868.20/8–2848: Telegram
The Secretary of State to the Embassy in Athens
Gama 1274. Reqst amplification your 1700 August 28 commenting on Amag 1508 August 25 and Gama 1246 Aug 16. Dept does not propose immediate drastic reduction Greek armed forces and appreciates difficulties still to be faced in bringing guerrilla forces under control, however, Dept seeking plan which can assure achievement objectives implicit present Greek Aid Program within budget set by Congress. Proposal in Amag 1508 does not seem satisfy this requirement in that proposed reduction is apparently to be accomplished largely by shift of burden from Greek-Aid to ECA funds, which not possible under present ECA program through first quarter 1949 since Greece’s share relatively fixed, and which would not satisfy mandate Congress effect real reduction US assistance once guerrilla forces brought under control. If this true Dept feels conclusion Amag 1508 that only savings possible before 1 April are 20,000 from NDC and 3,200 from Navy should not be accepted now as final but that further evaluation of situation should be made on or before 1 Dec. If campaign has progressed satisfactorily such evaluation might permit recommendations for initiation of token reductions this calendar year followed by more substantial reductions starting early next year.
There is now no basis for policy of continued US military assistance to Greece as long as there is threat of external aggression, as recommended par 3 your 1700, but Dept agrees this should not be communicated Greeks.
Re Emb 1700 Greek economy cannot of course in foreseeable future support itself or Army without outside assistance. With additional economic aid, however, Greece could support external cost of Army required to neutralize residual guerrilla force from her meager foreign exchange earnings.
Your further comment requested points raised by Gama 1246 and Amag 1508, including difference in view between Generals Matheny and Van Fleet on savings in RHAF budget indicated par 1 Amag 1508 and whether immediate cutbacks possible, also date at which feeding of Greek armed forces can be placed on Greek economy assuming it cannot be reflected in increase this year’s Greek ECA allotment. Plan of recommended reductions in cost and size of Greek armed forces to conform $150 million budget also requested as soon as progress present campaign against guerrillas permits.