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

868.51/7–546

Memorandum of Conversation, by Mr. H. Freeman Matthews, Political Adviser to the United States Delegation at the Council of Foreign Ministers

[Paris,] July 5, 1946.

Participants:	The Greek Prime Minister, M. Tsaldaris
	The Greek Ambassador to Washington, M. Diamantopoulos
	The Secretary
	Mr. Matthews

The Greek Prime Minister called, at his own request, on the Secretary this morning. He referred to the financial conversations which the Greek Deputy Minister for Economic Coordination, Mr. Ailianos, had had with Mr. Unger and asked if the Secretary was familiar with the substance of the talks. The Secretary said that his time had been so extremely occupied with the work of the Conference that he had not yet had time to go into the matter. The Prime Minister then explained that Mr. Unger had seemed to think the Greek line of approach to their rehabilitation needs was reasonable and it was suggested that further talks should be held in London, particularly with a view to ascertaining whether Mr. Ailianos should proceed to Washington for conversations with the Ex-Im Bank. Mr. Matthews suggested that the Secretary might wish to inform the Department of the talks here,²⁸ and have the Department communicate its reactions to our Embassy in London which in turn would convey them to the Prime Minister’s party there. The Department would probably wish to suggest further procedure with particular reference to possible Ex-Im Bank conversations. The Secretary agreed that this was the best procedure. He said that after possible talks had taken place with the Ex-Im Bank he would be glad to go into the whole question of Greece’s financial and economic needs and see what could be done. Mr. Matthews pointed out that the Greeks were requesting financial assistance to the extent of some six billion dollars and that perhaps the Secretary would feel that such a figure was not within the realm of possibilities. The Secretary so informed the Prime Minister, pointing out that the remaining available capital in the Ex-Im Bank is now rather reduced and that it may be a little while before Congress appropriates new funds. Both the Prime Minister and the Ambassador hastened to assure the Secretary that the figures mentioned to Mr. Unger were purely tentative and represented only what Greece would need for her long-term rehabilitation over a period of five to ten years. In this connection Mr. Tsaldaris spoke of attracting foreign capital, of Greece’s record for debt payments, and of the importance of the stability of the drachma. He said that small, piecemeal help was not sufficient really to put the country back on its feet.

Mr. Tsaldaris then said he wanted to go into another question, namely, Greece’s territorial claims. Greece has claims against Bulgaria which affect the security of Salonika, and claims against Albania to the Northern Epirus. Out of respect to her Yugoslav ally, Greece had hitherto advanced no claims against that country but he had just had a telegram from the Greek Embassy in London reporting that Yugoslavia and Albania had just signed a treaty of mutual support. He therefore no longer felt inhibited from advancing claims against Yugoslavia in the interest of Greek security and he thought the Allies might wish to consider the new situation presented by Yugoslavia’s support for Albania, a country with which Greece is still at war. He said he had followed with interest the solution of the Trieste problem which thus “neutralized” the northern end of the Adriatic. He then launched into a plea that a similar procedure be taken to “neutralize” Valona by setting up a Free Territory of Valona and giving Greece the hinterland just as Yugoslavia had been given the hinterland of Trieste. In the course of this presentation he said he had heard a British suggestion that “Albania be placed under the United Nations” but he did not see how this would solve the problem. The Secretary in reply said that he did not see that the question of the Greek-Albanian frontier would come up at the Peace Conference which is specifically called to negotiate the five peace treaties. The same was true of course of any Greek territorial claims against Yugoslavia.

Mr. Tsaldaris then spoke of the Greek reparations from Germany and the decisions of IARA and asked whether this question would come up at the Peace Conference. The Secretary informed him that it would not. The Prime Minister asked several further questions concerning the possible duration of the Peace Conference and the possible postponement of the General Assembly meeting to which the Secretary replied first that it was difficult to estimate the Peace Conference duration—it might last about three to four weeks—and (2) while there might be some delay in the meeting of the Assembly and Secretary General Lie had raised the question, the United States Government would not ask for any postponement.

The Prime Minister said he was leaving for London tomorrow and expressed his appreciation of the Secretary’s kindness.

28. The substance of the two memoranda of conversations of July 5 were cabled to the Department in telegram Delsec 670 (No. 3327 from Paris), July 8, 1946, 11 a.m. Mr. Byrnes concluded the telegram as follows: “I request therefore that Dept examine question of additional Ex-Im Bank aid to Greece and that if Dept finds it desirable, it should request through London Embassy that Ailianos visit Washington to discuss matter.…” (740.00119 Council/7–846)