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

338. Telegram From the Embassy in Greece to the Department of State⁰

Athens, December 1, 1962, 6 p.m.

575. Paris for USRO.

1. At his request, I called on Prime Minister yesterday afternoon. He said he wanted to tell me frankly of his great disappointment and concern over apparent failure of consortium. He was confirmed in his belief that Greece’s allies did not understand true situation, that their analysis was not same as his and that he was in better position than they to judge requirements of situation and consequences of failure. There had been more stability, political and economic, during his administration than in all modern Greece’s history. This, he believed, was because he had followed the correct policies. But, in spite of progress to date, much remained to be done. If he could not obtain the necessary assist-ance now to enable him to complete the task, all recent progress could be lost in brief time.

2. He indicated he had in mind making a public statement announcing withdrawal from consortium and a return to bilateral dealings. He stated that he would take no action of this nature pending December meeting of NATO Council. He asked that we help him in bringing pressure to bear on other NATO countries. He emphasized the serious political and psychological aspects of failure of consortium, not only internally for him and his government but also for NATO as a whole.

3. I told the Prime Minister that we had already used our best efforts with other potential contributors and would continue to do so. I repeated to him all that the US had done and was doing by way of aiding Greece and stressed that we thought the record a good one. I, too, emphasized the practical as well as political and psychological problems we have in continuing aid to Greece with our reduced appropriations, increasing demands, B/P deficit, etc. (I mentioned particularly economic and psychological problem of aid to country whose reserves increasing, to which he replied that reserves would soon disappear if economic progress does not continue.) With respect to other countries, I gave it as my personal opinion that some of them could do more. I then said to him that there were indications that satisfactory results might be obtained for support of the Greek defense budget and that this should be considered a real accomplishment. With respect to the consortium, I pointed out that this was not just a one-shot operation but also a long-range one. I emphasized that any hasty action in withdrawing would have serious consequences, for Greece would continue to require external aid and must look for it to the same countries who are members of the consortium. Withdrawal would only serve to annoy and make more difficult achievement of his government’s long-range objectives. Rather than withdrawal, I cautioned him to seek to explain to the public, that, in fact, Greece would receive substantial aid in 1963 and that consortium would continue to deal with Greece’s needs.

4. Caramanlis did not seem to think he could put a sufficiently acceptable face on results to date to enable him to deal with opposition and mounting public concerning situation. In latter connection, both government and opposition press have been active in denouncing failure of consortium to date.

5. Comment. (A) Although Caramanlis remarks followed fairly closely line he has been taking over past several months, he appeared more dejected than before. In addition, his pitch was not so much that US should contribute more, but rather that NATO countries as whole had failed to meet critical situation. He referred three times to humiliating nature of his position and also to his belief that NATO image will suffer. I believe he is sincerely concerned. He expects and obviously will receive much criticism from opposition and public that he has failed to present Greece’s case adequately. Fact that Turkish consortium appears to be going fairly well only aggravates his problems in this emotional atmosphere. This, I believe, is largely basis for his references to political and psychological factors. He is pinning last hopes on some action by NATO Council. If the combined contributions for defense through NATO working group and for economic development through consortium are not increased by mid-December (when he must present his 1963 budget), his present frame of mind would seem to lead to public statement that whole exercise has been waste of time and effort and he will take his chances through more usual bilateral negotiations.

(B) I hope to be able to influence Papaligouras to persuade him to follow more moderate course, although this will be difficult as Papaligouras feels personally involved and will take brunt of opposition attack for failure to obtain necessary aid.¹

(C) Caramanlis called in French Ambassador after seeing me yesterday and discussed French attitude which, to date, has been negative.

(D) From reports we have received here from Greeks and through USRO, it appears Greeks stand better chance of obtaining more new money for defense than for economic development. This could prove unfortunate for, while it would benefit B/P position, it would not meet budgetary requirements for development. We will comment further on this after talk with Papaligouras.

Labouisse

0. Source: Department of State, Central Files, 881.10/12–162. Confidential. Repeated to Paris.
1. Labouisse met with Papaligouras on December 3. In telegram 590, December 6, the Ambassador reported that during their discussions Papaligouras confirmed that Greece would make no decision about the consortium until the conclusion of the NATO Ministerial Meeting. (Ibid., 881.10/12–662) 1