867.51/6–749: Telegram

The Ambassador in Turkey (Wadsworth) to the Secretary of State

secret

256. Following message (supplementing mytel 194, April 301) is based on Polk’s2 preliminary review Turk finances. He received ready cooperation Ministers Finance, National Defense, Foreign Affairs, Economics and others.

1.
Turk budget difficulties serious and likely continue so at least three years due combination high expenditures on defense and development programs (under archaic revenue system only now amended for progressive revision beginning 1941 [1949?]).
2.
Probable that government will cut defense budget in 1950 below inadequate 1949 level. Minister National Defense stated his ministry slated bear major part projected total budget reduction circa LT 200 million. This might mean cutting defense budget by some 20 percent present total or almost LT 100 million. Note: Of LT 461 million present budget, 39 percent is needed to maintain 337,000 enlisted men at strikingly low figure of LT 527 per man per year. An additional 35 percent is required for 23,000 officers, 9,000 noncoms and 1,700 civilians. We find little possibility materially reduce expenditures covered by remaining 26 percent.
3.
Current budget, which seems maximum possible present Turk effort, fails provide funds for following vital military needs (round figure estimates based on detailed figures given Polk):
a.
Nonrecurrent expenditure at [LT?] 200 million for new construction (notably airports, ammunition depots, POL storage, training schools and repair shops for transport).
b.
Nonrecurrent expenditure LT 350 million for stocks of food, clothing and oil to support an expanded army in event of war. (Note: this figure is calculated on basis total mobilization of 1,500,000 men.)
c.
Recurrent annual expenditure of additional LT 50 million for maintenance military equipment.
4.
Investigation details of defense budget reveals no significant projected expenditure for non-military matériel imports (unless some $4 million POL can be so considered). Consequently we assume ECA could not under present policy (see Repto circular 190 April 203) [Page 1674]afford any substantial relief. (Note: budget provision for lira expenditures on locally procured consumption goods include food LT 125 million, clothing 49 million and fuel 13 million.)
5.
In general, we see present budgetary difficulties threatening essential progress strategic program and recommend serious consideration; early implementation following suggested relief measures:
(a)
Direct grant in aid in minimum amount $20 million (see mytel 194 April 30, paragraph 13).
(b)
General authorization for AMAT to defray, within limits of such grant, cost of imports now authorized in present defense budget and also cost of such nonbudgeted items (including building materials and labor) as it deems essential to orderly progress MAP.
(c)
Placing Turkey on grant basis for ECA aid, to avoid excessive foreign exchange and budgetary burden when service begins, as well as to provide counterpart funds. Latter would facilitate implementing projects and encouragement sound fiscal policy. (Note: Dorr concurs in this recommendation.)

Polk will prepare preliminary supporting report in Cairo, mailing copies directly to Department and Treasury. I strongly recommend his early return to continue survey (unfortunately cut short by Treasury instruction in Deptel 186 May 184). He has received fullest cooperation from Turk Ministers and fiscal authorities who have urged and expect his return. We are persuaded this is unique opportunity establish true financial picture. Dorr strongly concurs on basis prospective major contribution ECA objectives.

Sent Department 256; repeated Cairo 23 for Polk.

Wadsworth
  1. Not printed. In it Ambassador Wadsworth reviewed the current financial and budgetary problems in Turkey in some detail and concluded by recommending a minimum of $20 million in additional direct military aid on the understanding that the Turkish defense budget be not simply maintained but increased to ensure prompt realization of special projects of mutual interest to the Turkish Ministry of Defense and the American Mission for Aid to Turkey. Major General McBride concurred in the recommendation. (840.50 Recovery/4–3049) Telegram 195, April 30, from Ankara, not printed, reported that ECA Chief of Mission Dorr recommended additional economic aid of perhaps $30 million to increase the supply of consumer goods and to ease the current budget deficit (840.50 Recovery/4–3049).
  2. Judd Polk, Treasury Representative in the Middle East.
  3. Not printed.
  4. Not printed.