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136. Memorandum From Henry Owen of the National Security Council Staff to President Carter 1

SUBJECT

  • Emergency Aid to Turkey (U)

Your initiative in asking the Congress for $100 million in supplemental economic aid to Turkey, raising the potential US total contribution to $248 million,2 is putting pressure on Germany to fulfill its leadership role by offering a matching amount. It also has helped to convince the Turks that the international aid effort is serious. The impact on other donors has been less impressive. (C)

Schmidt responded (Tab A)3 on March 30 that it would be difficult to raise the German contribution above the $100 million (plus $70 million in previously planned project aid) already announced, but he would try. Subsequently our embassy reported that Schmidt’s special envoy for this exercise, Herr Kiep, and the Foreign Office are pressing for an additional $100 million German appropriation (exclusive of export credits comparable to our $50 [million] ExIm credit offer). We have repeatedly told the Germans that you want full matching by Germany. Senator Muskie plans to tell Schmidt on May 7 that Congress will not appropriate more economic aid for Turkey than the FRG provides. (C)

Giscard responded to you on April 11 (Tab B) with what we already knew: France will provide mixed export credits totalling $70 million and will try to cause them to be used quickly. Our experts doubt that more than half will be usable by Turkey in 1979. Giscard also claimed one-fourth credit for the prospective EC contribution of $100 million in development aid to Turkey—much of which is not applicable to the immediate Turkish balance of payments deficit. No reply to Giscard seems indicated. The State Department will express disappointment to the French Embassy. (C)

The UK will wait until it has a new government before reconsidering its $15 million offer. (C)

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Ohira’s reply indicated that Japan would increase its $50 million offer if France and the UK increased theirs. (C)

German hat-passing efforts are unlikely to be fruitful until Germany itself raises its contribution and the Congress reacts to your supplemental request. (Senate hearings on the supplemental for Turkey are to begin April 27.) These two actions are interrelated; the OMB memo that you approved provides that we will testify to the Congress that we will provide only such part of the proposed $248 million to this year’s emergency aid pool as the FRG will match. (C)

Meanwhile, Turkey has taken some significant economic rationalization measures and agreed to resume negotiations next week with the IMF on a comprehensive reform program. These negotiations are likely to take two to three months. The Turks now realize that they will not get emergency economic aid until they adopt a program acceptable to the IMF. (C)

We will keep you informed of further developments.4 (U)

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 75, Turkey: 4–8/79. Confidential. Sent for information. Carter and Brzezinski each initialed in the top right-hand corner.
  2. On April 10, Carter transmitted to Congress a bill to authorize $100 million in supplementary economic support for Turkey. (Public Papers: Carter, 1979, Book I, pp. 647–648)
  3. Tabs A and B are attached but not printed.
  4. In a May 5 memorandum to Carter regarding emergency aid to Turkey, Owen reported that the German Minister of State for Foreign Affairs told him that “the FRG still refuses to match us on aid to Turkey, as a matter of principle, but that there is no ceiling on the amount of German aid.” Owen suggested that the United States could accommodate the German position by asking the Germans to match the U.S. appropriated aid of $198 million but not match the ExIm Bank loan of $50 million. Owen reasoned: “Since they will probably make export loans anyway, in order to sell their exports, we would not lose out on the cash and they would not lose out on the principle. We could still tell the Congress that our appropriated aid was being matched.” Owen further reported that Schmidt was waiting to hear Carter’s response and Owen recommended that Carter approve telling the German Ambassador that the United States would adapt “its position to the Chancellor’s view by asking only for matching of our appropriated aid.” Carter approved the recommendation and initialed “J” at the bottom of the memorandum. (Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 51, Turkey: 5–12/79)