Foreign Relations of the United States, 1948, Eastern Europe; The Soviet Union, Volume IV

868.00/5–1948

Memorandum by the Coordinator for Aid to Greece and Turkey (McGhee) to the Under Secretary of State (Lovett)

confidential

[Washington,] May 19, 1948.

the problems

The problems are:

(1) To formulate the Department’s position in regard to administration of the ECA program in Greece in light of (a) the relationship of that program with the military portion of the program authorized by Public Law 75, and (b) its relationship to the unique political responsibilities which the United States has in Greece, differing substantially from those of the United States in any other OEEC country; and

(2) To formulate the Department’s position with regard to the organization in Washington to “backstop” the overall Greek program.

discussion

(1) Implementation of the Greek assistance program, authorized by Public Law 75, has injected the United States Government into a special situation in Greece which is not comparable to that existing in any other country participating in the European Recovery Program. The American Mission for Aid to Greece exercises advisory functions vis-à-vis the Greek Government in relation to almost all phases of the economy as well as governmental administration and military operations. Successful implementation of the overall American program in Greece requires continuation of these advisory functions during at least part of the period of ECA operations. Decisions by the Mission as to utilization of American aid do in fact determine most important decisions of the Greek Government.

At the time the American Mission for Aid to Greece was established, it was felt that political responsibilities of the diplomatic establishment under the Ambassador could be satisfactorily segregated from the economic and military responsibilities vested in the Chief of the Mission. It later became clear, however, that it is not possible clearly to delineate between political, military and economic aspects of the overall American program, and that it is highly desirable to concentrate responsibility for all aspects in one Administrator in order to achieve coordination of United States efforts in Greece and concentration of United States bargaining power vis-à-vis the Greek Government.

In planning the future program in Greece, therefore, it has been hoped that there could be appointed an Ambassador of special qualifications in whom would be vested total responsibility for all American operations in Greece, including the diplomatic establishment, the military group of the present American Mission for Aid to Greece, and the ECA Mission which is to assume economic functions previously carried out by the American Mission. In recent conversations with the ECA Administrator, however, it was indicated that the Administrator preferred to appoint a separate Chief of the ECA Mission in Greece, although he would be instructed to coordinate his activities with the Ambassador.

This arrangement would appear to present grave danger that proper coordination between various aspects of the program will no longer be possible. For example, what might be considered a routine economic decision by the ECA group in regard to the internal budget of the Greek Government might have a serious effect upon military or security Ministries of the government and, therefore, would affect the military program for which the Ambassador would be responsible. Conversely, a military decision made by the Ambassador might indirectly involve the use of Greek funds which would have significant consequences upon the economic program. Moreover, experience has proved that most “economic” measures ‘actually have very important political consequences.

Another factor which should be borne in mind is that the total personnel available for American operations in Greece can be utilized far more effectively in a combined organization under a single head than if separate groups are established to administer each phase of the program. Duplication in administrative, informational, legal, and’ many other phases of the work, present under the existing setup in Greece, could be eliminated. The Ambassador could rely upon the Economic Mission, if it were under his direction, to perform certain responsibilities of his State Department Mission, which otherwise must be performed at the expense of overlapping or duplicating activities. The reverse also would be true.

Governor Griswold, on the basis of his experience in Greece, has strongly recommended the “umbrella” concept of organization with the American Ambassador in charge of all American activities. During his forthcoming visit in Washington, he undoubtedly will wish to discuss the question of the future organization, and it is believed that his presence will present an excellent opportunity for the subject to be raised again with the Economic Cooperation Administration in an effort to arrive at a satisfactory solution. So far the Administrator has taken no step which would prejudice his reconsideration of this issue, and discussions have revealed sympathy in the ECA staff for the unified command concept.

(2) The special nature of the Greek case also requires special arrangements for coordination in Washington of the overall American program. Thus far responsibility for backstopping the American Mission for Aid to Greece, with regard to both economic and military aspects, has been carried out by U/GT which in effect serves as Washington agency for the Mission. Total departmental personnel presently involved in this effort is 65. U/GT assumes responsibility for obtaining appropriate action by established divisions within the Department or by other governmental agencies. Mr. Hoffman has asked that for the time being U/GT service the ECA Greek program. Whether or not ECA in the field actually will be placed under the direction of the American Ambassador, it is highly desirable that this organization or a similar organization continue to operate in relation to the overall American Aid Program in Greece in substantially the same way as at the present time.

Severe limitations imposed by the budget for the supplementary military aid program would render it impossible for U/GT, with the staff presently authorized, to continue after June 30th its present level of activity which includes coordination of ECA aspects of the program. Total departmental personnel requested under the Public Law 75 program is only 18. It would seem, however, that a joint staff consisting of a portion of personnel employed under Public Law 75 funds and personnel employed under ECA funds might constitute the best form of coordinating agency in Washington. Although this joint group could be located either in ECA or in the Department, because of the communications arrangement and the preponderance of State Department interests, at least initially, it is desirable that such group be located in the Department. The Head of such a group might have offices both in ECA and the Department. On military or political questions the group would report primarily to the State Department, and on ECA matters primarily to ECA. In all instances it would be in a position to assure effective and coordinated treatment of all matters relating to the American program as a whole in Greece. Discussions with the ECA staff have indicated considerable sympathy for this proposal.

recommendations

It is recommended that the Under Secretary, Governor Griswold, and other appropriate officials of the Department discuss again with the Economic Cooperation Administration as a separate problem administration of the ECA program in Greece, using as a basis for such discussion the departmental position that the following course should be adopted:

1. Field Operations

(a) That upon his assumption of responsibility as Ambassador to Greece and as Chief of the Military Mission to Greece, Mr. Grady be appointed by the ECA as ECA Special Representative to Greece.

(b) That ECA appoint a Deputy Special Representative to Greece who, under the direction of Mr. Grady, would have operating responsibility for the ECA Mission’s activities.

(c) That pending the arrival of Mr. Grady, Governor Griswold be asked to remain in Greece as Chief of the present American Mission for Aid to Greece, and also as interim ECA Special Representative.

(d) That all present personnel of the American Mission performing economic functions which will become the responsibility of ECA be transferred, effective July 1, 1948, to the rolls of the ECA Mission; provided that it is mutually agreed between Governor Griswold, the Department, and ECA that they are performing functions which will be continued under ECA, and that the personnel have proved themselves to be fully qualified and have been recommended by the American Mission for continuation.

2. Coordination in Washington

(a) That there be established in Washington a joint State Department–ECA group to “backstop” the overall program in Greece, serving in effect as Washington agency for field operations involving Public Law 75 and ECA.

(b) That there be assigned to such joint group personnel authorized in the Public Law 75 budget for the fiscal year 1949, together with other required personnel to be paid out of funds allotted by ECA. These latter personnel might include present employees of U/GT whose salaries have not been provided for under the Public Law 75 budget for next year.

(c) That the coordinating group, because of the communications situation, have its headquarters in the Department of State, but that it be responsible primarily to the ECA Administrator for all matters involving the Greek ECA program, and primarily to the Under Secretary of State for all non-ECA matters.