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

251. Operations Coordinating Board Report⁰

Washington, December 17, 1958.

OPERATIONS COORDINATING BOARD

REPORT ON GREECE (NSC 5718/1)¹

(Approved by President—August 5, 1957)

(Period Covered: From May 15, 1958 Through December 17, 1958)

A. Summary Evaluation

1. The Cyprus issue remained unresolved and there was a somewhat less favorable attitude toward the U.S. because of a popular feeling in Greece that its NATO allies, especially the U.S., have let Greece down on this crucial issue.

2. On the surface the political stability enjoyed over the last six years continued, but several factors had an increasingly adverse effect on this stability. These factors include popular frustration over Cyprus, discontent stemming from social and economic grievances and the marked absence of effective political leadership in the center and moderate left. The danger of future instability was highlighted by the results of the May 1958 elections which, although they gave the governing National Radical Union (ERE) of Karamanlis an increased majority, also saw a sharp increase in the extreme left at the expense of moderate opposition elements.

3. The effectiveness of the Greek armed forces continued to increase with U.S. assistance. A major problem confronting the Greek and U.S. Governments is the cost involved in providing for a modernized defense establishment of the kind and size called for by the NATO planning document entitled MC–70.² Greece is already bearing a very heavy defense burden and a significant increase in U.S. aid is not likely. Several steps to meet this problem are under study, including one to determine the extent to which the cost of modernization of Greek forces called for by NATO MC–70 could be offset by reducing those national forces which are in excess of MC–70 goals. However, Greek political considerations, especially Greek sensitivity regarding the Turkish military position, may cause Greece to resist any proposals to pare its conventional national forces and limit military buildup plans.

4. Greek Government plans for economic development have been strengthened by the extension in November 1958 of a West German Government loan of $47.6 million and a German Government guarantee on commercial credits totaling $95.2 million.

5. No review of U.S. Policy Toward Greece (NSC 5718/1) is recommended.

B. Major Operating Problems or Difficulties Facing the United States

6. Cyprus and Greek Allegiance to NATO. In the absence of a settlement of the Cyprus question, Greek relations with the U.K. and particularly with Turkey deteriorated further, with little immediate prospect for improvement. Greek-Turk cooperation within NATO has virtually ceased, following Greek withdrawal in June 1958 from NATO Southeast headquarters at Izmir, Turkey.³ Even though the Karamanlis Government considers itself bound to the West by solid interest and commitments, the effect on public opinion of a further worsening of the Cyprus dispute could bring about some further weakening of the NATO ties. It seems probable that Greece will follow at best a more independent line in NATO affairs and in matters affecting U.S. interests elsewhere, especially in the UN, so long as the Greek sense of annoyance with its allies over the Cyprus issue persists. Partially in view of this situation no approach has yet been made by NATO to obtain agreement for the establishment of NATO missile sites or atomic storage facilities in Greece. Action to obtain Greek agreement to base right for the U.S. at the NATO infrastructure field at Andravida was postponed.

Status of U.S. Actions. The U.S. has continued to seek through quiet diplomacy to help bring about agreement among Greece, Turkey and the U.K. on Cyprus. It has actively assisted the NATO Secretary General in his efforts to get agreement by the principal parties to an international conference and was instrumental in obtaining concessions from British, Greeks and Turks toward this end.⁴ Although these efforts have not as yet succeeded they appear to have at least temporarily halted the Greek public trend away from support for NATO. However, the U.S. has not been able to take a stand on the Cyprus issue to the satisfaction of Greece and no agreement has been achieved on either an interim solution or on the makeup or agenda of a conference to discuss the matter. The United States intends to continue to place major reliance on NATO as the most appropriate area in which to pursue efforts for a solution.

7. Declining Greek Support for U.S. Policies, a. During the past two years there has been a gradual decline in the degree of Greek support for U.S. policies generally. This has been most evident on issues in which Greece has a direct interest, such as Middle East developments, but also on such other matters as policy toward Communist China. In the Middle East, Greece has for some time criticized our approach toward Arab nationalism. During the Lebanese landings,⁵ it was only with much difficulty that landing and overflight rights were obtained for U.S. aircraft, and even then all operations had to be conducted in secrecy at the request of the Government. (See paragraphs 13 and 14.) Some Greek officials reportedly have also given thought to greater Greek collaboration with the Cairo–Belgrade type of neutralism. During voting at the 13th UN General Assembly on the question of Communist Chinese representation, a Greek decision to vote in favor of the Chinese People’s Republic was changed to abstention only at the last moment.⁶ This was the most significant departure to date from previous Greek policy of generally supporting U.S. positions in the UN. The Greek Government has also recently issue a decree removing the restrictions on Greek shipping calling at Chinese Mainland and North Korean ports.⁷ A ban on traffic in strategic goods to these ports continues, but there is some danger that this will be circumvented by chartering of presently laid-up Greek shipping to certain Bloc countries, notably Czechoslovakia.

b. Although the Cyprus issue has undoubtedly greatly aggravated this trend away from support for U.S. policies, it probably stems from basic changes in Greek attitudes over the past several years. These include a growing sense of national self-confidence and a desire to demonstrate a more independent role in foreign affairs, a decline in the popular Greek estimate of the danger from the Soviet Bloc and to Greek reactions to reduced American economic aid levels. On Middle East policies, it also reflects Greek conviction that U.S. policies fail to recognize the strength of Arab nationalism and place excessive reliance on Turkey.

Status of U.S. Actions. The U.S. has sought to demonstrate, in conversations with Greek officials and through appropriate use of political influence, that Greece’s continued independence and national integrity can best be assured in close cooperation with the U.S. and in NATO. We have emphasized repeatedly our hope that frustration over Cyprus will not be allowed to weaken Greece’s Western ties or adversely to affect the broad range of U.S.-Greek relations. USIS informational activities have been concentrated on the importance of NATO to Greece’s security and continued independence. During the Lebanese operation, arrangements were made for Greek and other journalists to visit Lebanon and observe American units there. This resulted in good press coverage, but probably had little effect on over-all Greek attitudes toward U.S. Middle East policy. It is recognized that success in all these efforts will be limited so long as the Cyprus issue remains unresolved.

8. Unsatisfactory Trends in Greek Domestic Politics. a. Although the Greek Government remains firmly in the hands of pro-Western conservative leaders who are committed to the broad lines of policy followed in the past, the present political trend is toward a polarization between the right and the extreme left, at the expense of the center and moderate left groups. This trend may threaten the relative political stability of the past six years. This polarization was demonstrated in the May 1958 elections when the Communist-front United Democratic Left (EDA) won an impressive 25 percent of the popular vote, compared with about 10 percent in previous elections, and as a party became the principal opposition group in Parliament. The trend has not been ameliorated by the continued splintering of the non-Communist opposition parties and the marked absence of new and inspiring leadership among them. At the same time EDA has been effectively improving its party organization throughout the country and actively exploits chronic economic discontent. This discontent has probably been accented rather than allayed by recent increases in gross national product because of a feeling that a disproportionate share of the income has gone to the higher income groups. In this situation and in view of rising public frustration over Cyprus, the EDA might gain even greater popular support in the event of new elections. This danger has led to talk among some opposition leaders and some of the press of the desirability of a broadened government to include some of the present non-Communist opposition. There have also been rumors of a rightist dictatorship with or without Royal acquiescence should the present Government fall.

b. Continued strengthening of extreme leftist elements poses a threat to internal security as well as to broad lines of policy in Greek-NATO defense matters, as memories of the civil war with the Communist guerrillas have faded and as Greek Communist-front elements have been made more respectable. Soviet efforts in the diplomatic, trade and cultural lines have helped in this regard and previous experience with communism is taking a back seat to the Cyprus issue. Communist elements have also made disturbing inroads in the Greek trade union organization, highlighted by the action of the GSEE trade union congress in October 1958 in readmitting certain Communist-dominated labor federations into the GSEE.

Status of U.S. Actions. The United States seeks to demonstrate, through the entire range of U.S. policy in Greece and especially through its economic aid and technical assistance programs, that social process and economic development are possible in Greece within the framework of that country’s present democratic system. Greece’s recovery from World War II and from the Communist guerrilla warfare of 1945–49, and its economic growth since then was made possible by a combination of Greece’s own efforts and U.S. economic aid which has totaled more than $1.5 billion since June 1947. Currently, U.S. efforts to counter unsatisfactory trends in Greek domestic politics are handicapped by Greek concentration on the Cyprus issue and a tendency to judge everything in terms of that issue. Nevertheless, through our programs in Greece, efforts are being made to continue to identify the United States as effectively as possible with the aspirations of the Greeks for improved economic and social conditions. [8–1/2 lines of source text not declassified]

9. Greek Defense Program, a. U.S. policy has provided for a review of the possibility of achieving a reduction of NATO-approved force levels for Greece and, in phase with the effective integration of advanced weapons in the Greek armed forces, appropriate revision of Greek force levels in the light of NATO requirements. Our policy has also looked toward the assumption by Greece of a larger share of the cost of the Greek defense establishment.

b. Total defense expenditures for Greece have been steadily increasing over the past several years, including those for recurring maintenance requirements. While the Greek portion of total defense expenditures has remained relatively constant, it already imposes one of the heaviest defense burdens in NATO relative to available national resources. With a per capita income of only about $280, Greece currently spends about 5% of its Gross National Product for defense. Moreover, the Greek Government is under increasing political pressure to expand its economic development program, and the Greek economy has recently experienced some deterioration in its balance of payments and a loss of hard currency reserves. In view of these pressures, it would be difficult for Greece to expand its share of total defense expenditures to finance a defense modernization program without jeopardizing either its development plans or its hard-won financial stability.

c. The NATO document, MC–70, approved for planning purposes on May 9, 1958, concerns the major combat unit requirements of NATO through 1963. This document reflects an eventual reduction in Greek army forces requirements approximating 20%, and a gradual and substantial modernization and force improvement in all three services, including the provision of certain short-range missile units. Fulfillment of these objectives cannot be realized without external aid. Further, the burden on the Greek economy would be excessive if the NATO MC-70 or MAP supported Army units were brought up to desired strengths without corresponding reductions among the units with purely national missions and which are in excess of MC-70 or MAP supported goals. If reductions can be achieved, the released resources might help reduce future defense costs in Greece to more manageable proportions. MAP objectives on a world-wide basis, including Greece, are currently under review and are expected to be completed in early February.

d. However, the problem of achieving such limitation or reduction in Greek defense forces is difficult because Greece’s determination to maintain approximate military parity with Turkey has increased as relations over Cyprus have worsened. Greek fears of Bulgaria also remain strong. Consequently, it can be expected that Greece will continue its military spending at somewhere near current levels and will put increasing pressure on the U.S. for additional defense support assistance to permit a continuing defense buildup. The outlook is that Greece will retain its national units in excess of NATO or MAP supported requirements while failing to bring the NATO MC–70 or MAP supported units up to higher strength levels, counting upon reservists in the event of emergency. It is possible, of course, that Greece would resort to domestic borrowing to continue a military buildup while increasing expenditures for economic development.

e. Greece has also been placing increasing emphasis on obtaining economic assistance from non-U.S. Western sources, and recently secured from West Germany a government loan of $47.6 million; a government guarantee on commercial exporter credits of up to $95.2 million and a promise of German technical assistance grants over the next five years totalling $3.6 million. This is the first time since World War II that a Western European nation has provided substantial loans to Greece.

Status of U.S. Actions. In the current fiscal year the U.S. increased defense support assistance to $20 million from $15 million in FY 1958 and is providing Construction and Consumables assistance under MAP valued at $12 million as against $6 million in FY 1958—to ease the resource and foreign exchange burden imposed on Greece by the defense program. With regard to future years, a marked increase in U.S. defense support allocations is not likely. Therefore, it may be necessary, in connection with the implementation of MC–70 or MAP goals, to seek some reduction in forces maintained by Greece for purely national purposes, and the U.S. is now examining this question. The U.S has also proposed to the Greek Ministry of Defense that it join us in a new effort to prevent an increase in recurring maintenance costs in the Greek defense program. An analysis is being made of Embassy Athens recommendations that we seek Greek Government agreement to impose ceilings at present levels in Greek ground force personnel and in Greek-financed defense expenditures, provided these ceilings are not detrimental to NATO requirements. This study also includes consideration of cutting back on the more costly elements in future MAP, specifically certain advanced weapons. Depending upon the outcome of this analysis, consideration will be given to making representations along these lines to the Greek Government. It must be borne in mind, however, that Greek receptivity to all these proposals will be limited by the politico-military factors described above, including Greek relations with Turkey and Bulgaria.

Note: See NIE 32–58, The Outlook for Greece’s Stability and Foreign Position, September 23, 1958.⁸

0. Source: Department of State, OCB Files: Lot 62 D 430, Greece. Secret. A title page, covering memorandum, and four annexes (a survey of additional major developments, a summary of Sino-Soviet activities in Greece, a financial survey, and an MSP pipeline analysis) are not printed. In the undated covering memorandum, Bromley Smith, Executive Officer of the OCB, noted that the Board revised and concurred in the draft report on December 17 with the understanding that its suggestions for revision would be included prior to transmittal of the report to the NSC. No copy of the draft report has been found. Smith also reported that the NSC had noted the report on January 23. The minutes of the December 17 OCB meeting are Ibid., Minutes VI.
1. For text of NSC 5718/1, see Foreign Relations, 1955–1957, vol. XXIV, pp. 585–592.
2. See footnote 2, Document 244.
3. June 14–15.
4. For documentation on U.S. efforts to find a solution to the Cyprus question within the framework of NATO, see Part 1, Documents 242 ff.
5. U.S. forces were sent to Lebanon on July 15 after a coup in Iraq toppled the monarchy.
6. September 19. Discussion of Chinese admission was put off by a vote of 12 to 7 with 2 abstentions.
7. Announced on August 14 and effective August 15.
8. Document 243.