868.00/11–645: Telegram
The Ambassador in Greece (MacVeagh) to the Secretary of State
[Received November 7—10:45 a.m.]
1257. Mytel 1255 Nov. 6. While Rankin saw Finance Minister this morning Prime Minister called on me expressing optimism regarding financial program which said adopted after lengthy conversations Economic Committee with cooperation also Tsouderos.6
Described program as primarily balancing budget and restoring confidence drachma by increased taxation, higher charges UNRRA [Page 260] products and release foreign exchange under strict control for business abroad. Omitted talks with British or gold proposals opposed by them (mytel 1250, November 5) and described possible foreign loans as secondary though still essential.
In connection loans I warned continued political dissension likely obstruct efforts obtain credits (urtel 1136, November 2) and he replied has good hopes bringing all parties but Communist–EAM into accord his efforts. Said planning electoral compromise between majority and proportional systems which already has confidential support Populists, Nationalist Papandreou, Republican Plastiras, as well as Liberal Venizelos though not yet Sophoulis. Insists intends follow middleroad policy politically, mentioning plans liquidate “X” organization6a of extreme Right as well as similar Leftist groupments and outlaw membership youth under university age in political organizations. Expressed self undisturbed by attack launched by Kaphandaris (Progressive) this morning holding Regent and not politicians responsible for political chaos and charging he maneuvering against Liberals and lending self to “insolent exigencies of Populists in order to arrive at unilateral solution”.
However, though Progressive Party numerically weak, chief still enjoys personal prestige and charges present Government “verging on neo-monarchism and dictatorship” may help consolidate Leftist and intransigent Liberal opposition to Cannelopoulos solution.