868.00/12–247: Telegram
Governor Dwight P. Griswold to the Secretary of State
Amag 555, Re Gama 470.1 A. Additional $50,000,000 requested Amag 4662 based on assumption PL 84 funds not yet entirely committed. Roughly half of amount requested intended for establishment of contingency fund to cover potential requirements for further assistance resulting from Governmental failure to effectuate return of evacuees, continuing military stalemate, etc. These potential requirements obviously not susceptible to precise measurement in dollar terms at this time.
Since Amag 466 Mission has secured promise Chief of Staff not only no further compulsory evacuations except cases urgent necessity, but also promise to return about 115,000 refugees to homes within two months. (Despatch 26, November 203). We doubt implementation latter promise but believe any major increase refugees above present estimated 400,000 unlikely. Greek budget provides meager care for average 284,000 for eight months. Assistance required but possibly not so great as first anticipated.
Mission fears that publicized discussion before Congress of necessity provision further dollar assistance in amount requested Amag 466 meet such contingencies would, through effect on Greek psychology, virtually ensure the realization of such contingencies and consequent need for full [$]50,000,000. Definite limitation on funds under PL 84 to $40,000,000 and necessity requesting additional aid under PL 75 with attendant publicity and specific earmarking has accordingly required revision earlier Mission requests for further assistance expressed in Amag 3974 and 466. Mission most reluctant to request additional $50,000,000 under PL 75 in view of seriously adverse repercussions upon Mission efforts to secure most efficient utilization of resources presently available to Greece.
B. To assist Department in arriving at best decision regarding overall approach to Greek situation, however, most significant facts in Greek exchange position are set forth below.
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(3) Increase in military requirements of $4,000,000 as per detailed justification from Livesay brought by Clay. Further 1,000,000 required to meet costs of new military observers.
(4) On basis limited price data available here, estimate that Greek import prices in foreign exchange up at least ten percent since April, [Page 430] 1947. If rise in import prices accepted as valid reason for additional appropriation, compensation for effects of such price increases upon AMAG civilian program alone would require additional grant of 3.5 millions for reconstruction, 1.4 millions for agriculture, .2 millions for public health, 8.4 millions for consumer goods. Total, 13.5 millions.
C. As result of such increases in civilian import requirements and successive curtailments of exchange availabilities, obvious that Mission program now contains absolutely no margin of safety within which further unexpected increases in exchange requirements for military, refugees, etc., or losses of exchange receipts could be absorbed. Mission has to date taken the position with Greeks that any new threat to exchange or budgetary equilibrium simply necessitates even more drastic reform measures. Mission convinced, however, that grave political repercussions inevitable if Greek economy forced to sustain full shock of all losses of exchange receipts and increases in exchange requirements outlined above.
D. Mission therefore urges, first, replacement of $10,000,000 reduction in $50,000,000 previously understood to have been allocated under PL 84, full amount of which is included in official budgetary estimates. Second, diversion of about $15,000,000 from Turkish share of PL 75 funds (refer Gama 1515) on following justifications: 1, replacement in AMAG civil program of $9,000,000 recently diverted to military program and, 2, increased military requirements of 5,000,000 as per statement General Livesay and expenses additional military observers.
Failing such replacement of PL 84 funds and diversion from “Turkish allocation, Mission urgently requests inclusion of Greece at special session in final version of interim aid for Europe bill and repeated plea Amag 466 that no fixed amount be specified in law unless specification essential. If as indicated Gama 526,6 such final inclusion not possible then we urge amendment PL 75 authorizing additional $25,000,000 on basis justifications outlined above.
E. If any official discussion of supplemental appropriation asked above, urgently request that no more than $10,000,000 be earmarked support of Greek Government welfare budget as replacement of unexpected reduction of $10,000,000 in PL 84 funds already valued in official budgetary estimates at 50,000,000. Any suggestion that a greater value of consumer goods and drachma proceeds of their sale will be made available for Government budget would constitute admission that present budget not firmly balanced and contradict repeated Mission assertions that budgetary equilibrium entirely feasible on basis of existing resources. Allocation of more than $10,000,000 to Government budget would also seriously weaken Mission endeavor to strengthen expenditure controls, force return of evacuees, and hasten shift from [Page 431] consumption to direct taxation. If necessity for strict budgetary economy and direction income taxation to be recognized by Greeks, possibility of securing new drachma revenues through further dollar assistance must be firmly excluded. Urge official earmarking of drachma receipts from sale of any new grants of consumer goods for deposit in reconstruction fund, already depleted by necessity subsidies upon bread, milk, etc. Such funds could, of course, be allocated to budget at expense of reconstruction if overriding needs develop.
F. This information in reply to Gama 470 and supplements Clay’s data. Reply to Gama 4957 follows immediately.
Please pass to Clay.