868.00/4–1248
The Acting Secretary of State to the Economic Cooperation Administrator (Hoffman)
My Dear Mr. Administrator: As you know, there was provided under Public Law 75, approved May 22, 1947, the sum of $300 million for military and economic assistance to Greece. Administration of the aid program in Greece is under the American Mission for Aid to Greece, headed by Governor Dwight P. Griswold, and consisting at present of 183 civilian and 242 military personnel. The allocation of funds under the initial appropriation provided approximately $172 million for military assistance and $128 million for economic assistance. In addition the Mission was given the responsibility for administration of some $40 million in aid to Greece under Public Law 84 (80th Congress, 1st Sess.), providing for relief assistance to the peoples of countries devastated by war. The supplemental appropriation under Public Law 75 for the fiscal year 1949 includes a further $200 million for military aid to Greece.
An agreement dated June 20, 1947 (which incorporates by reference an exchange of notes with the Greek Government) provides the basis under which the American Mission for Aid to Greece operates in relation to the Greek Government with respect to assistance under Public Law 75. An agreement of July 8, 1948 [19481], covers the relationship for relief assistance under Public Law 84. In addition, a series of agreements have been executed between the Mission and the Greek Government as a means of formalizing understandings with respect to policies and operating plans in such fields as reconstruction, foreign trade, government finance, government administration, agriculture, public health and relief. Attached for your information is a copy of a paper2 embodying these agreements. You will note that the terms of these agreements provide for economic measures and controls by the American Mission considerably beyond those contemplated under the ERP legislation, but that they are not inconsistent with the type of agreement required by that law.
The economic group of the Mission, comprised of several operating divisions, has as its general objective the extension of advice to the Greek Government concerning the effective use of American aid funds, as well as Greece’s own resources, in the recovery of the country. Its advisory services cover almost all segments of the Greek economy, including such matters as governmental administration and procedure, [Page 77] internal budgetary and fiscal controls, control of all foreign exchange resources, programming and control of imports, measures for stimulating exports, methods for obtaining from Greek shipping a greater contribution to the economy, the development and implementation of public health and welfare programs, the formulation of wage-price policies, and the direction of Greek reconstruction and development programs, including agricultural expansion.
With the inauguration of the European Recovery Program, it is considered by the Department of State essential that administration of American aid to Greece continue, at least during the first quarter’s operation of the European Recovery Program, within the general framework of the American Mission for Aid to Greece and pursuant to the above-mentioned agreements, which will remain in force. Any other arrangements would unavoidably entail a break in the flow of goods to Greece, would affect adversely the present close control over the economy now maintained by the Mission, and might affect adversely the prestige of the Mission and the morale of its members. The constant flow of goods and close controls are, of course, essential in the critical circumstances now prevailing in Greece.
In view of the special circumstances in Greece, the Department of State hopes that you will agree that the Chief of the American Mission for Aid to Greece, Governor Dwight P. Griswold, will for the time being be given authority, under your direction, for administering through his present Mission the Greek portion of the European Recovery Program, so that the Greek Government will continue to look to the Mission for all phases of American assistance, economic as well as military. Under this arrangement Governor Griswold would, of course, be responsible and report to you on ERP phases of his work in the same manner as would your representatives in other countries. It is understood that he will continue to report to the Department of State with respect to all military aspects of the Greek Aid Program and that if any conflicts arise they will be resolved directly between us.
It is hoped that the decision in relation to the immediate problem of administration during the first quarter can be made as a matter of urgency, without prejudice to longer-range plans, in order to avoid any break in continuity in our over-all program for Greek assistance. The Department feels that the unique Greek situation, where the principal objective of American efforts is now the success of the military campaign against the guerrillas and where the military, economic and political problems with which the United States is directly concerned are so closely interrelated, may require special arrangements after the first quarter, and I will at the appropriate time wish to discuss with [Page 78] you the administration in Greece of the European Recovery Program following the interim arrangement mentioned above.3
Sincerely yours,
- For information regarding the agreements of June 20 and July 8, 1947, see editorial notes, Foreign Relations, 1947, vol. v, pp. 204, 214.↩
- Not found attached.↩
- Mr. Hoffman, in his reply of April 21, agreed to Mr. Lovett’s proposals and requested additionally that the Department continue to perform “backstop” functions in relation to AMAG operations under the European Recovery Program until the organization of the ECA became more fully developed (868.00/4–2148).↩