Foreign Relations of the United States, 1958–1960, Eastern Europe; Finland; Greece; Turkey, Volume X, Part 2

240. Operations Coordinating Board Report⁰

Washington, May 14, 1958.

OPERATIONS COOPERATING BOARD REPORT ON GREECE (NSC 5718/1)¹

(Approved by the President, August 5, 1957)

(Period Covered: From August 5, 1957 Through May 14, 1958)

A. Summary Evaluation

1. In the period under review, we have experienced some difficulty in progressing toward our objectives in the political field. However, the elections of May, 1958, have given Greece the promise of stable government under a strong party, the ERE of Karamanlis. On the other hand, Communist-front political groups have achieved new power by winning a sizeable bloc of seats in the Greek Parliament. The Cyprus problem remains unsolved and threatens to provide a rallying cause on which further left-wing successes will be scored. Greek-Turkish relations, embittered by the Cyprus dispute, have not been improved. Although the United States and NATO have unlimited access to Greek military facilities, there has been considerable public disappointment with NATO for what is interpreted to be support by its members for Turkey rather than Greece on the Cyprus issue. There has also been a tendency to blame the Karamanlis government for reductions in United States aid. With the weakening of popular support for the Western alliance and the considerable popular wish for reduction in military expenditures, it seems unrealistic to expect the Greek Government to assume a larger share vis-à-vis the United States of its total defense budget, assuming that the total defense costs will remain at or above present levels.

2. On the other hand, continued progress was made in achieving a more viable economy able to support reasonable economic development. Substantial economic growth was indicated by an increase of approximately 10 percent in the gross national product in 1957 while financial and price stability were maintained. A decrease in United States aid shipments was largely responsible for a fall in hard currency reserves, but this was partially offset by an improvement in Greece’s balance of payments on current account.

3. No review of policy is recommended.

B. Major Operating Problems or Difficulties Facing the United States

4. Cyprus Problem. The unresolved Cyprus problem is a continuing cause of dissension between Greece and its NATO allies. However, recent British talks in Ankara and Athens² and the prospect of their continuation offer some hope. The tense relationship on the island, especially between Greek and Turkish Cypriots, continues as the Turkish Cypriots demonstrate against the British, and the EOKA (Greek Cypriot underground organization) carries on a passive resistance campaign supplemented by numerous acts of sabotage. Renewed all-out violence by the EOKA, in addition to thwarting efforts to reach a settlement through quiet diplomacy, might further provoke the Turkish Cypriots to intercommunal strife, and strengthen the Turkish Government’s insistence on partition of the Island as the only practical solution. The U.S. is encouraging the British to continue these talks.

5. Weakened Ties with the West. Although Greece has a government which is firmly allied to the West, there has been a gradual decline over the past two years in popular support for NATO. A spectacular increase in the political strength of EDA, the Communist-front party in the recent elections, is partly the result of this trend. It suggests that further difficulties may be encountered in ensuring Greece’s strong support for NATO. Basic discontent over the Cyprus issue and some public uneasiness over the prospect of IRBM bases in Greece lend themselves to political exploitation, and the communists are vigorously pursuing such exploitation in an effort to develop popular opposition to the establishment of such bases and to create a popular front which could promote further disengagement of Greece from its Western commitments. The lessened popular Greek support also is due in part to a decline in the Greek estimate of the danger from the Soviet Bloc, to a growing sense of national self-confidence which permits Greece to play a more independent role in foreign affairs, and to Greek reaction to reduced American economic aid levels. U.S. efforts, chiefly informational, have been concentrated on the importance of NATO to Greece’s security and continued independence. These efforts, however, have not diminished a general feeling of dissatisfaction with NATO which stems in large part from the unsolved Cyprus question.

6. Greek Relations with the Soviet Bloc. a. Political. The Soviet Bloc continued an offensive on diplomatic, trade and cultural fronts aimed at further weakening Greek ties with the West, increasing popular support for front parties in Greece and fostering growth of a climate in which legalization of the outlawed Communist Party could be achieved. The Soviet Union can be expected to make further efforts toward promoting political cooperation in the Balkans, probably through satellite proposals for conferences dealing with economic and social matters. In this respect, although Greece rejected the recent Rumanian proposal for a general Balkan conference, its reply did not completely close the door to future suggestions of this kind.

b. Economic. Greek trade with the Bloc as a whole has been steadily increasing although still below pre-war. Greek exports to the Bloc rose from $19.6 million in 1956 to $24 million in 1957. Imports rose even more, from $21.3 million to $30.5 million. At the same time, the percentage of this Bloc trade to total trade increased, for exports, from 10.3 percent in 1956 to 10.9 percent in 1957, and for imports, from 4.5 percent in 1956 to 5.8 percent in 1957. The need to dispose of certain agricultural surpluses presently not easily marketable in the West, such as lower grades of tobacco, makes Greece vulnerable to potentially greater dependence on Bloc trade and thus to exposure to possibly greater Soviet influence.

c. Effects on Greece. This Soviet Bloc campaign has not as yet shaken Greece’s fundamentally pro-Western position. Greece has been receptive to our suggestions in resisting a Russian request for traffic and transit rights for the Soviet airline, Aeroflot, through Athens to the Middle East. It has refused to renew a previous one-year grant of such rights to the Polish and Czech airlines and has instead offered temporary rights to these airlines terminating in Athens. Also, the Greek Foreign Office has sought our assistance in countering the pressure Greece is under to accept visits by Soviet Bloc cultural and athletic groups by increasing our own programs of this kind. Nevertheless, the Russian campaign is undoubtedly contributing to a gradual erosion of the previous firmness of Greece’s ties with the West, especially among the public. A heated election campaign, in which aspects of these ties become the subject of debate, could prove further detrimental to Greece’s Western alignment.

7. Economic and Military Aid Problems. The Greek economy has grown substantially in the past several years. This growth is continuing. At the same time the burden of its defense effort in relation to per capita income remains considerably greater than that of most other NATOmembers. In the past year there has also been some loss in hard currency reserves.

a. Economic Aid. The Karamanlis Government repeatedly requested increases in U.S. defense support assistance in FY 1958. The present caretaker government also requested that we increase this aid by $10 million. Similar requests can probably be expected when the next government takes office. Nevertheless, the United States reduced its defense support assistance from $25 million in FY 1957 to $15 million in FY 1958, and all requests that this be increased have been refused. However, we did reconstitute the content of our FY 1958 program in response to Greek requests (see paragraph 13).³

b. Greek Share of Defense Costs. To help determine the future course of our Defense Support and MAP programs in Greece, there is currently underway a joint US-Greek study of the impact on the Greek defense forces of the projected calendar 1958 Greek defense budget as supplemented by U.S. aid. The study will include a review of the extent of any gap between the cost of military requirements (based on NATO force goals) and the funds to meet these costs in the Greek defense program as supplemented by U.S. aid. In view of prevailing public opinion that the Greek defense effort is already very high for such a poor country, it is unlikely that Greece would be willing to accept a larger proportionate share of total defense costs vis-à-vis the U.S., as long as total defense costs remain at or above present levels.

c. PL 480.⁴ The good 1957 harvest in Greece reduced its import needs for grains supplied under PL 480 with the result that shipments under the $19.8 million PL 480 agreement of December 1957 are being delayed. In view of this situation only $1.5 million of our FY 1958 defense support program is being extended in agricultural commodities in contrast to last year when the entire program was in such commodities. Delayed shipments under the present agreement will cause a delay in the availability of PL 480 generated local currency earmarked for the Greek development budget. Expected good crops again this year will further decrease requirements for U.S. surplus commodities. This will also increase the pressure from the Greek Government for additional defense support assistance to compensate for reduced assistance through PL 480.

d. MAP Deliveries. The Greek press frequently reflects the feeling of most Greeks that the U.S., in its military aid program as in other ways, gives preference to Turkey and is mistaken in the reliance placed on Turkey in the Middle East area. In planning allocation of F–100 aircraft squadrons to Turkey with less advanced types (F–84F) going to Greece, we may very likely aggravate this feeling. However, there are presently available only twelve squadrons of F–100’s for allocation under MAP. Under present plans, arrived at after careful consideration of military and political factors and the desirability of single typing of aircraft, all have been allocated to France, Denmark and Turkey.

Note: See NIE 32–56, The Outlook for Greece, June 26, 1956.⁵

0. Source: Department of State, OCB Files: Lot 62 D 430, Greece. Secret. A title page, covering memorandum, and three annexes (a survey of additional major developments, a financial annex, and an MSP pipeline analysis) are not printed. In the undated covering memorandum, Elmer Staats, Executive Officer of the OCB, noted that the Board concurred in the report at its May 14 meeting and that the CIA and Department of State would prepare an analysis of the success of the EDA Party and the extent of KKE membership among winning EDA candidates. Staats also reported that the NSC had noted the report on June 4. A copy of the State–CIA study of the Greek elections, dated August 29, is ibid. Regarding the May 14 OCB meeting, see footnote 1, Document 239.
1. For text of NSC 5718/1, see Foreign Relations, 1955–1957, vol. XXIV, pp. 585–592.
2. Lloyd held talks with Turkish leaders in Ankara January 25–30 and with Greek leaders in Athens February 11–13. Sir Hugh Foot, Governor of Cyprus, was also present for the talks in Athens. See Part 1, Documents 178 and186.
3. Paragraph 13, regarding Greek applications to the Development Loan Fund, is in Annex A, not printed.
4. For text of P.L. 480, the Agricultural Trade Development and Assistance Act of 1954, see 68 Stat. 454.
5. For text, see Foreign Relations, 1955–1957, vol. XXIV, pp. 566–567.