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

341. Memorandum From the Director of the Office of Greek, Turkish, and Iranian Affairs (Jones) to the Assistant Secretary of State for Near Eastern and South Asian Affairs (Rountree)⁰

Washington, June 17, 1959.

SUBJECT

• Status of IRBM’s for Turkey

The purpose of this memorandum is to restate and amplify somewhat the oral report that I gave you last week concerning the present status of our implementation of the decision to proceed with negotiations with Turkey on IRBM’s.

The Turkish Government has indicated to General Norstad that it desires to have the IRBM’s and on May 6 General Norstad requested the United States Government to proceed with the necessary bilateral negotiations.

EUR, which has the responsibility with the Department for the bilateral negotiations, is now working on a Circular 175 authority¹ which will have two attachments: a proposed note to the Turkish Government concerning the IRBM installation in general and a proposed annex to the note having to do with certain financial aspects of our arrangement with the Turks. It is the latter, the financial annex, that is giving us the most difficulty at the present time here within the Department. There appear to be two broad issues involved in this financial annex.

The first has to do with the location of the proposed installation in Turkey and a more precise estimate of the costs of construction. This information will have to be supplied by Defense. It is likely that the cost of construction may be significantly influenced by the location that is finally agreed upon. You will recall that Defense undertook to consult with State on where the IRBM unit would be located. Information out of Paris indicates that at least the Air Force is thinking in terms of the Izmir area which, you will also recall, is one of our community relations problem areas. I believe the Department should press the Department of Defense for a decision on the location and then for a more precise estimate of construction costs, both foreign exchange and local currency.

The second has to do with the method of financing. I believe there is general acceptance of the principle, within the Department at least, that all construction costs, whether foreign exchange or local currency, should be borne by the United States Government. The insistence of EUR that a formula be devised that would permit the retroactive application of the concept of infrastructure common funding limits somewhat our freedom of action. If it were possible to waive the infrastructure common funding problem (and there is real doubt whether there will ever be an opportunity to apply it retroactively), the financing operation would be relatively simple. MAP funds could be made available directly to the U.S. Army Engineers for both the foreign exchange and the local currency components.

In order to preserve the infrastructure common funding concept, it is necessary to go through the fiction of having the Turks make the expenditures themselves, with the United States providing the financing. The most feasible way of doing this thus far suggested appears to be through additional Defense Support money. This has a number of political and practical disadvantages. It will represent another significant increase in Defense Support funds which Turkey’s undiscriminating neighbors, Greece and Iran, will interpret as further aid to Turkey. It will also be an awkward arrangement that cannot be assured of working as planned. On the foreign exchange element of cost, it involves our putting up Defense Support funds up to $10 to $15 million or more to finance needed Turkish imports and thus free an equivalent $10 to $15 million of Turkish foreign exchange for IRBM expenditures. This assumes Turkey now has or will have that much free foreign exchange. I doubt if this assumption can safely be made. We might well find ourselves in the position of putting up Defense Support funds without the Turks being able to put up the free foreign exchange for the IRBM’s. On the local currency element of cost, to the extent US-owned counterpart were inadequate it involves for the first time in Turkey our tieing Defense Support funds at the outset with counterpart generation to be used solely for a military requirement. This is a slippery slope to get onto and one from which it might be difficult to disengage ourselves at a later date. In both political and practical terms, we in GTI believe that direct MAP financing would be an infinitely simpler and more desirable way of financing this project and we have expressed the hope that EUR can find a way to accept this concept.

There are two issues here: (a) should construction costs be financed with MAP or Defense Support funds, (b) should we ascertain from Defense their thinking on location and costs before opening negotiations with the Turks. We cannot open negotiations with the Turks without an answer to the first question. I don’t believe we can answer adequately the first question without getting more precise information from Defense on the proposed location and on the total and composition of construction costs.²

0. Source: Department of State, Central Files, 782.00/6–1759. Secret.
1. This circular, dated December 13, 1955, outlined procedures under which the Department of State granted authority to its representatives abroad to conclude treaties or other formal agreements with foreign governments.
2. In a July 22 letter to Knight, Murphy outlined Department of State plans for funding construction costs for IRBMs and requested Department of Defense “current thinking” on security and housing. (Department of State, Central Files, 782.65/7–2259)