US offers war ally Turkey up to $8.5 bn in loans

In a surprise move, Bush included $1 billion in economic grants for Turkey, which could be used to secure the loans or loan guarantees.

Despite a rift over American troop deployments, US President George W. Bush's war budget for Iraq includes funds to support up to $8.5 billion in direct loans or loan guarantees to Turkey, White House documents released on Tuesday showed.

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In a surprise move, Bush included $1 billion in economic grants for Turkey, which documents showed could be used to secure the loans or loan guarantees. The loans could be made through Septemner 30, 2005.

The administration dropped plans to provide $6 billion in direct aid and up to $24 billion in loans after the Turkish parliament refused to allow 62,000 US troops into the country. Turkey did authorize overflight for US warplanes attacking Iraqi targets in the north.