882.10/3–2553: Telegram
No. 474
The Ambassador in Turkey (McGhee) to the Department of State
1185. Esenbel, Acting Assistant Secretary General for Economic Affairs, Foreign Office, approached me regarding additional Turk Export-Import Bank loan. He said Turks have not received response from Export-Import Bank to proposal for further Turk borrowings which he made to bank in October during visit States. At that time Esenbel presented bank tentative list projects aggregating 90.9 million dollars.
I replied I was not sure bank had considered his approach formal request, however, would investigate.
After full consideration Dayton joins me in urging prompt Export-Import Bank consideration this request. Long-range thinking Embassy and MSA, which agrees with that of Sayre group, is that future economic assistance to Turkey should principally be by loan on project basis. This particularly true in light anticipated limited availability economic grant funds fiscal year 54. We believe Turkey, whose foreign debt service now approximates only 7 percent of foreign exchange earnings, has current additional borrowing capacity of at least 100 million dollars. This view generally supported by Treasury Representative Ghiardi.
Turks have excellent longer-range opportunity earn dollars or gold through future EPU surpluses. We understand also that Export-Import Bank recently made loans involving combination of US and European procurement as against previous exclusive US purchases. In case of Turkey this combination would be highly desirable in view complimentary nature economies Turkey and certain European countries and long US haul, savings would tend stretch purchasing power of loans for certain equipment.
It is not believed present IBRD position in Turkey should prevent increased Export-Import Bank lending. Although IBRD has committed $47 million to Turkey and is in principle willing consider new projects, there is no proof of bank’s ability provide funds at rate necessary to keep strides with present rapid Turk development. According Turk Minister Finance amount actually spent by IBRD in almost six years only $4,124,905.
[Page 918]Although we do not necessarily approve all of particular projects presented Export-Import Bank by Turks, opportunities for investment in Turkey, both public and private, so great in light expanding economy that no difficulty should be encountered in finding suitable projects covering 100 million dollars. There are many projects capable of contributing to productive capacity Turk economy and to foreign exchange savings or earnings. Responsible Turk officials as in other countries, would prefer in future to borrow rather than be recipient of grants, which in my judgment is most healthy approach to economic assistance to Turkey.
Please advise Department and Export-Import Bank reaction and whether we should, in answer Esenbel’s query, propose that Turks make more formal application to bank. Dayton will discuss entire matter with Export-Import Bank, Department and MSA during forthcoming Washington visit.1
- Telegram 1205 to Ankara, Apr. 1, reported that the Department of State preferred that the Embassy not encourage the Turks to make formal application for this loan, pending discussion of the problem with Dayton. (882.10/3–2553) The Export-Import Bank did not issue the loan during the period under review.↩