Foreign Relations of the United States, 1958–1960, Eastern Europe; Finland; Greece; Turkey, Volume X, Part 2

317. Memorandum of Conversation⁰

Washington, September 12, 1958.

SUBJECT

• Turkish Economic Stabilization Program

PARTICIPANTS

• C. Douglas Dillon, Under Secretary for Economic Affairs
• John M. Leddy, W
• Owen T. Jones, Director, GTI
• Howard J. Ashford, Jr., GTI
• Turkish Finance Minister Hasan Polatkan
• Turkish Ambassador Ali S. H. Urguplu
• Assistant Secretary General for Economic Affairs Hasan Isik
• Inspector General of Ministry of Finance Munir Mostar

In the course of a final discussion with Minister Polatkan at the conclusion of his three-day visit,¹ Mr. Dillon made the following points:

1. U.S. officials had estimated that, in addition to the $25 million of special assistance, $50 million of defense support assistance would enable the Turkish Government to finance a first quarter import quota of $171 million. Steps were therefore being taken to release $50 million out of this year’s $75 million defense support program at once. It these estimates were proven wrong, we would undertake to also release the remaining $25 million. Otherwise, it would be held for utilization later on.

2. The U.S. was not able at this time to handle POL financing. However, $5 million of the $25 million special assistance would now be made available to the Turkish Government in the form of a cash check. This would be done on the understanding that it would be used by Turkey to settle EPU deficits in conjunction with the $25 million EPU credit.

3. Steps would be taken to relax the ICA bidding requirements in connection with the U.S. small business regulations so that they would not be a serious obstacle to imports under the first quarter of the new import regime. The exact details would have to be worked out in the next few days.

4. In response to the Turkish request for the release of 272 million Turkish liras of PL 480 counterpart, steps would be taken to release 225 million Turkish liras, leaving the remaining 47 million Turkish liras subject to further negotiations. This release would have to be made for military purposes but it would enable the Turkish Government to utilize for development purposes an equivalent amount of lira from their own accounts.

5. In connection with the Turkish request for additional assistance for the Turkish Industrial Development Bank in Istanbul, the limited amount of funds available to the Development Loan Fund precluded immediate action on this. If, however, funds became available either through supplementary appropriations early in 1959 or through the cancellation of existing commitments, this project, i.e., the IDB, was of the type to which we would want to give immediate consideration.

Minister Polatkan appeared to be genuinely pleased with the foregoing, thanked Mr. Dillon warmly, and in leaving reaffirmed his Government’s determination to press firmly forward in the implementation of its economic stabilization program.²

0. Source: Department of State, Central Files, 882.00/9–1258. Confidential. Drafted by Jones on September 13.
1. Polatkan made a presentation of Turkey’s needs and program at a September 11 meeting with Dillon and representatives of the ICA, Export-Import Bank, and DLF. A memorandum of the conversation is Ibid., 782.5–MSP/9–1158. No record of Polatkan’s meeting with IBRD representatives has been found.
2. For text of a statement issued at the conclusion of Polatkan’s visit, see Department of State Bulletin, October 6, 1958, pp. 533–535.