Foreign Relations of the United States, 1946, The Near East and Africa, Volume VII

868.51/7–546

Memorandum by Mr. Leonard Unger, Economic Adviser to the United States Delegation at the Council of Foreign Ministers, to the Secretary of State

[Paris,] July 5, 1946.

It was the desire of the Greek Premier Tsaldaris that for your Friday morning conversation with him you be acquainted with the following problems and requests of the Greek Government in connection with the present difficult economic situation in Greece.

1. Last winter Greece was granted a line of credit to the limit of $10 million with which to buy U.S. surplus property,²⁶ under which the Greek Government has submitted to the OFLC requests for about $4 million worth of surplus property. The Greek representatives report having been informed that practically none of this property is available to them, since most of it is either reserved for France or has been taken by other countries, including ex-enemies. It was promised that this question will be taken up both with Mr. Virden of OFLC in Paris and with the Department in Washington to assure that Greece is given fair and friendly treatment in the matter. In answer to the Greek request that the $10 million loan be increased, it was indicated that the Department would be hesitant to discuss this matter until it was clear that the loan already extended was in sight of being exhausted.

2. The major request being pressed by the Greek representatives is for recognition of their urgent requirement for very substantial financial assistance for the country’s reconstruction. These requirements, according to the representatives, have not previously been submitted to the United States Government in such concrete, comprehensive form and they are the main burden of Mr. Tsaldaris’ mission on the economic side. With the help of these loans it was claimed that at the end of 5 years Greece could again be self-supporting, and would be free from the necessity of applying continually for small loans, no one of which could have a permanent effect in rebuilding the Greek economy. The loans requested are divided into the following categories:

(a) A loan of $5 billion (present dollar value) for the reconstruction of material damage; the loan to be extended over an unspecified period.

(b) A loan of $600 million to cover shipments over 5 years, in decreasing amounts, of consumer goods, industrial products and raw materials. This loan appears to be essentially a continuation of the aid supplied by UNRRA; it is to meet the balance of payments deficit which these essential imports would incur.

(c) A loan of $440 million to cover internal budget deficits for a five-year period.

(d) An unspecified loan looking toward development over and above the pre-war level of the Greek economy.²⁷

Because of the continuing economic difficulties of Greece, these loan requests may require considerable careful study by the Department, even though the figures no doubt far exceed any possibility of being met. Moreover, certain inconsistencies and errors are to be observed in the text submitted.

The first three loans requested, (a), (b), and (c), are for immediately pressing needs, and it is doubtful that assistance of this nature would be forthcoming from the International Bank of Reconstruction and Development or any other agency except possibly the Governments of the United States and United Kingdom. The Greek representatives indicated that the Export-Import Bank had mentioned the possibility of its granting a loan for similar purposes to those outlined in point (b) above, although undoubtedly for a much smaller amount. Mr. Ailianos, Greek Deputy Minister for Economic Coordination, is ready to go to Washington to discuss these matters and, if it should be your decision to encourage this, he could be reached in London.

In relation to point (d) above, regarding future development, it would not appear worthwhile to hold discussions at the present time, and, in any event, such loans might well be within the province of private interests and the International Bank of Reconstruction and Development.

Mr. Ailianos is going to London with the Premier to discuss these same loans with the British Government. The British and American Governments, he thinks, will ultimately wish to consult with each other in order to coordinate their assistance to the Greek economy and to determine which country would be prepared to supply aid in which fields. He suggested the dispatch to Greece of a commission of American and British technicians to study the Greek reconstruction needs and advise their respective Governments in order to assure that any money which is advanced will serve a useful purpose and that the projects undertaken offer a good promise of repayment.

26. The terms of this line of credit were embodied in an agreement signed in Washington by Thomas B. McCabe, the Foreign Liquidation Commissioner, and Paul Economou-Gouras, the Greek Chargé on May 16, 1946 (868.51/5–1646).
27. Undated memoranda dealing with United States financial assistance to Greece and surplus property were presented to American officials at Paris by Greek officials on July 3 (868.51/7–1746).