882.2553/5–3152: Telegram
No. 465
The Ambassador in Turkey (McGhee) to the Department of State
priority
1355. At Pres Bayar’s invitation I met with him, PriMin Menderes and FonMin Koprulu for two and half hours eve May 28. Previously announced subject of conversation proved to be proposal by Pres for participation US oil companies in developing Turkey’s oil resources. Major points made by Pres, given below, are particularly [Page 891] important in light of Turkey’s consistent history of refusing to consider direct participation of either foreign or Turkish private interests in prospecting for and developing Turk oil.
- 1.
- Turk Govt has explored for oil in Turkey for almost 30 years.
- 2.
- Altho Turks have succeeded thru own endeavors in finding oil Ramandag, their efforts are not progressing satisfactorily.
- 3.
- Fundamental consideration from Turk viewpoint is to obtain oil production in Turkey as stimulant to econ development.
- 4.
- Turks also mindful of strategic significance attacked to discovery of oil, particularly in south or southeast Turkey.
- 5.
- It wld be in Turk national interest to solicit assistance US oil companies in search for oil, as oil industry requires technical knowledge and capital which Turks do not possess. Pres wished to dispel commonly held belief that Turkey did not wish such participation.
- 6.
- Pres understood that foreign companies wld require that they be able earn profits for their efforts, and was quite prepared they be free to earn such profits. Pres made it clear Turkey interested only in US companies.
In response I discussed at some length in what I explained was my private capacity the experience of other oil-producing countries and the technical considerations which confirmed the Pres’s conclusion that oil can best be developed by competent oil companies. I then commented on oil producing potentialities of various Turk areas, the uneconomic location of Ramandag field and its relatively poor product as source of supply for entire country, and the advantages of the Adana–Iskenderun area. I expressed personal view that US companies might, if Turk Govt wld agree to customary conditions, be interested in exploring this latter region for several reasons unnecessary to elaborate here.
I told Pres that my reply as Amb to his statements wld be that, if Turk Govt approached me with suggestion Pres had just made, I wld transmit it to my govt with expectation it wld advise that we were interested in possibility of US companies participating in development Turk oil because (1) We wish assist Turkey in her econ development, (2) Presence of such US companies operating in Turkey wld further strengthen ties between us, (3) It wld be greatly to mutual advantage two countries, both in period of peace and in event hostilities, to develop oil production in Adana–Iskenderun area.
I pointed out to Pres that, if Turk Govt so desired, normal procedure wld be for US Govt to address letter to all oil companies capable of and possibly interested in developing Turk oil. These companies might be invited discuss with Turk Govt general question or some particular aspect as desired by latter, leading to negots or bids for development rights. Also company decisions wld be based [Page 892] on their own econ considerations, our govt wld be pleased express its own interest and extend good offices. I told Pres that if this operation were undertaken in Turkey by American companies, I felt certain, on basis past performance, that such companies wld cooperate fully in every way with Turk Govt.
Pres concluded that I cld consider that he had approached me on this subject as Amb and that he had made his proposals for communication to my govt.
Comment: This proposal made to me by Pres Bayar, which comes after careful consideration by Turk Govt as indicated by numerous hints by Pres and PriMin over past several months that it was coming, I consider the most important development in Turk-US relations since I came here as Amb. This is true not only from standpoint of obvious possible substantive advantages to both countries, but also as influence on trend in relations between oil companies and producing countries generally, and as exhibition Turk confidence in US. I am particularly anxious, therefore, that we treat matter with care and seriousness which it deserves.
It appears to me that, in view of complexities involved, it wld be well to suggest to Turks that as initial step they obtain expert advice from US private consultants on matters pertaining to establishment of prospecting zones and determination of basis on which Turk Govt cld formulate proposal for presentation to US oil companies, either directly or thru US Govt good offices. There are, to the best of my knowledge, several competent consultants in this field, including Herbert Hoover, Jr.1 (Hoover and Curtis).
Review of varied Turk legislation governing oil exploration and exploitation indicates that in order permit participation US interests in this activity it wld be necessary repeal law 2804, June 14, 1935, which transferred all such rights to MTA,2 and probably to amend law 792, March 24, 1926, which does not take cognizance modern exploration techniques and appears unduly restrictive in many ways. Changes in this law, and possibly also in the foreign investment law 5821 August 1, 1951, adequate to insure interest in exploration and exploitation proposals wld also require expert recommendations.
I shall await great interest Dept’s views as to desirability of having US oil company or companies undertake search for oil in Turkey on basis Pres’s statement to me. I shld like to be able communicate to Pres or PriMin before I leave Ankara eve of June 5 for [Page 893] several weeks abroad, an appropriate message containing (1) statement of reaction US Govt to Turk proposal, (2) any preliminary suggestions as to best procedure for Turks to employ in realizing their desires and (3) how Turks might best seek type of consultants they may need to formulate proposals. Request particular steps be taken to safeguard security Turk proposal at this early stage.