement, there is currently no public consensus about what
constitutes an acceptable settlement. The GOT, relying to an
extent on the expertise of MFA officials who themselves are
in search of a way to break out of the 29-year stasis, wants
a proposal that garners a degree of consensus. It has not
yet fleshed one out. The lack of a clear plan is also due to
entrenched opposition to a settlement from parts of the
Turkish establishment which have enjoyed a cozy, mutually
beneficial material relationship with Denktash. In any case,
P.M. Erdogan will face a major leadership challenge in
convincing the public to accept compromises on a question
that for decades has been a hot button for Turkey's strong
nationalism. End Comment.
EDELMAN

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(C) The Ambassador formally delivered to Erdogan a letter
from President Bush concerning the PM's U.S. visit and
Cyprus. The Embassy delivered the letter informally in
advance of Erdogan's December 30 briefing on the MFA Cyprus
plan. Erdogan said the letter was constructive and had been
a useful element in his exchange with the MFA. He noted that
since coming to power in the November 2002 elections, the GOT
has consistently supported negotiations based on the Annan
plan, and he said that continues to be the goal. Elements of
the Turkish State agreed that negotiations on the basis of
the Annan Plan need to resume as soon as possible, but
internal discussions on details of the approach are
continuing. After a "TRNC" government is established the GOT
wants negotiations to resume quickly. It might be necessary
to hold another summit with the "TRNC" leadership in Turkey
to move the initiative forward.

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C o n f i d e n t i a l section 01 of 04 ankara 000348

Sipdis

E.o. 12958: decl: 01/07/2014 Tags: prel, pgov, pins, tu Subject: turkish p.m. Erdogan goes to washington: how strong a leader in the face of strong challenges?

(U) Classified by Ambassador Eric Edelman; reasons: 1.5 (b,d).

¶1. (C) Summary: P.M. Erdogan expects Washington to focus on Cyprus, economic reform, and anti-terrorism cooperation among other issues. In turn he will press for (1) concrete U.S. actions to block what Turks believe is the formation by accretion of a de facto Kurdish state in n. Iraq; (2) concrete U.S. actions against the PKK in Iraq; and (3) clear USG support for his government. While the Turkish side sees the visit as mainly about developing our broad common strategy, Erdogan is also looking for a public outcome he can characterize as concrete results. At the same time, although Erdogan is currently unchallenged as the paramount political figure in Turkey, he and his party face deep challenges which, if he cannot rise to them, will affect his longevity in government, Turkey's democratic development, and U.S.-Turkish cooperation. End summary.

¶2. (C) P.M. Erdogan appears to be riding a political high and uncommon luck as he prepares for his Jan. 28-29 visit to Washington, where he hopes to demonstrate the Administration recognizes him as an equal partner.

¶3. (C) Erdogan has been primed to hear plainspoken expressions of U.S. interest in Turkish action (1) to reach a Cyprus settlement by May 1; (2) to hew to credible economic reform and macro policies; (3) to cooperate unreservedly against terrorist groups of all stripes, including Islamist ones (he rejects the term “Islamic terrorism”); (4) to cooperate on Iraq; (5) to open the border with Armenia; and (6) to reopen the Ecumenical Patriarchate's Halki seminary in a way acceptable to the Patriarchate.

¶4. (C) In turn Erdogan will argue that raising U.S.-Turkish relations to a higher level depends directly on (1) clear USG political and diplomatic actions to dispel the conviction and consequent resentment among Turks of all political stripes that the U.S. is tolerating step-by-step formation of a de facto independent Kurdish state in northern Iraq; (2) concrete USG actions to remove the PKK threat from Iraq; (3) high-level, sustained USG support for the GOT's new Cyprus initiative; and (4) the clearest possible signal that the U.S. stands behind the democratically-elected government.

Who are we dealing with?

¶5. (C) Charismatic, and possessing a common touch and phenomenal memory for faces and functions of thousands of party members across the country, Erdogan has a strong pragmatic core. His pragmatism has led him away from the radical Islamist milieu of his past, a point noted to us unhappily by his (radical) former spiritual leader Kemal Hoca. His pragmatism has also led him to avoid precipitously pushing Islamic agenda items such as the wearing of Islamist headscarves while using his outstanding preacher skills and persona as someone persecuted by the secularist Establishment to maintain his hold on the hearts of his more religious supporters.

¶6. (C) In short, a natural politician, Erdogan has a common touch and an ability to communicate his empathy for the plight and aspirations of the common citizen. He projects the image of the Tribune of Anatolia, ready to take on corruption and privilege and to defend conservative traditions. As a result his AK Party won a two-thirds parliamentary majority in Nov. 2002 national elections. Owing to AK's image as the party of change at the national level, good record in providing services at the municipal level, and lack of viable political alternatives, AK could gain around 50% of the vote in March 28 nationwide local elections. Party insiders project that such a result would give AK control of 65% or more of the 3,200 municipalities in Turkey, including probably Istanbul and Ankara and perhaps even Izmir, where AK has not done well to date, plus most of the other large cities. Every step by the Turkish Establishment to try to diminish him – whether by blocking legislation or attacking his motives – cements his popularity in Turkey's urban sprawls and across the Anatolian heartland. While opposition to him remains bitter in various loci of the State apparatus, Erdogan currently faces no credible political opponent or party.

¶7. (C) Moreover, Erdogan knows his government has gained credit well beyond AK supporters, as well as in the EU, for political reforms which, if fully implemented, will substantially strengthen democracy in Turkey. His government's inability to pass legislation or regulations favored by AK supporters – land registry reform, Supreme Education Board (YOK) reform, Koran course reform – has not eroded support. Indeed, even right-of-center Turks who remain wary of AK readily tell us the Establishment's opposition to such reforms is counterproductive. Even if one can attribute Turkey's lowest inflation and interest rates in 30 years to luck, Central Bank skill, and global emerging market trends rather than to the AK government's actions, Erdogan has reaped the political benefit.

¶8. (C) Taking a high-profile approach in pursuing Turkey's EU candidacy through direct campaigning in EU capitals, Erdogan has relished being feted by EU leaders for the past year. He will have had positive visits by EU Commission President Prodi and German FonMin Fischer before his Washington trip and looks forward to the February visit by German Chancellor Schroeder. He sees himself at this point as one of (if not the) most important leaders of the Muslim world. Erdogan's view of relations with the u.s.

¶9. (C) Erdogan recognizes that U.S. support can be important for Turkey's economy and EU aspirations. He sees his task as managing Turks's ambivalence toward us; at the same time he wants to avoid being labeled pro-American. From the low point in bilateral relations in March 2003 he has taken several supportive steps, while being careful not to be too closely associated with us since opening Turkish airspace for the Iraq war. Erdogan agreed to a ground line of communication for Coalition forces in Iraq. He pushed through authorization for a Turkish deployment in support of the Coalition. He agreed to U.S. troop rotation through Incirlik airbase. In line with long-standing U.S. desires, he took a bold step in Nov. 2002 to try to move Turkey away from its no-solution stance on Cyprus and may be prepared now to do more. He seems to be more open than any previous Prime Minister to a re-opening of the Ecumenical Patriarchate's Halki seminary.

¶10. (C) On the other hand he has made public his discomfort with what most fellow Turks also see as American complicity in creation of a de facto independent Kurdistan in northern Iraq and lack of concrete U.S. action against the PKK/KADEK/KHK. He has not controlled anti-American suspicions among the AK parliamentary group or within the Cabinet (DefMin Gonul told us recently on the margins of a symposium in Istanbul that in closed meetings FonMin Gul continues to praise the Parliament's March 1, 2003 turndown of U.S. deployment and to advocate a more Arab/Islamic foreign policy orientation as a counter to relations with the U.S.). Nevertheless, Erdogan and Ministers like Gonul and Justice Minister Cicek see U.S. support for his government as essential to his survival, and he wants a successful visit.

The deeper challenges for erdogan

¶11. (C) Erdogan, AK, and his government face half a dozen serious domestic challenges which, if he does not manage them well, will begin to put a severe strain on his ability to govern by late 2004 and on his and our ability to maintain dynamic, deep U.S.-Turkish cooperation:

–Erdogan's character: Erdogan has traits which render him seriously vulnerable to miscalculating the political dynamic, especially in foreign affairs, and vulnerable to attacks by those who would disrupt his equilibrium. First, overbearing pride. Second, unbridled ambition stemming from the belief God has anointed him to lead Turkey (Mustafa Bilginer, a close confidant of Erdogan and his wife Emine from 1997-2003, has analyzed this trait in a draft book on Erdogan's character; Erdogan used Koranic allusion in his speech to the AK Congress in Oct. 2003 to make the point about his God-appointed mission). Third, an authoritarian loner streak which prevents growth of a circle of strong and skillful advisors, a broad flow of fresh information to him, or development of effective communications among the party headquarters, government, and parliamentary group. This streak also makes him exceptionally thin-skinned. Fourth, an overweening desire to stay in power which, despite his macho image, renders him fearful and prone to temporizing even at moments which call for swift and resolute decisions. Fifth, a distrust of women which manifests itself not only in occasional harsh public comments but also in his unwillingness to give women any meaningful decision-making authority in AK.

–Rival centers of power: Cabinet Ministers, Erdogan advisors and a raft of M.P.s constantly tell us of the tensions between Erdogan and Gul, with the latter appearing repeatedly to try to undercut Erdogan. Parliamentary Speaker Bulent Arinc, who has a strong following among more Islamist AK M.P.s, has also caused problems for Erdogan on controversial questions like pushing the right to wear headscarves at State functions. Although Arinc has kept a low profile for the past seven months, he remains a locus of troublemaking, especially on questions involving the U.S. (e.g., troop rotation through Incirlik).

–Lack of technocratic depth: While some AK appointees appear to be capable of learning on the job, others are incompetent or seem to be pursuing private or lodge (cemaat) interests. AK is far from bringing the bureaucracy under control or making it work efficiently. We hear constant anecdotal evidence, not only from those on the secularist left who have deep prejudices against AK but also from contacts on the right, that AK appointees, at the national and provincial levels, are incompetent or narrow-minded Islamists. AK officials – from Cabinet Ministers to local-level party activists across the country – admit to us that the party's choice of competent and broadly acceptable candidates for the March local elections will be exceptionally difficult and the election of controversial or inept AK candidates would complicate AK's ability to govern both at the local and national level.

–Weakness of public relations and the image of hidden agendas: Erdogan lacks advisors who are able to pre-empt or handle the news cycle; none of his advisors has good working relations with the Turkish military. His government has failed continually to consult broadly and openly or to prepare public opinion for legislative initiatives, long-overdue reforms, or foreign policy steps (e.g., pre-war U.S. troop deployment or troop rotation). As a result AK creates the impression, exploited by the Establishment, that it harbors an anti-republican, deep Islamist agenda or is selling out the country, leading to Establishment (dis)information campaigns which cause the government to retreat.

–Corruption: AK rode to power on the common citizen's revulsion against corruption. Charges that Erdogan amassed his fortune through kickbacks as mayor of Istanbul have never been proven but we now hear more and more from insiders that close advisors such as private secretary Hikmet Bulduk, Mucahit Arslan, and Cuneyd Zapsu are engaging in wholesale influence peddling. xxxxx that Erdogan and he benefited “directly” from the award of the Tupras (state petroleum refinery) privatization to a consortium including a Russian partner. Erdogan's direct acquisition of a significant interest in a food distribution company has become a public controversy.

–Islamist complexes and prejudices: Some appointments, such as Prime Ministry Undersecretary Dincer (who stands by his 1995 article calling into question the relevance of the Republic), Education Ministry Undersecretary Birinci (who in the past called himself an “ummetci”, i.e., a follower of a greater Islamic order and an opponent of the Republic), and head of State-run Turkish Radio and Television Demiroz (who once paid homage to Afghan fundamentalist Hekmatyar), have made the core of the State Establishment – Armed Forces, Presidency, and Judiciary – profoundly uneasy. Erdogan's refusal to condemn these positions, the question of the level of influence of Islamic brotherhoods and groups (including the followers of Fethullah Gulen) on the government, and the presence of Turkish Hizbullah supporters in AK Party provincial structures in the Southeast have also raised deep concerns among many long-standing Embassy contacts who themselves are pious. Erdogan himself recognizes the pernicious effect of a “closed brotherhood mentality” (cemaatcilik) in political affairs, as reflected in his Jan. 10 speech to a symposium in Istanbul, but how well he can control the phenomenon remains a very open question.

Comment

¶12. (C) As Erdogan rides the twin desires for reform in Turkey and for wider prosperity, he challenges those who have traditionally reserved power and wealth for themselves at least to yield pride of place to a different elite. While his ultimate direction and success remain to be seen, at this time Erdogan is the only partner capable of advancing toward the U.S. vision of a successful, democratic Turkey integrated into Europe. Edelman

http://wikileaks.org/cable/2004/01/04ANKARA348.html

[boomerang]

who said mighty turkey doesn't need the eu?

UNCLAS SECTION 01 OF 02 ANKARA 000881

SIPDIS


SENSITIVE


STATE FOR EB/IFD, EUR/SE
TREASURY FOR OASIA - JLEICHTER AND MMILLS
NSC FOR BRYZA AND MCKIBBEN


E.O. 12958: N/A
TAGS: EFIN ECON TU
SUBJECT: TURKISH MARKETS RALLY ON HOPES FOR A CYPRUS
SOLUTION


¶1. (U) Summary: Turkish markets, especially the stock
exchange, have soared this week on the encouraging news out
of New York regarding Cyprus. Turkish markets attach
particular importance to the Cyprus issue because it is
linked to Turkey's EU accession prospects. As of mid-day
Friday, Turkish equity markets had risen 13 percent this
week. End Summary.


Markets Soar...
------------


¶2. (Sbu) Turkish financial markets have soared this week on
the encouraging news on the Cyprus discussions at the U.N.
As of mid-day Friday, the IMKB 100 stock exchange index had
risen 13 percent this week, from 16,965.83 at last Friday's
close to 19,098.69 in mid-day trading Friday. The
lira--already strong in recent weeks--has also resumed its
appreciation, strengthening from TL 1.334 million at last
Friday's close to TL 1.317 at mid-day Friday, the 13th. The
Euro rally against the dollar exaggerates the lira/dollar
appreciation, but even against the Euro, the lira has risen
slightly from TL 1.696 to TL 1.691 during the same period.
In the government securities market, Turkish Eurobonds have
rallied but the benchmark domestic government bond's interest
rate has eased only modestly from 24.76 percent at last
Friday's close to 24.27 percent mid-day on the 13th.


...On Better-than-Expected news on Cyprus Talks
--------------------------------------------- --


¶3. (Sbu) Turkish markets have a tendency both to be volatile
and to pay particular heed to geo-political developments,
viewing the extent of international (EU, U.S., IFI) support
as critical to Turkey's financial prospects. In the case of
the Cyprus negotiations, the link to Turkey's economic and
financial health is particularly close because EU leaders
have stated that a Cyprus solution--while not an explicit
condition--will facilitate Turkey getting a date for EU
accession negotiations. What was particularly cheering for
markets about this week's developments was: a) the New York
talks went better than expected, and b) the Turkish side was
seen as less obstructionist than anticipated. Note that
Istanbul analysts have told econoffs that the market
expectation was either for no progress on Cyprus or very
little.


Stock market rises far more than Fixed Income Market
--------------------------------------------- -------


¶4. (Sbu) Though the fixed income market benefited from the
rally, the rise was far more pronounced in equities. Post
contacts divide into two schools of thought on this. One
perennially skeptical long-time Istanbul market-watcher
attributed the dramatic rise to manipulation by the handful
of market-makers in stocks. According to this contact, this
small group tried to spark a rally in early January but had
to retreat, and is now taking advantage of the good news on
Cyprus to run the market beyond where valuations would
justify. To an extent, this tracks with economist Guven
Sak's comment to Econcouns that the U.S. war in Iraq and
prospects for EU accession have meant that Turkish financial
markets no longer reflect economic fundamentals, but are
being driven in part by moral hazard. Central Bank Governor
Serdengecti has also made similar comments.


¶5. (Sbu) The other school of thought is that prospects for
Turkish financial markets are strong through at least this
summer, and that the preferred "Turkey play" is equities.
Both a visiting American hedge fund investor and an Istanbul
financial analyst have told econoff that equities are
preferable because they hold more upside potential whereas
debt instruments can't appreciate too much further in the
near term. The financial analyst said the most optimistic
scenario would only have the benchmark interest rate falling
to around 20 percent in the next couple of months, whereas
stocks could rise another 15 percent or so.


¶6. (Sbu) Interest rates in the domestic fixed income market
may also be bumping up against the floor created by Central
Bank rates. Several analysts and officials have told us the
only way government securities are able to trade so far below
the Central Bank's 27 percent overnight rate is that
banks--the primary holders of government securities--are
betting on rate cuts in the coming months; otherwise they
will have a "negative carry," i.e. their funding costs will
exceed the interest earned. The markets began expecting a
Central Bank rate cut in November, however, the Central Bank
has been reluctant to cut rates in the face of doubts about
the GOT's commitment to fiscal restraint. Last week, faced
with better-than-expected inflation numbers for January, the
Central Bank finally announced a grudging 200-basis point cut
but warned about the need for fiscal restraint. Many
analysts expect further cuts if and when the IMF and GOT
reach agreement on the Seventh Review and a package of fiscal
measures to cover the projected 2004 shortfall.


¶7. (Sbu) It was not clear how much of the rally stemmed from
foreign buying, though foreign inflows were certainly a
factor. A central bank official told econ specialist at
least $250 million flowed into the Turkish market this week,
particularly on Tuesday and Wednesday. Given that the lira
strengthened despite strong demand for foreign exchange from
Turkish oil importers BOTAS and TUPRAS, the central bank
official suspects there may have been as much as $500 million
coming into Turkish lira this week.


Non-Cyprus news mixed this week:
-------------------------------


¶8. (Sbu) Aside from Cyprus, other news this week would
normally have been a negative for the markets. One of the
few privatization deals that looked like it might actually go
through--the sale of the Tupras oil refinery--began to look
dicier this week. The minority shareholders in Tatneft, the
Russian oil company whose German-based affiliate Efremov
Kautschuk Gmbh leads the consortium buying Tupras, have
threatened to sue Tatneft, citing financial problems arising
from the Tupras purchase. Separately, Central Bank Vice
Governor Sukru Binay recently pointed out to econoffs that
Tatneft's local partner, the Zorlu Group, has companies that
are de facto bankrupt participants in the World
Bank-sponsored "Istanbul Approach" debt workout process.
Though the Tupras sale is still expected to go through,
worries have increased over the financial wherewithal of the
buyers.


¶9. (Sbu) Also negative for Turkish markets was the news that
the influential U.S. investment fund, CALPERS, announced that
it had cut Turkey, along with Argentina and Peru, from its
list of emerging markets in which it would invest. According
to CALPERS methodology, Turkey scored poorly on human rights
and accounting standards, among other criteria.
¶10. (Sbu) One bit of good news for markets was the--still
unconfirmed--report that the IMF Seventh Review mission would
return to Turkey next week. Since the press report of the
IMF return first appeared late Thursday, after the big
Wednesday-Thursday rally, this news was too late to be a
factor.
EDELMAN

http://wikileaks.org/cable/2004/02/04ANKARA881.html