Ankara Embassy Files: Lot 58F33: Box 3299: 500 ECA

The Administrator of the Economic Cooperation Administration (Hoffman), to the Turkish Ambassador in the United States (Erkin)1

Dear Mr. Ambassador: Mr. Foster and I have given thoughtful consideration to your letter of May 24,2 and generally to the present status of the Turkish counterpart fund release matter. We regret exceedingly the apparent misunderstanding which has beclouded our mutual understanding of the principles and procedures which govern this situation. I hope in this letter to provide a further clarification of ECA policy and requirements which have a bearing upon the releases of counterpart funds.

In this connection, may I call to your attention the recent meeting which took place in Paris between the Turkish Foreign Minister,3 accompanied by Messrs. Zorlu and Tiney, and Ambassadors Harriman and Katz.4 There was also an earlier meeting on May 16 between Messrs. Zorlu and Tiney and Ambassador Katz. At these meetings5 the Turkish counterpart question was discussed at some length. I am sure that these meetings were most constructive forward steps in our mutual understanding of the terms of reference under which this [Page 1274] problem must be solved. I fear, however, that I cannot agree with your feelings, as expressed in your letter, that our act in suggesting the earlier meeting can be interpreted only as an indication of a significant change in ECA policy.

I believe that in all discussions which have taken place on this subject between officials of the Turkish Government and officials of ECA, a consistent position has been maintained on our part. I am informed that subsequent to April 20, there occurred various meetings between Mr. McDaniel and members of the Turkish Government, including yourself and Messrs. Zorlu and Alpar, and Mr. Foster has recently discussed these conversations with Mr. McDaniel. I fear that Mr. McDaniel’s sympathetic understanding of the Turkish problem may have given you the erroneous impression that a significant change in ECA policy was contemplated. This is not, and cannot, be the case. Therefore, I am sure you will agree that further discussion as to the possible interpretation that might be placed on these conversations would serve no useful purpose.

May I therefore request that you accept our sincere regrets for any misunderstandings which have arisen out of past conversations on this matter. On the more constructive side, may I suggest that a continuation of the discussions currently being held in Ankara between Mr. Dorr and the officials of the present Turkish Government who are assuming responsibility for the coordination of the Turkish economic development program, will be the most rewarding means of pursuing this matter further.

May I reiterate, as Mr. Foster has already stated on numerous occasions, that neither our responsibility to the Congress of the United States, nor our general policy in such matters, as it has been applied in similar situations in other participating countries, permits our consenting to the automatic or quasi-automatic use of counterpart funds to meet governmental budget deficits.

What ECA requires, and must continue to require, is the submission of an overall counterpart expenditure program which is developed within the context of a total investment program and which takes into full consideration the objective of maintaining financial stability. Such a submission is required by ECA not only as a matter of policy, but also as part of our presentation to the U.S. National Advisory Council on International Monetary and Financial Problems, in support of our recommendations for the release of counterpart funds. As you know, counterpart funds can be released by the Administrator only after consultation with the National Advisory Council.

I should like to emphasize that in considering a counterpart release program in any participating country, we invariably rely heavily upon the recommendations of the ECA Mission Chief in that country.

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Both ECA/Washington and the Office of the Special Representative in Europe will do everything in their power to assist Mr. Dorr in arriving at an appropriate judgment in this matter. No action can be taken either in Washington or in Paris, however, until after we have received recommendations from the ECA Mission to Turkey. It is for this reason that I strongly recommend that discussions in Ankara be continued until any points of difference are resolved. I cannot believe that any of the points at issue are of such a nature as to preclude a complete and mutually satisfactory agreement in the near future. I am confident that Mr. Dorr recognizes the limitations to investment programming imposed on the Turkish Government by reason of less highly developed statistical data and sources.

I understand that you are about to leave on a trip to your homeland. May I extend every good wish for a most pleasant voyage and an enjoyable vacation.

If you should desire, Mr. Foster and I should be very happy to see you before you depart.

Sincerely yours,

Paul G. Hoffman
  1. The copy printed here was enclosed with a letter of June 22, not printed, from Mr. Moore to Ambassador Wadsworth.
  2. Also enclosed ibid.; not printed.
  3. Fuat Köprülü.
  4. Milton Katz, Deputy Special Representative in Europe for the Economic Cooperation Administration.
  5. No record of these meetings has been found in Department of State files.