TURKEY: A Friend in Trouble

Oil for the machines of Turkey lay bottled in the bowels of tankers last June while representatives of four big oil companies served notice on the Turkish government: unless some $50 million in past oil bills was settled, the new shipments would not be unloaded. With only a week's oil in reserve, the government did some frantic juggling and scraped together a payment.

The U.S.'s strongest ally in the Middle East is so strapped that it can barely pay its day-to-day bills.

A newspaper editor reported one day last summer that while Premier Adnan Menderes was off on a trip, some political scalawagging was going on inside the ruling Democratic Party. "While the cat's away," wrote the editor, "the mice will play." The editor was arrested, and only by appeal to a higher court escaped a jail sentence of six months. His crime: imputing animal characteristics to the Premier.

"In Turkey," said a troubled Istanbul man, "it is still possible to be a free man, a free journalist, or a free judge--if you are willing to take the risk."

Only yesterday Turkey had seemed a solid rock in the free world's sea of uncertainties. Now it is a bothered bastion. Its economy is sick and its government is flirting with bankruptcy. Its brief but intense experience with democracy is afflicted with a return of the familiar weapons of autocracy.

What has gone wrong, and what can be done about it? These questions, raised for months past, concern more than tough, debonair Adnan Menderes, his government and his 23 million countrymen. All the other allies of NATO have cause to worry about the health of the member that anchors NATO's Eastern wing, provides the allies' largest single bloc of soldiers (the entire Turkish army of 500,000 men), and stands stoutly across the Black Sea from Russia. The U.S., in particular, has cause for concern. It cannot let Turkey sink, and Turkey insists that the U.S. owes it the means to stay afloat. The proposed means: a $300 million loan, no strings attached. The U.S. reply: no more loans until Turkey puts its economic house in order. The question: Who will back down first?

Scrap Iron & Will

The Turkish problem grows in great part out of a commendable urge, an almost feverish yearning, to become overnight a dynamic, industrial nation. For a nation forged only 32 years ago out of the scrap iron of the broken-down Ottoman Empire and the hot will of the late great Kemal Ataturk, for a people who for centuries left the complexities of commerce to their Greek and Armenian subjects, the Turks have made historic progress. In the five years since Premier Menderes left his Opposition bench in the Assembly to lead the Democrats to a stunning upset victory over the Republicans, he has gone all out to expand Turkey's productive capacity.

On the surface, the record has been amazing. Setting aside half its budget for defense. Turkey has put 22 divisions into NATO, doubled its output of steel, cement, textiles. It has built 7,000 miles of road and started a dozen multipurpose dam projects. Its most spectacular gain has been in agriculture, where, with the help of subsidies and 40,000 imported tractors, it has doubled the tilled land and turned the country into an exporter of wheat and cotton.

"But the Turks," explained one important U.S. official recently. ". . . have tried to cram 50 years' progress into five; they just don't have the economic base to do it." In the midst of great accomplishment, troubles have bred like termites. In the pellmell rush of putting up factories, dredging ports, bulldozing roads, planting new crops, nobody found time or talent to coordinate and manage all the projects. Factories were located in one part of the country, the electric power to operate them in another. Sugar mills seemed to get built near voters, not beet fields. As soon as new cement plants got into production, their output poured off into the walls of speculative apartment houses in Istanbul instead of more urgently needed factory floors. When Turkey's huge new wheat crops poured to market, no facilities were there for cleaning the grain, and the wheat had to be downgraded for its impurities.

A Martini a Day

Pledged to maintain both a free economy and a breakneck pace of expansion, Turkey became more and more overextended. At home, Farmer Menderes staunchly refused (and still does) to extend the income tax to farmers, who represent 80% of the population and the bulk of Menderes' party's electoral support. The country exhausted its foreign-exchange reserves and ran up foreign debts, which continue to grow at the rate of $3,000,000 weekly. For months Turkey has been living hand-to-mouth, paying such urgent bills as last June's oil-company duns out of current earnings.

Shortages have grown worse. Chrome-mining firms cannot even get enough foreign exchange to buy dynamite; textile mills have closed because they cannot get funds to import wool tops and dyes. The sinking state of Turkey's credit has scared off foreign enterprisers who might otherwise have taken advantage of Menderes' generous terms for new oil and other foreign investors.

Last week the free-market rate of the Turkish lira sagged to nine to the dollar (the official rate: 2.8 to $1). The cost of living has been rising 30% a year for the last three years. Coffee is almost unobtainable. Hardships are greatest in the cities, where a laborer must work three days to buy a pair of shoes, and a tourist at the bar of the new Istanbul Hilton Hotel pays six liras--almost a workingman's entire one-day pay--for a martini.

Inflation and the lopsided boom have bred many millionaires. But Turkey's trouble has mostly bred deep discontent. It boiled viciously to the surface last month in the Istanbul and Izmir riots. They began, ironically, in what was almost certainly a government-inspired plan for demonstrations against Greece's claims to Cyprus (TIME, Oct. 3). But before the nasty surge was checked, it had swept beyond minorities, to strike at many Turks as well--a raging protest against high prices, low wages, and the sight of luxury in its midst. Trying to call off a mob from burning a Greek church, a Turkish woman lawyer, Surreya Agaoglu, shouted from her balcony that the marauders were endangering their own homes. "What have we to lose but a blanket and a pot?" came a harridan's screech from the mob. "You wait in your fine home. Your turn will come!" By then it was poor against rich.

Premier Menderes reacted in a manner characteristic of autocrats, but puzzling for one duly elected and re-elected by great majorities and seemingly backed by 500 of the 541 delegates in Parliament. He blamed the whole thing on the Communists, summoned the Assembly to approve a state of martial law. It was not, however, the first demonstration of Democrat Menderes' liberties with democratic procedure. Under its repressive, criticism-squelching 1954 press law, the Menderes regime has arrested some 40 journalists. The once independent judiciary has been placed under the public prosecutor's thumb.

Fund of Maneuver

Thirty years of Turkish politics have calloused any soft spots in Menderes' disposition. Born to cotton-planting wealth (in a family that took its name from the River Meander of classic fame), he studied at the American College in Izmir, took a law degree but has never practiced. Menderes dislikes criticism--none of his original Cabinet has survived in the same office. "Anybody who shows any spirit goes out," says a British observer. Because 90 Democratic Deputies showed enough spirit to object to his quick decree of martial law after the riots, Menderes last week fired one of their leaders out of the party central committee, later expelled nine other Deputies from the party. Next day, ten more Deputies quit the party with an angry cry of "dictatorship." But even though his popular and political support may have slumped, there are no Turks in view to challenge Menderes for the right to govern Turkey.

Those concerned with Turkey's sore plight wish that the Premier had shown himself as diligent in dealing with Turkey's deepening economic crisis as in dealing with his critics. They attribute much of this inconsistency to the man whom Menderes has chosen to direct economic affairs, a suave and resourceful protege named Fatin Rustu Zorlu.

Zorlu is an ambitious, Paris-schooled diplomat who has risen swiftly to the posts of Deputy Premier and Acting Foreign Minister by his talent for improvising debt settlements, spouting statistics, and providing his boss with arguments to show that Turkey's economic situation is basically shipshape. Turkey's foreign-exchange deficits, Zorlu explains, are paltry little imbalances caused by the passing inconvenience of a couple of drought-shriveled harvests in a row. All the country needs is a "fund of maneuver," say $300 million, to see it through till the development program starts paying off around 1958. This, Zorlu insists, is where the U.S. should step in with its purse. Says Zorlu: "Turkey is confident of itself. We can overcome our difficulties even alone--but we will arrive more quickly if we are aided."

To get the "fund of maneuver," Zorlu first went to the International Bank. The bank said it could advance no more funds unless the Turks drastically overhauled their policy and established their financial solvency. Menderes next called in an old friend, Max Thornburg, a rich, retired U.S. oil executive of 63 who lives on his own island in the Persian Gulf and devotes much of his time and widely admitted talents to helping Middle Eastern governments with their economic planning. Thornburg told Menderes that 1) he was rushing ahead too fast with his industrial-development program; 2) there was so little overall planning and scientific management that barely half of the capital that Turkey was pouring into new industries was paying off in productive output. Thornburg's recommendations: immediate appointment of a coordinating committee with strong powers to channel investment, materials and production; postponement of some new capital projects into the 1960s; firm controls on imports, credit and priorities.

Thornburg's recommendations apparently went to roost in an Ankara pigeonhole, and Diplomat Zorlu turned to the U.S. for $300 million. Zorlu's argument was spare and simple: surely the U.S. would not let a stout ally down in its hour of need. Some Washington officials used the word "blackmail."

The U.S. has poured more than $1.5 billion in military and economic aid into Turkey since 1948--with no regrets, and indeed, with results that speak well for Turkey. Stoutly anti-Communist well before the Western countries awoke to the extent of the U.S.S.R. menace, Turkey plunged resolutely into beefing up its army, sent a valiant 4,500-man brigade and replacements to Korea, accepted and promoted John Foster Dulles' concept of the "Northern Tier" alliance (see above). Last April Zorlu himself skillfully carried the West's position into the Bandung conference.

The Waiting Game

All this stout performance merely made it harder for U.S. officials to give their answer when Zorlu arrived in Washington last summer and formally held out his hand. The State Department had come generally to the same conclusions as Max Thornburg, was, if anything, more certain that Turkey's present course leads to bankruptcy. Additional U.S. millions, Zorlu was told, would merely stay the day, and Turkey would be back in a matter of months for more. When U.S. Treasury Secretary George Humphrey went to Turkey last month for the World Bank meeting, he put the U.S. position directly to Menderes himself.

Not even the tough no of tough George Humphrey swayed Adnan Menderes. Having exhausted the advice of one invited guest and turned down the advice of its ally, the Turkish government called in yet another adviser to give it the benefit of his advice and his knowledge of the ways of U.S. Government. As the legal counsel to the Turkish government in the U.S. (TIME, Oct. 16), Manhattan Lawyer Thomas E. Dewey has already taken a look at Turkey's economic affairs and will soon be busy in the U.S. studying what can be done about them. Turkey seems to expect that in return for his retainer--$150,000-- Tom Dewey will be able to turn a loud no into a multimillion-dollar yes. But Dewey carefully cleared his plans with the State Department before taking on the assignment, and he was told that the best service he could render his clients would be to show them why the U.S. answer must continue to be no.

Obviously, some very tough people have come to a very tough impasse. The Turks seem confident that they can outstare the U.S. The U.S. is staring back, in the belief that Adnan Menderes will be the first to blink and give ground.

This file is automatically generated by a robot program, so reader's discretion is required.