840.51 Frozen Credits/781: Telegram

The Ambassador in Turkey (MacMurray) to the Secretary of State

177. Department’s 78, October 21, 7 p.m. Foreign Office states that under the Turkish-Rumanian agreement of September 26, last, Turkey is to deliver to Rumania cotton to a maximum amount of 12,000 tons against petroleum products of an equivalent value to be furnished by Rumania. Rumania is obliged to pay for the cotton in dollars which will be deposited in a special account in the Turkish Central Bank and used for the payment of the petroleum products delivered by Rumania. Upon inquiry being made why provision was not made for an exchange of specified amounts of these products without payment in free exchange, the Embassy was informed that such an arrangement had been tried before and had not worked.

Foreign Office states frankly that it realizes that some of the cotton exported to Rumania may find its way to Germany. It is convinced, however, in view of the great need of cotton in Rumania that any such amount would be small. (Turks estimate minimum needs of Rumanian cotton mills at approximately 20,000 tons annually and usual sources of supply—Egypt and the United States—are not available.) While there is a provision in the agreement requiring clearance of the cotton through the customs, there is no stipulation prohibiting re-exportation. The cotton will be delivered in a series of shipments and a second shipment will not be made until Rumania has furnished petroleum products. Foreign Office emphasizes that Turkey was obliged to agree to deliver cotton to Rumania in order to obtain petroleum products which Turkey greatly needs and cannot at present readily obtain elsewhere. Rumania was willing to deliver such products only if Turkey furnished cotton.

The Foreign Office states that 3,100 tons of cotton are now being prepared for shipment to Rumania of a value of between $1,400,000 and $1,500,000.