346. Memorandum of Conversation0
SUBJECT
- Greek Minister Papaligouras’ Meeting with Secretary Rusk—Aid
PARTICIPANTS
- The Secretary
- Robert R. Schott—GTI
- Panagiotis Papaligouras, Greek Minister of Coordination
- Alexander Matsas, Ambassador of Greece
United States Contribution to NATO Greek Defense Exercise
Minister Papaligouras reviewed his meeting with the President. He said that he and the President had explored the possibilities of a United States participation in the form of a grant in the NATO Greek defense exercise in 1964. The only solution they had come up with was a 104(C), PL–480 (Title I) component. The President requested that his staff provide responses to the various requests made.
Mr. Papaligouras revealed that he wanted to learn the attitude of the United States on these matters in order to proceed with his planning. The GOG needed a reaffirmation of United States support (not that it is doubted) for internal political reasons. The Government has a guns vs. butter problem with attendant manifestations—social pressures, population movement, industrialization, unemployment and underemployment—which create problems of a much more sophisticated nature. A condensation of social pressures has resulted which, combined with rising expectations, are of a more explosive nature than heretofore. Greece must industrialize in 20 years to bridge the gap between its per capita income of $365 and the much higher rate of Western Europe with which Greece is now associated as a member of the EEC.
On the defense side, the Minister quoted the President as having said that the United States does not want to push Greek military expenditures to the point that they detract from domestic resources for development; Secretary McNamara and Messrs. Kaysen and Komer of the White House also put forth this attitude during the White House meeting. Secretary Rusk expressed some concern that defense expenditures should not be cut drastically because if the defense establishment of Greece went below a certain level, stability might be jeopardized and an [Page 671] outside threat invited. Papaligouras agreed and explained that he had made these identical points to the President who understood. What he and the President had agreed was that military expenditures should not be exaggerated. If in the past perhaps a too rapid build-up had occurred, it had not been done only at the behest of the Greek generals; SACEUR had also reported that the Greek army was in a low state of preparedness. At the same time, the Bulgarian army has been modernized and has taken an offensive posture as compared to its former defensive nature. These things worry Greek army officers and create potential internal political problems. Fortunately, the GNA is 100% loyal to the Government, NATO and the State; it is a conservative force. The maintenance of the army is an important factor politically, as well as being vital to sustain the morale of the people, particularly along the frontiers. There must be continued stability to set the stage for economic development and investment, which the GOG hopes to stimulate and, thus, eliminate the need for external assistance in a few years.
The Secretary remarked that Couve de Murville told him that De Gaulle was most impressed with the performance of the GNA.
Mr. Papaligouras went on to say that defense costs will remain at approximately 1963 levels for the next 1–2 years, and noted that salaries and the modernization effect might add a small amount, but nothing substantial. He recalled that Secretary McNamara stated he would look into ways to accelerate deliveries of MAP to enhance the modernization of the GNA. The Greek Government had the impression that MAP, including commercial consumables, would remain at previous levels ($100 million) in FY 1964. The President and Secretary McNamara had given the Minister assurances to this effect.
With regard to the NATO defense exercise, Mr. Papaligouras stated that the United States policy of promoting burden sharing had been a unique success. No such precedent had previously occurred. The NATO exercise for Greece should not be permitted to collapse because the GOG would not be able to replace the $23.4 million, which it obtained in 1963, from its own 1964 resources.
The Secretary agreed that the exercise should continue, adding that unless the Europeans recognize and accept their responsibilities, NATO is going to experience increasing difficulties. He asked if the $23 million had met the problem.
Mr. Papaligouras replied that a satisfactory level of Greek defense has resulted (about $185 million). The GOG realizes that the various force levels set by the generals cannot be achieved, but if the same procedure can be followed in 1964, a satisfactory situation will result. This calls for a United States participation in the form of a grant under PL–480 (104(C)). In this way the GOG will be able to utilize the West German commitment of a $9 million grant which was promised in 1964 [Page 672] on the condition that another major power would participate. The French offered commercial credits in the 1963 exercise which Mr. Papaligouras said he refused because the GOG found it unacceptable to finance defense with commercial credits. One of the principal problems already facing the GOG is the large number of commercial credits outstanding.
The Consortium
On the Consortium, the Minister commented that he is hopeful that the French would make a substantial contribution in the form of a loan. Mr. Cochran, the American Consortium chairman, who is doing an excellent job, believes there are favorable possibilities for Greece in the OECD Consortium.
The Secretary stated he was moderately optimistic because of the French participation in the Consortium. He emphasized it is very important from the United States Government’s view that the Consortium be supported. The United States cannot return to a bilateral economic aid relationship with Greece. The Secretary stressed the importance to Greece and the United States that a mechanism continue to exist to meet the problem of providing Greece’s external assistance requirements.
Mr. Papaligouras agreed to endeavor to influence the Prime Minister and the Cabinet to stay in the Consortium. Mr. Papaligouras admitted that creating a Consortium takes time. He said that the Prime Minister, at the time he considered abandoning the OECD Consortium, was primarily concerned lest a disappointed Greek public adopt an anti-Western attitude as a result of the apparent failure of the Consortium.
The Minister’s Five Wishes
Mr. Papaligouras reviewed his “five wishes”: (1) MAP, (2) commercial consumables, (3) PL–480 (104(C)) and United States participation in the 1964 NATO defense exercise for Greece, (4) 1964 program loan, and (5) project loans. On the first two the President and Secretary McNamara had indicated that he could plan on the same level as in FY 1963. On the last two, Mr. Bell and he had a constructive conversation and he would not take the Secretary’s time with further remarks on these points.
The Secretary commented he had the impression that MAP and commercial consumables for FY 1964 were programmed at the same levels, but that commercial consumables over the long-run would be phased-out. The decision on future levels of commercial consumables would be decided after FY 1964.
[Page 673]GOG Confidence in United States
The Secretary commented he has the feeling that Prime Minister Caramanlis is less sure and confident about his relationship with the United States than he should be. The Secretary expressed the hope that Mr. Caramanlis, in the future, will view the relationship with more certainty. The United States realizes that the Prime Minister has problems, like all political leaders, but hopes he realizes that Greece is regarded as a special, more mature friend which, unlike others, does not require periodic indications of reassurance. The Secretary commented that perhaps the United States should publish aid figures on a per capita basis in which case Greece would be at the head of the list. The Prime Minister could perhaps use these figures to reassure the Greek people.
Mr. Papaligouras replied that the Prime Minister was upset about the termination of supporting assistance, but now accepts the decision. The Minister remarked that without the NATO defense exercise the situation would have been grave. The Secretary answered that without the termination of supporting assistance, there would not have been a NATO defense exercise for Greece. The Minister agreed.
The Secretary explained that the problem of meeting rising expectations is built into the situation in each country. There are always differences between hopes and expectations and what is realistic and attainable. The United States has these problems in eighty countries. Undoubtedly in the seventeen year period during which the United States has rendered about $3.5 billion assistance to Greece, there has not been a single year in which expectations were satisfied. All political leaders have these problems and, hopefully, Mr. Caramanlis will adopt a more calm and understanding attitude.
The Secretary ended the meeting by reaffirming the United States’ interest in supporting the Greek government’s initiative to engender assistance from the other NATO powers. He agreed to look into the possibility of a PL-480 grant as a United States contribution. He added that the Department would hope to obtain responses to Mr. Papaligouras’ requests to give him prior to his return.
- Source: Department of State, Secretary’s Memoranda of Conversation: Lot 65 D 330. Confidential. Drafted by Schott and approved by S on June 18. The source text is labeled “Part I of IV.”↩