868.00/10–1547
Memorandum by the Director of the Office of Near Eastern and African Affairs (Henderson) to the Under Secretary of State (Lovett)
There appear to be three salient features of the attached monthly report from the Chief of the American Mission for Aid to Greece.1 They are: (a) Governor Griswold states that his Mission is making progress, that it is receiving good cooperation from the Greek Government, and that it has reached the point at which it can begin to put its plans into operation; (b) Governor Griswold gives a summary of the recent cabinet crisis and his own active intervention; (c) the economic situation in Greece continues to be critical and the report clearly foreshadows the need for very substantial additional aid to be made available to Greece after the expiration of the present American aid program on June 30, 1948.
With regard to the technical aspects of the Mission’s work and its approach to the Greek economic problem, I have no special comment to make other than to say that the report appears to show that the Aid Mission is progressing as well as could be expected and is obviously grappling with its problems in a serious fashion.
The section of the report dealing with the political situation repays careful reading because of the clear picture it gives of Governor Griswold’s personal approach to these matters. I should like to call especially to your attention Governor Griswold’s statement, on page three, [Page 369] that he “determined to try to stop” the formation of an extreme rightist cabinet “by attacking it on two fronts”. It appears that he took the initiative in consulting with three of the Greek political leaders with this object in view and, among other things, “urged Mr. Stephanopoulos to lead a fight within the Populist Party against the creation of a restricted rightist government.” Governor Griswold states frankly that he used the economic leverage of the Aid Program as a club to induce the Greek political leaders to form a broad coalition government. He asserts that without this club the present Populist-Liberal coalition could not have been formed. In this connection, he states that Ambassador MacVeagh disapproved of some of his actions in discussing political matters with Greek political leaders, but he justifies his policy by saying that the Ambassador had no “club” to use.
I believe we should give careful consideration to the position taken by Governor Griswold with respect to political affairs in Greece. Although I think we are all agreed that the Aid Mission must take a very keen interest in the character of the Greek Government and has every right and duty to present its views, I believe that in questions of major political consequence, such as the formation of a new government, its views should be channeled through the Ambassador and that its members, including the Chief, should refrain from taking the initiative in discussing such questions with Greek political leaders. Without in any way reflecting upon Governor Griswold and his staff, I think it is doubtful that they can be sufficiently versed in the intricacies of Greek politics or American foreign relations to justify them in operating independently or in overriding the views and advice of a veteran and highly capable Ambassador. The question is of more than academic interest since another Greek cabinet crisis may arise at any time, and it would be most desirable to avoid the confusion and unfavorable publicity which resulted from the uncoordinated activities of Governor Griswold and Ambassador MacVeagh during the recent change of government. We plan to have discussions with U/GT on this and related matters and will let you have our recommendations shortly.
In the final chapter of his report Governor Griswold sounds a note of warning that factors beyond the control of the Aid Mission may require a reorientation of the original plans and objectives. He points out that if the military situation requires the expenditure of larger sums for the Greek Army, the remaining Aid funds will be insufficient to meet the objectives of the program.
In the light of information furnished me by U/GT and members of my own staff, I feel that this warning should be put even more strongly. It appears that several developments in the past few months have greatly reduced the hopes held last spring that Greece could be [Page 370] substantially helped within the limits of time and funds provided by the Greek-Turkish Aid Bill. These developments include: (a) the extreme drought in Greece which has resulted in a deficit requiring the expenditure of some $25,000,000 more than the amount originally planned for food shipments if the planned ration level is to be maintained; (b) the delays in getting the program under way and putting into effect a plan for the promotion of Greek exports, the result of which is likely to be a serious reduction in the amount of foreign exchange which it was anticipated would be earned during the period; (c) increased costs in the U.S. and elsewhere, reducing the buying power of the funds provided; and (d) the decision of the Export-Import Bank to withdraw the unexpended balance of the credit which it extended to Greece last year. The foregoing adverse developments are, of course, in addition to and overshadowed by the increasingly grave security situation, which is not only forcing the diversion of funds to military expenditures but is also reducing Greek productive activity.
Even with the most effective administration of the Aid Program, it is obvious that these factors make success of the program infinitely more difficult to achieve. I concur in the plan to incorporate some warning of this sort into the President’s first report to Congress on the Greek-Turkish Aid Program.2
- Dated September 15, not printed; this, the first Monthly Report of AMAG, was transmitted to the Department on September 19 by Governor Griswold (868.20/9–1947).↩
- For President Truman’s 1st Report to Congress on Assistance to Greece and Turkey for the Period Ended September 30, 1947, see Department of State Publication No. 2957, released in November 1947.↩