711.56381/8–2253: Telegram
No. 449
The Chargé in Greece (Yost) to the Department of State
1
550. Noforn. Reference Embassy telegram 431, August 14.2 For negotiations on bases Prime Minister designated Markezinis to discuss “high policy aspects” with me and Ministers of Defense and Finance to carry on detailed negotiations with US team. Both groups had initial meetings yesterday. Discussions of second group are being reported separately.3
Gist of Markezinis remarks to me follows. Strong support which US and NATO are obtaining from Greece in wide variety of fields including bases, troops for Korea, maintenance of disproportionately large standing army, et cetera, is conceivably only under Rally Government. Alternative to Rally is unstable center-left center coalition led by Papandreou and Kartalis, which would certainly not carry out these measures. Factor which will determine whether Rally Government remains in power for four years or breaks up sometime during next twelve months will be whether its economic program is successful in improving to modest extent well being of Greek people. Basic difficulties arising from Greek poverty and military obligations are enhanced by earthquake disaster.
Markezinis, therefore urges US Government do all in its power, particularly during coming year, to assist in meeting Greece’s economic problems. He mentioned specifically following possibilities: (1) expenditure of funds available for bases in such way as to maximize benefits to Greek economy, (2) application of military aid to projects, such as roads, also having economic significance, (3) whole-hearted cooperation of FOA in assisting prompt realization of some important elements of investment program, (4) new aid specifically earmarked for repairing earthquake damage, (5) Exim bank loan, (6) encouragement to IBRD and private investors to place capital in Greece. Markezinis concluded by saying that, regardless of whether such assistance is forthcoming, Rally Government will endeavor to continue its close support of US but that if [Page 846] government fails and is overthrown many of programs in which we are interested will in fact not be carried out.
It is, of course, clear that Markezinis is taking advantage of base negotiations to seek increase in US aid and thus strengthen position of his government. He has been careful, however, to accept our base proposal in advance and hence not give impression of attempting blackmail. Moreover, his basic thesis, that we could expect to receive only from Papagos–Markezinis government strong support of character now being accorded, is undoubtedly correct. Government based on present opposition parties would reject or stall off some of requests being granted by present government and would exact high price in advance for acceding to others.
We, therefore, believe that it is definitely in US interest, without openly aligning ourselves with Rally Government and without granting Markezinis more extravagant requests, to use means at our disposal for assisting, to reasonable degree, in meeting government’s economic problems. Closer US–Greek military collaboration arising from base agreement and humanitarian appeal of earthquake disaster should provide justification for such policy. We hope Department will urge action along these lines upon other interested US agencies.
In this connection, any cut in FY 1954 aid figure below expected $20,000,000 (Deptel 617, August 21)4 would cause intense embarrassment to Greek Government and, coming immediately after earthquake and base agreement, might cause Papagos and Markezinis seriously to question whether their policy of close collaboration with US is worthwhile.
- Repeated for information to Frankfurt for Satterthwaite and USCINCEUR, to Rome for Maffitt, to Paris for USRO and Reinhardt, to London for CINCNELM, and to Wiesbaden.↩
- Supra .↩
- Telegram 554 from Athens, Aug. 22, reported on the first session of the Greek and U.S. teams negotiating for a military facilities agreement in Athens on Aug. 21. (711.56381/8–2253)↩
- Telegram 617 reported that FOA in consultation with the Department of State was considering a redistribution of aid amounts by country because appropriations for defense financing and economic aid for Europe were approximately 30 percent below the amount requested. (123 Cannon, Cavendish W.)↩