840.50 Recovery/6–749: Telegram

The Secretary of State to the Embassy in Turkey


250. 1. Despite your appraisal budgetary and defense problem outlined Embtel 256, June 7, present situation re possibility additional grant-in-aid for Turkey same as indicated Deptels 156 and 157 Apr 29.1 Polk’s report not yet received, but do not anticipate it cld change matters.

2. Cannot say whether Turks will be given ECA grants rather than loans for fiscal 1950; however, from informal conversation with ECA prospects not bright. In any case estab of grant basis wld not alleviate current local currency problem or provide counterpart funds not available under loan system or “facilitate implementing projects” unless latter means that ECA wld have more effective voice in allocating funds for development. To extent goods obtained with ECA loan funds are sold in Turkey and not used for govt acct, Turk Govt receives counterpart in liras which it can freely spend for any purpose. Moreover, Turk Govt does not have to obtain lira counterpart by taxation or borrowing to cover ECA imports for own acct. If Turkey put on grant basis counterpart for all imports, including those on govt acct, would have to be deposited. Five percent wld be reserved for US Govt expenditures and remainder cld not be spent without US approval. This involves review in Washington, including establishment of policy by NAC.

3. You can discuss Polk’s return with Glendinning who is accompanying Sec Treas to Ankara via Cairo.2

  1. Telegram 156 is printed, p. 1659. Telegram 157, not printed, transmitted the text of the note of April 26 from Assistant Secretary Thorp to Ambassador Erkin, p. 1657 (867.20/4–2649).
  2. C. Dillon Glendinning, Acting Secretary of the National Advisory Council on International Monetary and Financial Problems (NAC). Regarding the visit of Secretary of the Treasury John W. Snyder to Ankara in July, see despatch 239, July 25, from Ankara, infra.