302. Memorandum of a Conversation, Department of State, Washington, November 15, 1956, 12–12:50 p.m.1
SUBJECT
- Economic Aid
PARTICIPANTS
- Constantine Karamanlis, Prime Minister of Greece
- George V. Melas, Greek Ambassador
- Phedon Cavalierato, Counselor, Greek Embassy
- Mr. A.D. Sismanides, Foreign Trade Administration
- Secretary Hoover
- Robert Murphy, G
- William M. Rountree, NEA
- Mr. Seager, ICA
- Mr. Willis, Treasury
- Mr. Barnes, U/MSA
- Owen T. Jones, GTI
- Murat W. Williams, GTI
- Chalmers B. Wood, GTI
The Prime Minister opened by sketching the recent improvements in the Greek economy and indicating the remarkable stability which Greece had achieved: stable cost index, stable currency, greatly increased bank deposits reflecting public confidence and a reduction of interest rates from as high as 30% to 16%, greater availability of capital, balanced budget (“really balanced”), and good prospects for investment. “The economy of the country is now good and the Government seeks to consolidate these gains on a more permanent basis.”
The Prime Minister spoke first of Greece’s current needs and then of long range needs.
As to current needs he said that the US had usually taken into account the Greek balance of payments deficit which for the current Greek fiscal year (ending December 31, 1956) was $73 million. Greece could absorb $62 million in surplus commodities and the remaining $11 million should be in global PA’s. The Prime Minister also requested the release of 400 million drachmae before the end of the current Greek fiscal year (before December 31, 1956). He also emphasized that Greek crops were poorer than had been expected five months ago when it was thought Greece would receive $60 million in aid. He hoped any additional amount would not be in surplus commodities. It was important for the Greek Government to have the American decision soon since a new Greek budget had to be prepared for January 1, 1957.
[Page 576]Turning to the long range program Prime Minister Karamanlis said that although the Greek economy was now stable, it could be easily upset. The chief need was to improve the agricultural economy, since 63% of the population were farmers who were the backbone of Greece. Most of them were very poor since the arable land was only 20% (sic) of the area of Greece. The Government’s long range agricultural improvement program had two main parts: 1) improved farm production (agricultural machinery, etc) and 2) improved food processing (canning, etc). This Greek program would cost $60 million including a fertilizer plant. In making plans for it the Greek Government needed assurances that counterpart would be released promptly as the need arose.
Mr. Murphy promised that these questions would be studied immediately and sympathetically.
The Prime Minister then presented the attached paper on Economic Aid.2
The Acting Secretary then made some extremely cordial closing remarks to the Prime Minister stressing his admiration for Greek courage in time of war and for Greek determination and success in the subsequent reconstruction. He also emphasized the importance of NATO, the potentialities of the Balkan Pact, and closed by underlining the usefulness of these talks.
The Prime Minister was pleased and replied with warm appreciation.
The meeting adjourned at 12:50.
- Source: Department of State, Central Files, 881.00/11–1556. Confidential. Drafted by Wood on November 19. The times given for this conversation and the one supra are as on the source text.↩
- The November 15 memorandum, not printed, dealt with the following subjects: the level of aid for the current fiscal year, the need for the restoration of the earthquake-damaged areas in the Aegean Islands, extra aid for agricultural expansion and development—$60 million—duration 4 years, and terms and conditions under which aid is accorded to Greece.↩