Foreign Relations of the United States, 1961–1963, Volume XVI, Eastern Europe; Cyprus; Greece; Turkey

327. Memorandum of Conversation⁰

Washington, March 1, 1962.

SUBJECT

• NATO Mission on Greece and Turkey¹

PARTICIPANTS

• The Secretary
• Mr. Faure, NATO Mission member
• Mr. Ferguson, NATO Mission member
• Mr. von Mangoldt, NATO Mission member
• Mr. Kohler, Assistant Secretary, EUR
• Mr. Miner, Director, GTI
• Mr. Vincent, International Staff, NATO
• Mr. Habermeier
• Mr. Abrams, RA
• Mrs. Kupinsky, RA
• Mr. White, AID
• Mr. Schiff, NEA/GTI

The Secretary began the discussion by asking if the Mission had any unresolved anxieties which they wished to discuss. Mr. Ferguson stated that there were two. In the first place, the Mission would find it very difficult to make a judgment on whether Greece and Turkey should be pressed to increase their military strength to meet Force Goals and suggest that additional assistance be made available to permit them to do this. That is, the Mission would not be able to suggest that these two countries should be singled out for special assistance for this purpose, although if they did try to meet NATO Force Goals, they would need special assistance.

Secondly, so far as economic assistance was concerned, there appeared to be general agreement on the requirements of Turkey. However, the Mission felt that Greece would need “unorthodox” aid for a transitional period of two to three years. During this two to three year period, loans limited to the foreign exchange costs of projects would not satisfactorily meet the problem because the Greeks would have difficulty in mobilizing the needed domestic resources. Mr. von Mangoldt said the Greek capital market was still limited and could not be depended upon to provide the necessary resources. With time he felt it would grow. Mr. Ferguson noted that the Greeks could raise drachma for their investment program if they cut their defense expenditures, but the Mission would not want to make such a recommendation. Mr. von Mangoldt said the Mission understood the United States decision to terminate the grant assistance to Greece, but he believed that loans should be made available to cover not simply the foreign exchange costs of projects.

In response to the Secretary’s question as to what the order of magnitude would be, Mr. Ferguson replied that the Greeks might need external assistance of $20–30 million annually in 1963 and 1964, after allowing for assistance they would get from the European Investment Bank. This would provide the same type of assistance to the Greeks as they had received previously in the form of Defense Support funds from the United States, and assumes no rapid increase in military strength to meet NATO Force Goals. This presents a difficult technical problem, Mr. Ferguson stated, but it was only a technical one and not a major one. The Secretary then asked if there would be any problem created if the Mission reported an uncovered gap. Mr. Kohler said he thought this was not a problem and suggested there might be some advantage to reporting the minimum requirements of Greece, even if it could not be guaranteed these would be met. Mr. Ferguson added that the Mission’s report will identify the needs, try to get NATO to agree on the reasonableness of the needs and leave to the NATO members to decide if they are willing to commit themselves to acting on these requirements. This type of report would have a bearing on the use the Greeks make of their internal resources.

Mr. Faure asked again about NATO’s role in dealing with the Greek-Turkish problem and whether this should be done directly or indirectly. He suggested that the military assistance might be handled within NATO while economic assistance could be handled outside NATO. The Secretary said this is our preference too. Mr. Faure then asked whether NATO might not participate as an observer in any consortium, even on economic assistance, that might be arranged. Mr. von Mangoldt said from his OECD experience, he knew this would give the neutrals trouble. The best formulation, Mr. Ferguson stated, would be for the individual NATO members, as separate Governments, to agree to take some action. The Secretary added that the report could recommend to NATO that further action properly belongs in other organizations. He noted that if action were taken in OECD, the delegates in the OECD are, after all, not strangers to NATO, many represent the same Governments and will be acting under instructions from their Governments. It is the governments which would be acting, rather than NATO as such. Mr. Faure said he thought we were right.

Mr. Ferguson referred to previous resolutions in NATO on Greece and Turkey and said the Greeks and Turks would feel deceived if the same thing were to happen again. The Secretary expressed hope that NATO delegates would be prepared to say that the Delegate’s government, and not only that NATO as an organization, accepts the report. He then raised a question about a NATO military fund. Mr. Faure said there are two proposals—one for a military fund and the other for an economic fund. The latter, which was a mutual assistance fund mainly for defense support, had been mentioned previously by Foreign Minister Averoff at the Oslo meeting but the Greeks, who were supposed to submit memoranda on the subject, have never done so. Mr. Vincent said he thought the Greeks meant a mutual assistance fund for military assist-ance but supposed that the Greeks were awaiting the outcome of the Mission’s report, before pursuing the matter further. Greece appears to want a Special Fund relating military and economic aspects of assistance and emphasizing the importance of their tie-in to NATO.

Mr. Faure said the Mission must find some formula which demonstrates the NATO interest in Greek-Turkish problems, or, at least, would not entirely conceal the NATO role, but he admitted that the Greeks would probably be satisfied if enough aid were forthcoming regardless of its source. He asked whether, for example, if a consortium encountered problems, NATO could not help by prodding. Mr. Ferguson said he thought this was the responsibility of individual member governments. Mr. Kohler noted this is devolved on the Secretary-General of NATO to see that the resolution approved was implemented by member governments. Mr. Faure then asked the Secretary whether he had any further thoughts he wished to pass on. The Secretary said there might be a problem arising from the difference between any action that might be taken as a result of the report and the expectations of Greece and Turkey. Mr. Ferguson commented that he did not believe the United States would have impossible problems in terms of United States resources. He thought it important for the United States to provide funds to Greece over and above the foreign exchange costs and he believed AID would have the funds and flexibility to do this. Mr. Miner suggested this would provide an opportunity for other NATO members to help and Mr. Ferguson added this was exactly what the Mission had in mind.

The Secretary advised it would be good if both the Mission and the United States Government would feel free in the next month to keep the channels open for further exchanges of information. This was agreed to on all sides and it was also agreed that Ambassador Tuthill in Paris would be the logical point of contact.

Mr. von Mangoldt said that on Turkey they had nothing new to add. They could foresee that about $300 million a year would be required in 1963 and after. Mr. Faure said that NATO should take full cognizance of the military burden which each country has and to meet in some way the hopes of the Greeks and Turks and not simply relegate the problem on the economic side to other international agencies. He understood that NATO could not, however, take direct responsibility. The Secretary asked whether we could not talk to the Greeks since, although the problem is of direct concern to NATO, the means for dealing with it may require getting at it outside NATO. The Secretary thought that we might prepare Greece for the general approach that what is needed is a commitment from NATO Governments to follow through on action outside NATO since it is essentially governments who are involved in this responsibility.

0. Source: Department of State, Central Files, 375/3–162. Confidential. Drafted by Schiff.
1. The North Atlantic Council Foreign Ministers authorized the creation of a Mission to Greece and Turkey (“Wise Men”) to examine related defense and economic development problems during their May 8–10, 1961, meeting at Oslo, Norway. At the North Atlantic Council meeting in Paris December 13–15, 1961, the Foreign Ministers instructed the Mission to complete its report by April 1, 1962.