Foreign Relations of the United States, 1948, Western Europe, Volume III

840.50 Recovery/1–1748: Telegram

The Secretary of State to the Embassy in Turkey

confidential

Washington, January 21, 1948.

29. Estimates regarding Turkey’s role in ERP as presented to Congress based on following considerations:

1. Turkey’s general economic position exclusive military factors equal or above pre-war. Hence Turkey itself not faced with economic recovery problem per se. ERP not designed to cover military or economic development problems. Hence Turkey can expect under ERP only allocation of such commodities in short supply as are essential maintenance present level Turk economy or will make a greater contribution to general European recovery if sent to Turkey rather than to other European countries.

2. Chief short supply items tentatively estimated for distribution to Turkey first fifteen months of program starting April are:

(a) $17 million agricultural equipment, $6.8 million to come from U.S., $1.1 million from Canada, $9.1 million from participating countries.

(b) $5.4 million mining equipment, one million from U.S. and $4.4 million from participating countries.

(c) $5 million electrical equipment, two from U.S., three from participants.

(d) $9 million trucks, all from U.S.

(e) $2.7 million freight cars, all from participants.

(f) $14.2 million finished steel, five from U.S., $8.5 million from participants, balance from non-participants.

(g) $12.3 million petroleum products, $7.5 million from U.S., balance from non-participants.

(h) $10 million timber, three from participants, seven from non-participants.

3. Total estimated 15 months imports from U.S. and Western Hemisphere ex freight $58.9 million, total estimated exports $69.8 million, merchandise surplus $10.9 million, deficit on freight and other invisibles $10.1 million. Net surplus $.8 million. Imports from dollar areas ex freight estimated at 1946 rate.

4. Reurtel 41, Jan 15, estimated $140 million surplus with non-participants over entire recovery period recognized as somewhat unrealistic. Anomalies exist in data submitted to Congress for many countries, resulting from certain technical and administrative difficulties arising from magnitude and unprecedented nature of job of reconciling individual and aggregate commodity and balance of payments analyses for 17 countries several areas in short space of time available. Probable reluctance of Turkey to accumulate surpluses of inconvertible currencies recognized, and solution to payments problem being sought, but no commitments can be made Turks at this time pending Congressional developments. It is hoped Turks will export on credit to some extent to aid recovery of European economy with which Turkish economy remains strongly linked.

5. Formula of 25 percent gold reserve against note issue and working capital for current trade was used as very general guide. Considered unreasonable for Turks to add repayment of FRBNY and IMF loans and provision for all imports without allowing for exports. (Urtel 40, Jan 15).¹ Turks should continue to utilize credit sources available to them without burdening ERP appropriations required for countries with no other credit sources. Position of Switzerland, Portugal and Turkey so obviously better than that of other European countries that it was essential to admit distinction before Congress forced issue. For your info, Congress may insist that several countries receive aid only on loan basis.

6. Should be emphasized to Turks that figures presented to Congress are in no way intended to fix actual pattern of program. They have no status as either commitments or rejections. Aid Administrator will have broad discretion. Turks are free to undertake to persuade him that additional items for Turkey will assist general European economy, or that Turkey needs financial aid. Reurtel 47, Jan 17, it is unlikely figures presented to Congress will be changed substantially, since they are for illustrative puropses only, and probably as good as any others for that purpose. Time for decision will be after appropriation of funds and appointment of administrator.

7. Since situation here highly fluid and complex, Emb urged in so far as possible to refer Turks to Washington for explanations. Dept can keep Turk Emb informed of developments and assist presentation Turk views on day to day basis. Please try to convince Turks Ankara that

(a) Turkey’s cooperation in ERP desired.

(b) Turkey’s share under estimated distribution of available items in competion with other states whose need is greater constitutes in itself substantial aid, enabling Turkey to begin modernization agricultural and mining without waiting for all needs of Europe to be satisfied.

(c) U.S. not forgetting Turkey’s military problems and need for economic development, but these must be handled outside ERP.

(d) American opinion re (c) will be influenced by extent to which Turkey cooperates in accomplishment U.S. objective of European recovery, which is also vital to Turkey because of need for healthy Europe for permanent Turkish prosperity.

While ERP is basically political in concept, distribution of funds must necessarily be based on relative needs. If Turkey can demonstate greater relative need flexibility of program will enable administrator to make readjustments. Turks have other sources of credit for economic development as you properly brought out in conversation reported urtel 36, Jan 15. We fully recognize political importance of Turkey and have already invested $100,000,000 as token of confidence.

Marshall

1. Not printed.