882.00 R/3–1651

Memorandum of Conversation, by the Officer in Charge, Turkish Affairs (Moore)1


Subject: Turkish Request for Additional ECA Aid

Participants: Mr. Feridun C. Erkin—Ambassador of Turkey
Mr. Burton Y. Berry—Acting Assistant Secretary, NEA
Mr. C. Robert MooreGTI

Problem: Turkey’s need for additional ECA assistance.

Action Required: Continued consultation with ECA on how this problem can be met.

Action Assigned: GTI

The Ambassador presented a detailed background of this problem referring to the counterpart release problem which had created so much difficulty at the time Turkey’s FY 1950 budget was being considered, and the close collaboration which had taken place between Turkish officials, the ECA Mission and Ambassador Wadsworth with respect to the FY 1951 budget. He stated that the conclusion had been reached by all in early January that government expenditures, including those for the investment program which would provide a healthy basis for Turkey’s military effort and strength, were at a minimum and that revenues could not be increased. With a projected budget deficit of over TL 400 million, it was expected that ECA would increase its aid to [Page 1133] Turkey in the form of consumer goods which would generate Turkish liras and thus prevent this deficit from exercising a harmful inflationary impact on the economy, and it was assumed that the Turkish Government would be informed of this additional aid before the beginning of the new fiscal year on March 1. The Turkish Government was therefore surprised when Mr. Dorr, upon his return to Turkey in mid-February, reopened the question of the proposed budget. It felt that it could not agree, from the standpoint of the country’s economy, to cut ordinary and investment expenditures still further and to reduce, as Mr. Dorr proposed, its request for additional ECA aid to one-half of the amount previously requested.

The new Turkish fiscal year has now begun and the matter of additional aid is still unsolved. The Ambassador urged that this Government reach an early decision and added that the Prime Minister would welcome whatever additional aid can be given, although he believes that the full amount requested is the minimum required.

Mr. Berry told the Ambassador that the Department and ECA have been following this problem and have been kept informed of the discussions going on in Ankara. Translating dollar funds into goods which will generate Turkish liras to cover the budgetary gap presents many difficulties and we have not yet received word that such difficulties have been ironed out on the ECA allotment of $4 million which was made in January to help finance the NCO program. Mr. Berry expressed the hope that an early decision could be reached and stated that we would keep in touch with ECA on the problem and inform it of the Ambassador’s call.

  1. Drafted by Moore, GTI.