273. Message From Prime Minister Karamanlis to the Under Secretary of State for Economic Affairs (Dillon)0
The Greek Minister is anxious to express his deep concern for what he considers a lack of adequate appreciation on the part of the Government [Page 684] of the United States of the continuous strains and sacrifices of Greece, and her critical position in the area of the Balkans and the Near East.
There has of late been some indication that economic assistance from the DLF might be linked with the pending problem of the pre-war external public debt of Greece. Such a policy, if it were adopted, would perforce be considered by the Greek Government as unwarranted and unacceptable. The setting up of such a prerequisite would mean that no account is taken of the repeated efforts made by the Greek Government in the last two years in order to reach an equitable solution to this problem, and also of the lack of understanding shown by the representatives of the United States bondholders in the matter.
The Prime Minister deems it necessary to draw the attention of the United States Government to the serious effects on Greek public opinion of the above eventuality being realized. Under pressure from adverse popular reaction, the Greek Government might be led to withdraw the loan applications at present under scrutiny by the DLF, and such a development is liable to engender grave political consequences.
As already pointed out, the Greek Government has made earnest efforts to reach agreement, namely with the American bondholders, on the resumption of its public debt service on a reasonable basis. It wishes to stress anew that, to its deep regret, these efforts have not been duly reciprocated and proved unsuccessful.
More recently, the Greek Government informed the Government of the United States that it was prepared to consider a settlement along lines similar to the recent Yugoslav debt agreement,1 with the difference that the Greek settlement should be final and not temporary, since the special reasons applying to Yugoslavia have no bearing in the case of Greece.
The above proposal should be deemed reasonable and equitable. In effect, it is far more onerous to Greece, since equal treatment will be meted out to all bondholders, while in the case of Yugoslavia the bulk of her debt was practically written off through special agreement with France.
Furthermore, Yugoslavia’s remaining debt is not only far smaller, but also its relative incidence on the country still less onerous considering the size of the Yugoslav economy.
Besides, sizeable loans were previously granted to Yugoslavia or were being negotiated with this country by the World Bank, the Export-Import Bank and the DLF without heed to her debt then being in default.
[Page 685]Finally, one should not fail taking into account the difference in Yugoslavia’s political, social and economic system, and her lesser ties with the West as compared with Greece’s position as a member of the leading Western Atlantic Alliance.
- Source: Department of State, Central Files, 781.5–MSP/10–1659. No classification marking. Transmitted as an enclosure to a note from the Greek Embassy to the Department of State, October 16. The message and note were delivered by Ambassador Liatis during an October 16 meeting with Assistant Secretary of State for Near Eastern and South Asian Affairs Jones. Their discussions were reported to the Embassy in Athens in telegram 1103, October 20. (Ibid., 881.10/10–1559)↩
- See Document 269.↩
- Printed from a copy that bears this typed signature.↩