840.50 UNRRA/5–445

The Assistant Secretary of State (Clayton) to the Greek Ambassador (Diamantopoulos)

My Dear Mr. Ambassador: This refers to the “Statement on the Greek Economic Situation and on the Need for Immediate Outside Assistance” which Mr. Varvaressos left with me on April 17.25 I am deeply concerned with the economic situation which he describes in Greece and assure you that the United States Government earnestly desires to cooperate to the extent that it can in finding solutions to your country’s problems.

In the coming months Greece will undoubtedly receive a substantial part of its supplies through UNRRA. I understand that within the next month or two these supplies will surpass the minimum of 200,000 tons mentioned in your statement. Presumably the specific items [Page 214] included in the UNRRA program are as well adjusted as possible, within the tight supply situation, to the relief needs of Greece. Within the framework of UNRRA’s directives this program might, if desirable, be amended in consultations between UNRRA and Greek Government officials, in order to meet more of the emergency needs for clothing, medical supplies and industrial raw materials and equipment.

It is my understanding that at the present time the chief limitations on the UNRRA program in Greece are the reception capacity of Greek ports and the availability of shipping space. As port reconstruction proceeds and if the end of the war in Europe eases the shipping shortage, this situation should be improved.

It is our firm conviction as we are sure that it is yours that Greece will benefit from as rapid as possible a revival of private trade. Many of the obstacles to communication and commercial intercourse have recently been removed; the hindrances remaining are related to the shortages described above. The United States Government is encouraging the visit of American commercial representatives to Greece, as for example tobacco buyers, to stimulate Greek exports and the industries associated with them, as well as to renew long standing commercial ties between our countries. The resumption of private Greek import trade, necessarily on a limited scale for the present, is also being encouraged in the hope that as shortages are eased this trade will speedily be revived.

As regards imports into Greece outside the UNRRA program, the question of financing immediately arises. There will be available for financing such imports the assets in the United States of the Greek Government and the Bank of Greece and ultimately of other Greek entities which can be utilized under appropriate arrangements subject to U.S. Treasury license. These assets have been augmented since the liberation of Greece by the proceeds of remittances from the United States. With the resumption of Greek trade, the proceeds of exports from Greece to the United States will also be available.

Imports for full scale reconstruction of the damage suffered by Greece will obviously have to await easing of the situation with respect both to shipping and supplies of necessary materials and equipment. I believe that you understand the legal barriers to American loans to Greece at the present time.26 It is our hope that [Page 215] these barriers will be removed by action of the Congress27 and that it will become possible for the United States Government to consider making reconstruction loans to Greece. Such loans would be made for specific projects and it would be necessary for the Government of the United States to have detailed information as to the projects contemplated and the expected sources of funds for the repayment of the loans. External financial assistance of this type would not, of course, provide the solution to the inflation and general financial breakdown threatening Greece. Only stringent internal measures by the Greek Government plus whatever supplies are available from the outside can be expected to contribute to the solution of this problem.

Sincerely yours,

William L. Clayton
  1. Not found in Department files.
  2. Reference is to Public Law No. 151, approved April 13, 1934, which prohibited loans to foreign governments in default of their obligations to the United States Government, 48 Stat. 574; for documentation on this subject, see Foreign Relations, 1934, vol. i, pp. 525 ff. The question of Greek debts to the United States Government was regulated by the loan agreements of May 10, 1929, and May 24, 1932; for documentation on this subject, see ibid., 1932, vol. i, pp. 626 ff.; ibid., vol. ii, pp. 384 and 396 ff.; ibid, 1933, vol. ii, pp. 544 ff.; ibid., 1934, vol. ii, pp. 533 ff.; ibid., 1935, vol. ii, pp. 506 ff.; ibid., 1936, vol. ii, pp. 308 ff.; and ibid., 1940, vol. iii, pp. 612 ff.
  3. The loan prohibitions of the Act of April 13, 1934 were made not applicable to governments which were members of both the International Monetary Fund and the International Bank for Reconstruction and Development under the terms of the Bretton Woods Agreement Act, approved July 31, 1945; 59 Stat. 512, 516.