811.20 Defense (M) Turkey/463: Telegram

The Secretary of State to the Ambassador in the United Kingdom ( Winant )

3008. USCCO 4008. Your 2385, April 3.

We are currently considering the details of the proposal contained in reference cable and in Embassy’s 2453, April 8; 2932, April 28; 2380, April 3.29 Before replying, however, we are awaiting clarification of recent cables from Ankara regarding allocations and Turkish attitude towards unofficial purchasing.
Department and Board of Economic Warfare are of opinion that only absolute embargoes on export of all strategic commodities from Turkey assure effective preemption. However, in view of fact that the Turkish Government seems now unwilling to go to such lengths, we agree that we must proceed for present with preemptive purchasing operations.
We agree in principle with statement in paragraph 3 of cable of reference that the success of our preemptive program depends considerably upon cooperation of Turkish Government. We are pleased that the Preemption Committee now suggests that it is desirable (a) to give broad latitude for action to our representatives in Turkey, and (b) to embark upon unofficial purchases whenever the Embassies agree that our objective cannot be accomplished of official purchases [Page 1129] alone and that such a policy can be pursued without endangering political relations with the Turks. We welcome the acceptance of these principles as steps in direction of flexibility and greater effectiveness of our preemptive program. Department and BEW have been guided by these principles for some months. Our Ambassador has had complete freedom to act under directives issued here, has a discretionary fund at his disposal, and is authorized to purchase unofficially. This authority does not apply to items on the British side of the joint program.
In connection with your paragraph 6, we realize that many of our operations have the corollary effect of aggravating the inflationary tendencies in the Turkish economy. We agree with the Preemption Committee that this result is to be deplored; except in the case of hazelnuts, it is the consequence of no deliberate intention on our part. In fact our preclusive operations are in commodities produced exclusively or partly for the export trade, and not in commodities consumed entirely in Turkey. Consequently we are generally not in competition with domestic consumers. Even so, of course, there is a recognizable hardship involved in the indirect raising of the price level. Whenever necessary and possible, we have tried to lessen the hardship by reselling our purchases to the Turks under conditions guaranteed to prevent their movement to the Axis. We have never issued directives without the advice and generally the approval of the Ambassador, and we have relied upon him to warn us of any deleterious effects which preclusive operations might have on the Turkish economy or of possible political repercussions.
With reference to paragraph 6, we wish to call attention to a misunderstanding regarding the nature of disruptive operations. The United States is engaged in three types of preemptive purchasing operations in Turkey:
Planned efforts to seek out and deplete Turkish markets of the total exportable surplus of a given commodity.
Spot purchases consisting of efforts to buy up particular stocks of a commodity (less than the total export surplus) in which the Axis seems for the moment to be interested.
Disruptive, designed to raise the price of a commodity with the fewest possible purchases, in order to increase Axis exchange difficulties and thereby to interfere with or prevent Axis purchases.
With regard to disruptive purchases, the United States has engaged in this type of operation only in the case of hazelnuts and then at the recommendation of the American Ambassador. The operation was considered experimental. Reports indicate that the operation has stopped German purchases so far. The general effectiveness of such an operation, however, is still to be demonstrated.
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