Foreign Relations of the United States, 1952–1954, Eastern Europe; Soviet Union; Eastern Mediterranean, Volume VIII

781.5/2–2754: Telegram

No. 455
The Ambassador in Greece (Cannon) to the Department of State¹

top secret
priority

Athens, February 27, 1954—5 p.m.

2125. Noforn. Reference: Paris telegram January 29 sent Athens 77, repeated Department 2790, Rome 244, Bonn unnumbered, Frankfort 71.²

Country Team Message

1. Memorandum constituting Greek study Prime Minister referred to in his conversation with General Gruenther (reference telegram) has been transmitted me by Marshal Papagos.³ Copy being transmitted General Gruenther by Exindaris, Greek delegate NATO.

2. Main elements memorandum as follows:

a. Greece willing spend same amount for defense expenditure in fiscal year 1955 as budgeted this year (4,429 billion drachma by national definition) providing: (i) Equal release counterpart; (ii) Continued economic aid, including assistance for reconstruction earthquake area.

Except for counterpart release of 750 billions no specific aid figures cited. From other conversations we feel certain government will also make strong plea for continued counterpart releases for investment program.

b. Citing requirements which can not be met within this level expenditures, memorandum states it necessary reduce size army in order achieve more efficient utilization in defense effort of funds thus saved.

c. MDAP requirements listed in general functional fields.

Embassy will forward memorandum, together with preliminary comments shortly. Generally speaking conclusions similar those set forth Embassy despatch 610, January 4.⁴

3. Memorandum signed by Marshal Papagos who specifically requested negotiations be conducted personally by the two of us. As country team continues believe issue of reorganization GAF will not be resolved on mutually satisfactory basis without detailed joint study by JUSMAG and Greek military, and as such study will present problem in clearer terms than set forth in Marshal’s memorandum, I urged that these studies be undertaken. Marshal agreed and first joint meeting has taken place. At present stage, study will be confined to fact finding, i.e., what is actual supply position (cited in memorandum as being inadequate whereas our study indicates it comparatively very good). Envisaged that future developments of study will indicate defense capabilities within economic assumptions of memorandum from Marshal Papagos.

4. Suggest that upon receipt memorandum Department instruct me inform Marshal Papagos that United States Government shares concern Marshal that there shall be a proper balance between civilian and military sectors of budget and that funds allocated defense shall be used in most effective manner and that competent United States authorities are awaiting outcome present discussions between Greek and United States military representatives before replying Marshal’s memorandum in greater detail. If Department agrees, would be helpful if I could reply in name of President Eisenhower as Marshal himself directed preparation report and has signed it.

Cannon

1. Repeated for information to Paris for Hughes and Reinhardt, to Frankfurt for USCINCEUR and Satterthwaite, and to Rome for Maffitt.
2. This telegram reported that Papagos told Gruenther in Paris on Jan. 26 that some reduction in Greek forces could be effected; Gruenther offered the cooperation of SHAPE in the conclusion of a Greek-U.S. country team study of the Greek defense program. (781.5/1–2954)
3. Papagos handed a copy of his undated memorandum to Cannon on Feb. 23. (Enclosure to despatch 802 from Athens, Mar. 1; 781.5 MSP/3–154)
4. Despatch 610 reported the State–Defense–FOA country team estimate of Greek economic aid requirements as $35–$40 million in previously allotted aid funds which remained unutilized as of June 30, 1954, and $20 million in new funds for fiscal year 1955 of which $5 million would be for earthquake relief. The country team believed that a proposed expansion of Greek Armed Forces by 10,000 men should be deferred until the United States was prepared to cover the entire cost of such an increase. (781.5 MSP/1–454)