868.20/10–1449: Telegram
The Ambassador in Greece (Grady) to the Secretary of State
2164. Attention McGhee.1 Reduction AMAG and GNA strength making satisfactory progress. See my telegrams Amag 74 of September 232 and Amag 77 of October 19.3 By January 1, 1950 approximately 250 persons connected with AMAG (officers, men and their dependents) will have left Greece. Our field detachments with GNA being sharply reduced and will shortly be limited to representation only at four corps hdqtrs. JUSMAPG cooperating whole-heartedly in reducing AMAG and in bringing about decrease in size of Greek Army. I fully expect net reduction of 50,000 GNA to be effective by January 1.
We plan compensating for smaller size of army by increased efficiency, equipment and training. We contemplate, in conjunction with ECA, a program for road building in mountainous and border areas so as to increase mobility of relatively small army envisaged.
With general MAP appropriation now available, it becomes particularly important that requisitions for Greece now on file be quickly filled. There should also be prompt reduction of British military mission and withdrawal, as soon as practicable, of British brigade. I recognize full well that there is some hazard in all these military reductions, but I feel these dangers must be risked.
Progress on the economic front is encouraging. Because of counter-measures taken devaluation has gone off smoothly. Commodity prices are remaining steady and the open market price of gold sovereigns is dropping slowly.
Immediate budget picture is not bright. After careful screening of civil ministries budgets and assuming a 25 percent reduction in military expenditure during last half of FY 1950 and with most optimistic [Page 444] forecast of revenue including much larger collection of income tax, budget deficit will range between 1500 and 2000 billion drachmae. In addition to large sums for military purposes, principal contributory reasons for large size deficit are larger subsidies resulting from devaluation and allocation of 600 billion drachmae for refugees. It is, however, not unreasonable to envisage possibility of balanced budget for following year provided military expenditures can be further reduced, refugee problem liquidated, subsidies repealed and revenue continues to improve.
Porter4 sees eye to eye with me on streamlining ECA organization. Divisions are being consolidated and number of personnel slowly reduced. We are endeavoring to limit our objectives to essentials and clearly to define them. Morale of the organization is excellent.
We have had in effect the same government since last January and the ministers are on the whole working effectively with ECA. I am pressing for official announcement in the near future of a general election for next spring, perhaps as early as March. I am inclined to consider that fairness and representative character of these elections would be enhanced by installation of a service government four, five days prior to ballotting. I expect no government crises in the interim unless there should be some momentous change in the external situation. It is quite likely that elections may produce no significant change in Parliament or in government of the nation, but this reaffirmation of the democratic process should be beneficial in itself, both within Greece and abroad and together with the restoration of security and economic improvement may pave the way for the development of new and energetic political forces. I am encouraging other developments essential to the restoration of political freedom such as progressive lifting of martial law in safe areas. Removal of military control in Athens, for example, would have a profound effect in increasing press freedom throughout the country in view of the wide provincial circulation of Athens dailies. As situation becomes progressively stable I shall not hesitate to use this press freedom to carry our story to the Greek people to encourage, perhaps some times to force the Greek Government to take action we consider essential.
There are, of course, disturbing factors in the external situation, but I feel that to postpone vitally necessary measures such as the reduction of the Greek Army until Balkan and world situation becomes stabilized would mean dissipation of ECA funds with little permanent benefit.
[Page 445]Economic situation within Greece must be improved if Communists are not again, in not too distant future, to find ready at hand widespread discontent which can easily be welded into mass movement. This aspect of the Communist danger to Greece is as real, if not so immediate, as the renewal of aggression by armed bands across the frontier.
I am not particularly disturbed at the failure of UN conciliation efforts.5 The Balkan countries can themselves probably do better than ill-informed intermediaries from Australia, the Philippines and elsewhere. UNSCOB, if continued and revitalized, may be able to assist in this work and aid in discouraging renewed aggression.
- In telegram 1828,
October 26, to Athens, not printed, Assistant Secretary of State
McGhee personally replied that he found the Ambassador’s summary
of the Greek situation presented here most gratifying, and he
added the following comment:
“Improvement from mil, econ and polit viewpoints source of greatest satisfaction as indicating corner has been turned in our efforts to reestablish Greece in her proper place among independent nations. Realize there are dangers and difficult times ahead, but Dept has full confidence in your ability to carry through with winning program.” (868.00/10–2649)
↩ - Not printed, but see footnote 3 to telegram Gama 54, September 28, to Athens, p. 429.↩
- Not printed; in it Ambassador Grady expressed support for the recommendation made by Lieutenant General Van Fleet that the British Military Mission in Greece be reduced in strength. Grady believed that a general agreement with the British to accomplish this purpose would prepare the way for sizable reductions in both the American and British Military Missions, and he also urged consideration be given to withdrawing the British Brigade stationed in Greece in order to increase Greek self-reliance. (868.20 Mission/10–1949)↩
- At the beginning of September 1949, Paul It. Porter, until then Deputy United States Representative to the U.N. Economic Commission for Europe, succeeded John Nuveen, Jr., as the Chief of the Economic Cooperation Administration Mission in Greece.↩
- Regarding the work of the Conciliation Committee established by the First Committee of the U.N. General Assembly, see the editorial note, p. 439.↩