868.00/8–1147
Memorandum by Mr. William M. Rountree of the Office of Near Eastern and African Affairs to the Director of that Office (Henderson)
While it is too early to make a complete appraisal of the chances of success of the Greek aid program, I believe it important that the [Page 291] Department give early recognition to: (1) the probability that the presently planned program for this fiscal year will have to be curtailed by the Mission itself or supported by additional Congressional appropriations, and (2) the probability that the ultimate objectives of the President’s policy can not be attained by June 30, 1948. Congress and the public should be prepared for these unpleasant probabilities as early as the facts can be collected for intelligent forecasts.
The principal factors in the possible inadequacy of present funds to meet planned programs for this year are:
- First, the extreme drought in Greece during the crucial period has resulted in an additional deficit in wheat requirements of about 190,000 tons beyond imports originally programmed by the Porter Mission, in addition to which other food deficits have risen. The wheat alone will require foreign exchange amounting to $23 million beyond the sum scheduled. Other grain requirements may bring this new deficit up to a total of $30 million.
- Second, the Greek Government is, as you know, pressing for a considerable expansion in the armed forces. While the Mission has thus far disapproved plans which would entail military expenditures beyond the programmed funds, it appears possible that before the end of the fiscal year the security situation in Greece will require a revision in this policy to the detriment of the civil economic program.
- Third, requirements of foreign financial assistance as established in the President’s program contemplated commencement of American aid and supervision the first of April. Already several months have been lost and the program is not yet in full swing. This lost time is important: Greek expenditures during this period have continued unwisely; no progress has been made in effecting better utilization of Greek resources in the recovery effort; and it is doubtful that export possibilities which have been lost during the period can be made up.
Fortunately, there have on the other hand been certain favorable developments which may to some extent compensate for the foregoing factors. Olive oil production for this year is estimated at 150,000 tons, which is about 60,000 tons more than last year’s production and the Porter Mission’s estimates for the present crop. Latest indications are that tobacco production will exceed by 50% last year’s output. While every effort will be made by the Mission to obtain maximum benefit from these favorable factors during the present fiscal year, it is doubtful that the full benefit from them can be realized within the remaining months of the program.
While the probability that our objectives could not be achieved in the space of one year was recognized by the Porter report, in questioning on this point in the Congressional hearings and in newspaper comment, little recognition has been given to it in planning the actual program. Accomplishment of our economic objectives in one year would be difficult under any circumstances, and continuation of adverse [Page 292] conditions in the all important security and political fields will make their attainment impossible. It is increasingly evident that our program must be extended beyond June 30, 1948, if we are to support the Greek economy until it is able to carry itself.
The broaching of the extension of the program would best come from the Secretary of State in his first quarterly report to Congress on the work [of] AMAG. This would enable the problem to be raised on the basis of facts and predictions by AMAG, rather than on information which has been available within the Department during the period when we maintained that the need for extension was unsettled. If it is decided within the Department that the problem should be raised before the last minute, AMAG should be advised now that a complete analysis of the factors leading to a possible need for extension beyond 1948 should be made in its quarterly report to the Secretary.
Certainly on both of these problems the public should be told of developments so that the Department will not be confronted with the necessity of announcing without previous notice that our program as originally scheduled has failed to meet the goal, and that additional appropriations must be made during this and subsequent years.