868.00/12–1448
Memorandum by the Assistant Chief of the Division of Cheek, Turkish, and Iranian Affairs (Baxter) to the Director of the Office of Near Eastern and African Affairs (Satterthwaite)
The attached letter1 was handed to Ambassador Grady in Paris by Mr. Tsaldaris on December 9 when the Ambassador was en route to Washington for consultation. It is essentially an argument against the cancellation of the reconstruction program and the diversion of 500 billion drachmae from the drachma counterpart fund to cover some of the Greek budgetary deficits.
In conclusion the Greek Government proposes that the United States “continue to grant special military aid to Greece … sufficient to cover non-recurring military expenditures in the Greek budget” and that “until such aid is approved, Greece … accept the temporary solution of utilizing ECA funds to cover military expenditures, but on condition that such funds be refunded as soon as possible to the reconstruction account so that the reconstruction programme, as originally planned, be realized in its entirety.”2
A copy of the letter has been sent under instruction to Athens.
- Not printed; the letter is undated.↩
- Mr. Baxter discussed Mr. Tsaldaris’ letter with the Greek Ambassador on December 13, noting that “it would be difficult to adopt the procedure suggested by Mr. Tsaldaris, because it would require a substantial increase in the military aid appropriation and, furthermore, the only way I could see to increase the drachmae available to the Greek Government would be to take the additional dollars appropriated and use them to import additional consumer goods into Greece for sale to the Greek people. It would do no good to turn over the dollars as such to the Greek treasury, because unless they were used to buy something useful to the Greek economy, any additional drachmae put into circulation would have a bad inflationary effect” (868.20/12–1348)↩