334. Memorandum of a Conversation, American Embassy, Ankara, January 13, 1956, 10 a.m.1
- The Ambassador
- Mr. E. Perkins McGuire
- Mr. John H. Haskell
- Mr. Foy D. Kohler
- General William E. Riley
- General L. R. Dewey
- Mr. John Holcombe
- Mr. Gardner Patterson
- Mr. G. Lewis Jones
- Colonel Clayman
- Mr. John Goodyear
- Briefing on Turkey
Mr. McGuire opened the briefing by referring to the original statement of Mr. Harold E. Stassen which had been the basis for the commitment in the Aide-Mémoire of June 4, 1954, handed to Prime Minister Menderes on the occasion of the latter’s visit to Washington. [Page 660]He emphasized the importance of the time factor in programming, and specified that if we completed a program of a certain magnitude in six years instead of five, the country concerned sometimes made a case that the original five year program had not been completed. He continued that in his opinion the United States had, in the Aide-Mémoire referred to above, made a definite commitment in terms of material for one-fourth of the four year program for Turkey involving a buildup of military forces to United States approved NATO force goals.
The Ambassador then gave the background of Prime Minister Menderes’ visit to Washington in June 1954. He said that only a month previously, the Prime Minister’s Democrat Party had been swept into power, gaining 508 of 541 seats in the Grand National Assembly. Menderes thus felt that he had a definite mandate from the people (though actually the popular vote was in no way comparable to the overwhelming majority obtained in the GNA, the Democrat Party having gained approximately 60% of the popular vote in that election as opposed to approximately 55% in the previous one). Menderes had come to Washington with the hope of assistance from the United States to build an economic base in Turkey capable of sustaining the projected Turkish military posture in four years time (without taking account of replacement, spare parts, etc). He estimated that the military (Army) program then envisaged to bring Turkey up to NATO force goals called for an $800 million military aid program over a period of four years, with an expenditure of approximately $200 million a year. Further, the Prime Minister was seeking a $300 million economic aid loan, in addition to the economic program then envisaged for Turkey, at the rate of $75 million a year.
In Washington, the Prime Minister was told (the Ambassador continued) that there would be no four year commitment, but that the United States military authorities were sympathetic with Turkey’s plans, and were therefore willing to underwrite an immediate commitment for one-fourth of the four year program. In reply to Menderes’ request for economic aid, the United States Government suggested that there be a full, frank discussion of the problems involved, including the exchange rate for the lira, before there could be any consideration of a special accommodation. With some indignation, the Prime Minister said that “under no circumstances” would he discuss the exchange rate. Economic discussions thus ended on a frigid note, though when he left, the Prime Minister did have in his pocket a commitment for one-fourth of the military aid program and over $75 million economic aid for that year. Concurrently, the United States agreed to accelerate delivery of the sum of $500 million in the military aid pipeline.[Page 661]
Upon his return to Turkey, the Prime Minister was to undertake a stabilization program and to discuss further the matter of economic aid with the Embassy. However, he passed the summer pleasantly in Istanbul; took no action toward opening negotiations with the United States; took only a few measures toward stabilization; and was confronted with a sharp Turkish business reaction to even those he had taken. At the same time, the attitude of his principal advisor, Acting Foreign Minister Zorlu, was that Turkey should pump for $300 million in cash for purposes of “maneuver”, and without strings.
Mr. McGuire interrupted to pose a few questions. Was it the Embassy’s opinion, he asked, that there was an implied willingness on the part of the United States to consider the possibility of making allocations for the last three-fourths of the four year military aid program for Turkey, but no definite commitment to meet three increments? The Ambassador and Mr. Kohler said yes. Was there a commitment by Turkey, Mr. McGuire pursued, to discuss economic problems with the United States Mission? Again the answer was yes, with the comment that this commitment had not been fulfilled. The Ambassador then noted that there was a close relationship between the economic and military problems in Turkey, but that they were not as close as Mr. McGuire’s questions implied. In our relations with Turkey, the Ambassador continued, we must assess the importance of the following admitted assets of the country: (1) geography; (2) manpower; (3) psychology. No one could gainsay that Turkey was extremely strategically located; or that her military manpower was superior to that of any other in this area; or that, finally, the Turks have an ingrained anti-Soviet outlook. It was necessary, he added, to make definite decisions on our military program for Turkey, and to make them soon. Military strategy would not wait five years.
Mr. McGuire said that was all very well, and one must balance advantages and necessities, but he pointed out that many officials in Washington are asking: “What good is a bankrupt ally?”.
The Ambassador …. said that the Turkish view was: “What we have is yours”, but that concurrently they felt that what the United States has (in the form of credits, matériel, etc.) should be the subject of discussion by the United States with Turkey.
There ensued an exchange about the effect of United States relations with Germany upon United States-Turkish relations. Mr. McGuire wanted to know what the attitude of the Turkish Government would be if the United States substantially stepped up its military aid program to Germany. The Ambassador replied that, in general, the Turks have a strong regard for, and a substantial reliance upon, Germany as, a military mentor and provider; and that [Page 662]consequently, anything which increased German military potential was attractive to the Turks, since it would be presumed that part of that potential would be directly advantageous to Turkey.
The Ambassador then referred briefly to the fact that Turkey had been honored by the visit of some 100 United States Congressmen during the past year, and that the Embassy had been very careful to give these United States officials a very thorough briefing on Turkey. He spoke of the favorable attitude toward Turkey of such congressional leaders as Senator Saltonstall, Senator Green and Congressman Judd.2 He noted that out of the entire group there was only one dissonant voice, that of Senator Capehart, which could be explained by the fact that there are a number of Greek constituents in Indiana, who might be pressured to be emotionally interested in the Istanbul/Izmir riots of last September over Cyprus.
Mr. McGuire noted that in United States thinking, the Middle East was the number one priority in FY 1957, and asked about the relationship of a military aid program in Turkey to the Arab-Israeli conflict. The Ambassador pointed out that Turkey was the only country in this area which recognized the State of Israel and which did not observe the Arab economic boycott of that country. On the other hand, he noted that Turkey was doing everything in its power to improve its relations with the Arab States, and he adverted to the Turkish role in the formulation of the United Nations Resolution of 1951,3 and in the formulation of the Baghdad Pact. To indicate how carefully Turkey was treading in the delicate field of Arab-Israeli relations, the Ambassador referred to the fact that the Turkish Government did not even allow the Israeli Symphony Orchestra to come to Turkey last year to give a concert, or even to permit individual members of the orchestra to come to Ankara and give performances.
Mr. Kohler interrupted to say that he thought it was important to keep in mind that from the point of view of Israeli-Arab relations, a stepped-up military aid program for Turkey would not involve the complications that similar program to Iraq would involve, since the latter would presumably have to be balanced by some quid pro quo for Israel.
Discussion then ensued concerning recent Soviet overtures to Turkey. Mr. Kohler reviewed the Soviet Chargé’s recent conversations with the Deputy Secretary General of the Foreign Office (Mr. Melih Esenbel). He noted that Mr. Esenbel had turned a cold [Page 663]shoulder to these Soviet blandishments. Still, the Soviet approach had been strong, with a concurrent statement by Khrushchev, and a warm reception of the new Turkish Ambassador to Moscow. For the first time, Mr. Esenbel had expressed concern for the reaction of public opinion in Turkey should the Soviets choose to publicize the definite economic and financial offers which they had made. Continuing the discussion, the Ambassador noted that actually there was a certain amount of Soviet-Turkish trade going on all the time, amounting, among other things, to the transfer across the eastern border of some 100,000 head of cattle a year in exchange for Soviet POL products.…
Mr. McGuire brought up the subject of training Turkish military personnel. He stated that he had learned during his visit to Turkey that there were two problems involved here, (1) the problem of teaching English; (2) the problem of having technicians come back to Turkey and do what they were trained to do. He said that he had heard that all too frequently, for example, trained radar operators were assigned to kitchen police. It was agreed that this was indeed a problem, and that before technicians were brought to the United States for training, they should learn English; and that upon their return to Turkey, it should be understood that they should be indentured to the job for which they were trained.
Referring to the question of a relief brigade for Korea, the Ambassador pointed out that this question was a part of the Turkish trading position on the United States military aid program, and that the Turks might take the position that they would agree to ship a new relief brigade to Korea if the United States met certain conditions with respect to military aid.
The Ambassador continued to give Mr. McGuire the substance of the Embassy’s draft Progress Report on Turkey for the period August 11, 1955–February 11, 1956 (Embassy’s Despatch No. 299, January 11, 1956).4
Following this, Mr. McGuire brought up the specific question of the effect of fulfillment of the projected United States military aid program for Turkey upon the Turkish economy.
General Riley5 and Mr. Patterson6 replied that, in essence, a stepped-up military program for Turkey, within reasonable limits, would be no serious drain on the adequate Turkish manpower pool. Neither would such a military aid program be a major drain upon the output of the Turkish economy since the Turkish Army’s big [Page 664]requirement was for food and clothing and these would have to be provided for the personnel whether they were in the Army or not. Mr. Patterson noted that, at present, Turkey devotes approximately one-third of its central government budget to defense expenditures, and is actually planning to increase such expenditures in the future. It would, of course, be an anti-inflationary move if these funds could be frozen and not spent on defense, but there is no reason to believe that the Turkish Government would collect the present taxes if the proceeds were to be sterilized. He noted, incidentally, that one advantage to the civilian sector of the economy of a military aid program was the fact that many of the recruits were illiterate, and returned from their military service with a capacity to read and write.
Mr. Patterson agreed with a statement by Mr. McGuire that the United States did not want “bankrupt allies”, but stated that he did not believe cutting down United States military aid was a way of bringing Turkey out of bankruptcy—rather quite the contrary. He pointed out that because the Turkish Government was so intent upon fulfilling its military obligations to NATO it would probably make a serious attempt to do so whether or not the country were granted military aid, and that consequently lack of United States support for Turkey’s military program would mean that the Government would squeeze its defense financial requirements from other sectors of the economy, to the overall detriment of the Turkish economic situation. On the other hand, as regards to economic aid, Mr. Patterson said, it seemed quite clear that United States should hold to a firm policy of extending only the minimum amount of aid necessary to keep Turkey’s head above water unless and until Turkey were to undertake policies of living within her means and so restoring stability and solvency. Otherwise, Turkey could, and would be encouraged to, follow policies which necessitated ever-increasing amounts of foreign help.
In this general connection, brief mention was made of the use of economic aid as a foreign policy tool.
Following this, Mr. Patterson gave a briefing on the current Turkish economic situation. He pointed out that from 1949 to 1953, the gross national product of Turkey increased at a rapid rate, but that it fell off in 1954 as a result of the drought. The earlier increases of the GNP were caused by a fortunate conjunction of several factors: good weather resulting in good crops; the initial material improvements (investments) often had the most spectacular effect and by the consideration that the price of minerals during the period were high and thus increased the value of Turkish exports. United States aid was also an important contributing factor to this increase in the GNP. Possibly even more foreign assistance was [Page 665]obtained from Western Europe and this too had helped increase GNP. The result of all these things was that the Turkish officials became over optimistic and undertook an overambitious investment program. Turkey attempted to do more than it had the resources to pay for. The domestic device used for supporting the rapidly expanded investment program was a tremendous increase in money supply. Since this greatly exceeded the physical resources to match it, Mr. Patterson continued, the results were (1) a price increase (which had an adverse effect, though an admittedly limited one, on the military program with respect to trainees and to costs); (2) a larger foreign trade gap; and (3) a depreciation in the value of the lira. Soon, Turkey had no reserves; it had a large exchange deficit; it suffered from a shortage of imports—and yet the Turkish Government continued to lay new cornerstones almost every other day, and to undertake a headlong investment program. As a consequence, it finds itself in urgent need of ever increasing economic help from the United States.
At Mr. McGuire’s request, Mr. Patterson gave a detailed briefing on the use of counterpart in Turkey. He said that in the past couple of years, it had been used 100% for the military budget but that this year, as an anti-inflationary measure, the United States Government, by the use of its veto power over counterpart, has frozen some 30 million Turkish lira for future unspecified use. In addition, Mr. Patterson said, the United States had been parceling out economic aid piecemeal, again as an anti-inflationary measure, since it was hoped this policy would serve to convince the Turks that the United States was serious about the need for economic reforms. They had this year so far advanced only a “first slice” to Turkey, amounting to $12.5 million.
In this same connection, mention was also made of the administration of Public Law 480.
Mr. Haskell7 posed a question concerning the Central Bank. General Riley and Mr. Patterson indicated that the Central Bank in Turkey did not perform the classic role of such an institution in other countries, but that rather it was merely an adjunct to the Finance Ministry.
. . . . . . . . . . . . . .
A discussion concerning loans brought out Mr. McGuire’s view that in general he considered loans to many undeveloped countries [Page 666]unwise, because it was unrealistic to believe that such countries could actually make interests payments upon them.
A discussion then ensued concerning those members of the Menderes Cabinet who seemed to be behind real Turkish economic reforms. General Riley, Mr. Patterson and Mr. Kohler, together with the Ambassador, all agreed that the Minister of Foreign Affairs, the Minister of Finance, the Minister of Economy and Commerce, and the Minister of State Enterprises (and probably also the Minister of Defense) were strongly behind a program of realistic reforms in the economic field.
- Source: Department of State, Central Files, 782.5–MSP/1–2456. Secret. On January 24 this memorandum of conversation and the record of a previous briefing on January 12 were sent to Baxter by Kohler. According to Kohler, the minutes of the meetings were not cleared with McGuire, but seemed to reflect the “flavor” of the conversations. (Ibid.)↩
- Leverett Saltonstall of Massachusetts, Theodore F. Green of Rhode Island, and Walter H. Judd of Minnesota.↩
- Adopted by the Security Council in September 1951, this resolution affirmed the right of shipping to and from Israel to transit the Suez Canal. For text, see U.N. Doc. S/2322.↩
- Not printed. (Department of State, Central Files, 611.82/1–1156)↩
- Deputy Director for Management, FOA.↩
- Gardner Patterson, Special Assistant to the Director for Economic Affairs, Ankara.↩
- John H. Haskell, Deputy Representative, North Atlantic and Mediterranean Area.↩