335. Telegram From the Embassy in Greece to the Department of State 0
322. CODEL Johnson. Following is summary record conversation between Vice President Johnson and Prime Minister Caramanlis September 3 9:45 am at Prime Minister’s office.1 Conversation summarized herein followed 30 minutes private talk between VP, Prime Minister, Foreign Minister, Amb Labouisse and Komer. This summary prepared by Bowling and cleared with Amb Labouisse. Also present were Averoff, Papaligouras, Matsas, Palamas, Komer, Busby, Brewster, McCoy and Caramanlis’ private secretary. Papaligouras acted as principal interpreter.
Summary
Discussion centered on acceptance by Greeks discontinuance supporting assistance, and methods by which US aid for FY 63 could most effectively meet Greek needs. VP promised strong support for most effective possible aid program. Caramanlis asked US approach other NATO powers to encourage defense assistance. VP said Greeks must take initiative here; US would then support.
End Summary.
Caramanlis noted that in previous conversations each side presented its views and explained situation it faces. Explained now up to VP see what US can do to provide answer.
VP replied understand and sympathize Greek problem and hope Caramanlis understands our problem in Greece and elsewhere on defense support. Want do everything possible within limitations imposed by Congress strengthen Caramanlis and strengthen Greece. Will continue do so this year just as effectively as in past. Details can’t be spelled out now but we do know we can’t give defense support. No lessening of interest on part US; on contrary my presence shows US interest increasing. US intends provide substantial assistance in PL480, MAP, development loans; should be as effective next year as last year. Defense support impossible.
Caramanlis said he wished discuss details. Termination defense support understood, though still feel both sides do not have same appreciation this problem. In any case no further point in discussing defense [Page 648] support, now must discuss what can be done in terms forms assistance available.
VP said will try utilize other forms to do job, in terms self-help principle requiring recipient countries do their part. For instance, if Greece will get its development loan applications in order and present them to Amb Labouisse we will accelerate development loans.
PriMin described Greek development programs, pointing out of $200 million annually, only about $30 from Greek budget, rest from internal and external loans. Need for local currency much more acute than need foreign exchange, and is limiting factor in pace of development. Herein is importance defense support. Twenty percent or less stated development requirements are for foreign currency. Need local currency-generating form of aid if defense support terminated. In development projects requiring large proportion foreign currency, such as [omission in the source text] for good projects. Now working with US Embassy on three year project provide loan for foreign exchange such miscellaneous items as telephone system from US. This unfortunately will not be helpful unless private Greek purchases from US also included in order obtain more local currency for state investment program.
Amb Labouisse noted such procedure would in effect merely change budgetary support from grant to loan basis.
Caramanlis replied he was thinking of general program loan, not tied specific projects.
At VP’s request, Amb Labouisse explained US policy development lending is oriented toward projects, not programs. As you know, US stands ready with $10 million program loan. Question is application such loans to private sector development. This is difficult problem for us.
PriMin noted need local currency only one of problems Greek development. Another is that current program half-finished, which raises several problems: incomplete projects such as dams, road, and irrigation systems requiring large amounts local currency. Thus $10 million program loan important.
VP said US going to give $10 million program loan this year.
VP then said we intend continue major MAP deliveries, probably increased this year. Greece will receive 57 M47 tanks, 263 OAPC’s, 24 8-inch howitzers, 120 SS-eleven missiles, one LST, three minesweepers, and two squadrons F104 G’s. This is illustrative of the kind of MAP we hope provide if we get what we ask for from Congress. We also pleased over rate development Greece; more remains to be done; we intend help Greece do it. In addition $10 million program loan, we want act favorably on development loans and urge Greece expedite presentation additional project loans. US will continue PL480 if we can end sterile talk [Page 649] about defense support. Perhaps ways could be found through PL480 give Greece other surplus products to generate local currency for development.
VP warned he could not make commitments, and careful study necessary, but possibility exists using for instance supply US surplus dairy products to generate more local currency for economic development. PriMin remarked he now paying price for making Greece self-sufficient in most agricultural products US has in surplus.
Papaligouras said effort must be made see what surplus US products Greece could absorb under PL480.
Caramanlis asked if triangular trade arrangement for PL480 could be worked out.
Vice President replied in negative, must be bilateral. Prime Minister has effectively presented Greek case and we have explained our situation. We trying find ways make our aid more effective FY 63 than FY 62 and desire say so to press.
Caramanlis noted one problem is real. Other is how to present things to the public, and requested discuss former first. Understand Vice President cannot make commitments. Project loans solved foreign exchange but not local currency problem. US has expressed willingness help Greek development. We have perhaps tended act with defense support still in mind. Now no further question defense support. We therefore will submit to Embassy within next ten days everything we have in various projects and ideas for development lending. Hope Vice President will exercise his influence see they accepted to maximum possible extent, and do whatever he can to support Greek proposals.
Vice President said this was constructive suggestion, far better than bumping head against brick wall of defense support. US goal is a peaceful, strong Greece. We can go this way by several roads. Last year Greece got $90–100 million FY 62 MAP; if President has his way on foreign aid bill Greece should get $80–100 million FY 63, including as before some commercial consumables. Development lending is another road; in FY 62 we provided $10 million, in FY 63 we are assuming $20 to $40 million, assuming our Congress comes through and you find acceptable projects; this would be more than you are getting now.
Papaligouris noted Greece has EDFO and National Bank loans already approved, and hopes for Acheldos project loans; will see what other projects can be submitted.
Vice President went on to note that roughly $100 million MAP, $40 million development lending, $20 million PL480 would make $160 million in US aid FY 63. Congress may cut, but administration shooting for this size assistance to Greece. We can’t work out details and should peg our actions on Prime Minister’s constructive suggestion. I can’t say publicly [Page 650] you’ll get this much or that much. Realize Prime Minister’s opponents allege he does not present Greek case; we realize his internal political problems and want help him. Don’t want commit US to certain figure and then have it fall on him if we don’t deliver at day of reckoning. I should tell public how hour after hour he told me his needs various types US assistance and that I am convinced if Congress gives administration a good bill our aid for FY 63 will be more effective than for FY 62. Have prepared such a statement which would avoid commitments, avoid trouble from countries like Iran and Pakistan where defense support also terminated, and help Caramanlis.
Caramanlis asked for assurance of broad-minded US consideration Greek loan applications.
Vice President replied in affirmative, adding Prime Minister’s future is our future. Vice President then read his suggested statement to the press, commenting that like a Mother Hubbard it conceals everything and touched on nothing, but still, like a bikini, covered the essential points.
Caramanlis suggested and he and VP discussed changes in statement to:
- (a)
- emphasize termination supporting assistance is general policy not directed at Greece;
- (b)
- promise magnitude future aid would be greater than in past.
Vice President said domestic Greek public must understand Prime Minister pounded table on all issues and we understand Greek problems well. But US Congress must not get impression Vice President handing out commitments before appropriation voted, also Greeks must realize we love Greece more than ever. Don’t say I promised you a specific amount of aid, but I will really work to make our aid more effective for your needs.
Caramanlis requested that US support Greece in context NATO aid to Greek defense, materially if possible, otherwise morally.
[Page 651]Ambassador Labouisse pointed out that US cannot back creation special NATO fund, but within framework recent NATO resolutions will support Greek efforts obtain contributions from individual countries.
Vice President said Greece should exert its efforts submit speedy and adequate data to OECD consortium. If you want me to approach the Italians on assistance in connection NATO defense study or consortium, will do so provided you take the initiative with Italians. So far as I know you’ve taken no initiative.
Caramanlis said the contributions of other NATO countries would be dependent on US contributions. If US and each of the three others would each give $5 million, problem would be solved.
Ambassador Labouisse pointed out that US MAP was already heavy support for Greek defense.
Vice President declared US would try to help with Italians and others if Greeks took initiative.
Caramanlis said Greece would approach other countries through normal channels.
Remainder of the meeting was devoted to detailed review of two proposed press statements.2
- Source: Department of State, Conference Files: Lot 65 D 533, CF 2149. Secret. Repeated to Rome.↩
- Vice President Johnson visited Greece August 31–September 4, at the conclusion of a 5-nation tour.↩
- In a September 10
memorandum to the President, reporting on his tour, Johnson wrote:
“In Greece, we cannot allow Prime Minister Caramanlis to fall before an irresponsible opposition because of our termination of defense support. He has accepted the end of this form of aid, but to tide him through the next year and to save the Greek defense and development programs we need to: (a) provide $10 million in special help ($5 million extra in commercial consumables under MAP and $5 million counterpart now in the pipeline); (b) require Greece to provide roughly another $10 million for defense, to partially compensate for the loss of defense support; (c) shift our PL480 to a defense grant basis; (d) implement the $10 million program loan; and (e) give prompt and sympathetic consideration to Greek development loan applications.” (Department of State, Greek Desk Files: Lot 65 D 185, Vice President)
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