Foreign Relations of the United States, 1961–1963, Volume XVI, Eastern Europe; Cyprus; Greece; Turkey

332. Memorandum of Conversation⁰

US/MC/29

Athens, May 3, 1962, 6 p.m.

UNITED STATES DELEGATION TO THE TWENTY–NINTH MINISTERIAL MEETING OF THE NORTH ATLANTIC COUNCIL

Athens, Greece, May 4–6, 1962

PARTICIPANTS

• United States
  • The Secretary
  • Ambassador Labouisse
  • Mr. Robert Schaetzel
  • Mrs. Ruth Kupinsky (Reporting Officer)
• Greece
  • The Prime Minister Caramanlis
  • Foreign Minister Averoff
  • Coordination Minister Papaligouras
  • Ambassador Palamas (Dir Gen of Fon Off)
  • Mr. Jean Grigoriadis (Reporting Officer)

SUBJECT

• Discussion of Outstanding Problems Affecting Greece at NATO Meeting

Disarmament and Nuclear Testing

The Secretary said that the key questions at the NATO Ministerial Meeting would be Berlin and disarmament. On disarmament, it is clear that the Soviets will not accept inspection, and without inspection there can be no disarmament. The Soviet position is basically a propaganda position. This puts the US at a disadvantage since US proposals are based on what we can genuinely accept and are, therefore, more modest than Soviet propaganda recommendations. US proposals are based on Stage 1 which would protect the land mass under NATO and we would only move into Stage 2 when we were sure of Soviet intentions.

The US expects the Soviets to resume nuclear testing. We would be glad to stop tests under a nuclear treaty. If we could stop today, this would be consistent with the security of the free world. If the Soviets do not stop testing, however, we will compete with them. We have made extraordinary efforts to reach agreement on ending all tests, without success.

In response to a question from the Prime Minister, the Secretary said that the French were not taking part in the disarmament discussions and we assumed that this was due to their nuclear program. With regard to the Germans, both on Berlin and nuclear testing, the US and German positions were alike and we worked closely together. We would also have to negotiate what disarmament would involve for other countries not now directly participating in the discussions. It was essential that the balance of forces not be disturbed at any stage.

Berlin

The Secretary noted that during the Berlin crisis, attention is being given to the central front where forcible intervention might occur. During the discussion of the central front there has been less consideration of other fronts, including the US, and this has opened up the question on whether there is less interest in the other fronts. The Secretary assured Greece that we consider our commitment is to all of NATO, including Greece and that an attack on any part of NATO would bring into play NATO forces including US forces, to that area. President Kennedy wanted the Secretary to make this clear.

The Prime Minister said he thought the Soviet Union took advantage of ambiguities of the NATO countries to create frictions. He thought we should agree on common positions among ourselves and state these firmly to the Russians. The Secretary said that the effectiveness of this approach could be illustrated by Berlin where we have stated firmly that there is unanimous agreement by the Western powers that the presence of Allied forces in Berlin and free access to Berlin are not negotiable.

Aid to Greece

The Secretary observed that with a strong and more independent Europe, the Alliance has a more difficult problem on consultation than in previous years. He also noted that while NATO is primarily interested in the problems of the West and in confrontation with the Soviets the US also has to take an interest in problems of other areas of the world, particularly Latin America and the Pacific. The US gives the NATO area first priority in the struggle with the Soviets, since Europe plus North America are central to this problem.

With the emergence of 50 to 60 newly independent countries, the US has been called on for more foreign assistance and it is now particularly important that other industrialized countries also contribute to such assistance. This is important to the Alliance since the US could not continue to extend the aid required without the participation of other countries. The US will not do less than it has been doing, but is concerned that others do their part, and, in this context, the idea of consortia is important. Multilateral assistance, while adding to the unity of the Alliance also complicates its task. From the point of view of the recipient country, multilateral aid is not as simple or as comforting an arrangement as bilateral arrangements, since it takes time to negotiate and is complicated. This is one of the questions involved in the Wise Men’s report on Greece and Turkey.

What is required at the NATO Ministerial Meeting in Athens is a moral commitment from the member countries of the Alliance that the needs of Greece and Turkey are important and that the members of the Alliance will move ahead to work out arrangements to meet these needs. Ten years ago Greece was covered by the solid woolen blanket of US assistance. Now the way must be opened to weave what in America is called a “crazy quilt,” pieces of quilt which when put together make a warm covering. It should not be difficult with the Greek Ambassador, the US Ambassador and Mr. Stikker to find a good combination. The US has in mind such possibilities as infra-structure, which could be handled by Mr. Stikker, and development loans, Export-Import Bank loans, and increased consumables in the military assistance program, all of which could be handled here in Athens. The US envisages such countries as the UK, France and Germany participating in the combined program, and the US is prepared to work quickly with all involved since we realize that Greece has a time problem. The Secretary said he believed that the important question was not what was in the Wise Men’s report, and to which we understood the Greeks took exception, but that the countries in the Alliance recognize the requirements of Greece and commit themselves to do what was needed to meet them. Regarding the magnitude of the Greek requirements, the US envisages intimate bilateral consultations with the Greek Government in Athens on this question. It was also important to undertake a multilateral program with other interested countries, in which the US would have a large and active role. The Secretary emphasized the strong interest of President Kennedy in economic and social development. It was in the US interest to encourage Greek military strength and sustained economic development.

The Prime Minister agreed that the US principle was right but that Greece found the Wise Men’s report unacceptable. The report not only does not help Greece but creates difficulties in solving Greece’s problems. One of the Wise Men, Edgar R. Faure, had said he was “ashamed” that he had signed the report, since it was inaccurate and unjust. He had attempted to amend the report but Greece understood that Mr. Ferguson, the American, disagreed with this approach. Greece understands Stikker had also expressed disagreement with the report. Norstad was also understood to have said the report was incorrect, but urged Greece not to reject it. Since the question of the status of the report was now a matter of prestige, Stikker had suggested finding ways of ameliorating it.

Caramanlis said that the report created three problems for Greece: (1) From an economic point of view, the report created problems for the future since it was a bad appraisal of the country’s economy and its needs, and its estimates and conclusions would be used as guidelines in further consideration of Greek needs; (2) it results in an internal political problem because if the Government accepts the conclusions of the report, the political opposition would charge that the Prime Minister had not done enough to present the true situation; and (3) it creates an internal NATO problem since it gives rise to bitterness. Caramanlis said that he felt that they would be better off without the report.

On the economic side, the primary difficulty with the report, according to Caramanlis, was that the Wise Men took into consideration only the balance of payments gap. Caramanlis said Greece has a budget deficit problem. If the Wise Men had considered the whole budget, i.e., the military, regular expenses and public investment, they would have come out with a deficit of $150,000,000 for this year, compared with the Wise Men’s estimate of a need for $30,000,000 each year. The Prime Minister said that of this deficit Greece could raise $30,000,000 to $40,000,000 through internal borrowing, leaving a deficit of $110,000,000 which would have to be met by foreign assistance. Greece has a five-year program on which it has already begun. If funds are not found to continue this program Caramanlis said he would have to stop this program which is already successful. Public investment in economic infra-structure, such as roads and electric power, was an absolute necessity in Greece and if it were reduced this would have serious political and social repercussions. On the military side, Caramanlis said Greece cannot finance its military programs through loans and, therefore, believed that external assistance should be split between loans and grants.

Caramanlis said that his economic program had succeeded through his taking a hard political line and that at this stage the program is at a critical turning-point. Greece feels it is being abandoned, instead of appreciated, by the Wise Men’s report.

Caramanlis said that Greek hospitality for the NATO meeting in Athens does not permit her to reject the report, despite Greece’s strong feelings on this subject. He could not accept the Stikker–NAC resolutions without amendments, since these resolutions refer to the Wise Men’s report. The Secretary replied that the resolutions also refer to other reports, including a Greek memorandum. He suggested that the Greek Foreign Minister in accepting the resolutions at the NATO meeting could present a statement making the points made by the Prime Minister in the conversation. If the resolutions in their present form were accepted by the NATO countries, Greece would have a commitment from member governments that they would take all appropriate measures to meet Greek needs. In the multilateral arrangements in the OECD which would follow this commitment, the US would inform other countries what we can do to assist Greece, as leverage to obtain contributions from other Governments. The Secretary assured Caramanlis that the US had never let Greece down and would not do that now.

The Secretary went on to note that the US also has problems. Congress has made important changes in the aid program requested by the President, substantially reducing support assistance. The US also has a balance-of-payments problem, chiefly because of its contribution to NATO. In addition, the US has a budgetary problem, largely due to its debt resulting from loans it had made for its military programs. The Secretary said in the light of this situation, he could not be expected to take back to our Government for sympathetic consideration the Greek position that it could not finance defense programs through loans.

The Secretary said that the American proverb “There are many ways to skin a cat,” was apt to the present situation. He had no doubt that a way could be found to meet Greek needs if we could get a moral commitment from NATO countries at this NATO meeting. The Secretary was inclined to think that the public relations problem was most of the difficulty. If this was so, the question is how to handle the problem of public opinion and not to be concerned with the Wise Men’s report. The Secretary said he was sure that when responsible governments in the OECD consider Greek development needs they will not be bound by the figures in the Wise Men’s report.

Caramanlis replied that he would not bargain on a matter of principle and as he considered the Wise Men’s report inaccurate and unjust, he could not accept it as a basis for evaluation of the true Greek situation. He said he always had the courage to tell the truth about his position and that of Greece, and whatever decision was taken at the Athens meeting, Greece would remain the most loyal ally in NATO and of the US. Since Greece does not want to reject the Wise Men’s report at the Athens meeting, Caramanlis said he had amended the Stikker resolutions both on substance and procedure. If the US could not accept these revisions, Caramanlis said Greece would have to reject the report.

The Secretary said we would consider the Prime Minister’s proposals and let him know our position. The US is interested in the “inner reality” of the Greek problem and a sound solution to this problem. Greece has an obligation to clarify at the Athens meeting how Greece sees the situation since otherwise, other governments might get the wrong impression of the Greek position.

The Prime Minister agreed and said he would submit his amendments to the US Delegation early tomorrow morning.¹

0. Source: Department of State, Central Files, 375/5–362. Confidential. Drafted by Kupinsky and approved in S on May 6. The meeting was held in Prime Minister Karamanlis’ office.
1. No copy of these amendments has been found. The North Atlantic Council adopted resolutions concerning the special economic problems of Greece and Turkey. The resolutions called on countries to assist Greece and Turkey and called for examination of the urgent establishment of consortia for aid. See vol. XIII, pp. 389–393. In the NATO Final communique issued on May 6, the Ministers also “agreed to establish a study group to consider further the special defense problems of Greece.” For text of the communique, see American Foreign Policy: Current Documents, 1962, pp. 541–542.