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Greece

310. Airgram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 881.10/3 - 1261. Confidential; Limit Distribution. Drafted by Palmer and Berger.

Athens, March 12, 1961.

G - 508. Ref: Embtel 1509./1/

/1/Telegram 1509, February 7, discussed the alternatives available to the United States in its efforts to arrive at a settlement of the Greek bond issue. (Ibid., 881.10/2 - 761)

1. Probably most difficult question which will arise during Caramanlis/2/ visit is pre-war debt problem and related issue of DLF loan freeze. Following comments supplement refuel and our earlier messages.

/2/Karamanlis was to visit Washington April 17 - 20.

2. With most Greeks in pre-electoral mood, chances of negotiating bond settlement before elections are practically nil. Already decisions on other problems far less controversial are being postponed and Caramanlis will make no move which might conceivably cost him votes. Any attempt by U.S. to push through settlement before elections could only fail; moreover, public knowledge (which inevitable in Greece) of such an attempt could only lead to further acrimony.

3. I continue believe in general validity Embassy's appraisal (Embtel 526, August 31)/3/ of Caramanlis' Govt's behavior in last summer's negotiations, i.e., that last minute demand for ``most favored debtor" treatment, coupled with simultaneous withdrawal of DLF application for highway financing, was made with foreknowledge it would cause collapse of negotiations. I believe it would be poor tactics for U.S. Govt. at this time to view with favor Greek demand for ``most favored debtor" treatment. Not only would they continue delay settlement for domestic political reasons, but it would be counter to Greek character if they did not view such a gesture as one of ``softness" which could later be exploited through further endless rounds of negotiations like those of the last two years. The time may come when it might be advantageous for the U.S. bondholders to be in a position to offer some concession in Greece's direction, e.g. bondholders might be willing withdraw their ``standard clause" which probably not very meaningful in case of Greece. However, any gestures on our part should, if made at all, come only after Greeks show evidence they genuinely want a settlement by making a reasonably firm offer to conclude an agreement along the lines almost-agreed with U.S. bondholders last August.

/3/Not printed. (Department of State, Central Files, 881.10/8 - 3160)

4. I suggest Caramanlis be told when he is in Washington that basic U.S. attitude remains unchanged regarding importance attached to debt settlement and that we expect this matter will be taken up immediately after Greek elections as a matter of first priority action. If Caramanlis is especially insistent on need for statement about availability DLF financing, Dept may wish indicate that DLF would examine loan applications submitted for purely private projects. Whether we should then expedite such examinations, or drag our heels, can be left for later decision and would depend on all circumstances, i.e. nature of loan request, date of Greek elections, etc.

Briggs

311. Memorandum of Conversation

//Source: Department of State, Conference Files: Lot 65 D 336, CF 1836. Secret. Drafted by Marcy and approved in B on May 5.

Washington, April 18, 1961, 11:30 a.m.

SUBJECT

Bond Problem

PARTICIPANTS

Constantine Caramanlis, Prime Minister of Greece

Evanghelos Averoff-Tosizza, Greek Minister of Foreign Affairs

Christian K. Palamas, Director General of the Ministry of Foreign Affairs

Alexis S. Liatis, Ambassador of Greece

Gorge W. Ball, Under Secretary of State

G. Lewis Jones, Assistant Secretary, NEA

Howard R. Cottam, Deputy Assistant Secretary for Economic and Regional Affairs, NEA

Ellis O. Briggs, Ambassador to Greece

Robert G. Miner, GTI

Oliver M. Marcy, GTI

Following a discussion of the Greek 5-year program and related problems,/1/ Mr. Ball said there was one further question which he wished to raise. This had occasioned us and the Congress some concern. It was, of course, the question of the pre-war bonds. We were very sympathetic towards the Greek position, and did not wish to be rigid in our own. We recognized that the issue caused the Prime Minister some political problems, but Mr. Ball felt that he should say that it also occasioned political difficulties for us as well. He hoped that there would be some way to give assurances to the bondholders that the problem would be solved. At this point Ambassador Liatis asked whether Mr. Ball meant assurances to the bondholders: would such assurances be made public? This could be very dangerous. Mr. Ball responded that there was no necessity that such assurances be made public. It would suffice were they to be made to Mr. Munro.

/1/A copy of the memorandum of conversation on this subject is ibid.

Mr. Caramanlis then commented that, since the question had been brought up, he would like to make it clear that there was no question of the Greeks having refused to settle. Up to 1950, Mr. Ball should understand, Greece had experienced ten years of devastating war and emerged almost totally prostrate, and now found themselves in the position of being pushed to ask the Germans and Italians--the very nations which had visited such devastation on Greece--for assistance.

The Prime Minister then proceeded to explain the Greek position. In 1950 Greece had just emerged from the guerrilla war. There followed four years of political and economic instability: only in the last five to six years had the Greek Government been able to devote its energy to bringing order to the situation. In other words, during the period when European countries were able to use American assistance to rebuild their economies, the Greeks were forced to spend all they received on the war with the Communists; when it came their turn to rebuild, American assistance, and specifically the Marshall Plan, was fading away. Notwithstanding, since 1953 and 1954, they had taken four or five initiatives to try to come to agreement. All the Greeks asked were conditions which were politically acceptable. In a country which had suffered such devastation in the common Western interest, this was extremely difficult. No Greek had received a penny in indemnity for loss or damage to his private property, or indeed for loss of life. It is not easy first to settle foreign indebtedness, before investing in development projects designed to raise the country from prostration. There was no lack of will on the part of the Greek Government to do so. We must, however, remember that not only had Greek lives and property been destroyed without compensation during the war, but the entire economy was shattered with all savings, bonds completely lost with no prospect of reimbursement.

Against such a situation, any settlement must be very carefully presented from the psychological point of view. Notwithstanding, two years ago the Greeks made another effort. They had started out to offer $4 million per year to service the bonds, and had ultimately agreed to $7 million; but then the bondholders had interjected a proviso to the effect that they should receive the benefit of any more favorable settlement reached with any other creditor by the Greeks. The Prime Minister had, quite rightfully he believed, asked that this cause be reciprocal. He had in mind the Communist countries, for example Rumania. It would put his government in a completely untenable position to have such countries receive more favorable treatment at the hands of the United States. The Prime Minister made the point that he was operating within a democracy, albeit a poor democracy. If the Bulgarians or the Yugoslavs received more favorable treatment, he was required to explain it. He noted, for example, the temporary settlement reached between the bondholders and the Yugoslavs, asserting that they had received better terms than those offered the Greeks. At this point Mr. Averoff interjected the Yugoslav-French agreement, where the Yugoslavs received ``far better" treatment. Virtually 95% of the Yugoslav capital indebtedness had been written off. Mr. Caramanlis continued that, to the simple-minded Greek, it was impossible for him to explain why the United States was treating non-allies, neutrals, and even enemy countries such as Rumania, better than its ally, Greece. The political side was of much greater importance to the Prime Minister than the economic; he couldn't care less if it cost him $1 million more or less per year. The problem was how to present it. Greece might be poor, but it was democratic and politically-minded.

Ambassador Liatis then translated very carefully: ``the Prime Minister states that it is in his intention to settle", and ``indeed he might have been able already to settle it if you had not connected it with loans, DLF in this case. It would have been disastrous to the Greek Government, as to any Greek government--to appear to settle under the pressure of a threat of no loans unless there was a settlement. It would have been a similar disaster to the United States, from the point of view of its position in Greece." The Prime Minister could not follow what he viewed as a political mistake in Washington. The United States might be correct from its point of view, but the Prime Minister was, so far as Greece was concerned. In any event, the Greek Government ``is determined to find at a proper time a proper solution, without connection to aid from the United States." This was the duty of the Greek Government, and the Greek Government would settle with or without United States aid to Greece. This was one of the basic measures which the Greek Government must take in order to re-establish Greece's credit and good name. The Prime Minister wished to stress that, when the time came in his view to approach the bondholders, he would ask the United States to assist in achieving this, through admonitions and suggestions to the bondholders.

In response, Mr. Ball stated that he appreciated the Greek position and wanted to make it clear that we did not wish to be categorical. At the same time, he should say to the Prime Minister that the situation created for us some political problems, not only to the extent that it might condition the amount of help we can give Greece by Congressional control of funds, but also because the Congress exercises great scrutiny over our policies and programs thus limiting our own freedom of action. He did not put this forward as a categoric condition, but rather to reveal that these are political facts for us, as well as the Prime Minister. The Prime Minister interjected at this point that he saw quite well that the United States also had difficulties, and agreed entirely. The United States difficulties, however, were different. His were more fundamental.

After reverting momentarily to the prior discussion of the Greek 5-year program, the Prime Minister concluded his presentation by pointing out that when problems failed of resolution, occasionally it was because the means to resolve them were not available. At other times, it was because the problems were not understood. If now the problems between the United States and Greece were not resolved, it would not be because he had failed to do what he regarded his duty in endeavoring to explain them. For his part, Mr. Ball concluded by extending assurances that the United States had every intention of doing everything it could to help. The United States wished to see the Greek economy grow as rapidly as possible, and the standard of living raised for its people.

312. Memorandum of Conversation

//Source: Department of State, Conference Files: Lot 65 D 336, CF 1836. Confidential. Drafted by Jones and approved by S on May 12 and by the White House on May 24. The time of the meeting is from the President's Appointment Book. (Kennedy Library)

Washington, April 19, 1961, 10:30 a.m.

SUBJECT

Meeting of the Prime Minister with the President

PARTICIPANTS

H.E. Constantine Caramanlis, Prime Minister of Greece

H.E. Evanghelos Averoff-Tosizza, Minister of Foreign Affairs

H.E. Christian X. Palamas, Director General of the Ministry of Foreign Affairs

H.E. Alexis S. Liatis, Ambassador of Greece

The President of the United States

The Secretary of State

Ellis O. Briggs, U.S. Ambassador to Greece

G. Lewis Jones, Assistant Secretary, NEA

Note: This conversation was divided into two parts: the first part in which all participated is described below; the second part was between the President and the Prime Minister while they walked in the garden for ten or fifteen minutes. There is, as of now, no record of what transpired between them./1/

/1/According to the President's Appointment Book, the meeting lasted until 11:25 a.m. after which the two men held a discussion in the garden until 11:44 a.m.

Preliminary Briefing

Ambassador Briggs and Mr. Jones were called in about 10:20 to the President who asked how the visit was going. He was told that the Greeks are very pleased with the treatment they have received and that they were particularly delighted the U.S. Government has relaxed its informal ban on DLF lending arising out of the unresolved Greek bond problem.

The President said he would like to know more about the Greek bonds: Who owned them? were they the subject of speculation? It did not seem reasonable to him to withhold needed aid to a country over old debts of this kind. He asked Mr. Jones to submit to him a memorandum giving the details./2/

/2/Not found.

Mr. Jones gave the President for himself and Mrs. Kennedy as souvenirs the small enameled Greek cross prepared by PR for members of the official party.

The President showed familiarity with his briefing book and glanced at the topic heading papers prepared by GTI.

The Talk

Caramanlis initiated the conversation by congratulating the President on his firm, but unprovocative reply to Mr. Khrushchev's message on Cuba./3/ The President said that he was opposed to the U.S. moving in on the situation in Cuba at this time: we must keep in step with other Latin American countries.

/3/For text of Khrushchev's letter and President Kennedy's reply, see Department of State Bulletin, May 8, 1961, pp. 661 - 666.

Caramanlis said that everywhere democracies are faced with the problem of Communism and this calls for sacrifices to meet the challenge.

The President told Caramanlis that he knew the latter wished to speak to President Truman and that he had put through a long distance call to Independence, Missouri. He said he had just received a letter from President Truman regretting his inability to be present at the state luncheon given Monday for the Prime Minister's party. Caramanlis said he would be glad to speak with President Truman, whose name has special significance for Greece. Unfortunately, when President Truman was in Greece three years ago, the Cyprus trouble was at its height and he was unable to receive Truman. However, he would like to invite him to return to Greece.

Caramanlis said that it was essential to the success of NATO that equilibrium be preserved in the south of NATO. Greece for the past ten years had been endeavoring to achieve this. However, the NATO allies displayed a remarkable lack of willingness to make NATO strong. Disagreements existed. There was no disposition to make sacrifices in the interest of the whole as Greece had done in connection with the Cyprus question. The NATO members were too selfish.

Caramanlis said that among the NATO allies Greece was the only country ready and willing to have a larger army. Geography might account in part for this, but the fact remained that Greece was the poorest of the NATO allies and was always pressed to find ways and means to make ends meet.

The Prime Minister thought the fifteen NATO countries should get together to discuss seriously what needs to be done now and what in the future. He said that the U.S. was the ``natural leader" of NATO and, if necessary, the U.S. should ``compel" the NATO partners to straighten out their differences.

The President asked what was needed to strengthen NATO: Which way should NATO move?

Caramanlis replied that the first requirement was a common policy against Communism; the second great need was to establish consultation procedures which would be able to deal with all problems. Averoff interjected ``consultation with discrimination"--said that not all problems between NATO members were of general interest, in which event there should be consultations only between the parties concerned.

The President said that there was a real problem in dealing with NATO countries where differences in policy arose outside of Europe; for example, in the Congo, Angola and West Irian.

Averoff said that Caramanlis understood about these different policies: His essential thinking was that the NATO powers should be agreed on a policy against Communism.

Caramanlis reiterated that the U.S. should make itself the spokesman of the NATO countries while keeping the democratic essence of NATO.

Averoff said that the heads of governments should face the lines of policy, but the NAC was the proper forum for carrying them out. He said that due preparation would be needed before the heads of government meet but all should know how the other NATO governments think and feel. The last meeting of heads of state was in 1957.

(At this point the President was called out of the room for about five minutes. He returned and got Mr. Rusk out of the room also. Their combined absence lasted about ten minutes.)/4/

/4/Presumably for discussions related to the Bay of Pigs invasion. The President's Appointment Book indicates that during the morning he attended a series of brief meetings regarding Cuba.

When the President returned he said that President Truman was on the phone and Truman and Caramanlis talked. Caramanlis delivered a cordial invitation to Truman to come to Greece ``this year." Truman said he would think it over and wondered who might arrange such a trip. The President left the room while this call was in process, but when he returned he said at the request of Caramanlis that he would encourage Truman to go.

When the conversation again returned to substance, the President said he expected to see General DeGaulle in early June. He had seen Macmillan and Adenauer and their views appeared to coincide closely with the views of Caramanlis. The Prime Minister replied he had seen Macmillan about two months ago and they had reached agreement regarding consultation./5/

/5/President Kennedy met with Prime Minister Macmillan on April 6 and 8, and with Chancellor Adenauer during his April 12 - 17 visit to the United States. Karamanlis met with Macmillan during his February 13 - 15 visit to the United Kingdom.

The President said that an effort would be made to lay the groundwork for a heads of state meeting. If such a meeting takes place it must have a firm foundation--it must not be simply a ceremonial meeting.

Caramanlis agreed and said that the heads of state should, at a ``propitious moment," sit down and face frankly such issues as armament.

Caramanlis said that he wished to draw to the President's attention the special Greek interest in the Balkans and the Middle East. Greece was European, but rather far away. For centuries it had been subjected to pressures from its neighbors to the north. These pressures are greater today since Greece's neighbors are Communists and determined to push to the Aegean. He said that Greece was in a delicate and even ``critical" situation. It was trying to preserve equilibrium in the Balkans and was sacrificing to do this. Caramanlis went on to say that Greece is the link between Turkey and Yugoslavia. So far as the latter country was concerned Greece would be satisfied if it stuck to its neutral policy. At this point an urgent telephone call came through to the President and some minutes passed while he dealt with it. The Secretary commented to the Greek party that the situation in Cuba was very disturbing.

The general conversation ended at this point. The President and Caramanlis went for a walk in the garden and the remainder of the group waited in the President's office talking in a desultory way until their return.

313. Memorandum of Conversation

//Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Marcy and approved in S on August 9.

Washington, July 31, 1961.

SUBJECT

Prime Minister Caramanlis' Letter to the Secretary

PARTICIPANTS

The Secretary

Howard R. Cottam, Deputy Assistant Secretary for Economic and Regional Affairs, NEA

Oliver M. Marcy, Deputy Director, GTI

Alexis S. Liatis, Ambassador of Greece

Following an exchange of niceties, the Ambassador handed the Secretary (1) Mr. Caramanlis' letter to the President,/1/ and (2) Mr. Caramanlis' letter, together with its enclosures, to the Secretary./2/ The Secretary hastily perused Mr. Caramanlis' letter and laid it aside, saying that he would be responding to it promptly and that the Ambassador could be sure that the points raised by Mr. Caramanlis would have the direct and careful attention of the United States Government.

/1/In his July 24 letter, Karamanlis, after thanking the President for the courtesies extended during his Washington visit, indicated that Ambassador Liatis would be explaining specific Greek needs and concerns to Secretary Rusk. The message was forwarded to the Department of State in airgram A - 20 from Athens, August 10. (Ibid., 781.13/8 - 1061)

/2/This July 22 letter outlined Greek economic and military assistance requirements. (Ibid., 781.5 - MSP/7 - 2761)

In discussing Mr. Caramanlis' letter, Mr. Liatis made the point that the Greek Prime Minister is personally and most particularly interested in the economic program for Greece. He very much wants to get forward with it this year for a variety of reasons, including the example a prosperous Greece would set for the rest of the underdeveloped world. The Secretary merely commented that as the Ambassador knew the Administration had not yet gotten its foreign aid bill through the Congress: a great deal of what we could do would depend not only upon the authorization but also upon the appropriations bill. We were having difficulty because of the 5-year lending authority which we seek, but the Secretary was hopeful.

As regards the military aspects of the Prime Minister's letter, the Ambassador had little substantive to add, merely noting that the assist-ance sought would bring it more closely into conformity with NATO requirements, and that essentially what was desired was that the programs already elaborated between JUSMMAT and the Greek Government be expedited.

Again asserting that the Ambassador could be certain that the Prime Minister's letter would receive our immediate and careful attention, the Secretary raised the question of the Greek position regarding the maximum tariff on tobacco vis-a-vis the EEC. The Ambassador first commented that it was premature for the Greeks to act vis-a-vis EEC since Greece is not yet formally a member of that organization. Following some discussion, he elaborated that the principal difficulty was that tobacco was a very sensitive issue in Greece, and that any Greek action which smacks of being a concession to the United States in respect to tobacco is political dynamite. Following some further conversation during which Ambassador Liatis admitted that he had discussed the issue cursorily with Mr. Caramanlis prior to his departure from Athens, and undertook to review his own files concerning the conversation between Mr. Dillon and Mr. Protopapadakis in Paris, the Secretary asked if he could have his colleagues ``snap at the Ambassador's heels on this matter". The Secretary concluded that this was an issue we wished to resolve as quickly as possible and the matter was left that the Department would follow up with Ambassador Liatis.

As the meeting was breaking up, the Ambassador asked concerning Berlin and the Secretary's labors in respect thereto. The Secretary pointed out that he was going to Paris this weekend and following conversations with the British, French and Germans would speak with the North Atlantic Council on Tuesday. Upon his return to Washington he would no doubt be in consultation with the NATO Ambassadors because he foresaw that, as the crisis developed, there would be a great deal to do. He noted in this connection that we were most grateful for Greece's staunch support as regards the Berlin issue, to which Ambassador Liatis replied that we should never be in any doubt regarding Greece's position on such matters. The Secretary inquired as to the Ambassador's personal plans, and was told that the Ambassador would be available in Washington throughout the summer.

314. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 781.5 - MSP/8 - 2961. Confidential.

Athens, August 29, 1961, 7 p.m.

317. Deputy Prime Minister called DCM in this morning in lieu Ambassador who indisposed. Canellopoulos, making clear he spoke directly on behalf Prime Minister who still away taking cure, urged USG consider early announcement some increase in defense support, implying Caramanlis government would suffer in forthcoming electoral contest (still not announced but more and more probable) if it did not produce additional American aid. He made point amount not so important as ``psychology" and went on to say increase in defense support now would provide tangible results for successful Caramanlis Washington visit which had caused such favorable public reaction.

No encouragement given./1/

Briggs

/1/A more complete account of this discussion was transmitted to the Department of State in despatch 153 from Athens, September 1. (Ibid., 781.13/9 - 161)

315. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 781.11/9 - 161. Secret; Limit Distribution.

Athens, September 1, 1961, 7 p.m.

330. 1. Net impression of half hour talk with King Paul today, Crown Prince present, is that while steadfastly ``on our side" he has been doing relatively little homework during past two months vacation on Corfu, with only occasional brief visits to mainland, and the grim potentials of advancing international situation have yet to sink in. (This tallies with information reaching us from other sources; it contrasts with word that Queen is deeply concerned.) Royal family, minus Crown Prince who remains as regent at government's request, depart tomorrow for medical checkups in Munich and then Switzerland, to be gone two weeks. (Absence from country being shortened on urging of government.) King observed that he can always get back to Athens in three hours, should circumstances require.

2. King spoke highly of morale and readiness Greek Armed Forces, this in connection his visit to recent annual maneuvers in Kastoria area. He referred to Khrushchev's threat to atomize Acropolis as having salutary effect of uniting ``all Greeks except Communists" and with appreciation to Prime Minister's response./1/ He thinks incident far from intimidating people has solidified them; also that it has strengthened Caramanlis electoral prospects.

/1/During an August 10 reception in Moscow, Premier Khrushchev told the Greek Ambassador that in the event of war the Soviet Union would use nuclear weapons against all NATO states, including Greece. Asked if he seriously contemplated the destruction of priceless cultural monuments like the Acropolis, Khrushchev replied that he would ``destroy the whole thing." (Telegram 503 from Moscow, August 11; ibid., 781.56311/8 - 1161)

3. On elections, he said he does not believe Prime Minister has yet made up his mind since latter is somewhat reluctant schedule campaign in what may turn out be period international tension. He indicated Caramanlis decision might wait his return to Athens September 13. (All other evidence points to Caramanlis decision for autumn elections, with announcement probably to be made later this month.) Prime Minister himself has been absent capital for three weeks at Kamena Vourla; he ends vacation today, opens Thessaloniki Fair tomorrow and returns to Athens thereafter. Foreign Minister Averoff has been similarly absent at mountain home in Epirus; I expect see him tonight for first time since early August.

4. King also remarked that Moscow behavior has diminished chances of opposition making electoral deals with Communist EDA, and increased prospect that Papandreou (whom he is seeing prior departure) may succeed in forming combined opposition. (This of course will be all to the good--if it in fact develops.)

5. On Belgrade conference,/2/ King apparently uninformed but expressed hope participants wouldn't get off track. He has not been in touch with any attending Chiefs of State.

/2/The Belgrade Conference of Non-Aligned States September 1 - 6.

Briggs

316. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 881.10/9 - 1261. Secret.

Athens, September 12, 1961, 7 p.m.

377. Reference: Embtel 376./1/ Subject: Defaulted pre-war bonded debt.

1. We took advantage Zolotas visit to raise subject of resumption negotiations for settlement defaulted bond debt. We pointed out settlement would redound to Greece's favor not only with US but with Common Market and other circles as well. Zolotas responded he fully prepared and willing discuss informally at Vienna, noting however this remains essentially matter for Greek Government determine and settle. He volunteered opinion no Greek Government could withdraw from most favored debtor position because of oft-repeated political connotations. He thought however Greeks would welcome any assistance in advising [arriving?] at formula which would make such a clause acceptable to Bondholders Council. In his view it could be limited in application to Greece's immediate Communist neighbors in Balkans. Zolotas was given no encouragement on acceptability such formula but was encouraged include in any discussions with Dillon and Ball in Vienna./2/

Briggs

/1/Telegram 376, September 12, reported on Zolotas' overall analysis of the state of the Greek economy. (Ibid., 881.10/9 - 1361)

/2/At the Vienna meeting of the International Monetary Fund.

317. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 375/9 - 1361. Secret; Priority; Limit Distribution. Repeated to Paris for Stoessel.

Athens, September 13, 1961, 11 p.m.

386. 1. Prime Minister informed this morning of contents Department telegram 285./1/ Caramanlis' immediate reaction was to inquire whether this NATO guarantee or direct US assurance. After discussion in detail and some reflection his part, Caramanlis, who in calm unruffled mood, said he appreciated this reply from US to his request but wanted to say in all frankness it did not fully satisfy him. Asked to elaborate, Prime Minister went on to say record is clear that he and Greek Government have given strong support to NATO but that he frankly lacks confidence in ability of NATO to come immediately to aid of Greece in event of attack on this country. He pointed to pulling and hauling involved in all NATO decisions, mentioning doubts re British and Italian readiness face up to hard decisions involved in present crisis. He called attention, as he often does, to Greek geographic position, saying if Belgium or Holland attacked other Western European powers immediately involved because of geography, but this not necessarily so in case of Greece with her position separate from rest of European NATO. He said he had discussed his preoccupations about NATO with President Kennedy during his July visit. He said again this morning that he and Greek people know what they must do and will do it. There is no doubt, however, Prime Minister would like to have US assurances of direct and immediate support for Greece in case of trouble without waiting for results of NATO deliberations.

/1/Telegram 285, September 3, instructed Briggs to inform Karamanlis that the United States would regard a Soviet or Bulgarian attack on Greece as coming within the scope of Article 5 of the North Atlantic Treaty. (Ibid., 780.54/9 - 361)

2. In short, what Caramanlis wants is simple US statement to effect we are on Greece's side and have no intention letting Greece go down Soviet drainpipe. Reassurances along these lines would have more positive effect than assurances re NATO commitment which regarded here as useful but rather legalistic.

3. Same exercise repeated later in morning with Foreign Minister, who was attended by Director General Palamas. They had been advised of Caramanlis position and both took very careful notes of our statement.

Briggs

318. Editorial Note

Prime Minister Karamanlis resigned on September 20. King Paul appointed a ``service government" under General Constantine Dovas to conduct new elections. The elections were contested by three major political parties: Karamanlis' National Radical Union (ERE); the Communist-dominated Union of the Democratic Left (EDA); and a new center left party, the Center Union (KD), led by former Prime Minister George Papandreou, and formed through a merger of a number of smaller parties. The Dovas government called for elections on October 29.

319. Telegram From the Embassy in France to the Department of State

//Source: Department of State, Central Files, 375/9 - 2661. Secret. Repeated to Athens and Sofia.

Paris, September 26, 1961, 8 p.m.

1661. From Stoessel. General Norstad visited Athens September 24 - 25 to speak at opening session of annual conference Atlantic Treaty Association, derived following principal impressions from his numerous conversations:

1. Regarding build-up of NATO forces, military authorities stated those necessary actions within present Greek means are being taken and those requiring reallocation of funds within overall present capability are being considered, but acknowledged that full response to present situation dependent on level of defense support and military assistance funds. Norstad found military authorities (he called on interim Defense Minister and met with Chiefs of Staff) in virtual ignorance of measures being taken in light of Berlin situation by other NATO members, including US.

2. Norstad's contacts reflected general expectation October election would return Caramanlis to office, with no strong convictions more precisely formulated. Prime Minister Dovas, among others, noted opinion of ``political experts" that party's showing might improve by a few percentage points probably leaving Caramanlis short of Parliamentary majority.

3. Greeks with whom Norstad talked were unanimous in view that Exercise Checkmate/1/ had been useful to Greek people, with a positively good effect.

/1/NATO exercises in Thrace.

4. During an analysis of Communist protests and threats prior to Checkmate, General Frontistis remarked that Averoff had interrupted Bulgarian charge's reading of protest note (Athens 337 to Department),/2/ declaring it couched in unacceptable terms, and abruptly dismissing charge. Frontistis considers Bulgarian claims (in Athens and Sofia) to be worried about Greek actions not genuine, but merely propaganda. Greeks believe Bulgarians are increasing forces by holding conscripts longer and by calling additional conscripts and reservists, but note that an apparent increase of 20 - 25,000 is partly due to seasonal factors so that actual increase is about 15,000. Frontistis believes many of signs of reinforcement (temporary closing of roads to diplomats, stationing of tanks where clearly in evidence, etc.) are staged for effect, though he has evidence of some build-up in Struma Valley extension.

/2/Telegram 337 from Athens, September 3, reported Averoff's response to the Bulgarian demarche. (Department of State, Central Files, 780.54/9 - 361)

5. King and Queen, after exchange of pleasantries, opened conversation by saying they intended to be frank and asking ``If there is attack against Greece by Bulgaria, even small, are you coming to our defense?" Norstad replied, ``Yes, Sir, without any question," and elaborated from viewpoint of commitments and capacity of Alliance and of US record, beginning with Truman Doctrine and reinforced in word and action since. He mentioned Sixth Fleet presence and observed that Checkmate had demonstrated capacity for further reinforcement in matter of hours. King and Queen expressed warm appreciation for response and in return offered assurances that a border incident was farthest from Greek desire and that if one should occur government would go to great lengths to prevent it expanding.

6. King and Queen look forward eagerly to visit and lunch aboard US nuclear submarine Shark, remarking they had learned of vessel's port call ``by accident". When Norstad surmised US officials had perhaps wished to avoid embarrassing them, reply was ``We do not embarrass easily". Said they wished visit submarine to show its presence was all right, election or no, had been waiting for chance to make such public gesture ``after what happened in Denmark and elsewhere."

Comment: Norstad felt that warmth of response to his assurance of US and NATO support demonstrated both need for it and acceptance of it for the moment. Need is somewhat perplexing, especially in light recently renewed US pledge. Norstad concludes for time being that posing of question was but another manifestation of need characteristic of Greek Government for recurrent reassurance.

Gavin

320. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 781.5 - MSP/10 - 1961. Confidential; Priority; Limit Distribution. The telegram, delayed in transmission, was received on October 21.

Athens, October 19, 1961, 4 p.m.

524. For Assistant Secretary Talbot.

1. Following signature PL 480 agreement late yesterday,/1/ Minister Coordination Arliotis indicated desire for private conversation. In most serious tone, he began by saying Prime Minister has just received message from Greek Embassy Washington to effect aid for Greece being ``deeply cut." I told Arliotis we had received no word from Washington re aid level and anticipated none before end of month. In answer my inquiry, he indicated Greek Embassy had got it from ``semi-official" source. He went on stress this worst possible timing in view imminent elections, would have incalculable effect on voting, would be played with maximum emphasis to Greek people by Communists as confirmation their worst charges against US, et cetera. Arliotis implied only Prime Minister Dovas and he were privy this information (although top Foreign Office official must also know). He said Prime Minister had taken personal charge of matter and I could expect be called in probably tomorrow, Friday.

/1/For text of P.L. 480, the Agricultural Trade Development and Assistance Act, enacted July 10, 1954, see 68 Stat. 454. For text of the surplus agricultural commodities agreement, signed in Athens on October 18, 1961, and entering into force the same day, see TIAS 4876.

2. While Greeks have been ardently dramatic since dawn of history and we may expect them pull full stops out, I agree fully timing for this sort of news could hardly be worse. At present moment in Greece, with election campaign in full swing and Greek relations with Soviet Bloc in agitated state, any indication US aid to be reduced would have profoundly disturbing effect on US-Greek relations. Public knowledge of any planned reduction our aid to Greece would play directly into hands Greek Communists and reinforce their argument, hitherto lacking conviction, that Greece can only protect its security by going neutral.

[1 paragraph (10 lines of source text) not declassified]

[1-1/2 lines of source text not declassified] It goes to attitude of Greek people as a whole, for whom US presently plays role of strong protector of which they historically feel in need. Irrespective strong support Greeks in general give NATO, it is US help and protection they want above all else. At a time of tension for Greece, both domestic and international and when we are calling on Greece to make additional contributions to NATO effort (Embassy telegram 506),/2/ evidence of slackening US support would seriously damage our position and discourage those who support us in Greece.

/2/Telegram 506, October 13, reported the U.S. Military Assistance Group's (JUSMAGG) assessment of Greek military capabilities. (Department of State, Central Files, 781.5 - MSP/10 - 1361)

5. I have no desire be dramatic myself and do not believe above is overstating case. But if reported decisions re cut in Greek aid level should come out now by leak or otherwise, then, believe me, this comes at a time which will ensure maximum unfavorable publicity and harmful effects for us locally.

6. I realize demands on US are pressing everywhere, but do we want to rock Greek boat before it is tight enough to weather rough seas on its own? I should welcome any suggestions re tack to take in anticipated session with Prime Minister. Best thing, of course, would be to be able inform him reports are unfounded./3/

Bennett

/3/In telegram 409 to Athens, the Department of State replied: ``You may if necessary reassure Greek Govt there no intention communicate to Greek Govt, let alone make any public announcement concerning, aid levels prior Greek elections. FYI. We understand AID expects inform you shortly proposed aid levels on classified basis soliciting your comments with view considering them at regional conference to be held shortly." (Ibid., 781.5 - MSP/10 - 2361) Bennett relayed this message to Prime Minister Dovas on October 23. He reported on their discussions in telegram 538 from Athens, October 23. (Ibid.)

321. Editorial Note

Greek national elections held on October 29 resulted in a victory for the National Radical Union, which captured 51 percent of the vote and 176 seats in Parliament. The Center Union won 34 percent and 100 seats. The EDA was the major loser, dropping from 24 to 15 percent and from 78 to 24 seats in the new Parliament. The King asked Karamanlis to form a new government. The Embassy commented:

``New Caramanlis Cabinet represents a reshuffling of old ERE elements plus strong injection of new blood notably in key economic areas. Papaligouras (Coordination) likely be strong personality in Cabinet along with Averoff in Foreign Affairs, Theotokis in Finance and Rallis in Interior. Appointment of Papaligouras and particularly Pipinelis in Commerce indicative of fact Caramanlis feels he has strength to place persons he considers most able into key positions despite possible disgruntlement of other tried and true ERE followers; Papaligouras led rebel movement which brought down Caramanlis govt in 1958 and Pipinelis has so far failed win parliamentary seat. Protopapadakis in Defense will be unknown quantity.

``We consider Cabinet on the whole an improvement by several notches over previous Caramanlis Cabinet." (Telegram 600 from Athens, November 6; Department of State, Central Files, 781.13/11 - 661)

George Papandreou protested over the manner in which the elections were conducted, calling them fraudulent, and announcing that he would undertake a ``relentless struggle" to topple the Karamanlis government and force new, untainted elections.

322. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 375/12 - 261. Confidential; Priority. Repeated to Paris Topol, Rome, and Ankara.

Athens, December 2, 1961, 3 p.m.

699. Paris for USRO, Stoessel and McGuire. Rome for Rood. Main Greek effort in connection Stikker visit/1/ was to emphasize crucial nature Greek need for continuing external aid order support its military effort. Pointed to low per capita income, import-export imbalance. Estimated aid of $35 million more aid required annually beyond present levels.

/1/NATO Secretary General Dirk Stikker visited Athens December 2 for discussions relating to NATO's scheduled spring Ministerial Meeting. During his visit, the Greek Government outlined its case for further military aid. The Embassy reported on the Stikker visit in airgram A - 296, December 2. (Ibid.)

Greeks pushed idea of NATO multilateral special fund to make up deficiencies national military budgets. Stikker responded cautiously. Foreign Office NATO Director reports Averoff intends approach Secretary in Paris to solicit his support multilateral fund idea, and that Averoff will push for it at NATO meeting.

Airgram follows.

Briggs

323. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 781.21/12 - 461. Confidential.

Athens, December 4, 1961, 6 p.m.

704. Parliament opened officially this morning (December 4) with address by King Paul and oath-taking by approximately two-thirds of deputies. Entire opposition except for progressive and handful of independents boycotted session. This accords with irresponsible decision of Papandreou and Venizelos, as protest measure against alleged election irregularities (notwithstanding their success at polls). Communist-controlled PAME deputies were likewise absent, thus gesturing anew toward united front.

Chiefs of Mission attended and public galleries were filled. King's address did not touch directly on domestic politics, but stressed international affairs, reaffirming Greek loyalty to NATO. Markezinis deputies refrained from applause, some which was interpreted to imply that progressives, while participating parliamentary sessions, may still try to make trouble for Caramanlis. (Prior to Royal address, Caramanlis drew round of applause from ETE deputies and gallery walking to floor of parliament and greeting Markezinis.)

According various reports, Center Union intends to enter parliament December 8 or 9, taking oath ``with reservations" (which is permitted by Greek constitution) and launching attack on conduct of elections. Not clear where Center thinks it going with these tactics, but leadership being pressed by portion of rank-and-file to adopt more constructive and moderate approach. Interior Minister Rallis told Embassy Officer he thought steam would go out of Center campaign by mid-month. This remains be seen. Airgram to follow.

Briggs

324. Telegram From the Department of State to the Embassy in Greece

//Source: Department of State, Central Files, 881.10/12 - 861. Confidential; Limit Distribution. Drafted and approved by Marcy and cleared by OFD, B, and S/S.

Washington, December 8, 1961, 10:22 p.m.

536. Department has had initial session with FBPC representatives Munro and Heath with little tangible result re most favored debtor clause. Hopes have second more successful session next week. Meantime Munro states British agitating for multi-national approach to Greeks to include Councils UK, France, Germany, Switzerland as well as Ottoman Council. Response request for reaction Department opined Multilateral approach might well spoil favorable disposition towards settlement we believe we have created on part of Caramanlis. It generally understood by all concerned that settlement with US would set pattern for settlements with other Councils.

Request your comment this possible approach which may prove only new element in event Munro continues insist it impossible meet Greeks on most favored debtor issue./1/

Rusk

/1/In telegram 733 from Athens, December 12, Briggs commented: ``I strongly support Department's view that interjection non-U.S. bondholders into picture at this juncture could mean protracted renegotiation of agreement already reached in principle with FBPC." (Ibid., 881.10/12 - 1261) The Greek bond question was ultimately solved through bilateral discussions between the bondholders representatives and the Greek Government. An agreement embodying the terms of the settlement was signed on October 19, 1962.

325. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 781.5/1 - 162. Secret; Priority. Repeated to Paris.

Athens, January 1, 1962, 8 p.m.

777. Paris for Stoessel. Reference Paris 3271 to Department repeated Athens 41./1/ In view my repeated recommendations re desirable level FY 62 aid for Greece it will be no surprise to Department that I associate myself with General Norstad's views as repeated reftel. If, in addition this unexpectedly heavy slash projected in MAP funds, supporting assistance is to be cut anywhere near as sharply as rumored, then I can only declare my belief we are heading for trouble in Greece.

/1/Telegram 3271 from Paris, December 30, 1961, reported that General Norstad was ``disappointed" with the tentative figure of $83 million in MAP for Greece. (Ibid., 781.5/12 - 3061)

There has been much Washington publicity in recent months that under our new aid policies America means to help those who help themselves and that we intend to give our assistance especially to those who share our view of the world et cetera. Greeks hold strong convictions, which we in Embassy share, they meet both these criteria.

We do not see how we can overlook fact that Greece has to live with three communist neighbors on its Northern boundary, or that Greece is subject to continuing feints and threats from Soviet bloc. (Latest one, as recently as last week, received official notice by Department. Moreover it has not escaped our Greek allies that we have within week announced substantial additional aid program for one of their Communist neighbors.)

Nor can we ignore ominous shadow cast by events in Berlin in this part of the world. In that connection, Greece responded promptly and loyally to Berlin build-up plans. Since it has been long agreed that Greece is NATO country which requires outside assistance in her military effort if her economic development is not to be critically handicapped, perhaps Greeks may be excused by [if] they thought they would have adequate help on their military effort taken in wake of Berlin. At all events they went ahead on their build-up per request, and surely that stoutness of attitude is worth something to us in these times.

No one is more anxious than I to see Greece's economic development proceed apace. Great strides have been made in past decade and there is general agreement the next three or four years may be crucial. This is precisely why I consider aid decisions re Greece for FY 62 and 63 to have such special importance. Whatever its faults, new Greek Government formed after last fall elections is best aggregation of progressive talent Greece has had since war. With government stability and sound, progressive economic leadership on Greek side, and with judicious mixture of advice and financial assistance on our part--and with some luck--we could within three or four years actually see Greece able stand on her own feet for first time in modern history. That to my way of thinking is an objective worth keeping constantly before us.

Aid to Greece should not by any means be considered a ``reward for good behavior", but rather an investment toward sound and attainable mutual goals. We are getting good return on our investment.

True enough, current statistics are optimistic on Greece's foreign exchange reserves and balance of payment position. I personally do not believe situation here is nearly so rose-colored as these figures appear to imply to some economists. With Greek history in mind and with knowledge that almost one third Greek exports now go to eastern bloc, statistics alone can be insecure basis for decision. To establish FY 1962 aid levels for Greece mainly on economic grounds and without adequate weight being given to political and psychological factors, not to mention harsh military realities imposed by Greece's geographic position and by Berlin situation, would in my judgment be a great mistake for US Government to make.

These matters have now been before appropriate Washington officials for many weeks. Our Greek allies, handicapped in their own budgeting, are becoming understandably restive and concerned. I once more, in all seriousness, bespeak aid level adequate and appropriate to Greece's need, as specified in repeated communications from Athens and Paris. I do so in belief that on our decision in this matter may well depend character of our relations with this threatened and exposed ally during predictable future./2/

Briggs

/2/In Polto 888, January 11, Ambassador Gavin endorsed the views of Norstad and Briggs and urged that assistance to Greece be given a priority by NATO. (Ibid., 781.5/1 - 1162)

326. Telegram 859 From the Embassy in Greece to the Department of State

Athens, January 30, 1962, 6 p.m.

[Source: Department of State, Central Files, 781.00/1 - 3062. Confidential. 1 page of source text not declassified.]

327. Memorandum of Conversation

//Source: Department of State, Central Files, 375/3 - 162. Confidential. Drafted by Schiff.

Washington, March 1, 1962.

SUBJECT

NATO Mission on Greece and Turkey/1/

/1/The North Atlantic Council Foreign Ministers authorized the creation of a Mission to Greece and Turkey (``Wise Men") to examine related defense and economic development problems during their May 8 - 10, 1961, meeting at Oslo, Norway. At the North Atlantic Council meeting in Paris December 13 - 15, 1961, the Foreign Ministers instructed the Mission to complete its report by April 1, 1962.

PARTICIPANTS

The Secretary

Mr. Faure, NATO Mission member

Mr. Ferguson, NATO Mission member

Mr. von Mangoldt, NATO Mission member

Mr. Kohler, Assistant Secretary, EUR

Mr. Miner, Director, GTI

Mr. Vincent, International Staff, NATO

Mr. Habermeier

Mr. Abrams, RA

Mrs. Kupinsky, RA

Mr. White, AID

Mr. Schiff, NEA/GTI

The Secretary began the discussion by asking if the Mission had any unresolved anxieties which they wished to discuss. Mr. Ferguson stated that there were two. In the first place, the Mission would find it very difficult to make a judgment on whether Greece and Turkey should be pressed to increase their military strength to meet Force Goals and suggest that additional assistance be made available to permit them to do this. That is, the Mission would not be able to suggest that these two countries should be singled out for special assistance for this purpose, although if they did try to meet NATO Force Goals, they would need special assistance.

Secondly, so far as economic assistance was concerned, there appeared to be general agreement on the requirements of Turkey. However, the Mission felt that Greece would need ``unorthodox" aid for a transitional period of two to three years. During this two to three year period, loans limited to the foreign exchange costs of projects would not satisfactorily meet the problem because the Greeks would have difficulty in mobilizing the needed domestic resources. Mr. von Mangoldt said the Greek capital market was still limited and could not be depended upon to provide the necessary resources. With time he felt it would grow. Mr. Ferguson noted that the Greeks could raise drachma for their investment program if they cut their defense expenditures, but the Mission would not want to make such a recommendation. Mr. von Mangoldt said the Mission understood the United States decision to terminate the grant assistance to Greece, but he believed that loans should be made available to cover not simply the foreign exchange costs of projects.

In response to the Secretary's question as to what the order of magnitude would be, Mr. Ferguson replied that the Greeks might need external assistance of $20 - 30 million annually in 1963 and 1964, after allowing for assistance they would get from the European Investment Bank. This would provide the same type of assistance to the Greeks as they had received previously in the form of Defense Support funds from the United States, and assumes no rapid increase in military strength to meet NATO Force Goals. This presents a difficult technical problem, Mr. Ferguson stated, but it was only a technical one and not a major one. The Secretary then asked if there would be any problem created if the Mission reported an uncovered gap. Mr. Kohler said he thought this was not a problem and suggested there might be some advantage to reporting the minimum requirements of Greece, even if it could not be guaranteed these would be met. Mr. Ferguson added that the Mission's report will identify the needs, try to get NATO to agree on the reasonableness of the needs and leave to the NATO members to decide if they are willing to commit themselves to acting on these requirements. This type of report would have a bearing on the use the Greeks make of their internal resources.

Mr. Faure asked again about NATO's role in dealing with the Greek-Turkish problem and whether this should be done directly or indirectly. He suggested that the military assistance might be handled within NATO while economic assistance could be handled outside NATO. The Secretary said this is our preference too. Mr. Faure then asked whether NATO might not participate as an observer in any consortium, even on economic assistance, that might be arranged. Mr. von Mangoldt said from his OECD experience, he knew this would give the neutrals trouble. The best formulation, Mr. Ferguson stated, would be for the individual NATO members, as separate Governments, to agree to take some action. The Secretary added that the report could recommend to NATO that further action properly belongs in other organizations. He noted that if action were taken in OECD, the delegates in the OECD are, after all, not strangers to NATO, many represent the same Governments and will be acting under instructions from their Governments. It is the governments which would be acting, rather than NATO as such. Mr. Faure said he thought we were right.

Mr. Ferguson referred to previous resolutions in NATO on Greece and Turkey and said the Greeks and Turks would feel deceived if the same thing were to happen again. The Secretary expressed hope that NATO delegates would be prepared to say that the Delegate's government, and not only that NATO as an organization, accepts the report. He then raised a question about a NATO military fund. Mr. Faure said there are two proposals--one for a military fund and the other for an economic fund. The latter, which was a mutual assistance fund mainly for defense support, had been mentioned previously by Foreign Minister Averoff at the Oslo meeting but the Greeks, who were supposed to submit memoranda on the subject, have never done so. Mr. Vincent said he thought the Greeks meant a mutual assistance fund for military assist-ance but supposed that the Greeks were awaiting the outcome of the Mission's report, before pursuing the matter further. Greece appears to want a Special Fund relating military and economic aspects of assistance and emphasizing the importance of their tie-in to NATO.

Mr. Faure said the Mission must find some formula which demonstrates the NATO interest in Greek-Turkish problems, or, at least, would not entirely conceal the NATO role, but he admitted that the Greeks would probably be satisfied if enough aid were forthcoming regardless of its source. He asked whether, for example, if a consortium encountered problems, NATO could not help by prodding. Mr. Ferguson said he thought this was the responsibility of individual member governments. Mr. Kohler noted this is devolved on the Secretary-General of NATO to see that the resolution approved was implemented by member governments. Mr. Faure then asked the Secretary whether he had any further thoughts he wished to pass on. The Secretary said there might be a problem arising from the difference between any action that might be taken as a result of the report and the expectations of Greece and Turkey. Mr. Ferguson commented that he did not believe the United States would have impossible problems in terms of United States resources. He thought it important for the United States to provide funds to Greece over and above the foreign exchange costs and he believed AID would have the funds and flexibility to do this. Mr. Miner suggested this would provide an opportunity for other NATO members to help and Mr. Ferguson added this was exactly what the Mission had in mind.

The Secretary advised it would be good if both the Mission and the United States Government would feel free in the next month to keep the channels open for further exchanges of information. This was agreed to on all sides and it was also agreed that Ambassador Tuthill in Paris would be the logical point of contact.

Mr. von Mangoldt said that on Turkey they had nothing new to add. They could foresee that about $300 million a year would be required in 1963 and after. Mr. Faure said that NATO should take full cognizance of the military burden which each country has and to meet in some way the hopes of the Greeks and Turks and not simply relegate the problem on the economic side to other international agencies. He understood that NATO could not, however, take direct responsibility. The Secretary asked whether we could not talk to the Greeks since, although the problem is of direct concern to NATO, the means for dealing with it may require getting at it outside NATO. The Secretary thought that we might prepare Greece for the general approach that what is needed is a commitment from NATO Governments to follow through on action outside NATO since it is essentially governments who are involved in this responsibility.

328. Telegram From the Embassy in Greece to the Embassy in France

//Source: Department of State, Central Files, 781.5/3 - 662. Secret; Niact; Noforn. Repeated to the Department of State and Rome. The source text is the Department of State copy. President Kennedy appointed Henry R. Labouisse Ambassador to Greece on December 18, 1961, and the Senate confirmed the nomination on January 29, 1962. He presented his credentials to King Paul on March 7.

Athens, March 6, 1962, 3 p.m.

124. Paris for General Norstad, Stoessel, McGuire and USRO. Rome for Admiral Hussell and Rood. Gen. Frontistis plans call on Gen. Norstad March 7 to present results military studies showing reductions required three Hellenic services beginning January 1, 1963 attributed withdrawal US defense support in 1963. Proposed reductions already notified by Chief JUSMAAG Athens to Gen. Wheeler. Drastic cuts planned seem designed reduce expenditures to levels substantially below what would seem be required if objective confined to reduction defense expenditure for 1963 by amount of withdrawn defense support.

There has been no effort on civilian side of Greek Government to allocate resources to military completely or even partially to fill gap created by withdrawal 1963 assistance even though this clearly possible in light of overall budget increase equivalent $96 million, of which only $33 million investment. Balance $63 million for miscellany of general purposes. We forced to conclusion Greeks have come to fundamental decision that except as external grant aid may be available they entitled to and should reduce level their defense effort (measured against GNP) to levels other small NATO powers. They using withdrawal 1963 defense support as cover for this decision.

Following analysis may be helpful:

(1) Although level support 1961 and 1962 commonly thought of as $20 million, in fact retention 10 percent of generated counterpart by US for own use brings figure to $18 million.

(2) Carry-over during calendar 1963 estimated at $5 million. This results from time required to procure imports with US dollars and collect the drachmae from Greek importers. Effect of reduction in 1963 therefore about $13 million.

(3) This amounts to 1.6 percent of the 1962 Greek budget.

(4) Military apparently arbitrarily excluded from sharing in steadily increasing tax revenue. If military got proportionate share of increase $6 million additional would be available annually.

(5) By financing larger proportion investment budget through international loans, Greece could, if it wished, divert some of its own financial resources and investment to defense. US, Common Market, Germany, possibly other NATO allies all possible sources of substantial loans for construction projects and equipment.

In summary cessation American grant aid need not have such drastic effect unless Greek Government wants it that way.

However, unless US credits on easy terms and in amounts at least sufficient to equalize past grant aid can be available promptly, there appear to be serious economical, political and psychological factors which will make it extremely difficult if not impossible for government to maintain military expenditures we desire.

I shall comment further on this subject later.

Labouisse

329. Memorandum From the President's Special Assistant for National Security Affairs (Bundy) to Secretary of State Rusk

//Source: Department of State, Central Files, 811.0081/4 - 2362. Secret. Also sent to the Secretary of Defense and the Administrator of the Agency for International Development. A note on the source text indicates the memorandum was received and distributed in the Department of State as NSAM No. 139.

Washington, March 23, 1962.

I am concerned lest if we increase MAP for Greece as is, I gather, being advocated by General Norstad, we will be going contrary to the President's instruction in NSC Action 2447 of last January 18th./1/ In effect it called for prompt further reviews of US aid programming for certain key countries, including Greece, and recommendations by July 15 for proposed FY 1964 - 68 military assistance plans (including the final proposed FY 1963 program) on certain alternative bases.

/1/This NSC Action instructed the Agency for International Development to prepare a study of its programs with an emphasis on the mix of military and economic assistance, alternative programs, and, in the case of Greece and Turkey, to take into consideration the special factor of their NATO membership. (Ibid., NSC Files: Lot 70 D 265, NSC Meeting, January 18, 1962)

My query is whether a quick decision now would not at least partly prejudge the outcome of this exercise. If a quick decision is imperative, we must of course bite the bullet. However, in view of the President's desire for a thorough-going review of the Greek and Turkish aid programs, I believe we should consult his wishes in this case.

McGeorge Bundy

330. Despatch From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 781.00/3 - 2662. Confidential. Drafted by Stearns.

No. 619 Athens, March 23, 1962.

REF

Embdesp #604 of March 8, 1962/1/

/1/Despatch 604 reported on political attacks on the Crown and on the efforts of the Royal family to improve its public image. (Ibid., 781.11/3 - 862)

SUBJECT

A Winter of Discontent: Some Implications of the Current Political Maneuvering in Greece

1. It is apparent that the Center Union's campaign to nullify the results of the October 29, 1961, elections is turning into a broader and more fundamental attack on several of the governing institutions of Greece; what started four months ago as a disgruntled effort on the part of the defeated opposition to challenge the legitimacy of the elections, and therefore of the Caramanlis Government, is becoming an effort to challenge the legitimacy of certain Greek institutions, such as the Palace, the military leadership, and the internal security forces which, in the minds of the opposition, exerted undue influence on the conduct of the elections. To understand the significance of this challenge, and to estimate the lines of its probable development, it is useful to consider briefly the electoral debate itself and to see what, if anything, the opposition has proved by its campaign.

2. The general charge advanced by the Center Union against the Dovas Service Government is that the conduct of the elections was characterized by force and fraudulence (``via kai nothia" in the euphonic Greek phrase). The evidence adduced by the opposition to support the charge falls into two categories: (a) evidence designed to show that many voters, especially in the Athens area, were illegally registered, and that military voting registers were not made available to party repre-sentatives for inspection within the time specified by law; and (b) evidence of police pressure on individual voters in some provincial areas.

3. While the Center Union, for purposes of its campaign, has tended to lump the evidence together, and to draw from it extravagant conclusions about a ``master plan" to rig the elections in favor of ERE, objective examination of the evidence makes clear that much of what the opposition has been talking about is not malfeasance but nonfeasance. That is, with respect to the civilian vote the opposition has proved numerous technical violations of the law, especially as it affects the registration of voters, but has failed notably to prove that the elections as a whole were rigged. Thus, despite all the time that the opposition has spent rooting through the registers, not a single case of double voting has so far been proved and the Government has been able to show that a number of illegally registered voters were in fact supporters of the opposition.

4. With respect to the military vote and the activities of the police and para-military TEA forces in the provinces the evidence, while scattered, is somewhat more persuasive. Numerous [less than 1 line of source text not declassified] reports tend to confirm that the Army high command bent every effort to deliver a heavy vote for Caramanlis and that General Kardamakis, the Chief of Staff of the Hellenic Army and a long-time associate of the Prime Minister, was deeply involved in the electioneering. The pre-electoral activities of TEA and the gendarmerie do not appear to have been so explicitly pro-ERE; the mission of the internal security forces was to hold down the vote of the extreme left. Nonetheless, in at least one instance, that of the Police Chief in Methoni, the Courts have found evidence of strong-arm methods employed against a non-Communist, and it is permissible to question the wisdom of allowing provincial constabulary to intervene in free elections even when motivated by anti-Communism.

5. The conclusions to be drawn from these observations are the following: (a) while there was no widespread adulteration of the civilian vote, the administration of the elections was poor and open to abuse by all parties; (b) the Army leadership was overly involved in the campaign and inadequate restraints were placed on the activities of the internal security forces in the pre-electoral period.

6. It is probable, as some Government spokesmen have said, that similar conclusions could have been drawn from any Greek election, including those conducted by the present opposition leaders. However, what was acceptable, or at any rate accepted, practice in 1951 or 1956 may not be so today. The Center Union, under the purple banner of Papandreou's oratory, has ridden off in all directions and in so doing has created much confusion about the real issues raised by its attack on the election results. These issues do not, as the Center Union would have us believe, pose the question, ``who should govern Greece?" They do, however, raise important questions about the way Greece should be governed.

7. If we accept this line of reasoning, it becomes easier to see why the Greek public's response to the Center Union campaign has been mixed and why the campaign itself has shifted emphasis so markedly in recent weeks. There has from the beginning been a measure of reserve and skepticism in the public's attitude toward the Center Union and especially toward its leadership. No serious observer of the Greek political scene believes that Papandreou and his ill-assorted coalition command as much popular confidence as Caramanlis, and once this is admitted the most extreme of the opposition charges become transparently ridiculous. Many people believe, however, that the Palace, the Army leadership and the internal security forces intervene too much in the political life of Greece, and that the sluggishness of government administration, its apparent unresponsiveness to individual needs, has created a potentially dangerous gap between the governing class and the governed.

8. For this reason public opinion, which was apathetic about the Center Union's attack on the election results, has appeared more receptive to its attacks on the Palace. It explains why many intellectuals who have little or no use for the leadership of the Center Union nevertheless feel that in questioning the impartiality of the Army leadership and the gendarmerie the opposition is performing a useful service. Finally, it indicates how, almost without realizing what they are doing, the Center Union leaders find themselves conducting a very different campaign from the one they began four months ago. In recent weeks the implicit issues have simply become explicit.

9. Greece, it is often said, is in mid-passage, but the phrase is usually used to describe a stage in the country's economic development. It is less widely understood that Greece is also in mid-passage socially and politically. Methods of administration appropriate to the conditions of prewar Greece; habits of thought suitable to the period of the Bandit War; royal prerogatives which survived in the atmosphere of an earlier and less enlightened time; these are a few of the anachronisms whose continued existence vexes the public and will trouble the Government until they are resolved. These are real issues, as opposed to the synthetic ones which the Center Union introduced at the beginning of its campaign. The apathetic response of the Greek public to Papandreou's attempt to discredit the elections (which the public correctly identified as political opportunism) has, in effect, forced the Center Union leadership to change the focus of its attack.

10. In these somewhat changed circumstances the danger to Caramanlis does not appear to be especially serious at the moment. The immediate threat was diminished as soon as it became clear that a majority of the Greek public were extremely skeptical about the most violent and politically-motivated of Papandreou's charges. When the Prime Minister was able to ascertain that public confidence in the Government had not been shaken, his position became simpler and his principal concern one of holding together the versatile but high-strung group of men who compose his present cabinet. So far, he has managed to do this with consummate skill. Ministers whose personal loyalty he has reason to doubt--Finance Minister Theotokis and Interior Minister Rallis, in particular--have been those to whom he has assigned responsibility for conducting the Government's defense in Parliament. This strategy has enabled the Prime Minister to avoid direct participation in the election debate and has forced ministers of untested reliability to commit themselves publicly on a subject they might have preferred to finesse. The total effect has probably been to strengthen the cohesiveness of the Government and to lessen the danger that it can be brought down from within, as it was in 1958.

11. The Prime Minister's success in holding together his cabinet also strengthens his position with the Palace. An important objective of the Center Union has been to convince the Royal Family and, to a lesser extent, the American Embassy that the Caramanlis Government is ``irregular" and therefore a source of political instability in Greece. When the opposition leaders call for a ``transitional" government they are appealing to the Palace to replace Caramanlis with some compromise candidate whom they would support until new elections were held. Given the well-known lack of personal rapport between Caramanlis and the Palace, the Center Union reasons that this scheme might be acceptable to the Royal Family if they become convinced (a) that the Prime Minister was not giving them adequate protection from political attack, and (b) that a compromise candidate of their own choice would receive widespread bipartisan support in Parliament. In such a situation the likeliest candidate would be Theotokis, who enjoys close personal relations with the Royal Family, is well regarded by backbenchers of both Government and center opposition, and has no great affection for Caramanlis. Other, more remote possibilities would be Rallis, Minister of Coordination Papaligouras, or Minister of Commerce Pipinelis. It is perfectly clear, however, that this strategy has little chance of succeeding as long as Caramanlis remains in full command of his cabinet and his party. In recent events, there is no sign that his grip is relaxing or that rumored anxieties of the Royal Family are being exploited to his political disadvantage.

12. Indeed, at present it is the Center Union leaders who seem to be in trouble. Papandreou has become enmeshed in a tiresome debate with ex-Liberal members of the cabinet about who is entitled to wear the mantle of the elder Venizelos; the Center Union rank-and-file are deeply divided on how to phrase their criticism of the military leadership and an open letter which the party recently addressed to the Armed Forces, denouncing their present leaders as ``unworthy", was revised so often that its eventual release was anticlimactic; lastly, at a time when public interest is centered on Princess Sophie's dowry, the financing of the Queen's Fund and other matters involving the Royal Family, the Center Union finds itself half in, half out of Parliament and created a further impression of confusion by rushing off to Crete on March 18 for a mass rally on the elections.

13. Assuming that public confidence in Caramanlis remains unshaken, we are justified in concluding that the Government will ride out the present agitation. In its fumbling way, the Center Union has found in the Palace and in some questionable political activities of the military and internal security forces valid issues with which to attack Caramanlis. Its confused handling of these issues, however, provided the Prime Minister with the time he needs to fashion at least temporary solutions to the most pressing of his problems. It is to be hoped that he will do more than that. Basic reforms are long overdue in Greece's internal security legislation, in the way the country conducts its elections and in the way the Royal Family comport themselves. The changing character of the election debate has clearly demonstrated that it is in these areas that the Greek public is looking for effective action from the Government.

For the Ambassador:

H. Daniel Brewster

Counselor of Embassy

for Political Affairs

331. Telegram From the Embassy in France to the Department of State

//Source: Department of State, Central Files, 375/4 - 762. Secret; Priority; Limit Distribution. Repeated to Athens.

Paris, April 7, 1962, 3 p.m.

4766. Department pass Defense. From Stoessel. Embtel 4723 and Polto 1333./1/ Following text (non-essential words omitted) memo for record dictated by Gen Norstad regarding his discussion with Greek PriMin April 6:

/1/Telegram 4723 from Paris, April 5, reported that Norstad and Frontistis had agreed that, pending the completion of NATO's study of the Greek defense situation, Greek forces would remain at existing levels. (Ibid., 375/4 - 562) Polto 1333 from Paris, April 6, reported that Averoff was dissatisfied with the Wise Men's report and believed that it would cause considerable political harm to the Karamanlis government. (Ibid., 375/4 - 662)

Begin text.

1. Friday 6 April, lunched with Caramanlis, FonMin Averoff, and Secy Gen Fon Office home Amb Melas, Greek PermRep NATO. Since I warned Caramanlis extremely disturbed about econ Wise Men's report/2/ and he wished discuss this with me, I myself broached subject by asking if he wished spoil his digestion by discussing Greek mil budget problems during luncheon. Ensuing discussion extremely frank throughout.

/2/NATO document AC/213.D/2.

2. Caramanlis without question seriously disturbed, in fact angered, conclusions Wise Men's report. He indicated Averoff already stated strong objections NATO Secretariat and Melas would be instructed reject report at early meeting NATO Council. Stated he failed persuade Americans on problems Greece on recent visit in States and attitude United States, together with Wise Men's report, very discouraging. Assured me lack external assistance in proper form would not change his policy and he would continue support NATO wholeheartedly; however, Greece's contribution would have be seriously curtailed.

3. I responded by stating I felt rejection report would be mistake since such action would not help him achieve any results and same time would tend alienate others, including many his friends. I very definitely indicated outright rejection at this time would not be well recd by United States. I gave this as my opinion and not result any indication from United States. I indicated Greece could state her objections parts report if she felt that had be done, but an outright rejection would be most unproductive. This position clearly had support Melas and I believe also Averoff. PriMin, as translated by Secy Gen of FonOff, did not yield on this point at this time.

4. I reviewed my meeting with Frontistis on 7 March 62, taking advantage this opportunity make it abundantly clear that I had given Frontistis figure $50 mil as gap ceiling, indicating limits within which he should work, with no suggestion as to how gap would be filled or in fact, without any indication it could be filled by any means. This point there discussion whether it best consider matter on NATO basis or bilaterally, and I suggested that, while I knew no decision on part United States on this particular point, there some indication willingness consider joint Greek-American approach in first instance (see DEF 911870)./3/ There appeared be general agreement bilateral approach would be better course, at least as initial step. There followed brief consideration level at which such discussions should take place, in course which I stated in reply to question that United States side would probably be headed, at least nominally, by Amb or Assistant or Under Secy level, depending location discussions took place.

/3/Not found.

5. I suggested Frontistis be encouraged provide us with reply on force goals as early as possible, since this essential basis for any further discussions.

6. Caramanlis ended talk by stating because Greek public opinion he could not promise not publicly reject Wise Men's report, but because my advice he would give it further consideration. As Melas saw me to door, he suggested, since Averoff seemed sold this line, he quite hopeful.

7. From this meeting I conclude Caramanlis will not publicly reject Wise Men's report, NATO Council. Greeks will probably make effort separate Greek and Turkish parts report, hoping former can be held up on basis Wise Men will consider additional information which has become available since visit to Greece--an action for which appears be some justification. It obvious Greeks hoped subject would not be discussed Athens since do so could be embarrassing hosts and guests alike.

8. I recommend United States take initiative in proposing bilateral consideration Greek def budget, basing action in general on long association in creating and maintaining Greek mil strength and specifically on request made by PriMin in letter to SecState 28 June 61,/4/ which has been acknowledged, but to which, according Greeks, no real reply of substance recd. Fact meeting would be directed toward def problem would in no way preclude consideration broader econ and financial problems Greece.

/4/Not further identified.

9. Believe this joint approach problem would not only contribute directly solution but also prove most useful smoothing over what has become quite sticky situation. For instance, Greeks claim have been told Wise Men's report reflects American thinking and Averoff said he had been told report itself written by State Department. I dismissed remark by simply saying I did not believe it. Whatever action taken, early indication most important.

End text.

Gavin

332. Memorandum of Conversation

//Source: Department of State, Central Files, 375/5 - 362. Confidential. Drafted by Kupinsky and approved in S on May 6. The meeting was held in Prime Minister Karamanlis' office.

US/MC/29 Athens, May 3, 1962, 6 p.m.

UNITED STATES DELEGATION TO THE TWENTY - NINTH MINISTERIAL MEETING OF THE NORTH ATLANTIC COUNCIL

Athens, Greece, May 4 - 6, 1962

PARTICIPANTS

United States

The Secretary

Ambassador Labouisse

Mr. Robert Schaetzel

Mrs. Ruth Kupinsky (Reporting Officer)

Greece

The Prime Minister Caramanlis

Foreign Minister Averoff

Coordination Minister Papaligouras

Ambassador Palamas (Dir Gen of Fon Off)

Mr. Jean Grigoriadis (Reporting Officer)

SUBJECT

Discussion of Outstanding Problems Affecting Greece at NATO Meeting

Disarmament and Nuclear Testing

The Secretary said that the key questions at the NATO Ministerial Meeting would be Berlin and disarmament. On disarmament, it is clear that the Soviets will not accept inspection, and without inspection there can be no disarmament. The Soviet position is basically a propaganda position. This puts the US at a disadvantage since US proposals are based on what we can genuinely accept and are, therefore, more modest than Soviet propaganda recommendations. US proposals are based on Stage 1 which would protect the land mass under NATO and we would only move into Stage 2 when we were sure of Soviet intentions.

The US expects the Soviets to resume nuclear testing. We would be glad to stop tests under a nuclear treaty. If we could stop today, this would be consistent with the security of the free world. If the Soviets do not stop testing, however, we will compete with them. We have made extraordinary efforts to reach agreement on ending all tests, without success.

In response to a question from the Prime Minister, the Secretary said that the French were not taking part in the disarmament discussions and we assumed that this was due to their nuclear program. With regard to the Germans, both on Berlin and nuclear testing, the US and German positions were alike and we worked closely together. We would also have to negotiate what disarmament would involve for other countries not now directly participating in the discussions. It was essential that the balance of forces not be disturbed at any stage.

Berlin

The Secretary noted that during the Berlin crisis, attention is being given to the central front where forcible intervention might occur. During the discussion of the central front there has been less consideration of other fronts, including the US, and this has opened up the question on whether there is less interest in the other fronts. The Secretary assured Greece that we consider our commitment is to all of NATO, including Greece and that an attack on any part of NATO would bring into play NATO forces including US forces, to that area. President Kennedy wanted the Secretary to make this clear.

The Prime Minister said he thought the Soviet Union took advantage of ambiguities of the NATO countries to create frictions. He thought we should agree on common positions among ourselves and state these firmly to the Russians. The Secretary said that the effectiveness of this approach could be illustrated by Berlin where we have stated firmly that there is unanimous agreement by the Western powers that the presence of Allied forces in Berlin and free access to Berlin are not negotiable.

Aid to Greece

The Secretary observed that with a strong and more independent Europe, the Alliance has a more difficult problem on consultation than in previous years. He also noted that while NATO is primarily interested in the problems of the West and in confrontation with the Soviets the US also has to take an interest in problems of other areas of the world, particularly Latin America and the Pacific. The US gives the NATO area first priority in the struggle with the Soviets, since Europe plus North America are central to this problem.

With the emergence of 50 to 60 newly independent countries, the US has been called on for more foreign assistance and it is now particularly important that other industrialized countries also contribute to such assistance. This is important to the Alliance since the US could not continue to extend the aid required without the participation of other countries. The US will not do less than it has been doing, but is concerned that others do their part, and, in this context, the idea of consortia is important. Multilateral assistance, while adding to the unity of the Alliance also complicates its task. From the point of view of the recipient country, multilateral aid is not as simple or as comforting an arrangement as bilateral arrangements, since it takes time to negotiate and is complicated. This is one of the questions involved in the Wise Men's report on Greece and Turkey.

What is required at the NATO Ministerial Meeting in Athens is a moral commitment from the member countries of the Alliance that the needs of Greece and Turkey are important and that the members of the Alliance will move ahead to work out arrangements to meet these needs. Ten years ago Greece was covered by the solid woolen blanket of US assistance. Now the way must be opened to weave what in America is called a ``crazy quilt," pieces of quilt which when put together make a warm covering. It should not be difficult with the Greek Ambassador, the US Ambassador and Mr. Stikker to find a good combination. The US has in mind such possibilities as infra-structure, which could be handled by Mr. Stikker, and development loans, Export-Import Bank loans, and increased consumables in the military assistance program, all of which could be handled here in Athens. The US envisages such countries as the UK, France and Germany participating in the combined program, and the US is prepared to work quickly with all involved since we realize that Greece has a time problem. The Secretary said he believed that the important question was not what was in the Wise Men's report, and to which we understood the Greeks took exception, but that the countries in the Alliance recognize the requirements of Greece and commit themselves to do what was needed to meet them. Regarding the magnitude of the Greek requirements, the US envisages intimate bilateral consultations with the Greek Government in Athens on this question. It was also important to undertake a multilateral program with other interested countries, in which the US would have a large and active role. The Secretary emphasized the strong interest of President Kennedy in economic and social development. It was in the US interest to encourage Greek military strength and sustained economic development.

The Prime Minister agreed that the US principle was right but that Greece found the Wise Men's report unacceptable. The report not only does not help Greece but creates difficulties in solving Greece's problems. One of the Wise Men, Edgar R. Faure, had said he was ``ashamed" that he had signed the report, since it was inaccurate and unjust. He had attempted to amend the report but Greece understood that Mr. Ferguson, the American, disagreed with this approach. Greece understands Stikker had also expressed disagreement with the report. Norstad was also understood to have said the report was incorrect, but urged Greece not to reject it. Since the question of the status of the report was now a matter of prestige, Stikker had suggested finding ways of ameliorating it.

Caramanlis said that the report created three problems for Greece: (1) From an economic point of view, the report created problems for the future since it was a bad appraisal of the country's economy and its needs, and its estimates and conclusions would be used as guidelines in further consideration of Greek needs; (2) it results in an internal political problem because if the Government accepts the conclusions of the report, the political opposition would charge that the Prime Minister had not done enough to present the true situation; and (3) it creates an internal NATO problem since it gives rise to bitterness. Caramanlis said that he felt that they would be better off without the report.

On the economic side, the primary difficulty with the report, according to Caramanlis, was that the Wise Men took into consideration only the balance of payments gap. Caramanlis said Greece has a budget deficit problem. If the Wise Men had considered the whole budget, i.e., the military, regular expenses and public investment, they would have come out with a deficit of $150,000,000 for this year, compared with the Wise Men's estimate of a need for $30,000,000 each year. The Prime Minister said that of this deficit Greece could raise $30,000,000 to $40,000,000 through internal borrowing, leaving a deficit of $110,000,000 which would have to be met by foreign assistance. Greece has a five-year program on which it has already begun. If funds are not found to continue this program Caramanlis said he would have to stop this program which is already successful. Public investment in economic infra-structure, such as roads and electric power, was an absolute necessity in Greece and if it were reduced this would have serious political and social repercussions. On the military side, Caramanlis said Greece cannot finance its military programs through loans and, therefore, believed that external assistance should be split between loans and grants.

Caramanlis said that his economic program had succeeded through his taking a hard political line and that at this stage the program is at a critical turning-point. Greece feels it is being abandoned, instead of appreciated, by the Wise Men's report.

Caramanlis said that Greek hospitality for the NATO meeting in Athens does not permit her to reject the report, despite Greece's strong feelings on this subject. He could not accept the Stikker - NAC resolutions without amendments, since these resolutions refer to the Wise Men's report. The Secretary replied that the resolutions also refer to other reports, including a Greek memorandum. He suggested that the Greek Foreign Minister in accepting the resolutions at the NATO meeting could present a statement making the points made by the Prime Minister in the conversation. If the resolutions in their present form were accepted by the NATO countries, Greece would have a commitment from member governments that they would take all appropriate measures to meet Greek needs. In the multilateral arrangements in the OECD which would follow this commitment, the US would inform other countries what we can do to assist Greece, as leverage to obtain contributions from other Governments. The Secretary assured Caramanlis that the US had never let Greece down and would not do that now.

The Secretary went on to note that the US also has problems. Congress has made important changes in the aid program requested by the President, substantially reducing support assistance. The US also has a balance-of-payments problem, chiefly because of its contribution to NATO. In addition, the US has a budgetary problem, largely due to its debt resulting from loans it had made for its military programs. The Secretary said in the light of this situation, he could not be expected to take back to our Government for sympathetic consideration the Greek position that it could not finance defense programs through loans.

The Secretary said that the American proverb ``There are many ways to skin a cat," was apt to the present situation. He had no doubt that a way could be found to meet Greek needs if we could get a moral commitment from NATO countries at this NATO meeting. The Secretary was inclined to think that the public relations problem was most of the difficulty. If this was so, the question is how to handle the problem of public opinion and not to be concerned with the Wise Men's report. The Secretary said he was sure that when responsible governments in the OECD consider Greek development needs they will not be bound by the figures in the Wise Men's report.

Caramanlis replied that he would not bargain on a matter of principle and as he considered the Wise Men's report inaccurate and unjust, he could not accept it as a basis for evaluation of the true Greek situation. He said he always had the courage to tell the truth about his position and that of Greece, and whatever decision was taken at the Athens meeting, Greece would remain the most loyal ally in NATO and of the US. Since Greece does not want to reject the Wise Men's report at the Athens meeting, Caramanlis said he had amended the Stikker resolutions both on substance and procedure. If the US could not accept these revisions, Caramanlis said Greece would have to reject the report.

The Secretary said we would consider the Prime Minister's proposals and let him know our position. The US is interested in the ``inner reality" of the Greek problem and a sound solution to this problem. Greece has an obligation to clarify at the Athens meeting how Greece sees the situation since otherwise, other governments might get the wrong impression of the Greek position.

The Prime Minister agreed and said he would submit his amendments to the US Delegation early tomorrow morning./1/

/1/No copy of these amendments has been found. The North Atlantic Council adopted resolutions concerning the special economic problems of Greece and Turkey. The resolutions called on countries to assist Greece and Turkey and called for examination of the urgent establishment of consortia for aid. See vol. XIII, pp. 389 - 393. In the NATO Final communique issued on May 6, the Ministers also ``agreed to establish a study group to consider further the special defense problems of Greece." For text of the communique, see American Foreign Policy: Current Documents, 1962, pp. 541 - 542.

333. Memorandum From David Klein of the National Security Council Staff to the President's Special Assistant for National Security Affairs (Bundy)

//Source: Kennedy Library, National Security Files, Staff Memoranda, Klein. Secret.

Washington, July 11, 1962.

SUBJECT

Greece and the Defense Budget

Labouisse's telegram 23/1/ and his conversations with the Greek Prime Minister on the question of the defense budget is under study by State, AID and Defense.

/1/Telegram 23, July 7, reported on three separate discussions between Ambassador Labouisse and Karamanlis on Greek defense and economic assistance requirements. (Department of State, Central Files, 881.10/7 - 762)

The consensus remains that $175 million is a good figure and that the United States Government should not permit itself to be pushed to finance the higher SHAPE estimate. There is no military justification for the higher figure. From a purely economic standpoint, there seems to be no need for increased U.S. assistance. This problem--taken by itself--seems to be one of weaning the Greeks from continued and interminable dependence upon us.

At this juncture there seems to be agreement within the government agencies concerned on new tactics for dealing with the defense budget problem. Until now we have insisted that $175 million was the optimum figure and there was no justification for more. However, it is now being proposed that, instead of a categorical reply, the Greeks be told the United States remains committed to the $175 million target figure but if the Greeks feel that $197 million is what they want, the United States would not object to their seeking the additional $22 million from other non-U.S. sources.

(Frankly, from my reading of the cables on the Labouisse - Karamanlis talks, I get the uneasy feeling that we are focusing almost all our attention on symptomatic aspects of the basic problem rather than the basic problem itself--the reason for Karamanlis' mood and his entire catalogue of complaints which clearly go beyond the specific military and fiscal problems.)

As for handling the defense budget exercise, there are at least two schools of thought. One is to let Karamanlis write the President about this problem, as he threatens to do; the other is to have the Secretary or Under Secretary of State take the initiative and speak with the Greek Ambassador here, spelling out the U.S. position, making it clear that there is an absolute identity of views on this problem between the President and the Secretary of State.

Bob Komer leans to the first approach--letting Karamanlis write the President. Of course if Karamanlis is determined to do this, there is no way--or reason--to stop him. For our part, however, I think it preferable that, in the first instance, the Secretary or Under Secretary of State speak with the Greeks; try to probe their thinking a little more carefully than has been done; attempt to convince them that as far as the defense budget is concerned, we have studied the problem carefully and sympathetically; we have come up with what seems to us the right proposition; and that this decision is that of the U.S. Government and not merely of the Department of State. Karamanlis may still write the President, but, in my view, the Secretary should delve into the problem and at least establish its nature before the President becomes involved personally./2/

/2/In telegram 32 to Athens, July 14, Secretary Rusk instructed Ambassador Labouisse to inform Karamanlis that the United States had not changed its policy of seeking close ties with Greece and would make every possible effort to find sources of military assistance for Greece. (Ibid.) The Secretary made similar points in a July 17 meeting with Ambassador Matsas. A memorandum of their conversation is ibid., Secretary's Memoranda of Conversation: Lot 65 D 330.

The White House will be consulted before any single course of action is taken. In the meantime I will stay in touch with Bob Komer and make sure that you are informed of the latest developments. And perhaps it might be useful if Bob and I had an opportunity to talk with you in the next day or so about this matter to be certain we are all working on the same frequency.

DK

334. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 781.5/7 - 3062. Confidential; Priority.

Athens, July 30, 1962, 7 p.m.

119. Eyes only for the Secretary. Because I fear we are about to contribute unnecessarily to the differences which exist between us and the Greek Government on the question of our aid to the Greek defense effort, I would appreciate your personal consideration of our position. Embtels 113 and 114/1/ are the last of a series of exchanges which involve not only the question of the amount and form of our aid to Greek defense, but also the manner in which we propose to provide it.

/1/Telegram 113, July 28, reported Labouisse's belief that the Greek Government was ready to increase its defense spending to the $165 million level and suggested that talks be held in Athens, preceded by indications of U.S. willingness to contribute an additional $5 million to its 1964 Greek economic assistance package. Telegram 114, also July 28, outlined Labouisse's objections to NATO procedures and tactics for negotiations with Greece on the interrelated issues of economic development and defense assistance. (Both ibid., 375/7 - 2862)

The Greeks have undoubtedly exaggerated the harm they will suffer by the withdrawal of our defense support in 1963; they have chosen to look at the ``deeper implications." I have lost no occasion to make clear to them the basis for our decision and how we foresee they should be able to solve their defense budget problem. Although they understand our position intellectually, they continue to entertain a substantial suspicion that we are drawing away from the intimate relationship which has existed since the beginning of the Truman Doctrine.

It is only natural that unreasonable and exaggerated Greek reaction to our policies should generate impatience on our part, however much we try to avoid it. But I hope we will take Greek attitudes into account (as an important and unavoidable factor in our problem) not only as concerns the substance of our decisions, but also for the manner in which we choose to carry them out.

More is at stake than the Greek defense program (which I hope we think is important). The departments of our government enjoy many privileges in this country. Because of our special relationship these privileges are not only extensive but given ungrudgingly, without condition or demand for quid pro quo. To the degree we dilute that relationship by what the Greeks consider a lack of understanding, we will find it increasingly harder to get and keep such privileges.

As this relationship is important to us and as there can be no question of the Greek need for assistance in their defense effort, I feel strongly that we should follow the line recommended by the Embassy, particularly in Embtels 113 and 114.

Labouisse

335. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Conference Files: Lot 65 D 533, CF 2149. Secret. Repeated to Rome.

Athens, September 4, 1962, 7 p.m.

322. CODEL Johnson. Following is summary record conversation between Vice President Johnson and Prime Minister Caramanlis September 3 9:45 am at Prime Minister's office./1/ Conversation summarized herein followed 30 minutes private talk between VP, Prime Minister, Foreign Minister, Amb Labouisse and Komer. This summary prepared by Bowling and cleared with Amb Labouisse. Also present were Averoff, Papaligouras, Matsas, Palamas, Komer, Busby, Brewster, McCoy and Caramanlis' private secretary. Papaligouras acted as principal interpreter.

/1/Vice President Johnson visited Greece August 31 - September 4, at the conclusion of a 5-nation tour.

Summary

Discussion centered on acceptance by Greeks discontinuance supporting assistance, and methods by which US aid for FY 63 could most effectively meet Greek needs. VP promised strong support for most effective possible aid program. Caramanlis asked US approach other NATO powers to encourage defense assistance. VP said Greeks must take initiative here; US would then support.

End Summary.

Caramanlis noted that in previous conversations each side presented its views and explained situation it faces. Explained now up to VP see what US can do to provide answer.

VP replied understand and sympathize Greek problem and hope Caramanlis understands our problem in Greece and elsewhere on defense support. Want do everything possible within limitations imposed by Congress strengthen Caramanlis and strengthen Greece. Will continue do so this year just as effectively as in past. Details can't be spelled out now but we do know we can't give defense support. No lessening of interest on part US; on contrary my presence shows US interest increasing. US intends provide substantial assistance in PL480, MAP, development loans; should be as effective next year as last year. Defense support impossible.

Caramanlis said he wished discuss details. Termination defense support understood, though still feel both sides do not have same appreciation this problem. In any case no further point in discussing defense support, now must discuss what can be done in terms forms assistance available.

VP said will try utilize other forms to do job, in terms self-help principle requiring recipient countries do their part. For instance, if Greece will get its development loan applications in order and present them to Amb Labouisse we will accelerate development loans.

PriMin described Greek development programs, pointing out of $200 million annually, only about $30 from Greek budget, rest from internal and external loans. Need for local currency much more acute than need foreign exchange, and is limiting factor in pace of development. Herein is importance defense support. Twenty percent or less stated development requirements are for foreign currency. Need local currency-generating form of aid if defense support terminated. In development projects requiring large proportion foreign currency, such as [omission in the source text] for good projects. Now working with US Embassy on three year project provide loan for foreign exchange such miscellaneous items as telephone system from US. This unfortunately will not be helpful unless private Greek purchases from US also included in order obtain more local currency for state investment program.

Amb Labouisse noted such procedure would in effect merely change budgetary support from grant to loan basis.

Caramanlis replied he was thinking of general program loan, not tied specific projects.

At VP's request, Amb Labouisse explained US policy development lending is oriented toward projects, not programs. As you know, US stands ready with $10 million program loan. Question is application such loans to private sector development. This is difficult problem for us.

PriMin noted need local currency only one of problems Greek development. Another is that current program half-finished, which raises several problems: incomplete projects such as dams, road, and irrigation systems requiring large amounts local currency. Thus $10 million program loan important.

VP said US going to give $10 million program loan this year.

VP then said we intend continue major MAP deliveries, probably increased this year. Greece will receive 57 M47 tanks, 263 OAPC's, 24 8-inch howitzers, 120 SS-eleven missiles, one LST, three minesweepers, and two squadrons F104G's. This is illustrative of the kind of MAP we hope provide if we get what we ask for from Congress. We also pleased over rate development Greece; more remains to be done; we intend help Greece do it. In addition $10 million program loan, we want act favorably on development loans and urge Greece expedite presentation additional project loans. US will continue PL480 if we can end sterile talk about defense support. Perhaps ways could be found through PL480 give Greece other surplus products to generate local currency for development.

VP warned he could not make commitments, and careful study necessary, but possibility exists using for instance supply US surplus dairy products to generate more local currency for economic development. PriMin remarked he now paying price for making Greece self-sufficient in most agricultural products US has in surplus.

Papaligouras said effort must be made see what surplus US products Greece could absorb under PL480.

Caramanlis asked if triangular trade arrangement for PL480 could be worked out.

Vice President replied in negative, must be bilateral. Prime Minister has effectively presented Greek case and we have explained our situation. We trying find ways make our aid more effective FY 63 than FY 62 and desire say so to press.

Caramanlis noted one problem is real. Other is how to present things to the public, and requested discuss former first. Understand Vice President cannot make commitments. Project loans solved foreign exchange but not local currency problem. US has expressed willingness help Greek development. We have perhaps tended act with defense support still in mind. Now no further question defense support. We therefore will submit to Embassy within next ten days everything we have in various projects and ideas for development lending. Hope Vice President will exercise his influence see they accepted to maximum possible extent, and do whatever he can to support Greek proposals.

Vice President said this was constructive suggestion, far better than bumping head against brick wall of defense support. US goal is a peaceful, strong Greece. We can go this way by several roads. Last year Greece got $90 - 100 million FY 62 MAP; if President has his way on foreign aid bill Greece should get $80 - 100 million FY 63, including as before some commercial consumables. Development lending is another road; in FY 62 we provided $10 million, in FY 63 we are assuming $20 to $40 million, assuming our Congress comes through and you find acceptable projects; this would be more than you are getting now.

Papaligouris noted Greece has EDFO and National Bank loans already approved, and hopes for Acheldos project loans; will see what other projects can be submitted.

Vice President went on to note that roughly $100 million MAP, $40 million development lending, $20 million PL480 would make $160 million in US aid FY 63. Congress may cut, but administration shooting for this size assistance to Greece. We can't work out details and should peg our actions on Prime Minister's constructive suggestion. I can't say publicly you'll get this much or that much. Realize Prime Minister's opponents allege he does not present Greek case; we realize his internal political problems and want help him. Don't want commit US to certain figure and then have it fall on him if we don't deliver at day of reckoning. I should tell public how hour after hour he told me his needs various types US assistance and that I am convinced if Congress gives administration a good bill our aid for FY 63 will be more effective than for FY 62. Have prepared such a statement which would avoid commitments, avoid trouble from countries like Iran and Pakistan where defense support also terminated, and help Caramanlis.

Caramanlis asked for assurance of broad-minded US consideration Greek loan applications.

Vice President replied in affirmative, adding Prime Minister's future is our future. Vice President then read his suggested statement to the press, commenting that like a Mother Hubbard it conceals everything and touched on nothing, but still, like a bikini, covered the essential points.

Caramanlis suggested and he and VP discussed changes in statement to:

(a) emphasize termination supporting assistance is general policy not directed at Greece;

(b) promise magnitude future aid would be greater than in past.

Vice President said domestic Greek public must understand Prime Minister pounded table on all issues and we understand Greek problems well. But US Congress must not get impression Vice President handing out commitments before appropriation voted, also Greeks must realize we love Greece more than ever. Don't say I promised you a specific amount of aid, but I will really work to make our aid more effective for your needs.

Caramanlis requested that US support Greece in context NATO aid to Greek defense, materially if possible, otherwise morally.

Ambassador Labouisse pointed out that US cannot back creation special NATO fund, but within framework recent NATO resolutions will support Greek efforts obtain contributions from individual countries.

Vice President said Greece should exert its efforts submit speedy and adequate data to OECD consortium. If you want me to approach the Italians on assistance in connection NATO defense study or consortium, will do so provided you take the initiative with Italians. So far as I know you've taken no initiative.

Caramanlis said the contributions of other NATO countries would be dependent on US contributions. If US and each of the three others would each give $5 million, problem would be solved.

Ambassador Labouisse pointed out that US MAP was already heavy support for Greek defense.

Vice President declared US would try to help with Italians and others if Greeks took initiative.

Caramanlis said Greece would approach other countries through normal channels.

Remainder of the meeting was devoted to detailed review of two proposed press statements./2/

Labouisse

/2/In a September 10 memorandum to the President, reporting on his tour, Johnson wrote:

``In Greece, we cannot allow Prime Minister Caramanlis to fall before an irresponsible opposition because of our termination of defense support. He has accepted the end of this form of aid, but to tide him through the next year and to save the Greek defense and development programs we need to: (a) provide $10 million in special help ($5 million extra in commercial consumables under MAP and $5 million counterpart now in the pipeline); (b) require Greece to provide roughly another $10 million for defense, to partially compensate for the loss of defense support; (c) shift our PL 480 to a defense grant basis; (d) implement the $10 million program loan; and (e) give prompt and sympathetic consideration to Greek development loan applications." (Department of State, Greek Desk Files: Lot 65 D 185, Vice President)

336. Memorandum of Conversation

//Source: Department of State, Conference Files: Lot 65 D 533, CF 2152. Confidential. Drafted by Horgan and cleared by S on September 27. The meeting was held at the U.S. Mission. The source text is labeled ``Part IV of IV." Separate memoranda of conversation covering Greece's foreign relations with other states, the Yugoslav and Macedonian issue, and Cuba are ibid.

SecDel/MC/12 New York, September 25, 1962, 10 a.m.

SECRETARY'S DELEGATION TO THE SEVENTEENTH SESSION OF THE UNITED NATIONS GENERAL ASSEMBLY

New York, September, 1962

PARTICIPANTS

US

The Secretary

NEA--R. B. Horgan

Greece

Foreign Minister Averoff

Ambassador Bitsios, Permanent Representative to U.N.

SUBJECT

Problem of External Assistance for Greek Defense

Mr. Averoff reported that he was under instruction from the Prime Minister to express the latter's distress on this matter. He said this was ground which had been covered before and he only wished to take time to make one point in this conversation.

He reported that the NATO reaction ``had not been bad" at the meeting of September 12. He gave as an example that the Germans were hinting at $10,000,000. However, he wondered whether the United States could not find some way to participate. He said that Mr. Stikker had a number of suggestions for ways NATO members could participate: (a) in connection with the imports of the Greek Army; (b) in the building of national strategic works (NATO infra-structure). He explained that when Greece approached other members, the members had a tendency to parry the request with a question as to what the United States was doing. Mr. Averoff said that the Greeks were giving them facts and figures of the many forms of American aid to Greece, but that United States participation in helping to solve this particular problem would be most useful.

The Secretary expressed the hope that the Greeks would be taking the initiative with other governments. Mr. Averoff indicated that he would not do so right now. He said the rationale being used (Greece needs assistance because the Greeks are defending not only Greece but other members of NATO), is not a very effective one coming from the Greek Foreign Minister. It is an effective rationale coming from Mr. Stikker, and the Greeks are holding back only until after Mr. Stikker has moved in this direction.

The Secretary explained to Mr. Averoff that any United States initiative would not, in our opinion, be useful. He said he would look into the question as to what the United States might do with regard to the two types of participation Mr. Averoff had mentioned.

337. Memorandum of Conversation

//Source: Department of State, Conference Files: Lot 65 D 533, CF 2153. Confidential. Drafted by Horgan and approved in S on October 7. The meeting was held at the U.S. Mission. The source text is labeled ``Part I of II." A separate memorandum of conversation dealing with Cuba is ibid.

SecDel/MC/90 New York, October 5, 1962, 9:30 a.m.

SECRETARY'S DELEGATION TO THE SEVENTEENTH SESSION OF THE UNITED NATIONS GENERAL ASSEMBLY

New York, September, 1962

PARTICIPANTS

U.S.

The Secretary

NEA--Rogers B. Horgan

Greece

Foreign Minister Averoff

Ambassador to the U.S. Matsas

SUBJECT

External Assistance for Greek Defense; Gromyko's Insulting Behavior

Mr. Averoff called on the Secretary at his own request.

He said he wished to let the Secretary know about the change in Greek tactics in the campaign to obtain external assistance for Greek defense, which has been necessitated because of Mr. Stikker's illness. As he had told the Secretary on September 25, Greece had been counting heavily on Mr. Stikker who was a strong pillar of support. Foreign Minister Averoff had instructed the Greek representative at NATO to call upon all the other representatives himself. Here in New York, Mr. Averoff had talked very seriously with Foreign Minister Piccioni of Italy. He said he had couched what he had to say in the most friendly fashion but had argued very hard for Italian assistance. He said one of his arguments had been that Greece had never asked for reparations after the war when Italy was devastated. Now that Italy was rich again, they owed something to Greece. He said Piccioni had no reply except to laugh with Averoff who had made this argument, he said, in a joking way but felt it had force. Mr. Averoff said he had also spoken with Mr. Spaak, who he believed was personally sympathetic; but he wondered whether the Belgian Government policy would permit anything to be done. He made the point that even a little assistance from Belgium, perhaps in materials, should be a very strong stimulus for Italy to do more. He said he might be able to see Foreign Minister Luns of the Netherlands in Europe.

The Secretary indicated approval of these actions and said that this was the kind of initiative the U.S. had wished so that we would be in a position to support it./1/

/1/In Topol 505, October 12, repeated to Athens as telegram 433, the Department of State commented that it was encouraged by Greek efforts to stimulate donor contributions and instructed the Permanent Representative to NATO to follow up on Greek approaches, stressing U.S. support. (Ibid., Central Files, 871.5/10 - 1262)

Mr. Averoff went on to underline the importance for Greece of obtaining this assistance for its defense needs. He said that it was, of course, partly a financial problem for Greece. He said that Greece had one and a half million people whose incomes were in the $50 - $80 per year range; but, he added, the significance was also political. He said he was confident that Mr. Karamanlis would remain in power--that the regime was stable. He said, however, that the opposition was extremely bitter and ``was attacking everything." If assistance was not forthcoming, the opposition would argue that the Greek Government, having lost U.S. aid, had made a mistake in placing its confidence in NATO. The Secretary bantered with him concerning U.S. aid, pointing out that it was because Greece had been doing so well that it had lost one type of aid from us. Mr. Averoff agreed that progress had been made but said he only wished to say that it was not yet enough.

Mr. Averoff mentioned the fact that, when he had gone to Mr. Gromyko's Reception, he had been greeted in a very unfriendly way. When Mr. Gromyko saw him coming, he had called out to him: ``I see you are sharpening your knives against us." Mr. Averoff said he had explained that Greece had lived in a very dangerous part of the world for over three thousand years and was only interested in keeping its independence. Ambassador Matsas stressed the public rudeness of Mr. Gromyko's treatment.

338. Telegram From the Embassy in Greece to the Department of State

//Source: Department of State, Central Files, 881.10/12 - 162. Confidential. Repeated to Paris.

Athens, December 1, 1962, 6 p.m.

575. Paris for USRO.

1. At his request, I called on Prime Minister yesterday afternoon. He said he wanted to tell me frankly of his great disappointment and concern over apparent failure of consortium. He was confirmed in his belief that Greece's allies did not understand true situation, that their analysis was not same as his and that he was in better position than they to judge requirements of situation and consequences of failure. There had been more stability, political and economic, during his administration than in all modern Greece's history. This, he believed, was because he had followed the correct policies. But, in spite of progress to date, much remained to be done. If he could not obtain the necessary assist-ance now to enable him to complete the task, all recent progress could be lost in brief time.

2. He indicated he had in mind making a public statement announcing withdrawal from consortium and a return to bilateral dealings. He stated that he would take no action of this nature pending December meeting of NATO Council. He asked that we help him in bringing pressure to bear on other NATO countries. He emphasized the serious political and psychological aspects of failure of consortium, not only internally for him and his government but also for NATO as a whole.

3. I told the Prime Minister that we had already used our best efforts with other potential contributors and would continue to do so. I repeated to him all that the US had done and was doing by way of aiding Greece and stressed that we thought the record a good one. I, too, emphasized the practical as well as political and psychological problems we have in continuing aid to Greece with our reduced appropriations, increasing demands, B/P deficit, etc. (I mentioned particularly economic and psychological problem of aid to country whose reserves increasing, to which he replied that reserves would soon disappear if economic progress does not continue.) With respect to other countries, I gave it as my personal opinion that some of them could do more. I then said to him that there were indications that satisfactory results might be obtained for support of the Greek defense budget and that this should be considered a real accomplishment. With respect to the consortium, I pointed out that this was not just a one-shot operation but also a long-range one. I emphasized that any hasty action in withdrawing would have serious consequences, for Greece would continue to require external aid and must look for it to the same countries who are members of the consortium. Withdrawal would only serve to annoy and make more difficult achievement of his government's long-range objectives. Rather than withdrawal, I cautioned him to seek to explain to the public, that, in fact, Greece would receive substantial aid in 1963 and that consortium would continue to deal with Greece's needs.

4. Caramanlis did not seem to think he could put a sufficiently acceptable face on results to date to enable him to deal with opposition and mounting public concerning situation. In latter connection, both government and opposition press have been active in denouncing failure of consortium to date.

5. Comment. (A) Although Caramanlis remarks followed fairly closely line he has been taking over past several months, he appeared more dejected than before. In addition, his pitch was not so much that US should contribute more, but rather that NATO countries as whole had failed to meet critical situation. He referred three times to humiliating nature of his position and also to his belief that NATO image will suffer. I believe he is sincerely concerned. He expects and obviously will receive much criticism from opposition and public that he has failed to present Greece's case adequately. Fact that Turkish consortium appears to be going fairly well only aggravates his problems in this emotional atmosphere. This, I believe, is largely basis for his references to political and psychological factors. He is pinning last hopes on some action by NATO Council. If the combined contributions for defense through NATO working group and for economic development through consortium are not increased by mid-December (when he must present his 1963 budget), his present frame of mind would seem to lead to public statement that whole exercise has been waste of time and effort and he will take his chances through more usual bilateral negotiations.

(B) I hope to be able to influence Papaligouras to persuade him to follow more moderate course, although this will be difficult as Papaligouras feels personally involved and will take brunt of opposition attack for failure to obtain necessary aid./1/

/1/Labouisse met with Papaligouras on December 3. In telegram 590, December 6, the Ambassador reported that during their discussions Papaligouras confirmed that Greece would make no decision about the consortium until the conclusion of the NATO Ministerial Meeting. (Ibid., 881.10/12 - 662) 1

(C) Caramanlis called in French Ambassador after seeing me yesterday and discussed French attitude which, to date, has been negative.

(D) From reports we have received here from Greeks and through USRO, it appears Greeks stand better chance of obtaining more new money for defense than for economic development. This could prove unfortunate for, while it would benefit B/P position, it would not meet budgetary requirements for development. We will comment further on this after talk with Papaligouras.

Labouisse

339. Telegram From the Department of State to Secretary of State Rusk, at Paris

//Source: Department of State, Central Files, 781.5/12 - 1262. Secret. Drafted in the White House and cleared by Bundy.

Washington, December 12, 1962, 7:58 p.m.

Tosec 11. Eyes only for Secretaries Rusk and McNamara from the President. In our NATO review we did not touch upon the Greek problem, which I gather may come up again at Paris. I am concerned lest, wearing our NATO hats, we press for too high a Greek defense budget and NATO contributions thereto at the expense of the equally important Greek development effort.

Labouisse in Athens suggests that the Greeks will end up increasing their 1963 defense budget to $185 million but cutting back their development plan by an even larger amount. Since I gather that we would find acceptable a defense level of $175 million, wouldn't it be better (from our standpoint and that of the Greeks themselves) to tell the Greeks so, and to tell our NATO allies to go higher on the economic consortium rather than the defense side, if we can't get them to do both.

I don't want to tie your hands on this complex matter, but I suggest we tread softly on these ``mix" issues, which involve quite substantial cumulative US and NATO outlays, until we can sort them out here.

Ball

340. Memorandum of Conversation

//Source: Department of State, Central Files, 396.1 - PA/12 - 1462. Confidential. Drafted by Breecher and approved by S on December 15. The meeting was held in the U.S. Delegation headquarters in the NATO Building.

US/MC/9 Paris, December 14, 1962, 4 p.m.

UNITED STATES DELEGATION TO THE THIRTIETH MINISTERIAL MEETING OF THE NORTH ATLANTIC COUNCIL

Paris, France, December 13 - 15, 1962

PARTICIPANTS

United States

The Secretary

Ambassador Finletter

Mr. Willis Armstrong

Mr. Charles Breecher (Reporting Officer)

Greece

Foreign Minister Averoff

Coordination Minister Papaligouras

Ambassador Palamas

Deputy PermRep Phrydas

SUBJECT

Problems Affecting Greece at NATO Meeting

Greek Defense Problem

The Secretary said he knew Mr. Averoff realized that the US Administration had a stronger and stronger political problem at home on defense aid because the Congress kept asking what the Allies of the US were doing both to help themselves and to help less wealthy Allies. Mr. Averoff replied he thought that the other members of the Alliance did not realize the full extent of the Communist danger and as a result they were not doing in the defense field what they should. In particular the people in Europe did not understand the military threat and were therefore not ready to counter it. The Secretary commented that it seemed governments were not making enough of an effort to educate their people on the Soviet threat and what was needed to meet it.

Mr. Averoff said he had to agree that the failure of the Alliance to mount an adequate conventional defense was due to psychological and political reasons. The Alliance was not fully awake to the dangers of local conventional wars. The Secretary remarked that certainly the Berlin problem threw a special light on this situation. Mr. Averoff said that was true but the Europeans were counting on the US deterrent alone to protect them and not on conventional forces. The Secretary stated one could perhaps understand this type of reasoning better regarding the central front but one could understand it even less for the flanks. He then asked Mr. Averoff what information the Greek Government had concerning Bulgaria. In particular, did the Greek Government think society was being thrown open to somewhat freer discussion such as seemed to be taking place in the Soviet Union, where more freedom of speech was being given to writers? Further, was there a noticeable difference in living standards between the Greeks living on the Bulgarian border and Bulgarians living 50 miles further north?

Averoff replied the Bulgarians had found some scapegoats for their bad economic situation. The Greeks did not feel any destalinization had taken place in Bulgaria, because the Bulgarian regime was just as rigid or even more so than in Stalin's time. The Bulgarian army had been reinforced. There was a lack of consumer goods. As to living standards, these were appreciably lower in Bulgaria than in Greece. However, the Bulgarian army was stronger than the Greek army and had means which the Greek army didn't have. They had advanced firing technology which only the Soviets had in remainder of Communist world and had very modern airplanes. Greek pilots were better trained than Bulgarian pilots but Bulgaria's planes were faster and could fly higher. He didn't feel that the Bulgarians intended to attack Greece on their own but thought the Soviets considered Bulgaria a faithful Ally that could be used for any purpose the Soviets desired. The Bulgarians were rightly called the Prussians of the Balkans. If there was any Bulgarian attack the Greeks would have to withdraw well inside Greek territory. This was hard on morale within the Greek Government though the facts of the situation were fortunately not known to the Greek population.

The Secretary said that apparently Greece was also concerned with ``forward strategy" and seemed to feel that the most likely danger was a local war with conventional means. However, it was hard to imagine that the Bulgarians might attack Greece without full Soviet backing and it seemed questionable that the Soviets would wish to become involved to that extent. Averoff replied that after Cuba one could be more optimistic that the Soviets would not think that the West would accept as a fait accompli a land grab carried out within 24 to 48 hours. That seemed to be the real danger. The Soviets might rely on the theory that the Allies would accept a limited extension, by the Soviets, of their territory. This was the reason why Greece needed stronger armed forces which could prevent occupation of Greek territory. However, Greece was already spending for its armed forces more than it was spending for education and for welfare together. This obviously created internal political difficulties. There was for instance a strong drive in Greece which had Communist backing, to increase educational spending by 15% at the expense of defense spending. If the Government instead put its money into defense it was most important that it could say that the other members of the Alliance were also helping this Greek defense effort.

Mr. Papaligouras added that at the NATO Ministerial meeting at Athens it had been agreed to deal with the Greek military problem in NATO and with the Greek economic problem in the OECD. So far, the OECD Consortium for Economic Aid to Greece had not produced anything. If the NATO side failed too, the Greek economic problem and even more important, the Greek political problem created by this failure would be very serious. The Greek populace would interpret failure of the two exercises as a refusal by the Alliance to help Greece. There would also be unfavorable comparisons with Turkey. Greece wanted a strong Turkey and had been glad yesterday to support the Turkish case in NATO. However, as he had stated to NATO Acting Secretary General Colonna 13 December it was necessary that the pledges to Greek defense as recorded in the NATO ``protocol" be firmed up. Since particularly Germany wanted to make its pledge conditional on pledges by others, it might be desirable to postpone discussion of the NAC defense resolution on Greece from this afternoon to tomorrow 15 December. The Secretary said he had talked to German FonMinister Schroeder and the Germans were aware of the problem. He could not say more on this at this time.

Averoff said that it was pertinent to recall that the personal prestige of Mr. Karamanlis was engaged in getting help from Greece's allies. Nobody but Prime Minister Karamanlis had the prestige to keep Greece together, so it would be a very serious matter if Mr. Karamanlis were to be unsuccessful in his endeavor. Greece did not want to turn into another Turkey and face a ``post-Menderes" situation. This would not happen in Greece because the Greek army was sound and the population was more advanced than in Turkey. Nevertheless, if Mr. Karamanlis was hit seriously by the opposition over the issue of aid to Greece this could lead to political instability since there was nobody else who had the personal prestige to do the job.

The Secretary said that while he was fully aware of Mr. Karamanlis's great value to Greece and to the Alliance he felt sure one would not want to think of the future of a NATO country in terms of one life which might depend on a car accident. He recalled that when Mr. Pusey who was then quite unknown, had been offerred the presidency of Harvard he said that he simply did not have the prestige to take on that type of job. The Harvard trustees replied that the day after Mr. Pusey had become president of Harvard he would have the necessary prestige. The Secretary of course did not mean these words as any disparagement to Mr. Karamanlis who was so greatly admired throughout the Alliance.

The Secretary asked whether the present pledges made in NATO if firmed up would not help the Greek Government domestically. Papaligouras said yes they would. If $23.5 million were made available that would certainly help, particularly if it was ``presented right" to the Greek people. The difficulty was of course that the Greek Government had continuously been saying that something was going to be forthcoming from Greece's allies in the aid field and this event was being continuously postponed. So it was important that a firm announcement should be made now. The Secretary agreed this might be desirable but pointed out that as of now the Greek delegation could not yet tell its Government that the whole matter was settled in NATO. Therefore, and in line with the wish of the Greek Delegation he would suggest to Mr. Colonna that the Greek defense item on the agenda this afternoon be postponed to tomorrow, 15 December./1/

/1/On December 15, the NATO member states agreed to provide Greece with $24.4 million in defense assistance through a combination of grants, spare parts, equipment, and raw materials. Acting NATO Secretary General Colonna informed the Greek Government of this decision. The Karamanlis government accepted the offer and informed the Secretary General that it would raise its defense budget by $6 million. See vol. XIII, pp. 462 - 467.

341. Telegram From the Consulate General in Thessaloniki to the Department of State

//Source: Department of State, Central Files, 781.00/1 - 1563. Confidential. Repeated to Athens.

Thessaloniki, January 15, 1963, 2 p.m.

91. Most significant statement to emerge from three and half hours lunch January 14 with Northern Greek CU leaders at home Bacatselos was measured statement by Deputy Pasmatzides that ``unless King terminates favoritism to Caramanlis and returns to neutral role, CU prepared to raise constitutional question and attempt remove both King and Crown Prince from scene". Whether this statement designed as blackmail in obvious hope it will reach King or is advance warning not made clear. In any case circumstances of statement, during deliberate lull in conversation, presence of Bacatselos, Ioannides of Macedonia and CU Deputy Karaghiozis, plus strong emphasis, subsequent reiteration, and reference to ``allied favoritism" to Caramanlis, make clear statement not idle theatrics. Indeed appears luncheon was scheduled so statement could be made. Airgram follows./1/

/1/Airgram A - 62 from Thessaloniki, January 18. (Ibid., 881.062/1 - 1863)

Folsom

342. Memorandum for Director of Central Intelligence McCone

//Source: Department of State, Greek Desk Files: Lot 66 D 232. Secret; No Foreign Dissemination; No Dissemination Abroad; Controlled Dissemination; Background Use Only.

Washington, February 8, 1963.

SUBJECT

Comments of Queen Frederika on DeGaulle, the British, Greek Political Leaders and the Political Situation in Greece

On 31 January 1963, Queen Frederika of Greece made the following comments [less than 1 line of source text not declassified]

1. With regard to Greek reaction to DeGaulle, Queen Frederika stated that serious damage to NATO and the Common Market would be unfortunate but indicated a thinly-veiled admiration for DeGaulle's attitude toward the British by saying that ``it is high time someone told them they cannot always have their cake and eat it." (Comment: Her deep-seated animosity toward the British is likely to affect her judgment on any issue where British interests are concerned.)

2. Queen Frederika feels that Prime Minister Konstantinos Karamanlis is a man of great ability and is completely loyal to the Crown, but he is becoming increasingly hard to get along with and occasionally shows bad judgment. As an example, she mentioned his ineffectiveness in protecting the Crown from public criticism, particularly where Royal financial matters were concerned such as the dowry for Princess Sophia's marriage. Thus, the time may be approaching when elections and a new government are in order. According to the Queen, the best solution would be a government headed by some National Radical Union (ERE) figure other than Karamanlis, such as Minister of Interior Georgios Rallis or Minister of Finance Spyridon Theotokis, and including moderate elements attracted from the Center Union (EK).

3. The Queen believes that the future election should be held under a reinforced proportional system as it was in 1961. (Comment: Sofoklis Venizelos, EK Parliamentary Deputy, recently informed [less than 1 line of source text not declassified] that King Paul had advocated to him the related party system. It is possible that the Queen's comment reflects recognition by the Palace that the Center will not accept the related party system and that the best alternative is the reinforced proportional system.)

4. In discussing Venizelos and EK leader Georgios Papandreou, the Queen feels that the former is exploiting Papandreou's extremism in order to put Papandreou out on a limb from which he will eventually tumble, leaving Venizelos as the dominant figure in the Center. She considers Papandreou a fanatic and irresponsible and Venizelos a slippery opportunist who is trying to ingratiate himself with the King and Queen in pursuit of a scheme to isolate and discredit Papandreou. She apparently also does not have a high regard for Progressive Party leader Spyros Markezinis.

5. Although claiming not to fear grave internal political crisis in Greece, she emphatically stated that if this ever happens, all United States support must be enlisted in behalf of the Crown since ``otherwise there will be complete chaos." (Comment: She is constantly haunted by vague fears of political upheaval which might destroy the Monarchy, or perhaps more likely, a series of political events which might eventually force the abdication of the sovereign. She has little confidence in the basic stability of the government and believes that only constant vigilance of the Crown can protect Greek politicians from their own follies and prevent political chaos which, in turn, would be successfully exploited by the Communists. Hence, all of her political judgments are based on the assumption that what is good for the Monarchy is good for Greece.)

6. While discounting allegations that the military are deeply involved in internal politics, the Queen is confident of their loyalty to the King and Queen. (Comment: During the conversation, she gave the impression that if faced with a critical situation, the Royal couple might turn to the military as a last resort to save the regime.)

For the Deputy Director, Plans:

[less than 1 line of source text not declassified]

343. Letter From the Ambassador to Greece (Labouisse) to Secretary of State Rusk

//Source: Department of State, Greek Desk Files: Lot 66 D 232, Athens. Top Secret.

Athens, April 5, 1963.

DEAR MR. SECRETARY: We have received disturbing information this week concerning the organization of a possible coup d'etat against the Greek Government. While the indications are that the coup is not planned for the immediate future, the information, which comes from General Kardamakis, the recently retired Chief of Staff of the Greek Army, has such a ring of authenticity that I believe you and the President should be advised without delay of this possibility of an overturn in Greece some time in the coming months.

The story was told by General Kardamakis to Colonel Baldry, our Army attache. The following is the gist of Colonel Baldry's report to me.

[13-1/2 lines of source text not declassified] Something would also have to be done about controlling the venal and disruptive press.

General Kardamakis stated that the decision for a coup d'etat has already been taken, that it is no longer a question of whether, but when. General Kardamakis described the officer corps of the Army as broadly divided into two groups, with the majority consisting of ``truly patriotic" strong, loyal officers who form a large bloc and look to him as their leader. This group, he said, was fully organized--he supplied names of some key officers--and capable of assuming power. They believe that the time to strike will soon arrive./1/

/1/The three officers whom Kardamakis indicated as leaders of the conspiracy were Brigadier General Odesseus Angelis, Colonel Alexander Hatzipetros, and Lieutenant Colonel Georgios Papadopoulos. Colonel Baldry reported that Papadopoulos was ``not known to this office." (Memorandum from Baldry to Labouisse, April 3; ibid.)

[4 lines of source text not declassified] On the other hand, he expressed the opinion that the sizeable left-leaning element of the nationalist opposition would combine with the communists to win the next elections. Dissatisfied with the present, this officer group is not content to wait for elections and allow the latter to happen. It, therefore, plans a military take-over before waiting until blood would have to be spilled.

General Kardamakis said that he himself felt that such a revolutionary step should be taken only as a last resort and that he has been resisting heavy and mounting pressure from the younger officers in the group for some time now. To get away from this pressure he has decided to leave Greece at the end of the month on an extended European trip with his wife, to be abroad two to three months. He did not think the coup would take place in his absence, but he could not guarantee it in view of the rising impatience of the officers (it could also be that, if such a move is being planned, the General would prefer to be out of the country at the time of execution so as to avoid responsibility and would then expect to be called home to take over the helm).

Colonel Baldry pointed out to General Kardamakis the very serious consequences both in domestic affairs and in Greece's international relations which would follow on such a coup and suggested various other possibilities of easing the situation. The General was not, however, to be dissuaded and expressed the determined conviction that a military coup is the only way to bring about necessary reforms in Greece. After two years or so the government could then be returned to the people under a new, stronger constitution. The General stressed that the Army's loyalty is to the country and to the Crown.

As for our analysis of the above, General Kardamakis is known to us as a blunt, dedicated, but opinionated officer who is not averse to using the Army for political purposes and who is of the type inclined to feel that the Army is the true guardian of the country's honor and knows what is best for Greece. His identification of other key officers in the conspiracy was forthright, and there seems little reason to doubt his general description of the forces at work among the officer corps. In short, his presentation seemed sufficiently genuine and accurate to be greatly disturbing.

We have from time to time had vague rumors and bits of information concerning Army cliques, secret societies within the armed forces, predictions that the Army would never allow nationalist opposition leaders with any leftist tinge to take over in the event of electoral victory and the like. Of late rumors have been somewhat on the increase. However, we have considered that, despite rather feckless attempts of the Papandreou - Venizelos opposition to draw the Army into politics, there was little likelihood of violent overturn in Greece [1-1/2 lines of source text not declassified]. In fact, one of the achievements of recent years in Greece has been the removal of the Army from politics to a more proper military role. If Kardamakis is right in his appraisal of the situation, then we are indeed headed for trouble here. [2-1/2 lines of source text not declassified]

In my judgment there is no remote justification in the present local situation for the type of action General Kardamakis declares he and his group are planning and which, unfortunately, they may well be in a position to carry out (the appointment several months ago of the present Army Chief of Staff was more or less forced on the government by the Kardamakis group, and the present Chairman of the Joint Chiefs of Staff is regarded as a figurehead). [13-1/2 lines of source text not declassified] Resentments of this sort may lie at the base of the current disaffection of Kardamakis.

It would seem, however, that other factors also weigh heavily in the balance: the impatience of the officer corps (which comes largely from the economically less advanced rural areas) with social inequities and with the pace of social reform, as well as irritation over the inevitable loose ends of democracy, such as a largely irresponsible press and petty venality, along with the fear that the next election would result in a Popular Front Government. While there is no doubt some corruption in the Greek bureaucracy, we have considered it to be of rather mild proportions for this part of the world.

I have considered this problem at some length with Colonel Baldry and with my Deputy, Tap Bennett. Because of the sensitivity of the information we have not yet brought in any other officers of the Mission. Colonel Baldry has informed his superior, Major General Fitch, Army G - 2, by personal letter. I am sending a copy of this letter to Phil Talbot for his information, but am making no other distribution.

I am planning to have Colonel Baldry arrange another discussion in the near future with General Kardamakis, at which time he would be provided with a carefully worked-out rundown of the fateful consequences to Greece of this contemplated action. The General would be advised in emphatic terms of the damage to Greece's international reputation, the blow to NATO confidence in this country, the dangers of upsetting the essentially fragile economic structure and the creation of an instability which would frighten away the very investment which is only now beginning to come to Greece and which the country so desperately needs for its economic development.

[1 paragraph (7-1/2 lines of source text) not declassified]

Sincerely yours,

Henry R. Labouisse/2/

/2/Printed from a copy that bears this typed signature.

344. Letter From the Assistant Secretary of State for Near Eastern and South Asian Affairs (Talbot) to the Ambassador to Greece (Labouisse)

//Source: Department of State, Greek Desk Files: Lot 66 D 232, Athens. Top Secret; Official - Informal.

Washington, April 22, 1963.

DEAR HARRY: The Secretary has asked me to respond to your letter of April 5 to him. The information conveyed by General Kardamakis to Colonel Baldry is indeed disturbing and we would like to be kept informed of any new developments resulting from subsequent contacts with General Kardamakis.

We agree with your analysis there is no justification for the type of action Kardamakis proposes. We concur that it jeopardizes much of what has been accomplished in Greece's economic as well as military advancement. Such a ``solution" would be regarded as a blemish on Greece's good name, particularly here in the United States. In view of our long involvement and large investment in Greece, we could not stand idly by and witness the creation of a Latin American type of totalitarian government in Greece, nor do we want a return to the Metaxas kind of tyranny. We are therefore unalterably opposed to such a ``solution" in Greece.

[2-1/2 lines of source text not declassified] It occurs to me that the General may be trying to justify action on lines similar to the May 27 movement in Turkey. However, Greece's economic indicators belie him. The rate of Greek progress has indeed been most impressive. [4-1/2 lines of source text not declassified] Some of the current frustrations with the social system are a result of the economic progress of the last decade.

Your action in informing the General of the dire consequences to Greece of such contemplated action was well taken. We would like to add that Greece with a totalitarian government in the Balkans would be a staggering blow to the cause of democracy in the area; the derogation of democracy would be a source of satisfaction to Greece's Communist neighbors.

You may also indicate to Kardamakis that the use of United States equipment to achieve such a ``solution" would be regarded with grave misgiving and disappointment by the United States. Such a development would jeopardize MAP on a world-wide basis and add fuel to criticism from some sources that it is used to displace democracy in its very homeland. We would also find it difficult, if not impossible, to continue our MAP for Greece at anywhere near the same magnitude as in the past; at a minimum it would cause a review of our military assist-ance programming.

Obviously it is impossible for Caramanlis to remain in power indefinitely and we are prepared to cooperate with another government should it come to power through constitutional means. We would not be diffident concerning the possibility of working with such a government as long as the turnover did not involve Communists or find them represented in the cabinet. In the meantime we would not wish to do anything to compromise the effectiveness of Caramanlis' Government as it still has considerable time to serve in office--nor can a politician of Caramanlis' skill be discounted in the next election by any means.

We are aware of the dilemma caused by the Center Union's ``inexorable" struggle and realize that perhaps this causes anxiety and frustration among various circles in Greece. A political pot that is warm or hot is not, however, particularly unique in Greece. Consequently, we are not unduly concerned about the Center campaign, although we would quite obviously prefer the Center to focus its energy on Greece's real problem areas, rather than its present activities, including accusing the United States of meddling in Greek affairs. Approaches similar to the General's probably point to one of the Center's problems--the need to satisfy the Army as to their attitude toward the monarchy in the short run.

Please keep us informed. I look forward to the opportunity the Istanbul meeting will give us to review these problems./1/

Sincerely yours,

Phil

/1/On May 1, Labouisse reported that Colonel Baldry had made a detailed presentation to Kardamakis outlining U.S. opposition to any attempted coup and that Kardamakis indicated that he no longer regarded a coup as inevitable. Labouisse also reported that U.S. soundings indicated that many military men would oppose a resort to force, adding: ``In sum, I believe there is less reason for concern about the situation than seemed the case three weeks ago." (Letter from Labouisse to Talbot, May 1; ibid.)

345. Memorandum of Conversation

//Source: Department of State, Central Files, POL Gr - US. Secret. Drafted by Komer.

Washington, June 3, 1963.

SUBJECT

Call of Mr. Papaligouras, Greek Minister of Coordination, on the President

PARTICIPANTS

The President

Mr. Phillips Talbot

Mr. Robert W. Komer

H.E. Alexander A. Matsas

Mr. Panagiotis Papaligouras

The President indicated to Papaligouras that we don't want to push Greek military expenditures to the point where it takes away from economic development. The President said that the threat is always there but he doesn't anticipate any major attack on Greece or generally. DeGaulle might say that the Americans couldn't be trusted to defend Europe but Khrushchev doesn't know this and can't afford to take the risk. The President was aware of Greek concerns over the Bulgar threat but said the Soviets won't unleash the Bulgars ever if they were stronger than at present (the major danger in Greece, as in Italy, is internal). The President said Greece should concentrate on internal growth. Let's not have a Communist resurgence in Greece as in Italy (Papaligouras indicated he fully understood the President's views but did not regard them as incompatible with his own proposed policy of keeping the army at the present level and keeping the defense budget at a level which would allow for only a small annual growth, less than the increase in GNP. Papaligouras summarized Greek defense needs as being hardware, plus $10 million in military consumables, plus commercial credits (from Europe), plus around $20 million in externally generated resources comparable to the $23 million which Greece got last year. Papaligouras said that Caramanlis had asked him to appeal to the President personally to find ways and means of helping the Greek military budget as we had in 1963. Papaligouras also expressed interest in U.S. support of a smooth transition from a state of dependency to economic self-sufficiency on Greece's part. He hoped we could ease this transition via further program loans and P.L. 480.

The President stated that we would take a look at all of the Greek proposals and he asked that they be brought to his personal attention (the President did not however make any commitment whatsoever on any specific Greek request).

346. Memorandum of Conversation

//Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Schott and approved by S on June 18. The source text is labeled ``Part I of IV."

Washington, June 6, 1963, noon.

SUBJECT

Greek Minister Papaligouras' Meeting with Secretary Rusk--Aid

PARTICIPANTS

The Secretary

Robert R. Schott--GTI

Panagiotis Papaligouras, Greek Minister of Coordination

Alexander Matsas, Ambassador of Greece

United States Contribution to NATO Greek Defense Exercise

Minister Papaligouras reviewed his meeting with the President. He said that he and the President had explored the possibilities of a United States participation in the form of a grant in the NATO Greek defense exercise in 1964. The only solution they had come up with was a 104(C), PL - 480 (Title I) component. The President requested that his staff provide responses to the various requests made.

Mr. Papaligouras revealed that he wanted to learn the attitude of the United States on these matters in order to proceed with his planning. The GOG needed a reaffirmation of United States support (not that it is doubted) for internal political reasons. The Government has a guns vs. butter problem with attendant manifestations--social pressures, population movement, industrialization, unemployment and underemployment--which create problems of a much more sophisticated nature. A condensation of social pressures has resulted which, combined with rising expectations, are of a more explosive nature than heretofore. Greece must industrialize in 20 years to bridge the gap between its per capita income of $365 and the much higher rate of Western Europe with which Greece is now associated as a member of the EEC.

On the defense side, the Minister quoted the President as having said that the United States does not want to push Greek military expenditures to the point that they detract from domestic resources for development; Secretary McNamara and Messrs. Kaysen and Komer of the White House also put forth this attitude during the White House meeting. Secretary Rusk expressed some concern that defense expenditures should not be cut drastically because if the defense establishment of Greece went below a certain level, stability might be jeopardized and an outside threat invited. Papaligouras agreed and explained that he had made these identical points to the President who understood. What he and the President had agreed was that military expenditures should not be exaggerated. If in the past perhaps a too rapid build-up had occurred, it had not been done only at the behest of the Greek generals; SACEUR had also reported that the Greek army was in a low state of preparedness. At the same time, the Bulgarian army has been modernized and has taken an offensive posture as compared to its former defensive nature. These things worry Greek army officers and create potential internal political problems. Fortunately, the GNA is 100% loyal to the Government, NATO and the State; it is a conservative force. The maintenance of the army is an important factor politically, as well as being vital to sustain the morale of the people, particularly along the frontiers. There must be continued stability to set the stage for economic development and investment, which the GOG hopes to stimulate and, thus, eliminate the need for external assistance in a few years.

The Secretary remarked that Couve de Murville told him that De Gaulle was most impressed with the performance of the GNA.

Mr. Papaligouras went on to say that defense costs will remain at approximately 1963 levels for the next 1 - 2 years, and noted that salaries and the modernization effect might add a small amount, but nothing substantial. He recalled that Secretary McNamara stated he would look into ways to accelerate deliveries of MAP to enhance the modernization of the GNA. The Greek Government had the impression that MAP, including commercial consumables, would remain at previous levels ($100 million) in FY 1964. The President and Secretary McNamara had given the Minister assurances to this effect.

With regard to the NATO defense exercise, Mr. Papaligouras stated that the United States policy of promoting burden sharing had been a unique success. No such precedent had previously occurred. The NATO exercise for Greece should not be permitted to collapse because the GOG would not be able to replace the $23.4 million, which it obtained in 1963, from its own 1964 resources.

The Secretary agreed that the exercise should continue, adding that unless the Europeans recognize and accept their responsibilities, NATO is going to experience increasing difficulties. He asked if the $23 million had met the problem.

Mr. Papaligouras replied that a satisfactory level of Greek defense has resulted (about $185 million). The GOG realizes that the various force levels set by the generals cannot be achieved, but if the same procedure can be followed in 1964, a satisfactory situation will result. This calls for a United States participation in the form of a grant under PL - 480 (104(C)). In this way the GOG will be able to utilize the West German commitment of a $9 million grant which was promised in 1964 on the condition that another major power would participate. The French offered commercial credits in the 1963 exercise which Mr. Papaligouras said he refused because the GOG found it unacceptable to finance defense with commercial credits. One of the principal problems already facing the GOG is the large number of commercial credits outstanding.

The Consortium

On the Consortium, the Minister commented that he is hopeful that the French would make a substantial contribution in the form of a loan. Mr. Cochran, the American Consortium chairman, who is doing an excellent job, believes there are favorable possibilities for Greece in the OECD Consortium.

The Secretary stated he was moderately optimistic because of the French participation in the Consortium. He emphasized it is very important from the United States Government's view that the Consortium be supported. The United States cannot return to a bilateral economic aid relationship with Greece. The Secretary stressed the importance to Greece and the United States that a mechanism continue to exist to meet the problem of providing Greece's external assistance requirements.

Mr. Papaligouras agreed to endeavor to influence the Prime Minister and the Cabinet to stay in the Consortium. Mr. Papaligouras admitted that creating a Consortium takes time. He said that the Prime Minister, at the time he considered abandoning the OECD Consortium, was primarily concerned lest a disappointed Greek public adopt an anti-Western attitude as a result of the apparent failure of the Consortium.

The Minister's Five Wishes

Mr. Papaligouras reviewed his ``five wishes": (1) MAP, (2) commercial consumables, (3) PL - 480 (104(C)) and United States participation in the 1964 NATO defense exercise for Greece, (4) 1964 program loan, and (5) project loans. On the first two the President and Secretary McNamara had indicated that he could plan on the same level as in FY 1963. On the last two, Mr. Bell and he had a constructive conversation and he would not take the Secretary's time with further remarks on these points.

The Secretary commented he had the impression that MAP and commercial consumables for FY 1964 were programmed at the same levels, but that commercial consumables over the long-run would be phased-out. The decision on future levels of commercial consumables would be decided after FY 1964.

GOG Confidence in United States

The Secretary commented he has the feeling that Prime Minister Caramanlis is less sure and confident about his relationship with the United States than he should be. The Secretary expressed the hope that Mr. Caramanlis, in the future, will view the relationship with more certainty. The United States realizes that the Prime Minister has problems, like all political leaders, but hopes he realizes that Greece is regarded as a special, more mature friend which, unlike others, does not require periodic indications of reassurance. The Secretary commented that perhaps the United States should publish aid figures on a per capita basis in which case Greece would be at the head of the list. The Prime Minister could perhaps use these figures to reassure the Greek people.

Mr. Papaligouras replied that the Prime Minister was upset about the termination of supporting assistance, but now accepts the decision. The Minister remarked that without the NATO defense exercise the situation would have been grave. The Secretary answered that without the termination of supporting assistance, there would not have been a NATO defense exercise for Greece. The Minister agreed.

The Secretary explained that the problem of meeting rising expectations is built into the situation in each country. There are always differences between hopes and expectations and what is realistic and attainable. The United States has these problems in eighty countries. Undoubtedly in the seventeen year period during which the United States has rendered about $3.5 billion assistance to Greece, there has not been a single year in which expectations were satisfied. All political leaders have these problems and, hopefully, Mr. Caramanlis will adopt a more calm and understanding attitude.

The Secretary ended the meeting by reaffirming the United States' interest in supporting the Greek government's initiative to engender assistance from the other NATO powers. He agreed to look into the possibility of a PL-480 grant as a United States contribution. He added that the Department would hope to obtain responses to Mr. Papaligouras' requests to give him prior to his return.

347. Editorial Note

Prime Minister Karamanlis resigned on June 11, following a disagreement with the Royal family over their desire for a State visit to the United Kingdom. The Prime Minister's resignation climaxed a long period of slowly increasing conflict with the Royal family and came shortly after Georgios Lambrakis, an EDA Deputy, was killed by right-wing terrorists during a political rally. The left charged government complicity with this crime.

On June 17, after consultations with the ERE leadership, the King asked Panayiotis Pipinelis to form a transitional government prior to elections.

348. Memorandum of Conversation

//Source: Department of State, Central Files, POL 15 - 1. Confidential. Drafted by Labouisse.

Athens, July 2, 1963.

PARTICIPANTS

Prime Minister Pipinelis

Ambassador Labouisse

I called on the Prime Minister on July 2 at 10:30 a.m. He told me that he was more optimistic than he had been last week about the general situation. He sees his government as an interim one: to cover the Royal visit and to prepare for elections. He thinks the visit will go well enough. As soon as that is over, he hopes to be able to bring about the passage of an acceptable electoral law, to be followed by early elections. He would like to see Caramanlis back in his old seat. He has already spoken to the ERE leaders about the electoral system. They want a majority system but might be willing to compromise. He will see the leaders of the other parties and hopes to have some understanding with them before parliament meets so that a new law can be passed easily.

He said that Papandreou had just made a statement that he wanted elections to be held in November (to give more time to ``ventilate" the country) but that he, Pipinelis, wants earlier elections, ``probably in October." If he can obtain no agreement from the parties, he will have to go forward on the old system--``this is my threat."

Pipinelis says that he does not want to see ERE broken--``this would be a catastrophe." On the other hand, he says that the Center Union has already split.

Concerning the election, he said that the only real question was that of the electoral law. Other matters, such as replacement of monarchs, control of the Gendarmarie, Army voting, etc., he can deal with on his own initiative. He mentioned, as an example, the success which he had with the national radio, saying that representatives of the Center Union and the Progressive Party sat with the director of the national radio to ensure non-discriminatory action.

The Prime Minister is anxious to keep things moving forward, and realizes the dangers of loss of momentum. His government must see that decisions are taken on pending matters, wherever necessary.

I mentioned the need for a reply about the VOA projected sites in the north. He said he would try to let us have an answer in a day or two.

HL

349. National Security Action Memorandum No. 251

//Source: Department of State, S/S - NSC Files: Lot 72 D 316, NSAM 251. Secret.

Washington, July 8, 1963.

TO

The Secretary of State

SUBJECT

Estimate of Greek Political Outlook

Before approving the proposed aide-memoire on U.S. aid to Greece arising out of the Papaligouras visit, the President would like the Department's estimate of the Greek political outlook. In particular he wonders what sort of alternative cabinets could emerge from the current political crisis, and what the likely implications for U.S. interests of each might be. If we face the prospect of prolonged jockeying and possible renewed instability in Greek politics, is there anything the U.S. could or should do about it?

McGeorge Bundy

350. Paper Prepared in the Department of State

//Source: Department of State, S - S/NSC Files: Lot 72 D 316, NSAM 251. Secret. Drafted by Schott, Barnes, and Lagoudakis and cleared by Talbot and RNA. An annex entitled ``Background of Current Greek Political Situation" is not printed.

Washington, July 15, 1963.

RESPONSE TO NSAM 251

U.S. POLICY AND THE POLITICAL OUTLOOK IN GREECE

U.S. Policy in Greece

1. As set forth below, the most probable outcome of the present Greek cabinet crisis is one which will be relatively favorable to basic United States interests--namely, a return of Caramanlis and the ERE to power. Since any United States actions which could be construed as interference in Greek domestic politics would almost certainly reduce rather than enhance this probability, and would be welcomed by both the Palace and opposition elements as grounds for attack against Caramanlis, the U.S. should refrain from such steps. We should, however, continue our current programs in Greece and proceed with the delivery of the projected aide-memoire, which will signify the continuity of our policy of cooperation and our interest in the welfare of Greece.

2. In the current context it is to the benefit of the largest parties, ERE and the Center Union, as well as to the benefit of U.S. interests in Greece, that elections be held by about October. Through an unfortunate combination of developments not now foreseeable, such as an indefinite postponement of elections, the currently favorable outlook might be reduced. Under such circumstances, we will consider what United States actions might be necessary and possible to increase the chances for an outcome compatible with our basic interests in Greece.

3. In any such consideration we must constantly bear in mind that Greeks are in general suspicious and resentful of real and imagined foreign intervention in their domestic political affairs. Greek public opinion is particularly alert to the operation of the so-called ``American Factor."

Political Outlook in Greece

1. The Pipinelis government will be under pressure from several directions during its period in office. The Communist-dominated EDA, of course, will oppose the government at every turn and will try to secure the cooperation of the non-Communist Center Union in some of its anti-government activities. The Palace probably will attempt to intervene more directly in governmental affairs in an effort to weaken Caramanlis' position. The Center Union is likely to continue its attempts to harass the government, though it will be wary of joint action with EDA. The Center Union probably will devote much of its energies toward securing a favorable electoral law and ensuring that the election is a ``fair" one, threatening to continue its struggle of the past two years if its demands are not met. Pipinelis has already met some of the Center Union's demands--such as equal radio time--and probably will attempt to work out acceptable compromises on other issues. Despite the pressures from all sides and his desire to compromise, Pipinelis is dependent on the support of Caramanlis' ERE, and is unlikely to take any steps that would seriously weaken Caramanlis or the ERE. It now appears that the ERE will retain its cohesion. Pipinelis will strive to push through an electoral law and complete the formation of the electoral rolls in time for an election within the next few months.

2. The outcome of the coming election is likely to depend to a considerable extent on the type of electoral law adopted. Caramanlis and many members of the ERE favor the majority system, and several years ago Caramanlis forced such an electoral law through Parliament. However, the Center Union, EDA, and some elements of ERE are opposed to such a system. So are many sections of the public, who fear that it would drive the Center Union and EDA into an electoral alliance, and create new bitterness between the government and the opposition. While the opposition parties and probably the Palace favor a relatively straight proportional representation system as one most likely to reduce Caramanlis' strength, the ERE is strongly opposed. The most likely outcome of the struggle, after considerable political maneuvering, is the adoption of a reinforced proportional representation system--such as was used for the last election--which would benefit the ERE and the Center Union, so long as the ERE and the Center Union maintain party discipline.

3. The timing of the election will also have a bearing on its outcome. Caramanlis appears to have strengthened his popular appeal by resigning over his dispute with the Palace. As time passes, however, this issue may be superseded by other issues less favorable to Caramanlis and ERE. The now electoral rolls now under preparation apparently cannot be completed much before October or November. The Pipinelis government could attempt to rush the election by taking short-cuts in preparing the rolls, but such a maneuver probably would spark accusations that the government was rigging the elections in favor of ERE, and seems unlikely to be attempted. A more serious danger is that the Palace, fearing that Caramanlis might curb the royal family, might undertake desperate political moves to postpone elections in the hope of somehow preventing his return to power. For example, it might seek the cooperation of opposition leaders and perhaps some disgruntled ERE elements to form an openly political government. However, it is likely that the ERE will remain united and the government will carry out electoral preparations thoroughly and as speedily as possible, and probably will be able to hold elections sometime during the fall.

4. Caramanlis and the ERE will be in a strong position for elections held under such conditions. After many years in power ERE is relatively well-organized throughout the country, while the Center Union's organization is weak in most rural areas. Greece has had seven years of stability and progress under Caramanlis, and there is widespread confidence that such progress will continue. Satisfactory crops in most parts of the country, expanding industrial activity, and a booming tourist business are elements of strength for the government. These factors are somewhat offset by the solid core of support possessed by both the Center Union and EDA and by the feeling of many Greeks that Caramanlis and ERE have been in office too long. However, it seems unlikely that these considerations will be enough to overcome Caramanlis' assets, and he is likely to be returned to office with at least a working majority. No basic change in the Parliamentary strength of EDA or CU appears likely.

5. Such an electoral outcome would result in a further period of political stability and economic progress in Greece, as well as a continuation of Greece's present foreign policy. The need to compete with the other parties in promising greater welfare benefits might create some fiscal problems for a new Caramanlis government. If relations with Greece's neighbors become a prominent campaign issue, it could limit the flexibility of a new government in dealing with some perennial problems. However, even if these developments do occur they would create relatively minor difficulties. Friction between Caramanlis and the Palace might be a more serious problem, for Caramanlis may insist that the royal family play a more circumspect role--a prospect which the Palace, particularly the Queen, would find most unpleasant and would attempt to evade.

6. If for any reason--a long-delayed election, changing popular sentiment, or unexpected economic difficulties--Caramanlis failed to obtain a majority of seats in Parliament, Greece's political stability would be substantially reduced. Even if the Center Union obtained a majority, conflicts within the leadership, the lack of cohesion in its components, and lack of a clear policy, would result in at least a modest decline in stability. However, it seems quite unlikely that the Center Union could secure a majority itself. A more likely result would be the failure of any party to win a majority of seats, with the consequent need for a coalition government. While such a coalition, which almost certainly would not include EDA, would not inevitably be short-lived or characterized by a preoccupation with political maneuvering to the exclusion of dealing with the problems of a nation entering the modern world, there would almost certainly be strong tendencies in these directions. There is no reason to fear that a Center Union government or a coalition government excluding EDA would, at least in the foreseeable future, represent a threat to Greece's pro-Western foreign policy.

351. National Security Action Memorandum No. 257

//Source: Department of State, S/S - NSC Files: Lot 72 D 316, NSAM 257. Confidential.

Washington, July 31, 1963.

MEMORANDUM FOR

The Secretary of State

The Secretary of Defense

The Administrator, Agency for International Development

SUBJECT

Aide-memoire for Greece

I approve the proposed Aide-memoire submitted by the AID Administrator concerning U.S. assistance to Greece,/1/ with one exception. Since we have not yet resolved the question of the appropriate long term ``mix" of our aid to Greece (as required by NSC Action 2447),/2/ and since we do not know how much our aid appropriations will be cut, I do not believe that we should make even an implicit commitment to continue MAP at a level which the accompanying memorandum suggests would be around $100 million annually. It seems to me quite sufficient to indicate that we propose ``to continue a substantial program of grant military assistance", instead of saying that we at present contemplate no reduction.

/1/Not found.

/2/See footnote 1, Document 329.

When we present this Aide-memoire, we should use the occasion to underscore the U.S. view, that, above the present level of defense effort, Greece should give top priority to an intensified development effort. As I told Mr. Papaligouras, ``we don't want to push Greek military expenditures to the point where they take away from economic development."

Because U.S. representatives in the past have spoken with conflicting voices, I wish steps taken to insure that all concerned, including our NATO military people, are aware of and actively support the position in the Aide-memoire with respect to Greek defense budgets.

John Kennedy

352. Memorandum of Conversation

//Source: Department of State, Central Files, POL US - Gr. Confidential. Drafted by Hoctor.
Washington, August 7, 1963.

SUBJECT

U.S. Aide-memoire to Greece

PARTICIPANTS

His Excellency Alexander A. Matsas, Ambassador of Greece

The Honorable Phillips Talbot, Assistant Secretary of State, NEA

Joseph Wheeler, AID/GTICC

Thomas F. Hoctor, GTI

The Greek Ambassador called on Mr. Talbot to receive the U.S. aide-memoire on defense assistance and economic aid to Greece/1/ in response to requests made by Coordination Minister Papaligouras at the time of his recent visit to the U.S. In presenting the aide-memoire, Mr. Talbot made the following points:

/1/Not found but see Document 351.

1. In delivering the aide-memoire we wish again to emphasize the continuing U.S. interest in the security, stability and progress of Greece.

2. Our views regarding the feasible and proper level of the Greek defense effort are formed in the light of the probable availability of Greek resources and NATO assistance and of the competing needs of the growing Greek economy. We regard these matters as interdependent. Military security provides the confidence and stability needed for economic growth; increased economic strength and well-being should provide the basis for an adequate defense effort. The foundation of Greek security, like that of the other NATO countries, rests on the NATO alliance.

3. U.S. aid programs regarding Greece reflect our belief in Greece's growing ability to sustain a satisfactory rate of economic growth. At this stage we regard Greece's own efforts as the essential ingredient, with inflows of foreign capital being attracted by Greece's successes in the economic field rather than, as in the past, Greece's economy being impelled toward growth by foreign assistance. We therefore reiterate our view that the GOG should continue to press ahead wherever possible at this time in its economic programs.

Mr. Matsas read the aide-memoire, expressed the thanks of his Government, and pointed out that, since the aide-memoire is a long and complicated document, he could not comment on it except to note in passing the fact that the U.S. proposed to contribute $5 million in 1964 toward the NATO Working Group exercise for Greek Defense, rather than $10 million, as had been the case in 1963. He also noted the phased reduction of commercial consumables under MAP.

In conclusion, Mr. Talbot remarked that the state of U.S.-Greek relations marked by the aide-memoire showed the remarkable progress made by Greece since 1947, and even since 1953. He reiterated his previously expressed view that the U.S. wished to continue on a ``business-as-usual" basis with regard to Greece, despite the present pre-election situation.

353. Editorial Note

Prime Minister Pipinelis resigned on September 26 following protests by the Center Union that his links with ERE and the repeated election law violations during the 1961 campaign necessitated a neutral figure at the head of the Greek Government during national elections. King Paul asked the President of the Supreme Court, Stylianos Mavromichalies, to form a government to oversee elections. Mavromichalies presented his government to Parliament on September 28 and announced that the King would call new elections for November 3.

354. Memorandum of Conversation

//Source: Department of State, Central Files, DEF NATO - 19. Secret. Drafted by Schott.

Paris, October 16, 1963.

SUBJECT

Discussion of Greek Defense with Secretary General Stikker

PARTICIPANTS

United States

Ambassador T. K. Finletter

J. R. Schaetzel, Deputy Assistant Secretary, EUR

David H. Popper, EUR/RPM

Ronald I. Spiers, EUR/RPM

Robert H. Kranich, EUR/RPM

Philander Claxton, S/MF

Seymour Weiss, G/PM

Arthur Foley, REU

Charles Sullivan, Treasury

Robert Schott, GTI

Frederick Sligh, AID

Mrs. Bracken, GTI

Herbert Spielman, EUR/RPM

NATO International Staff

Dirk U. Stikker, Secretary General

John Getz, Director, Office of the Secretary General

David Bendall, Deputy Assistant Secretary General for Economics and Finance

Mr. Stikker commented that as a result of the NATO resolution to assist the Greeks to finance their inordinately high defense budget, he had agreed to act as the collection agent for them. In spite of the need which he personally believes justified, it has not been an easy job. For example, in Athens where he recently met with the Greeks, he had experienced a rather difficult time. He found the Greeks to be ungrateful regarding his efforts to obtain 1963 assistance and full of complaints. The Greek attitude was annoying, but he had tried to control his temper. In the Secretary General's experience, the Greeks have not taken the initiative expected of them. They have failed to follow through to negotiate out the various pledges; their efforts have not been well-coordinated; and they have not been very cooperative.

In spite of these difficulties, Mr. Stikker stated he is hopeful the Greeks will raise their self-financed Greek budget, which was $154 million in 1962 and was raised to $161 million in 1963, to $170 million in 1964. Of course, this event is predicated on the assumption the NATO exercise will come up with approximately the same amount as pledged in 1963. The Greeks calculated their over-all defense requirement in 1964 to be $213 million, leaving a $43 million gap. The Secretary General told them this was too high and they came down to $30 million; however, he believed they would be satisfied with approximately last year's level. Perhaps, if the Greeks settle their pre-war debt with the U.K., the latter might contribute. If the U.K. participates, France may also, although the French have a tendency to consider Greece and Turkey as United States preserves.

Mr. Stikker referred to his conversation with Secretary McNamara/1/ and said that he had hoped the United States would contribute $10 million to the 1964 exercise, as it has done in 1963. However, Mr. McNamara had stated that the United States could not contribute more than $5 million because of our worldwide commitments. Mr. Stikker pointed out that our cut would make his job exceedingly difficult. He agreed to use the totality of our aid to Greek defense, which he knew was significant, as an argument to buttress the United States contribution (his aide then reviewed the projected DOD figure for FY1964 which was: $5 million for the defense exercise, a programmed MAP figure of $80 million, and expected deliveries amounting to $150 - $180 million). Mr. Stikker reiterated that he considered it important to assist the Greeks, even though their economic progress has been impressive. He commented that the Bank of Greece estimated the 1963 increase in GNP to be 9%, which, combined with the 1962 rate of about 4%, averaged out at about 6%.

/1/A copy of the memorandum of conversation is ibid.

Mrs. Bracken agreed that while there is a lack of coordination in the GOG, that perhaps the technique of the Greeks submitting a shopping list to the members might be helpful. The Secretary General remarked the Greeks have resisted this approach because of their desire to translate these contributions into drachmae for the defense budget. It was also mentioned that the consumable portion which is purchased abroad for the Greek defense budget is a small component of the over-all defense budget and the Greeks would probably prefer to purchase these items from traditional suppliers. Mr. Stikker admitted that he had found it difficult to obtain an accurate figure on the ``gap". He emphasized the importance of the United States coordinating its projected amounts of military assistance with him because this information is necessary when discussing the problem with other prospective donors. They insist upon knowing what the United States is planning to do. We indicated the impossibility of projecting possible future long-range U.S. aid to Greece in view of current congressional attitudes.

A general discussion of Greek military planning ensued and it was generally agreed that the Greeks would attempt to utilize the planning exercise as a way to obtain aid.

Mr. Stikker referred to his recent overflight of Thrace near the Bulgarian border. [5 lines of source text not declassified]

355. Editorial Note

Greek national elections held November 3 resulted in a victory for the Center Union. The party emerged with 42 percent of the vote and 138 seats in Parliament. ERE won 39 percent and 132 seats while the EDA took 14 percent and 28 seats. Since he lacked a clear majority, Center Union leader Papandreou formed a minority government and introduced a series of reform measures. When Parliament refused to pass one of his reform bills, Papandreou resigned and asked the King to dissolve Parliament and call new elections.

356. Memorandum of Conversation

//Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149. Confidential. Drafted by Talbot and approved in the White House on December 2.

Washington, November 25, 1963.

SUBJECT

President's Reception, November 25, 1963

PARTICIPANTS

President Johnson

Assistant Secretary of State Phillips Talbot

Her Majesty, Queen Frederika of Greece/1/

/1/Queen Frederika led the official delegation to the funeral of President Kennedy on November 25.

The President welcomed the Queen, recalling his long and friendly association with Greece. He reminded her that he had been the first member of Congress to speak in favor of the Truman Doctrine. She responded that she remembered that well, and that American actions had saved Greece. The President referred to Greece as a brave country and staunch ally, with whom we stand firmly.

In response to the President's question about the current situation in Greece, she said it was going to be all right. The "present crowd" (the new Government) were a little nervous, because they had attacked "us" (presumably the Royal Family) while they were out of office. But they were learning that they could work with "us" and she did not foresee any great trouble. She wanted President Johnson and the United States to know as a certainty that so long as her husband was there, the Communists would never gain any power in Greece. President Johnson said he was sure this was true, and that we are proud of our friendship with Greece.

357. Memorandum of Conversation

//Source: Department of State, Secretary's Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Talbot and approved in S on December 9.

Washington, November 26, 1963, noon.

SUBJECT

Call of Greek Deputy Prime Minister on the Secretary

PARTICIPANTS

The Secretary

His Excellency Sophocles Venizelos, Deputy Prime Minister and Foreign Minister of Greece

His Excellency Alexander A. Matsas, Ambassador of Greece

NEA--Phillips Talbot, Assistant Secretary

The Deputy Prime Minister expressed the deep grief of the Greek people at the tragedy which had overtaken America. The Secretary responded with appreciation to Mr. Venizelos for having come at this time of great grief here. He was also glad to have this chance to talk with him.

Mr. Venizelos expressed his desire to speak briefly about both internal and external aspects of Greek policies. His party for 11 years had been in opposition before forming the present Government. This Government differed from Caramanlis' Government in that while both opposed the Communists, the previous Government had depended on police measures, whereas this Government intended to use the more efficient measures of social action. The Secretary might remember that this party had fought Communists effectively in the past. Mr. Venizelos himself had been appointed Prime Minister specifically for the purpose of fighting Communist efforts to take over the country. After the liberation he had taken part in all efforts to fight the Communists and other Ministers in the present Cabinet had done the same. It was worth noting that in the 1961 elections the EDA was opposed by Caramanlis through repressive measures, whereas in the 1963 elections they came out with less support even though repressive measures were not used. If the present Government should remain in power long enough it would hope to limit the EDA to its normal 8% of the popular vote by providing a reef in the Center for those in the EDA who are not Communists.

Secretary Rusk said we understood what the new Government was seeking to achieve. We hoped we could be helpful to Greece in meeting its problems, but we were not interested in being too large an influence in Greece, nor for that matter in Turkey. The right balance was the question. It was important to consult on the security problems facing Greece, and on its relations with its immediate neighbors. At one stage it had seemed that our estimate of the threat from Bulgaria, for example, was somewhat different from the Greek estimate. We were not interested in an arms race if some way could be found to limit it.

Deputy Prime Minister Venizelos recalled that he had headed a Greek delegation to the United States in 1946 which had led to the Porter Mission, from which had come the great cooperation between Greece and the United States. Secretary Rusk responded that these broad policies of the West in the post-war period were developed by different parties at different times. We spoke of a bipartisan policy in this country. It was interesting to recall that it was the Labor Party of Britain that helped form NATO. The most elemental problems are national in character, rather than partisan. Thus we could see no difficulty in continuing our cooperation with Greece through one party or another.

Mr. Venizelos observed that all members of the present Cabinet in Greece are pro-West in orientation and great friends of the United States. It was under a government he himself had headed that Greece joined NATO. He wanted the Secretary to know that Greece is absolutely determined to maintain its commitments.

The only external question on which the present government would differ with the Caramanlis government, Mr. Venizelos went on, was Cyprus. In order for Cyprus to live on it would be essential to make some changes in the Constitution. He was glad to be able to report that the British understood this well. Here in Washington, Mr. Venizelos had called on Prime Minister Inonu and Foreign Minister Erkin of Turkey. They would meet again at the NATO meeting, and he hoped the Ministers of the three guarantor powers would also meet in Paris to discuss the Cyprus matter.

The great concern would be to eliminate from the Cyprus Constitution those parts that caused great friction between the communities in Cyprus and thus between Greece and Turkey, Mr. Venizelos said. He wanted the Secretary to understand that this had nothing to do with any step toward enosis, i.e., union with Greece. Its sole purpose was to eliminate those dangerous frictions. Contrary to the stories of desire to prepare Cyprus for union with Greece, the proposals were intended to make Cyprus livable for its own people. His Government would be content to see not Cyprus as part of Greece but a second Greece in Cyprus.

Secretary Rusk said we in the United States had no specific formula to suggest for Cyprus. Our great interest was in good relations between Greece and Turkey and in a stable situation in Cyprus. He would hope the Greeks would be in close touch with their colleagues in Turkey and with the guarantor powers. The situation had considerable delicacy, of course. The United States could be glad to keep in touch with the thinking of the Greek Government, but he doubted that we should take any initiative ourselves.

Mr. Venizelos said the Greek Government would be grateful to the United States if it would contribute to finding the solutions necessary so that Cyprus could go ahead as an independent state. Ambassador Matsas added that the Greek Government would be thankful if, when the amendment question was raised, the United States would view the problem with sympathy and understanding, as did the United Kingdom.

Mr. Venizelos commented further that the present situation, involving for example a Turkish veto, made the situation very difficult. He could say that Archbishop Makarios was ready to make concessions beyond the Constitution, as for example by agreeing that the Vice President rather than the (Greek) Speaker of the House should act in his stead when the President was absent from the country. This was still a confidential matter, but it indicated his intention and showed that the Archbishop envisaged the issue as a question of negotiation to amend certain articles of the Constitution while at the same time making serious concessions.

Secretary Rusk responded that we would hope this should be acknowledged as a problem in the first instance for the guarantor powers. He hoped that anything done would be accomplished by negotiation and agreement.

Turning to another subject, Mr. Venizelos said that his Government was putting greater emphasis on the internal situation. It did not fear isolated attack from its neighbors, for example, Bulgaria. Thus, it was mainly interested in the domestic health of the country, and especially the condition of the peasants who were its backbone.

Secretary Rusk asked about the Minister of Defense. Mr. Venizelos explained that the present Minister was a military man who had been a member of the caretaker government, kept on at the request of the King. He indicated that a new Minister would be chosen after the vote of confidence in the Parliament.

The Foreign Minister said that his Government had no intention of cutting its military expenditures in a unilateral way. It recognized that this could only be done in consultation with NATO. Secretary Rusk expressed himself as very glad to hear this. We had pledged ourselves to each other, and needed to consult closely. We might have talks in NATO and discuss the situation in, say, Bulgaria as we both saw it. If at times we had different estimates, it was particularly important that we consult.

Mr. Venizelos referred to a complaint of the Soviet Ambassador about recent NATO exercises. He indicated that the Soviets had not gotten much comfort from his response.