ECA Assistance to Turkey for
FY
1952
1. ECA assistance to Turkey, as
presently projected for FY 1952,
amounts to $66 million. Assuming incremental Turkish military
efforts to the extent of $40 million are met in full from this
$66 million, only
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$26 million of economic, as distinct from military, aid would
result. Only two-thirds of this amount, or approximately $18
million, would be applicable to the non-military internal budget
gap of approximately $120 million for the Turkish fiscal year
1951 (March 1, 1951 to February 28, 1952).
2. In the absence of additional ECA aid Turkey will not be able to cover in full
the gap of $120 million, without inflationary financing or
damaging cut-backs in expenditures. The U.S. would strongly
oppose any cutback in military expenditures; therefore the
cutback would have to be primarily in investment expenditures
which, according to the ECA
Mission in Turkey, are already at virtually a minimum level
consistent with the maintenance of a sound economy. Even at
present and contemplated levels, gross investment in Turkey as a
percentage GNP (Gross
National Product) is below that of virtually all participating
countries.
3. Up to the present ECA aid to
Turkey has been granted to finance a capital development program
(which otherwise would not have been undertaken) rather than to
finance a balance of payments deficit. In the present
projection, ECA indicates that
the import forecast has not been specifically developed to allow
for the possible requirements of a relatively poor economy whose
historic imports have often been shaped by foreign exchange
limitations rather than need. Increased imports designed to
increase internal resources in order to help cover the budgetary
gap would have relatively little effect on per capita
consumption which would still remain at a bare subsistence
level. Additional ECA aid would
not result in an increase in Turkey’s monetary reserves and it
would not be difficult to obtain the Turkish Government’s
concurrence to measures that would prevent such a
development.
4. In order to retain Turkey’s confidence in the sincerity of our
interest in helping it become strong militarily, economically,
and politically, it is essential for us to give support in the
economic as well as military field. This is particularly
important inasmuch as Turkey, for many years, has been willing
to bear a heavy defense burden which has limited the funds
available for financing its investment program—a program which
aims at raising the very low standard of living of the Turkish
people and which will enable them better to support their
military establishment.
A drastic cutback in the investment program would affect the
internal position of the new Government of the Democrat Party in
Turkey, which was elected in the first free and fair elections
held in that country.3
Local reaction would undoubtedly extend to the U.S. and make it
more difficult for the Government to cooperate as fully with the
U.S. as in the past. The Turks are very conscious of their
military contribution to the free world forces and consider that
they
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have received
relatively limited amounts of economic assistance from the U.S.
in relation to other countries whose standard of living is
higher and whose devotion to the common cause has been less
effectively demonstrated. While this can be countered with the
explanation of what ECA was
established to accomplish, the explanation is not one that is
understood by the large mass of relatively uninformed Turks
whose views must be taken into consideration in the new
democratic Turkey.
5. We feel that ECA should
endeavor to meet the position formulated by Russell Dorr who requested that
ECA finance $60 million, or
approximately one-half, of the $120 million gap (exclusive of
the military support program). This formula would involve
additional ECA aid of $42
million ($60 million minus $18 million already projected) or a
total for FY 1952 of $108
million. As a minimum, we should seek an additional $20 million,
or approximately half of that balance.
