Foreign Relations of the United States: Diplomatic Papers, 1943, The Near East and Africa, Volume IV

811.20 Defense (M) Turkey/289: Telegram

The Chargé in the United Kingdom (Matthews) to the Secretary of State

London, January 27, 1943.
[Received January 27—7:30 p.m.]

698. For Department and Board of Economic Warfare. British have received telegram from UKCC⁵ Istanbul stating that an application will be made to Minister of Commerce for 2,000 tons valex and 10,000 tons valonia to be delivered between February and September 1943. UKCC warns that prices, which will have to be negotiated with the berlik,⁶ may be as much as 50 percent higher than prices paid for same commodities last year. It is understood that Germany is to receive at fixed export prices sterling T800,000 of valonia and sterling T400,000 of extract under Clodius Agreement.⁷ It is estimated that suppliers of valonia and valex will suffer a loss of approximately 25 percent on market prices now ruling. As compensation they will be allowed to sell to other countries at whatever prices can be obtained.

Preliminary view is here that this extortion cannot be countenanced. Recently British were informed by the Turks that higher prices would have to be paid for dried fruits because of increases in cost of production in spite of fact that a lower price had been fixed by contract. There is evidence that Germany has in Turkey several thousand tons of valonia and valex which had not been completely paid for, due to shortage of funds arising out of failure to deliver quantities promised in Clodius Agreement. Since there is no prospect that Germany can move in immediate future even those quantities promised under Clodius Agreement, it is felt here that we are not under immediate pressure to agree to purchase valonia and valex at excessively high prices. Ministry of Economic Warfare intends to discuss matter with Foreign Office with a view to making diplomatic representations to Turkish Government. Embassy would appreciate your views.

Matthews

5. United Kingdom Commercial Corporation.
6. Turkish for union or cooperative.
7. Commercial agreement between Germany and Turkey signed at Ankara, October 9, 1941. Dr. Carl Clodius was head of the German trade delegation that negotiated the agreement, which became the basis for all subsequent economic relations between the two countries. For summary of this agreement, see telegram No. 388, October 17, 1941, from the Ambassador in Turkey, Foreign Relations, 1941, vol. iii, p. 964; a supplementary agreement was signed at Ankara June 12, 1942.