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868.48/12–1644 : Telegram

The Minister in Sweden (Johnson) to the Secretary of State

STOCKHOLM, December 16, 1944—3 p. m.

[Received 10 p. m.] 5142. My 4926, December 2, noon. Swedish reply to joint démarche of November 30 was communicated orally to American and British Ministers December 14 at Foreign Ministry. Although Grafstrom, Stahle, Lundborg and Ripa of Foreign Ministry were present, Gunnar Carlsson, representing Swedish shipowners did most of talking. He emphasized that owners have no desire to withdraw ships.

Carlsson said shipowners had at time when each ship was released signed guarantee to German Government covering return of ship in question to Sweden. These guarantees fall into two types, viz.: type (a) requiring owner to bring ship back to Sweden whenever Germans so request and (6) later type which merely specifies ship must return to Sweden when purpose for which it was released shall have been accomplished.

Type (a) guarantee applies to Akka, Formosa, Boolongena, Fenris and Parramatta (perhaps also to Boreland and one other vessel).

Shipowners feel type (a) guarantee constitutes obligation which would have to be complied with should Germans so demand. Therefore, some solution is necessary to get around need for such compliance.

Swedish Government licenses for validity of charters covering Greek relief vessels were formerly issued for 6-month periods. However, recent licenses have been limited to 3 months. Carlsson suggests that present charters on vessels bound by type (a) guarantee be replaced at once (not prolonged) by new charters valid for 6 months. After these new charters take effect Swedes will be in position to reply to an eventual German demand for return to Sweden of ship in this group by saying ships will return at expiration of charters. Shipowners might add that return trip requires Allied safe conduct and Allies refuse to authorize return of ships until charters expire.

Swedes do not regard type (6) guarantee as sufficient basis for Germans to demand return of ships while they are still engaged in traffic for which originally released. They are convinced this group of ships can be kept in traffic for at least 6 months without heeding any efforts on part of Germans to force their withdrawal.

Carlsson stressed that neither type of guarantee requires return of ships to Sweden merely in case safe conduct is withdrawn. If Germans cancel safe conduct, shipowners will be informed by Swedish authorities that it need cause no alarm and ships should continue in traffic. (Second point in Swedish note of October 19 reported in my 4258, October 19, 6 p. m., indicated that in case of cancellation of safe-conduct shipowners would decide individually whether vessels should continue to sail as before, with understanding that Red Cross markings be retained. Carlsson's present remarks developed this point by indicating Swedish shipowners may be expected to continue. Presumably possibility cannot quite be excluded that some individual shipowner might insist on withdrawing his ships.)

Stahle made it clear that Swedish Government would deal favorably with applications for 6-month licenses. Although new 6-month charters are not really necessary to insure continuance of ships with (6) type guarantee, Swedes may for sake of uniformity also want such charters for their group.

Carlsson said he would begin at once preparing new charters. Steps are: (1) Approach Swedish Red Cross; (2) get new charter parties signed; (3) obtain license which renders charters valid for 6 months. Matter is urgent if only because new charters should be in force before Swedish intentions regarding Allied shipping pool become public. News of these intentions may provoke angry reaction from Germans.

Carlsson said he thought convoys should be avoided.

Swedish reply outlined above constitutes a type of informal assurance that, without heeding any adverse steps Germans may take, Swedes plan to keep Greek relief fleet in service for at least 6 months to come. Stahle stated this arrangement was best Swedes could do and British Minister and I believe that it represents limit to which they are willing to go in order to meet our wishes.

Definite lists of ships affected by guarantees (a) and (6) will be telegraphed as soon as Foreign Ministry obtains particulars from Carlsson.

Although he is at present unable to communicate with his Government Greek Chargé is prepared to sign new charters in accordance with usual procedure if American and British Ministers so recommend. Sir Victor Mallet and I consider that basic assumption of our démarche of November 30 (paragraph 1 of Department's 2329, November 18, 9 p. m.) justifies our giving this recommendation and we shall do so as soon as charter parties are ready, unless contrary instructions are received.

Please instruct whether in case Swedes prepare new charters for ships under type (6) guarantee, we should also give Greek Chargé recommendation to cover these vessels.

JOHNSON 868.48/11-1744: Telegram

The Secretary of State to the Minister in Sweden (Johnson)

WASHINGTON, December 16, 1944—midnight. 2538. Reurtel 4705, Nov. 17.36 Department and financing agencies envisage indefinite continuance of Greek relief program utilizing Swedish ships at present on St. John-Piraeus run under safe conduct. Financial arrangements have been made to cover first quarter 1945 for charter-hire of ships and for supply program similar to last quarter 1944. Plans are based on at least nominal existence of neutral commission with Swedish delegate to whom cargoes will be assigned. It is our understanding that Swedish Foreign Office concurs and will endeavor to maintain skeleton organization in Greece. You might at your discretion inquire if Swedish views remain unchanged and indicate importance Department attaches to continuance of identical status as before liberation so that Germans can have no overt justification for withdrawing safe-conduct. Sent to Stockholm, repeated to Athens.

STETTINIUS

868.48/12-2144 : Telegram

The Minister in Sweden (Johnson) to the Secretary of State

STOCKHOLM, December 21, 1944-7 p. m.

[Received December 22—11:28 p. m.] 5222. Confirmation was obtained today from Swedish Foreign Ministry of Swedish desire to continue Greek Relief Commission at least in skeleton form and to avoid any overt justification for Germans to withdraw safe-conduct for ships (cf. my 5142, December 16, 3 p. m.) not sent to Athens (and Department's 2538, December 16, midnight, repeated to Athens).

In talks here with Justice Sandstrom Foreign Ministry worked out tentative plan to continue Commission in its present functions (in these parts of Greece which Allied authorities have assigned to Commission for distribution) until February 15 at which time Commission would give up distributional activity and become mere skeleton control body to which cargoes would still be consigned. Control functions is important to demonstrate to Germans that neutral character of Commission remains.

[Here follows a brief summary of some operational problems of the relief program.] My 1, December 21, 7 p. m., to Athens repeats this message.

JOHNSON

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REQUEST OF THE GREEK GOVERNMENT FOR FURTHER FINANCIAL

ASSISTANCE FROM THE UNITED STATES 37

868.51/8–1044 Memorandum of Conversation, by the Under Secretary of State

(Stettinius)

[WASHINGTON,] July 28, 1944. The Greek Ambassador 38 called at his request to present Mr. Varvaressos, Ambassador Extraordinary for Economic Affairs and Governor of the Bank of Greece, who had attended the Monetary Conference at Bretton Woods 39 and was well satisfied with the results. Mr. Varvaressos feels that the plan adopted is sound, comprehensive, and workable. I recalled my conversations in London in April with the Greek Minister of Finance regarding the Greek Government's financial situation.40 They left with me the attached memorandum on the Greek financial position and stated that they wished to discuss the matter further with me next week.

Mr. Varvaressos stated that he had applied to the British Government but had received no encouragement. The Greeks feel their financial situation is desperate and they hope aid of some kind can be granted. I assured the gentlemen we would analyze their memorandum promptly with the greatest care and would give it our most sympathetic consideration.

[Annex) Mr. K. Varvaressos to the Under Secretary of State (Stettinius)

No. 2654

WASHINGTON, July 27, 1944. MEMORANDUM CONCERNING THE FINANCIAL SITUATION OF THE GREEK

GOVERNMENT SIR: During your visit to London you were good enough to grant an interview to Mr. Mantzavinos, Mr. Spyros Skouras and myself, in the course of which we gave you a short account of the financial situation of the Greek Government. As you will recall, we then undertook to forward you a brief memorandum embodying exact particulars and figures.

I have therefore the honor to submit to you hereunder these particulars which, I hope, will give a clear picture of the problem. We

37 For correspondence on the granting of financial assistance to the Greek Government in 1943, see Foreign Relations, 1943, vol. IV, pp. 167 ff., passim. 38 Cimon P. Diamantopoulos.

For correspondence on the United Nations Monetary and Financial Conference, which met at Bretton Woods, New Hampshire, from July 1 to 22, 1944, see vol. II.

40 Memorandum of April 18 not printed.

39

41

are confident that you will examine them with the same kind interest that you have devoted to every question concerning our country.

When, on the 28th of October, 1940, Greece took up the struggle against Italian aggression, the British Government declared to the Greek Government that it would afford unlimited financial aid to Greece for the conduct of the war. The British Government discharged this promise, undertaking to pay:

a) the value of all war materials which Greece might obtain within the sterling area,

b) a sum of £5,000,000 monthly for war expenditure incurred by the Greek Government inside Greece. This sum was to be paid up to April 1941, when the situation would again be reviewed. The Greek Government expended these sums within the country, acquiring the equivalent in drachmae by selling the total monthly amounts of pounds sterling to the Bank of Greece,

c) a single credit amounting to £5,000,000 towards the cost of supplies purchased outside the sterling area, in view of the fact that such purchases were exhausting the country's exchange reserves.

On the occupation of Greece by the enemy, the British Government intimated to the Greek Government, then provisionally established in Crete and later in Egypt, that it was not prepared to continue affording financial aid on the basis of the original agreement, even if the latter were amended in regard to the sums involved, but that negotiations should be opened in London for the purpose of arriving at a new basis.

These negotiations took place when the Greek Government was established in London, and ended in an agreement 42 the substance of which is the following:

The British Government will not demand from the Greek Government payment of the value of materials and services supplied by Departments or Agents of the British Government, in so far as they may be necessary for the equipment and maintenance of the Greek armed forces.

All other expenditures of the Greek Government, including the remuneration, allowances, pensions, etc., of officers and men of the Greek armed forces, are a charge upon the Greek Government and must be defrayed out of its own resources.

In addition, in every case where expenditure was to be incurred for the despatch of foodstuffs to the population within Greece or for the relief of refugees from Greece, the Greek Government was required to make a declaration, and in fact did so make this declaration, to the effect that it would make itself responsible for the expenditure involved.

11 For correspondence on the Greek-Italian war, see Foreign Relations, 1940, vol. III, pp. 524 ff.

42 Dated March 9, 1942; for summaries, see telegram 5202, September 17, 1942, 6 p. m., from London, and report of October 15, 1942, by the Greek Minister of Finance, ibid., 1942, vol. II, pp. 803 and 804, respectively.

554-184-65-15

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