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

781.5 MSP/3–1854

No. 456
Memorandum of Conversation, by the FOA Assistant Regional Director for Near East, South Asia, and Africa Operations (Seager) and by the FOA Military Program and Planning Officer (Arth)

secret

Washington, March 18, 1954.

Subject:

• Meeting Between Governor Stassen and Greek Defense Minister Panayotis Kanellopoulos,¹ held at 4:00 p.m., Monday, March 8, 1954

Present:

• FOA:
  • Governor Harold E. Stassen
  • Dr. D. A. FitzGerald
  • Mr. Cedric Seager
  • Mr. M. P. Arth
• Greece:
  • Greek Minister of Defense Panayotis
  • Kanellopoulos

The Minister gave a rapid-fire review of the Greek defense situation and the enormous burden imposed on the Greek budget by the need to maintain the Greek armed forces at their existing level. He mentioned the many measures taken since April–May 1953, when a devaluation was combined with the removal of controls (the latter measure to inspire confidence). He also mentioned Prime Minister Papagos proposed realignment of Greek forces with Greek budgetary capabilities, referred to conversations with General Gruenther on this subject,² and the analysis of this issue of forces readjustment under way in Greece jointly by the Greek Government with U.S. elements in Greece.

The Minister said that during the past year the Greek Government had been forced to sacrifice a great deal in order to protect the national investment program. This had created present deficiencies in the areas of air defense, reservist and national reconstruction. He stated that the country had reacted favorably to the very stringent economic measures that the Government had been forced to impose. He cited particularly that there had been no strikes since the Papagos Government had taken office.

Mr. Kanellopoulos mentioned that the Cabinet was pressing him as Defense Minister, to accept his share of sacrifices necessary to permit the national investment program to move forward at an accelerated pace, as desired by Minister of Coordination Markezinis in particular. This year the total budget is larger than last year, the budget for the armed forces has been maintained at the same level; thus the percentage for defense is lower. For the first time in many years, the government’s stringent economic measures and prudent handling of national finances has enabled the Minister of Finance to show a surplus of 300 billion drachmae.

The Minister said that if the Greek defense potential is not to be weakened, some additional U.S. special help will be necessary, saying he would be “very grateful to you, Mr. Governor, if you could examine the possibility of special help to meet our great defense expenses.” He stated that such help was particularly needed in connection with the present and impending NATO infrastructure costs, with particular reference to the sums that would have to be paid to farmers in connection with the expropriation of properties for the construction of airports at Suda Bay, Lekhana, Nea Khiordos, etc. He said these sums must be paid out immediately, as General Gruenther is insisting upon the early completion of the airports. The total amount required by way of such special help is the equivalent in drachmae of $2.2 million, and he said the funds cannot be provided by the Greek Minister of Finance. The Minister suggested that if this aid could not be extended in the form of a grant, it might be made the basis for a U.S. Government loan carrying a nominal interest charge and repayable in five years, and that under such circumstances the Greeks could pay back one-fifth of it, plus interest, each year, making their first payment before the end of June 1954.

Governor Stassen thanked the Minister for his careful review of the Greek economic and military situation. He stated that the Greek Defense Minister is held in the highest regard in this country and added that the Greek Government in recent times has displayed great skill in the handling of its finances. He reminded the Minister of the worldwide commitments that the United States has assumed with respect to the defense of the free world and with respect to support for the economies of a great many less privileged countries. He emphasized also the importance attached to Greece as a member of the NATO alliance and stated that the Greek Minister’s request would be given his careful and sympathetic consideration. In passing, he mentioned the fact of a large pipeline of U.S. aid which assured continued substantial U.S. support for Greece for some time to come. On the question of the need for assistance to finance NATO infrastructure land acquisition, he stated that the U.S. would look into this issue, but was concerned about establishing a precedent vis-à-vis similar means of other NATO countries.

Mr. Kanellopoulos reviewed the very full program of engagements that lay ahead of him but remarked that he would pay a farewell visit to Washington on March 18, at which time he hoped there might be an opportunity to see Governor Stassen once again, a hope in which Governor Stassen concurred.³

1. Kanellopoulos, who visited the United States as a guest of the Department of Defense, arrived in Washington on Mar. 5 and made calls on the three Service Secretaries, the Assistant Secretary of Defense for International Security Affairs, and the Director of the Foreign Operations Administration on Mar. 8. On Mar. 9, he began a tour of installations of the Armed Services. He met with the Deputy Secretary of Defense, the Director of the Foreign Operations Administration, and the President on Mar. 18 (see the memorandum, infra). During his visit to Washington, he also met with the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs.
2. During the visit to Athens, Oct. 20–21, 1953, Gruenther told Papagos that he recommended no major changes in the organization of Greek Armed Forces, and Papagos assured him the Greeks would make none before completion of a Greek and JUSMAG Athens joint study of the problem. (Telegram Joint Weeka 43 from Athens, Oct. 23, 1953; 781.00(W)/10–2353) Regarding Gruenther’s conversation with Papagos in Paris on Jan. 26, see footnote 2, supra.
3. A briefing memorandum, Mar. 18, by Arth to Stassen on Kanellopoulos’ call on Stassen that day is in file 781.5/3–1854. No record of the conversation has been found in Department of State files.