881.00 R/11–2051: Telegram
The Ambassador in Greece (Peurifoy) to the Department of State 1
2388. For Rountree. Ref Toeca 1432, Nov 19.2 I wish to urge acceptance ECA/G recommendation that Grk level of aid this year be fixed at not less than $200 million and that decision be announced at earliest possible moment.
As Dept knows various spokesmen of present govt, including Venizelos and Kartalis, have announced publicly Grk Army cannot be maintained at present level unless part of burden is borne by NATO or US. While stating govt’s formal démarche in this sense has been submitted to Wash, we have inquired what concrete form additional mil aid could take, considering that MDAP equipment and common use supplies already account for the foreign exchange cost (about 50 percent of total expenditures) for Grk armed forces and that, insofar as drachma problem is concerned, ECA is already sterilizing entire budget deficit. Govt replies make clear kind of relief they envisage is import additional consumer or capital goods, thus permitting release additional counterpart for mil or non-mil purposes. Objective of request for further mil assistance is therefore in fact to increase economic aid, or failing that, to provide polit justification for failure govt parties to solve urgent econ problems. Longer govt is left in doubt as to level of econ aid stronger will be momentum behind plea for further mil help and greater disillusionment and recrimination when no further benefits are forthcoming.
[Page 521]Although plea for further mil aid appears in this sense specious, need for at least $200 million econ aid is very real indeed. As Dept knows, margin in Greece between econ and polit stability and instability is extremely narrow and we feel cut of 20 percent from originally proposed program (73 percent of last year) is crowding that margin very closely. Thanks to civil war [Greece has] army already in being comparable, on basis population and resources, to 1953 goal for western Eur armies but maintenance that army in state of effectiveness depends on delicate complex of polit, econ and psychological factors. While further specifically mil aid is not required, sufficient econ help to underpin present abnormal mil establishment is essential if Greece is to play contemplated role in NATO. We feel cut of aid to $170 million likely to break through margin of stability and morale and doubt that saving $30 million warrants running that risk at this critical time. Increased austerity is being and will be demanded of Grk Govt and people, despite their already low standard of living, but we shld not expect to maintain necessary stability and enthusiasm for our cause if aid cuts are too drastic or too sudden.
For these reasons I hope Dept will exert its influence to obtain prompt allocation of at least $200 million to Greece. Projects which all agree are essential are already coming to a standstill throughout Greece and further delay will merely multiply difficulty and waste in getting them underway once more.
Announcement at this time of aid program of less than $200 million, even though ECA/W might be prepared to make additional allocation at later time, wld in our judgment, create a serious psychological reaction which might well set in train a sequence of events seriously aggravating current inflationary situation. Cost of remedying such situation at later date might be more expensive than announcement of more reasonable figure at this time.