Foreign Relations of the United States, 1948, Eastern Europe; The Soviet Union, Volume IV

868.00/11–2448

Report by the Policy Planning Staff on United States Aid to Greece ¹

secret

[Washington,] November 24, 1948.

PPS 44

The following Policy Planning Staff paper: “Report on U.S. Aid to Greece”, was prepared by a working group consisting of Gordon P. Merriam of the Staff, Chairman; Colonel Edwarn [Edwin?] A. Walker, Department of the Army; and Charles E. Marshall, Economic Cooperation Administration.

The assignment of the group was to examine the U.S. aid program to Greece in the light of the existing security, economic and political situation in that country.

Report on U.S. Aid to Greece

1. A Committee consisting of Colonel Edwarn [Edwin?] A. Walker, Plans and Operations, Department of the Army; Charles E. Marshall, Program Coordination Division, Economic Cooperation Administration; and Gordon P. Merriam, Policy Planning Staff, Department of State, heard the following persons between October 20 and 26 in the order listed:

• Messrs: Nuveen, Chief, ECA Mission to Greece; Coombs, ECA; Coleman, ECA; McGhee, U/GT; Jernegan, GTI; Baxter, GTI; Thompson, EUR; Barbour, SE.
• Colonel Mayo, Middle East Branch, Plans and Operations, Department of the Army;
• Lt. Colonel Koepcke, Department of the Army (JUSMAPG);
• Mr. Cromie, GTI.

2. All of those who talked to the Committee did so freely and frankly on a personal basis. The analysis, conclusions and recommendations set forth below represent, similarly, the personal appraisals of the members of the committee.

analysis

3. Probable Results of Cessation of U.S. Aid to Greece

Cessation of U.S. aid to Greece would probably result in the immediate formation of an extreme rightist Greek Government, under cover of which a sauve qui peut exodus of persons and property from Greece would occur. Virtually complete collapse would take place in a few months, whereupon the communists would control Greece. The international repercussions would be deep and far-reaching, for it would be impossible to explain why we had abandoned a small country which it was well within our capability to support against communist pressure applied by political means and by the use of guerrillas. The entire communist movement would be greatly encouraged and strengthened by such a demonstration of a lack of firmness and perseverance in U.S. policy. All governments and peoples adhering to western concepts would be profoundly discouraged and seriously weakened.

4. Degree of Success Achieved Thus Far

The program has been successful in the negative sense that it has prevented the extension of communist control over Greece. On the other hand, the operations of the Greek armed forces (the present authorized strength of the GNA is 147,000) have not resulted in the elimination or even in any substantial reduction of the guerrilla threat to Greece. The maximum guerrilla strength in Greece, 26,400, was reached at the end of March, 1948. Their strength decreased to 20,000 by September 1 and has now been rebuilt to 24,500, despite the fact that 24,000 casualties have been inflicted upon the guerrillas. The guerrillas are militarily not less active or efficient. Recently they have increased their activities at numerous points in the interior of Greece. Economically, success has been achieved up to a point. Runaway inflation has been checked. Imports have been restricted to essentials. The distribution of food and clothing has been reasonably adequate. Some reductions in superfluous governmental personnel have been effected. Substantial repairs and other improvements have been made in canals, roads, bridges, housing, drainage, agriculture and public health. The adverse side of the economic picture contains such elements as the following: increase in the number of refugees (total now about 700,000) from disturbed areas, guerrilla sabotage of new construction and equipment, insecurity of communications over wide areas of Greece including all of the Peloponnesus, laggardness of Greek export trade, non-investment by Greeks in enterprise in Greece.

$150 million has been allocated for the Greek military program in fiscal 1949. OEEC has recommended a direct allocation to Greece of $146 million for the economic program (about 3 percent of the total ERP outlay). Greece’s intra-European drawing rights amount to an additional $66.8 million.

5. Relative Importance in Present Circumstances of Military and Economic Aid

The guerrillas, backed by three satellite states and the USSR, continue as in the past to constitute a direct and serious military threat to Greece by virtue of their operations across the frontiers into Greek territory. These frontier operations, taken together with the sum of their operations in the Greek interior, are having serious disruptive effects, with the result that the life and development of Greece along essentially normal lines cannot take place. The budgetary and foreign exchange drain for military purposes is far beyond Greek capabilities. The physical destruction and damage done by the guerrillas, even the likelihood or possibility thereof, stultify the economic life of the country in numerous ways and set limits to economic rehabilitation. Finally, there is the important question of confidence. So long as the military and public security issues are in doubt, there is no incentive for Greeks to put their capital to work in Greece. Greek capitalists tend, therefore, to sterilize or export their funds. The correction of the situation does not require complete elimination of guerrillas but guerrilla activities must be reduced to the occasional brigandage which is traditional in Greece.

On the other hand, it is obvious that the Greeks cannot fight in an economic vacuum. Strength in Greek economic life will react to strengthen the basis for military effort, both materially and morally—and will reduce the need for U.S. assistance. Weakness has a corresponding adverse effect.

6. Causes of unsatisfactory Results of U.S. Aid to Greece

Military Causes. Within Greece, the causes are many and various.

The sheer length of the Greek frontier—723 miles, of which 600 miles is hostile frontier in present circumstances—in proportion to the area, population and resources of Greece, is a heavy handicap. The mountainous character of the frontier and of most of the interior is another. The military task would be greatly eased if United Nations observers could work inside Albania, Bulgaria and Yugoslavia as they have done inside Greece, if an effective demilitarized zone could be established on both sides of the frontier, or if operations against the guerrillas could be pushed to completion across the frontiers without causing serious international complications. Thus far, however, all efforts in the United Nations which would result in eliminating, for practical purposes, worry in regard to the Greek frontier, have failed. These causes must be regarded as unalterable for the time being.

Of possibly alterable military causes, the inefficiency of the Greek Army is by far the most important. The elements of this inefficiency are considerable in number.

The Greek soldiers are tired. Except temporarily, their fatigue has more of a moral than a physical character. Greece as a nation has been fighting since 1941. When unable to fight effectively during the German occupation, the country was being stripped and given over to disease and starvation. The soldiers cannot look forward to a time when they can stop fighting. They consider, moreover, that they are bearing the brunt of a fight which is being conducted against the whole western world. They are aware of their duty to defend their own country, but believe that the odds are too great and that, since they are in fact defending the western world as well as Greece, they should receive far more assistance, particularly from the United States. The soldiers are poorly trained and badly led. One explanation for the downturn in Greek morale since Grammos is that the soldiers have realized the capability of the guerrillas to retreat across the frontier and return in force in other localities. Soldiers who are near the term of their enlistment do not want to get killed.

The officers are also poorly trained, except in certain echelons, where there are a substantial number of capable officers. Where efficient officers develop, they are not necessarily given commensurate posts and commands because: (a) of the prevalent Greek sensitivity to casualties; (b) of political preferment. In consequence the officer corps is not on a sound or secure footing but is permeated with distrust; (c) some Greek officers are guided to an important extent by political ambitions.

On the other hand, the Greek soldiers are much better fed, clothed and armed than the guerrillas. The strength of the latter lies in their ability to retreat, rest, rearm and regroup in non-Greek territory without fear of disturbance, in the fact that the proportion of guerrilla strength devoted to actual combat operations is very high, because the auxiliary services of training, supply, hospitalization, etc., are furnished by the satellite governments. It also lies in the strict and brutal discipline of the guerrillas, and the rigid weeding-out of incompetent officers as the result of commissar supervision of operations. It is estimated that, by origin, 20 percent of guerrillas consist of hardcore communists, 30 percent of fellow-travellers and adherents by convenience, and 50 percent of more or less forced conscripts. Indoctrination and intimidation are successful in producing fighting qualities of a high order throughout the guerrilla ranks.

Economic Causes. The impact of the security situation upon the economic life of Greece has been mentioned in paragraph 5, and is fundamental. It should be added in this connection that one out of every ten persons in Greece is an indigent refugee, and that substantial areas of the best grainland have been abandoned because of guerrilla activities.

The high degree of centralization of governmental authority is another important deterrent to economic progress. The simplest matter, such as replacing a broken pane of glass in a school house, requires a decision from Athens. The export trade of Patras is dead because of the difficulty of getting permits from Athens. It is hard to revive foreign trade because of high production costs in Greece and the difficulty of marketing semi-luxury products such as are available for export from Greece.

Although several measures have been taken in recent months which presented great difficulties for the coalition government, a large number of reforms are desirable in connection with the economic recovery program. The general economic picture in Greece is one of frustration due to widespread insecurity, the military burden, the refugee problem, underproduction, petty politics and governmental inefficiency. On the other hand most of the economic gains which have been achieved thus far have held up well in the face of recent military reverses.

Administrative Causes. In addition to over-centralization of the Greek Government, there should be mentioned excessive compartmentalization within ministries, which necessitates dealing with inter-ministerial matters on top levels. The Government is over staffed. The positions are rigidly fixed by law, with the result that old positions cannot be abolished or changed except by new legislation. Civil Service standards are low and government employees are poorly paid. Working methods and facilities are inadequate and antiquated.

The ministers are overloaded with detail. They see far too many people but feel that they have to do so, given the highly individualistic character of the Greeks.

In sum, it is difficult to get reforms on the books and even more so to carry them out. The Greek Government has been operating on a highly centralized basis since Greece became independent in 1830.

Political Causes. A democracy cannot be as efficient over the short term as an authoritarian government, due to the checks, balances and delays inherent in the democratic form. Nor can a coalition government such as exists in Greece be as efficient or forthright as a single-party government, because of the compromises required to set it up and keep it going.

The ineradicable individualism of the Greek results in tingeing or dyeing everything with political coloration. No governmental action, therefore, whether taken or proposed, is considered on its merits. While this is true to some extent in all democratic countries, it is eminently so in Greece. Since all reforms upset vested interests, every appointment is in some degree a plum, and all battles result in casualties and the transfer of forces from one area to another, the political hand has plenty to grasp if it so wishes. In Greece it is too ready and willing to do so.

7. Possibilities for Relieving the Situation

Starting from the premise that Greece’s difficulties arise principally and fundamentally from the objectives and policies of the Soviet Union, the question was examined whether a reduction or a proposal of a reduction in the U.S. aid program would result in friction between Yugoslavia and Bulgaria, and therefore, in effect, between Yugoslavia and the Soviet Union, in view of the fact that Yugoslavian and Bulgarian claims to portions of Greek territory are to some extent conflicting. While there was full agreement as to the desirability of such a development, it was felt that there could be no confidence that it would occur to a degree that would have real importance. Probably the existing guerrilla–Markos framework would be maintained, with the result that Markos and his guerrilla forces would be encouraged. The communist countries which are helping the guerrillas might be encouraged to furnish additional assistance which otherwise might not be forthcoming. If Yugoslavia should decide to utilize the occasion by enlarging its territory at the expense of Greece, and difficulties ensued with Bulgaria, the Soviet Union might intervene for the purpose of overthrowing Tito on the ground of necessary protection for Bulgaria. The Greeks would be deeply discouraged and the chain of events mentioned in paragraph 3 might commence.

Military. The present GNA strength is eight divisions. It had been felt in some quarters that an increase in strength to twelve divisions would result in a reasonably sound frontier situation. The cost and the effects upon the Greek budget and general economy would be serious, however, consequently the probable benefits of such a program would have to be weighed carefully against the disadvantages. In view of the recent lack of offensive spirit on the part of the Greek soldiers, and poor tactical handling, the question has arisen whether quality rather than quantity should not be the immediate objective. Preliminary consideration is being given to a plan whereby military aid-to-Greece would be changed from a year-to-year to a three or four-year program in which sound training of a large proportion of the GNA, coupled with a weeding-out of incompetent officers, would be the main features. The object would be to build up moral and military competence. Other steps, such as the replacement of old soldiers by young men, lengthening the present two-year service term, some additions to equipment, a greatly strengthened Greek information service to work on military as well as civilian morale, appear possible without too much difficulty. The appointment as Commander-in-Chief of a competent military officer^* with sufficient prestige and force of personality to eliminate political interference with the military effort, is desirable, particularly if it can be brought about as the result of the initiative and with the approval of the regularly constituted political leaders.

A more streamlined handling of Greek civil affairs also appears necessary if the full national effort is to be mobilized to support the military effort. There are various ways of accomplishing this, all of which require careful exploration. It could be a military framework, a civilian framework, or a combination. In any case, the objective would be to bring about greater efficiency in both military and civil administration, and to put aside, temporarily, many of the less essential features of representative government as normally practiced in Greece. Everything possible should be done to curtail petty political maneuvering and similar impediments to efficient action during the present period when the life of Greece as a free nation is at stake. Provided such a change takes place on the basis of popular approval, the overall results might well be not only beneficial to the military effort but fairly acceptable to western public opinion. The great pains which the U.S. and other countries took to assist in the resumption of Greek political life on a thoroughgoing democratic basis, are realized. However in the United States, which after all is the mainstay of Greece, interest at the present time appears to be directed increasingly to the question whether the Greeks are doing their utmost to overcome the communist threat.

Economic. A series of steps and measures beneficial to Greek economy have been taken and more are projected. The most important of these at the present time is proposed legislation for the decentralization of the Greek administration. There is widespread support for a measure of this kind in Greece. There is also some Greek opposition. Moreover, there is considerable difference of opinion among U.S. officials in Greece as to the merits of the draft legislation as it stands, and as to the rapidity and extent of the improvement in conditions which would follow its enactment.

Two other important steps, first, providing conditions for greater effectiveness of the Foreign Trade Administration, and second the elimination of octroi and third-party taxes, are under discussion with the Greek Government. A list of additional reforms to be incorporated in the Government’s recovery program is now being prepared jointly by the U.S. and Greek Governments.

It should be noted that, to the extent that counterpart funds have to be utilized for military purposes, these are not available for the economic program.

The U.S. has adequate bargaining power for pressing through reforms. These are: (1) the existing understanding with coalition leaders that individual ministers, if uncooperative, will be removed at U.S. suggestion; (2) authority provided by U.S. legislation to terminate aid in whole or in part if Greek cooperation is not forthcoming or inadequate, by withholding authorized and allotted funds; (3) threat that the U.S. Congress, if not satisfied with Greek cooperation, will cut down or eliminate future aid to Greece; (4) general Greek reliance upon the U.S. for support and advice on a wide range of problems in the field of Greece’s foreign relations.

8. Conclusions

A. The communist effort to dominate Greece through the use of Greek guerrilla forces continues unabated.

B. This effort has not been successful, nevertheless the regular Greek forces have been unable to establish a satisfactory security situation on the frontiers or in the Greek interior.

C. As the result, adequate progress cannot be made in the program of economic rehabilitation.

D. The reasons for this unsatisfactory situation are inefficiency and lack of sustained fighting spirit of the Greek Army, political interference in military affairs or fear thereof, inefficiency of the Greek civil administration, and inability to bring about, through the United Nations a relaxation of communist pressures.

E. The military and internal security requirements are paramount in the present situation. Several means for increasing the morale and competence of the Greek Army are under active consideration.

F. We have not yet exhausted the possibilities of bringing about improvements through the power and influence which we are in a position to exert under existing arrangements and conditions.

9. Recommendations

A. We should continue with our efforts to achieve, through economic and military aid, an improvement in conditions in Greece so long as it is in our interest to oppose communist aggression in that part of the world by the use of U.S. resources, and so long as the Greek Government continues to evidence determination to oppose such aggression.

B. In determining the size and nature of the economic aid programs, the implications of our policy of giving priority to the solution of the military-security problem should be taken fully into account.

C. We should not hesitate to insist with the Greek authorities on such action as we are sure would be beneficial to the success of our program and which they could realistically be expected to take. In this connection, our first consideration should be the efficacy of the action from the standpoint of the entire program. Considerations of adverse opinion in this country or elsewhere should be secondary.

D. We should encourage the Greek Government to simplify its operating methods and procedures, both political and administrative, and in general to strive for greater efficiency in meeting the dangers with which the country is faced.

E. For the time being the differences which have developed between Yugoslavia and the Cominform countries should not be the cause of any modification in our policy.

F. While we should not lightly threaten specifically a withdrawal of aid, we should not hesitate to make it clear to the Greeks, whenever necessary, that there are limits beyond which it would no longer be worthwhile for us to proceed with a program of economic and military assistance to Greece, and that if those limits are exceeded we would have to seek other means of safeguarding U.S. security in the area.

G. If there should be a deterioration of conditions leading to an immediate or near-term likelihood of communist domination of Greece, the situation should be reviewed at once.

1. Drafted by an ad hoc committee of representatives of the Department of the Army, the Economic Cooperation Administration and the Policy Planning Staff under Mr. Kennan’s general direction. Its purpose “was to evolve an up-to-date statement of policy which would give uniform direction to our economic, military and political efforts in Greece at this time.” Mr. Kennan transmitted the paper to Mr. Lovett for approval in a memorandum of November 24, which noted that the paper was being sent simultaneously to Mr. Hoffman for his approval (808.00/11–2448).
2. The highest military authority in Greece at the present time is the Supreme Council of National Defense, a politico-military body. [Footnote in the source text.]