333. Telegram From the Department of State to the Embassy in Turkey1

878. Your 819.2 In prospective talks with President your presentation should be along following lines which is reiteration US position:

US welcomes Turkish desire discuss their economic problems at highest levels with appropriate US officials Ankara. Such consultation is consistent with wholehearted cooperation our countries have had recent years in building free world strength against communist menace.
US gravely concerned over recent economic deterioration; believes difficulties are largely of internal origin centering around large monetary expenditures of government, state enterprises, and private sector which are beyond Turkish real resources. Seems to us difficulties are accentuated by magnitude bank credits, and specifically, scale of development program seems constitute heavier burden than Turkish economy can stand combined with defense efforts. We fear present difficulties are likely get worse rather than better unless stabilization program energetically undertaken.
Patiently explain disastrous consequences inflation.
Turkey has said it intends undertake economic stabilization program and at Turkish request US submitted statement on general nature measures necessary entitled “Measures to Relieve etc.” However Turkish measures taken so far do not appear adequate meet situation. Due to its significance in economic situation total budget for coming year will be special interest as indication Turkish intention this field. Ambassador should indicate US would appreciate statement by Turkish Government results thus far achieved toward economic and financial stability. Also desire detailed foreign exchange budget quarterly basis.
US believes stabilization program essential to solution economic difficulties and realization Turkish objectives. Allen letter June 83 to Zorlu said “future economic assistance will be based upon effectiveness measures to be taken by Turkish Government to bring about economic and financial stability, and upon appropriations of [Page 659] US Congress for foreign aid, subject of course, to requirements for assistance of other nations.”
US Government is prepared keep Turkish economic situation under constant review.4

  1. Source: Department of State, Central Files, 882.00/11–1555. Confidential. Drafted by Young, who also signed for the Acting Secretary. Repeated to Istanbul.
  2. Telegram 819, November 15, reported on Warren’s meeting with Zorlu on November 14 concerning Turkey’s economic situation. The discussion touched upon methods the Turkish Government might undertake to study and correct their economic and financial problems before approaching the United States for aid. (Ibid.)
  3. See footnote 2, Document 329.
  4. On November 29, Prime Minister Menderes submitted his resignation as a result of strong opposition to his government’s economic policies. President Bayar requested that Menderes form a new cabinet, which was announced on December 9. In telegram 981 to Ankara, December 9, the Department informed the Embassy that until the new Cabinet’s attitude and program toward the economy was known it would be inadvisable to attempt to determine a firm US line of action. The Department added that in the absence of new developments other than the appointment of the new Cabinet, it would be inadvisable for the Embassy to approach the Turkish Government. (Department of State, Central Files, 882.00/12–355)