Office of the Historian

811.20 Defense (M) Turkey/849: Telegram

The Chargé in Turkey (Kelley) to the Secretary of State

Ankara, November 5, 1943—4 p.m.
[Received November 67:19 a.m.]

1810. Department’s 835, October 15. The views of my British colleague and myself regarding the economic problems which Turkey will face when it no longer has either an Axis or a productive [preclusive] market are as follows:

1.
We still hold the opinion that the cessation of “unauthorized” purchases alone would have but slight effect on Turkish economy. If, however, the cessation of all [preemptive?] purchasing (both authorized and unauthorized) occurred simultaneously with the loss to Turkey of her Axis markets and supplies we believe that the result would be the profound disorganization of Turkish economy. It would mean the loss of probably 75% of her foreign markets for which particularly in view of the high prices of Turkish products there would be no obvious alternatives.
2.
The necessity of finding new markets for their export surpluses would confront the Turks with the serious problem of adjusting their production costs to world levels in order to render competitive their export prices which thanks to belligerent competition have reached their present inflated level. Even granted Turkish willingness to deflate or devalue the adjustment could only be made gradually and in the interim period their products would be commercially unsalable. For example, the possibility of their disposing in the Middle East of their exportable surplus of oil seeds would depend on their ability to bring down the average export price from 100 to 35 pounds sterling per ton. Which case is typical.
3.
We agree that purchases by the United Nations, e.g., for the Middle East and for relief would probably be the only solution but since Turkish production costs could not be suddenly reduced to conform with the United Nations price level this solution would require the Allies to make up the difference between the price in Turkey and the sales price abroad. So far the Turkish Government has shown no signs of having any policy to cope with the situation. In the [Page 1150] course of recent negotiations for the sale to the British of dried fruits and mohair, etc., Turkish officials far from recognizing the danger of excessive inflation showed great eagerness to obtain even higher prices. We would point out that even in the unlikely event of Turkish willingness to bring about a reduction of prices their means and ability to do so are doubtful except by the abolition of export and certain other taxes.
4.
It should also be remembered that only certain Turkish products, i.e., foodstuffs could be absorbed in the Middle East for relief. Markets for other commodities such as industrial raw materials and minerals could presumably be found only outside that area.

My British colleague has sent a similar telegram to London.

Kelley