VZCZCXRO7317
PP RUEHDA
DE RUEHAK #0584 0881224
ZNR UUUUU ZZH
P 281224Z MAR 08
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC PRIORITY 5723
INFO RUCPDOC/USDOC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHIT/AMCONSUL ISTANBUL PRIORITY 4056
RUEHDA/AMCONSUL ADANA PRIORITY 2817
RUEHRC/USDA FAS WASHDC
UNCLAS ANKARA 000584
SIPDIS
DEPT PASS USTR FOR MMOWREY
TREASURY FOR OASIA
USDOC/ITA/MAC/SNAJDI
DEPT PASS EXIM FOR MARGARET KOSTIC
USDA OSEC FOR DEP U/S TERPSTRA
USDA FAS FOR OA YOST; ITP/SHEIKH; FAA/DEVER
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EAGR EINV ETRD TU
SUBJECT: PARLIAMENT PASSES ANOTHER LAW TO SAVE CARGILL'S SWEETENER
PLANT IN TURKEY
1. (SBU) Summary: The Turkish Parliament yesterday passed an
amendment to the Soil Protection and Land Use Law that is intended
to protect several thousand companies from closure, including
Cargill's Orhangazi sweetener plant. This is the third attempt by
the ruling party AKP to give an amnesty to industrial facilities
built on agricultural land without the required licenses. With the
amendment, the companies will have a two-year period to obtain the
missing licenses, during which they may continue to operate.
Although the amendment seems to address the objections listed in
previous court rulings against prior laws intended to protect
Cargill and others, it can provide only limited shelter against more
legal challenges from foreign investment opponents. End Summary.
2. (SBU) On March 26, the Turkish Parliament passed an amendment to
the Soil Protection and Land Use Law, which is being publicly
referred to as the "Cargill Law." The amendment gives amnesty to
industrial facilities built on agricultural land before October 11,
2004 without the required licenses. To benefit from the amnesty,
the companies must apply to the Ministry of Agriculture and Rural
Affairs (MARA) to get the missing licenses within one year of
issuance of this amendment. The industrial facilities may continue
to operate for two years after the issuance of this amendment, while
the companies' license applications are processed. The companies
will also be required to pay a YTL 5 (USD 4) per square meter fee to
the GOT for non-agricultural use of land, and commit not to disrupt
the "integrity of agricultural land."
3. (SBU) This was the fifth attempt by the ruling AKP party to give
an amnesty to industrial facilities built on agricultural land. The
first was in 2004 and required the companies to complete their
licensing within 6 months following issuance of the legislation.
Cargill was unable to benefit from this legislation due to
objections from local administrations and subsequent court rulings.
The GOT passed a second law in 2005 intended to define these
industrial facilities as "Private Industrial Zones." The Council of
State issued a stay order on this law in 2006, which caused
interruptions in operations at the Cargill plant. The AKP then
amended the Soil Protection and Land Use law in 2006, but the
amendment was vetoed by former President Sezer. The amendment was
passed again by the Parliament in 2007, but the Constitutional Court
stopped implementation of the law, arguing that such establishments
harmed the integrity of agricultural land. The latest amendment
addresses the Court's concerns and requires that companies maintain
the integrity of agricultural land as a precondition for amnesty.
4. (SBU) Commenting on the legislation, Cargill representatives
noted that the opposition CHP Party could refer the new amendment to
the Constitutional Court for review. However, the wording of this
amendment is precisely the same as the previous one that the Court
upheld, so the CHP may see no value in asking for another Court
review. However, they expect further challenges during the
permitting process. Regarding permits, Cargill plans first to wait
for the results of their appeal of local court rulings against their
previous permit applications under the 2005 law. If the Danistay
(High Court) rules against Cargill or a decision is not forthcoming,
they will re-apply for permits under the newly amended law.
5. (SBU) Comment: While the stated purpose of the amendment is to
allow over 20,000 industrial facilities built on agricultural land
to continue operation, the vast majority of those companies --
Turkish-owned and operated -- have never been threatened with
closure. Cargill has been singled out by local politicians and
NGOs, who have led the seven-year legal war against a major foreign
investor that made a relatively rare greenfield investment in
Turkey. Although this legislative amendment includes the correct
wording required by the previous Constitutional Court ruling, there
is no guarantee that it will bring the legal warfare to a close.
Cargill's investment symbolizes foreign investment for many FDI
opponents, and they will look for ways to continue the fight. End
Comment.
WILSON