328. Telegram From the Embassy in Turkey to the Department of State1

1519. Last Sunday night Istanbul when I was arranging with Prime Minister for release four American airmen still under charges of desecration of Turkish flag on Turkish Independence Day at Izmir, I inquired concerning the progress of Zorlu’s conversations in Washington. I had not then seen the Department’s memoranda of conversations of May 18, 19, 20 and 21. 2 The Prime Minister was depressed.

He said that there was no positive reaction from any of the American officials to the suggestions Zorlu advanced for putting the [Page 645]Turkish financial and economic house in order. I ventured that the study of the Holcombe report was not yet completed in Washington and that in my opinion the American position on what might be done with Turkey at this time could not be expected to be firmed up until that analysis was finished and related to other studies that have been under way during the past several months. The Prime Minister rejoined that meanwhile the situation on Turkey is deteriorating rapidly both financially and politically.

We then discussed the petroleum situation. The Prime Minister said he was following it closely and realized that unless he is able to do something positive in meeting the petroleum companies requirements for firm letters of credit before any further petroleum shipments are made supplies in the country will be exhausted by June 30. He had hoped to borrow $11,000,000 from the International Monetary Fund to tide him over this emergency but there had been delays in working this out with the IMFT and he feels that even if the loan were available it would be too little and too late to meet the country’s requirements following harvest and transport during the season that is already under way.

The Prime Minister was also depressed about the political situation. He said that Kalim Gulek, Secretary General of the RPP, was that very day, last Sunday, addressing a meeting of some 3,000 persons in Izmir, alleging that the Menderes Government is incompetent to manage the country’s economic affairs and has already brought the economy to the brink of disaster. Given the fact that this government still has three years to go before a general election, the Prime Minister says the country and its friends now face the risk of having to work with a government whose people become upset in a national sense, there is no telling what may happen. He said he is taking to the countryside immediately to answer these attacks but he believes the effects of these inter changes of polemics will do nobody good unless it is the Soviet.

I then inquired, since I had not yet seen the memoranda above mentioned, whether the Prime Minister considered recalling Zorlu and having Gork request the American Government to send a high level team immediately to Turkey to inquire into the situation here and to try to work out recommendations on how best to meet the situation. It may be recalled that this proposal was being considered favorably when I left Washington early May. The Prime Minister said he is prepared to do anything to ease the situation and I inferred that such a request would be forthcoming.

I recommend that if such a request is made it be entertained seriously. In my opinion no good purpose will be served if the opposing Turkish political parties wrangle throughout the countryside this summer over the responsibilities of their current economic [Page 646]and financial crisis. Inevitably the United States will be drawn into the picture by adverse press comment. The only effective way to control this, in my opinion, is to have the Americans visit take place, with an understanding from both principal political parties that now is not the time for recriminations. I believe it possible to get such an understanding from the opposition party although relationships between the government and the opposition have deteriorated within the last two weeks, largely on account of some personal animus between the leaders.

Meanwhile Max Thornburg, who saw the Prime Minister after I did Sunday, was instructed to get on with his studies. 3 He had an intimation that the Prime Minister is convinced he should set up a special commission for economic and financial control and management and I gather he may want Thornburg either to head it or be the Secretary General. The indication to Thornburg was that if such an organization were undertaken it would probably have to continue for several years until the country’s economy was on its feet and until there was an integration of planning and coordination with respect to the public and private sectors in the Turkish economy.

Warren
  1. Source: Department of State, Central Files, 882.00/6–755. Secret.
  2. See Documents 325 and 326. The reference to a conversation of May 18 is not clear as Document 325 indicates that the first meeting was on May 19.
  3. On July 15, Max Thornburg, a private American industrial consultant, completed his report on the economic situation in Turkey, which had been requested by the Government of Turkey. (Transmitted in despatch 126, September 29; Department of State, Central Files, 882.00/9–2955) In telegram 169, August 8, the Embassy in Ankara reported that Menderes had called Thornburg in to discuss the report and disputed Thornburg’s findings and recommendations. (Ibid., 882.00/8–855) Thornburg’s report concluded that no American loan could be obtained until Turkey strengthened its economic administration.