This record is a partial extract of the original cable. The full text of the original cable is not available.
081413Z Jan 04
UNCLAS SECTION 01 OF 02 ANKARA 000114
SIPDIS
SENSITIVE
STATE FOR E, EB/IFD/ODF, AND EUR/SE
STATE PASS EXIMBANK FOR FOLEY/TUMMINIA/ELLIS
NSC FOR MBRYZA AND TMCKIBBEN
TREASURY FOR OASIA - MMILLS AND JLEICHTER
E.O. 12958: N/A
TAGS: EFIN BEXP ETRD TU IZ
SUBJECT: TURKISH EXIMBANK SEEKING GOT APPROVALS FOR TRADE
CREDIT TO IRAQ; EAGER TO COOPERATE WITH U.S. EXIMBANK
1. (Sbu) Summary: In a meeting with a U.S. Eximbank
official, Turkish Eximbank President Kilicoglu expressed
strong determination to establish a credit facility for the
Trade Bank of Iraq, but said he first had to obtain approval
from a cabinet-level committee, which might take until
February. Kilicioglu was also keen to establish a framework
for co-financing with U.S. Exim--a topic that could be woven
into Prime Minister Erdogan's Washington visit. Separately,
U.S. Exim met with the Turkish Development Bank, with both
sides agreeing to pursue the possibility of a credit
guarantee facility to cover U.S. exports to Turkish
companies. End Summary.
2. (Sbu) U.S. Eximbank officials Ray Ellis and Paul Tumminia,
in Ankara for the FCS-organized Iraq reconstruction
presentations to the Turkish business community, also held
meetings with the Turkish Eximbank and the Turkish
Development Bank.
Trade Bank of Iraq Facility:
---------------------------
3. (Sbu) U.S. Eximbank Senior Relationship Manager Raymond
Ellis, accompanied by econoffs, met with Turkish Eximbank
President Ahmed Kilicoglu, Vice President Alev Arkan, and
representatives from MFA and the Foreign Trade
Undersecretariat. Ellis briefed on U.S. Eximbank's progress
in establishing a short-term credit facility for the Trade
Bank of Iraq (TBI) as well as on progress in encouraging
other Export Credit Agencies (ECA's) to set up similar
facilities. Ellis provided a copy of the Framework Agreement
between ECA's at the recent meeting in Rome. Though he did
not say so explicitly, Kilicoglu clearly regretted that
Turkish Exim was not included in the Rome meeting. Kilicoglu
asserted that his institution has been working on setting up
a similar facility, though he would not specify a dollar
amount under consideration. He and Arkan admitted they had
not yet established any contacts with the TBI. Kilicioglu
was frustrated about the lack of coordination within the GOT
on this issue. He characterized comments by officials from
other government agencies that the U.S. should somehow
counter-guarantee a Turkish Eximbank facility to Iraq as
"nonsense" and a "waste of time."
4. (Sbu) According to Kilicoglu, he very much wants to set up
a TBI facility similar to U.S. Exim's, saying "we need to do
it, we have to do it." He explained that, in order to do so,
he would have to incorporate the facility in his 2004 lending
program. This program has to be approved by the Turkish
Treasury and requires Turkish Exim's board approval, though
Kilicoglu said that could happen quickly. Finally, the
program has to be approved by a cabinet-level interagency
committee, chaired by Foreign Trade Minister Tuzmen, and
including Industry Minister Coskun, Central Bank Governor
Serdengecti, and Treasury U/S Canakci. This might not happen
until late February, but Kilicoglu vowed to push for rapid
approval.
5. (Sbu) Vice President Arkan asked a number of technical
questions about the U.S. facility, and pointed out that
Akbank, the Turkish bank in the TBI consortium, would not be
confirming letters of credit for the TBI, only advising.
However, Arkan said that, once the facility is in place,
Turkish Exim would provide insurance cover to Turkish
exporters on TBI-issued L/C's.
6. (Sbu) Comment: Post has been pushing--and will continue to
push--for Turkey to establish this kind of trade credit
facility to Iraq. End Comment.
Co-financing with U.S. Eximbank:
-------------------------------
7. (Sbu) Aside from the short-term trade financing facility
for Iraq, Kilicoglu raised the possibility of broader
cooperation between U.S. and Turkish Eximbanks, covering
co-financing of medium-term transactions and not limited to
Iraq. Kilicoglu pointed out that Turkish contractors are
very active in Central Asia, and often team up with U.S.
companies, yet financing is a major constraint. Turkish
companies have even established U.S. offices in order to
avail themselves of U.S. Eximbank financing.
8. (Sbu) Ellis noted that U.S. Eximbank enters into
co-financing arrangements with other Export Credit Agencies
and has framework agreements with ECGD of the UK and EDC of
Canada. Ellis undertook to discuss the idea with U.S.
Exim,s co-financing task force and send Kilicoglu
documentation about a possible arrangement.
9. (Sbu) Ellis pointed out that U.S. Exim preferred to lead
such co-financings, to which Kilicoglu heartily agreed for a
variety of reasons: U.S. Exim is larger and stronger and more
experienced with co-financing and would carry more weight
with commercial banks.
10. (Sbu) Comment: Kilicioglu seemed very keen on the idea of
co-financing with U.S. Eximbank. If U.S. Eximbank agrees to
pursue this idea with its Turkish counterpart, though it may
be premature to include as a ,8 Washington
agencies may want to consider weaving this issue into Prime
Minister Erdogan,s Washington visit in some fashion. End
Comment.
Turkish Development Bank - Possible Credit Guarantee Facility:
--------------------------------------------- ----------------
11. (Sbu) In a separate meeting with the Turkish Development
Bank (TDB), Ellis and fellow Eximbanker Paul Tumminia,
explored the possibility of a Credit Guarantee Facility (CGF)
that TDB could use to on-lend to Turkish importers of U.S.
goods. The facility would have to be at least USD 10
million, with transactions under it as small as USD 50,000.
In order to establish the facility, the Turkish Development
Bank would have to provide evidence that there would be
demand.
12. (Sbu) TDB General Manager Taci Bayhan and his staff
seemed quite interested: after they learned the details of
Exim's CGF, they said they had similar facilities from SACE
of Italy and KFW of Germany. Ellis and Tumminia agreed to
send TDB written information on the CGF structure after which
TDB would provide evidence of potential demand.
DEUTSCH