Memorandum of Conversation, by the Assistant Chief of the Division of Near Eastern Affairs (Jones)

The Turkish Ambassador called on Mr. Henderson today at 3 p.m. by appointment. Anticipating that he would wish to talk about the proposed loan to Turkey, Mr. Henderson had earlier in the day asked Mr. Luthringer to be present.

The Turkish Ambassador opened the conversation by stating that his plan to go to Mexico to present his credentials had been somewhat altered by instructions from Ankara to return there in the near future on consultation. The Ambassador said that if there was any possibility that the loan to Turkey would be granted during the next two weeks he would delay his departure until early July. He said that if there was no chance of the loan going through in this period he would depart earlier.

Mr. Luthringer explained that technical questions had delayed consideration of the loan to Turkey but that matters have now progressed to a point which might permit a decision on the matter before the Ambassador’s departure. He said that the next step was to obtain the approval of the National Advisory Council. If and when this was obtained Mr. Luthringer thought that the Bank might act promptly.

The Ambassador expressed his thanks and said that on the strength of Mr. Luthringer’s picture of the situation he thought that he would delay his departure until early July. The Ambassador said that the application of the Turkish Government had embraced a number of separate projects and that he now wondered, in the light of the size of the loan which was under consideration, whether the Bank would specify to the Turkish Government the particular project for which the loan should be employed or whether the Turkish Government would be free to decide which of its several projects would receive the benefit of the loan.

Mr. Luthringer said that he did not think that the Turkish Government, in the event a loan was granted, would have any difficulties with the ExImBank on this score.

The Turkish Ambassador then tried to elicit from Mr. Luthringer a statement regarding the interest rate which would be charged. Mr. Luthringer explained that there were several categories of ExImBank loans and credits, each of which had different periods and different interest rates. The Turkish Ambassador appeared entirely satisfied, however, when he was told that in the event a loan was granted the Turkish Government would receive equal treatment to that given any other country for the category of loan involved.

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After Mr. Luthringer took his departure the Ambassador again mentioned to Mr. Henderson, as he had done on previous occasions, the difficult position in which the Turkish Government finds itself with regard to this loan. He said that he hoped that we would do anything we could to ease this situation. Mr. Henderson said that we were keeping this aspect of the question very much in mind.

The Ambassador, consulting notes, then asked whether there was anything Mr. Henderson could tell him regarding the prospect for a larger loan in the future. Mr. Henderson said that the Department could give the Ambassador no assurance of any kind in this connection. He explained to the Ambassador that the trend in the Department was away from Export-Import Bank loans for development. The United States being the largest contributor to the International Bank greatly desired to see the Bank a going concern which would handle all such loans on a world basis. Mr. Henderson quoted the proponents of this theory as believing that if the United States through the ExImBank were to compete with the International Bank in making such loans, the US might be open to the charge that it was employing its economic resources in order to gain political ends.

The Turkish Ambassador said that he could understand this point of view and, expressing his thanks, took his departure.