781.5 MSP/3–652

No. 423
Memorandum by the Acting Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Berry) to the Secretary of State 1



  • Ambassador Peurifoy’s Telegram No. 3980, March 52

In his personal telegram to you, Ambassador Peurifoy reported his concern over an apparently basic disagreement which exists between Athens and MSA/Washington regarding the current Greek aid program. You may be interested in the following background:

As Ambassador Peurifoy indicated, the main problem lies in the determination of the extent to which policies designed to attain “economic stability” will be implemented regardless of their adverse effect upon other American goals in Greece, particularly the extent to which development projects must be sacrificed in order to conserve expenditures of Greek drachmae. The lack of agreement upon this point has resulted in failure by MSA/Washington to release counterpart funds in adequate quantities and in sufficient time to prevent disruption of a number of projects now being carried out by the Greek mission.

This matter has been discussed on a continuing basis by Departmental representatives with MSA/Washington. Ambassador Peurifoy, during his recent visit, also pursued the subject with appropriate [Page 787] MSA officials including Mr. Kenney. It was agreed at that time that an inter-Departmental group would be dispatched to Greece to survey the economic situation and to recommend policies which should be pursued in light of all pertinent considerations. Unfortunately, several individuals who were considered by MSA to head the group have declined, but it is hoped that someone will be appointed within the next few days. It is expected that the Department will designate an official to join the group. As yet, however, no such individual has been chosen since the terms of reference of the group have not yet been agreed upon within MSA or discussed with the Department. It is expected that this will be done in the very near future, and in the meantime Mr. Kenney has dispatched a telegram to Athens informing our people there that the group will be forthcoming as soon as possible.3

Pending the arrival in Athens of the group and the results of its survey, I am informed that it has now been agreed within MSA to meet the immediate problem of counterpart releases in the following manner: 50 billion drachmae will be released immediately for current obligations, and MSA will consent to the automatic release of a total of 300 billion drachmae for the period January 1 to June 30. These releases will be authorized in accordance with any schedule recommended by Athens. For the time being, pending the outcome of the special group, the amount of 300 billion drachmae will be regarded as the maximum which can be released unless progress upon the counter-inflationary program is later considered to warrant an increase.

In effect, this arrangement would provide the Greek mission with latitude for counterpart releases to meet minimal needs until there has been sufficient time for a total review by the Greek mission of United States economic policy objectives in Greece and the manner of attaining them. I believe that this should be found satisfactory to Ambassador Peurifoy. It is understood that a telegram outlining this plan will be dispatched by MSA to Athens, probably today, after appropriate clearance with agencies represented in the NAC.

I do not believe it necessary at this juncture for you personally to discuss the matter with Mr. Kenney, but if there are any major problems concerning the interim financial arrangements or concerning the terms of reference of the special group to be sent to Athens, NEA may recommend at a later date that you do so.

[Page 788]

A telegram to Ambassador Peurifoy will be drafted as soon as the position of MSA/Washington concerning counterpart releases has been formalized.4

  1. Drafted by Rountree and routed to the Secretary of State through S/S and G; initialed by Acheson.
  2. Not printed. (781.5 MSP/3–552)
  3. Not further identified.
  4. Infra.