882.00 R/1–2251

Memorandum of Conversation, by the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (McGhee)1


Subject: Additional Economic Assistance to Turkey

Participants: Mr.Paul R.PorterECA
Mr. Henry WiensECA Mission Ankara
Mr. George C. McGhee—Assistant Secretary, NEA
Mr. William M. Rountree—Director, GTI
Mr. C. Robert MooreGTI

Problem: Turkey’s need for additional economic assistance, not only to cover increased defense expenditures, but its investment program and other relatively essential needs.

Action Required: FMACC decision on financing the proposed increased defense expenditures and ECA and Department consideration of possible assistance to help meet other costs.

Action Assigned: GTI to work closely with ECA and S/ISA.

Mr. Wiens referred to recent telegrams from the ECA Mission in Ankara regarding a gap of TL 491 million ($175 million) between anticipated expenditures and resources in the public sector for the Turkish fiscal year 1951. Conversations in Ankara between ECA Mission and high Turkish officials with respect to increased efforts which the Turks might make to close this gap, such as decreased expenditures and increased taxes and other resources, have proved fruitless, and it is apparent that the Turks are hoping that ECA will solve the problem by extending additional aid of approximately $100 million. [Page 1109] In view of the desirability of reaching some agreement with the Turks with respect to additional Turkish measures of self-help as a condition for additional ECA aid before their budget for the new fiscal year, which is to come into effect on March 1, 1951, is enacted by the National Assembly, Mr. Dorr, with whom Mr. Wiens spoke by telephone this morning, suggested a new, coordinated approach to the Turks. Mr. Dorr’s thought was that if we could determine within the next few weeks the amount of additional assistance, military and economic, that we would be prepared to extend Turkey to build up its military potential, we would be in a strong position to negotiate an agreement with the Turks which would call for greatly increased measures of self-help.

I pointed out that, from a practical standpoint, the question of a substantial strengthening of Turkey’s military capabilities and the economic support which this would require could not be worked out in time to make possible the negotiation, before the new budget is enacted, of an agreement of the scope Mr. Dorr proposed. In the meantime, we are faced with the problem of helping the Turks meet a proposed increase in the national defense budget of some TL 88 million (approximately $32 million) to provide for an increase in the Turkish armed forces from 260,000 to 300,000 and for other military purposes apparently strongly recommended by the Turkish General Staff and JAMMAT. I felt certain that, if, subsequently, further economic support was required to enable Turkey to achieve the military strength which U.S. policy dictates, funds would be found.

With respect to the present estimated gap of TL 491 million, which takes into consideration the additional defense expenditures of TL 88 million, as well as the investment program from which most of the fat has been extracted, refugee expenditures, etc., Mr. Wiens indicated that Mr. Dorr had himself been thinking in terms of additional aid of perhaps $75 million. Should such an amount be possible, he felt that the Turks should find the means to close the remaining gap. Mr. Porter questioned whether he would support at this time any more than an additional $30 million to finance the proposed increased defense expenditures. As a telegram has just been received from the Ankara Embassy giving requested details on these increased expenditures, it was hoped that the FMACC would be able to act quickly on the question of additional U.S. aid to meet them. There would still remain the problem of the additional aid requested by the Turks (approximately $70 million) to cover the remaining gap.

In sum, it was agreed that we should seek to obtain an early FMACC decision on the question of the TL 88 million and, if favorable, should negotiate with Turkey the most satisfactory agreement possible under the circumstances in return for such assistance. I felt that the Department would agree with ECA on the desirability of [Page 1110] maximizing Turkey’s own contribution in meeting its increased internal expenditures but that we must not lose sight of the fact that our objective will probably be to build up Turkey’s military capabilities, and that in the final analysis we will probably be willing to pay the cost of such a build-up, if that is the only way to get it.

George C. McGhee
  1. Drafted by C. Robert Moore, GTI.