«Apostolos Vetsopoulos University College London 'The Economic Dimensions of the Marshall Plan in Greece, 1947-1952: The Origins of the Greek economic ...»
University College London
'The Economic Dimensions of the Marshall Plan in Greece, 1947-1952:
The Origins of the Greek economic miracle'
Thesis submitted for the fulfillment of the requirements
For the degree of Doctor of Philosophy
University of London, 2002
During the time of research and writing of this thesis a lot of people
provided me support and advice. It is my principal duty to express my gratitude to
Professor Kathleen Burk and Professor David French of the University College London, the two supervisors, who followed this thesis from the beginning until the end with great interest and gave their solid advice generously. In particular, Professor Kathleen Burk, as the first supervisor, provided constant support and courage for me towards solving every obstacle in planning and writing my thesis.
The other staff and my fellow graduate students of the History Department spared no help in exchanging ideas about the character of the thesis.
I would like to thank Mr Paul R. Porter and Mr James Warren Jr. who served as experts in Greece during the Marshall Plan, and Aristotelis Sismanides who served in Washington DC helping the function of the Marshall Aid for Greece because they showed great eagerness to help the research of my thesis, explaining crucial questions. In particular, during the years of my research Mr James Warren Jr.
became a great friend, trying to assist and many times advised me on clarifying points of my thesis, while he granted me important material from his personal archive. I am also indebted to the staff of the Public Record Office, Kew Gardens, London; the staff of the National Archives in Washington DC; the Staff of the Truman Library & Institute in Independence (MO), and especially the archivist Mr Dennis Bilger and the office manager Ms Lisa Sallivan for their valuable assistance to carry out the research of my thesis.
Furthermore, I have to express my gratitude to the Royal Historical Society which provided me with the travel costs of a visit to the National Archives in Washington DC, the Graduate School and the Hale Bellot Fund of the UCL, which fmanced a part of my living expenses during a research trip to the US. In particular, I am indebted to the Truman Institute, which fmanced my travel costs and the living expenses of a research trip to Independence (MO).
I am also grateful to my friends, the family of Mr Nikos Kantartzis and Mrs Magdalene Papapostolou who offered hospitality and support generously to me in Washington DC in April 1998 and May 2000, the family of Mr George Arsenis who offerd hospitality in New York in May 1998, the family of Mr Ratinder Kular who offered hospitality and assistance to me in London and Mr Kostas Tzavaras for his assistance in Greece. Finally, I would like to thank my parents Vassilios and Chryssoula Vetsopoulou whose support and courage were invaluable to carry out this research.
This thesis concerns the economic dimensions of the Marshall Plan in Greece from 1947 to 1952. The Marshall Aid Program and Mission contributed to the reconstruction and development of the Greek economy after the destruction of World War II and the Greek Civil War. However, because of the shortcomings of its backward economy, Greece was a special case in the implementation of the Marshall Plan in Europe. In particular, the problems of inefficiency and corruption influenced political and social issues on the decision-making process, while uniquely, the Marshall planners tried to create institutions in order to facilitate reconstruction and to improve Greek people's life.
The implementation of the Marshall Plan aimed at the development of the Greek economy parallel to the economic development of the other European countries. The Marshall Plan tried to help the backward Greek economy participate in international trade, and created the foundations for the post-war development of the Greek economy. The principal argument of the thesis is that the Greek economy was too weak to absorb fully the enormous aid granted because private and state investments were too negligible to meet further economic development, while a number of Greek politicians and bourgeoisie prevented the implementation of the economic programme. This forced the American Marshall planners to 'freeze' a great part of the aid in order to cover the budget deficit and to hold inflation. The 'frozen' aid 'counterpart funds' were utilised in the two fiscal years following June
1952. Therefore, in the post-war period, the Marshall Plan was the first systematic effort to stabilise the Greek economy, thereby in due course enabling Greece to join the European Economic Community in 1980.
1.2. The roles of the AMAG Mission, the American Embassy and the Greek Government during the implementation of the AMAG Program p. 61
1.3. The policy of selling gold sovereigns by the Bank of Greece in relation to the weak drachma and the problem of gold in the economy and society p. 72
Chapter Two: The first period of Marshall Plan in Greece from July 1948 to the end of the Greek Civil War in early Autumn 1949
2.1. The structure and character of the ECA Mission in Greece and the objectives and features of the Greek Four-Year Reconstruction Plan p. 98
2.5. The contribution of the Marshall Plan to the Greek reconstruction and investment programme—Attempts towards the reformation of the Greek administration and structural reforms p. 147 Chapter Three: The second period of the Marshall Plan in Greece from early Autumn 1949 to the outbreak of the Korean War in June 1950
3.5. The contribution of the Marshall Planners and Marshall aid to the Greek reconstruction and development programme. Attempts towards the reformation of the Greek administration and structural reforms p. 194 Chapter Four: The third period of the Marshall Plan in Greece from the outbreak of the Korean War in the summer of 1950 to June
4.2. The roles of the American Embassy, the Greek government and the ECA Mission in the implementation of the Marshall Plan p. 221
4.3. The economic policy of the Greek government and attempts to implement a Stabilization Program—The policy of selling gold sovereigns and credit in order to counter inflation along with control of prices and wages p. 237
5.2. The roles of the Greek government, the American Embassy and the ECA Mission—American attempts to admonish the Greek government p. 284
5.5. The contribution of the Marshall Planners and Marshall aid to the Greek reconstruction and development programme—Attempts towards the reformation of the Greek administration and structural reforms p. 325
List of tables Table 1. American Economic Aid Allotment to Greece from July 1947 to June 1954 Table 2. American military Aid to Greece from July 1947 to June 1954 Table 3. Counterpart proceeds and releases to Greece from 1948-49 to 1953-54 fiscal years under the ECA, MSA & FOA Aid Programs Table 4. The National Budget from 1947-48 to 1952-53 fiscal years Table 5. Greek economic production from 1947 to 1953 Table 6. Agricultural production from 1947 to 1953 compared with 1935-3 8 Table 7. The balance of payments from 1948-49 to 1953-54 Table 8. Summary of the July 1947-June 1954 Public Investment Drachma Program Table 9. Gross Investment with US Funds (AMAG, ECA, MSA & FOA): Local expenditures (withdrawals) & Capital goods imports combined Bibliography
Anotaton Symvoulion Anasyngrotiseos (Supreme Council for ASA Reconstruction) Committee for European Economic Co-operation CEEC
Community Voluntary Labour Programme CVLP Demosia Epechensi Electrismou (Public Electricity Corporation) DEH Etimiko Apelevtherotiko Metopo (National Liberation Front) EAM Ecconomic Co-operation Administration ECA ECAIW Economic Co-operation Administration in Washington DC ECA/G Economic Co-operation Administration in Greece Enomem Democratiki Aristera (United Democratic Left) EDA Ethnikos Democratikos Ellenikos Syndesmos (National Republican EDES Greek League) Ethnikos Laikos Apelevtherotikos Stratos (National Popular Liberation ELAS Army) Ethniko Metsovio Polytechnio (National Technical University) EMP
Enomeno Sindikalistiko Kinima Ellados (United Trade Union ESKE Movement of Greece) Food and Agriculture Organization FAO Foreign Operations Administration FOA Foreign Trade Administration FFA General Agreements on Tariffs and Trade GATT Genike Synomospondia Ellenon Ergaton (General Confederation of GSEE Greek Workers) ICFTU International Confederation of Free Trade Unions Idryma Koinonikon Asphaliseon (Social Security Agency) IKA International Monetary Fund 1MF Joint Administrative Services JAS JUSMAG Joint US Military Aid Group Kommounistiko Komma Ellados (Greek Communist Party) KKE Laiko Enotikon Komma (Populist Union Party) LEK Mutual Security Administration MSA MSA/G Mutual Security Agency in Greece NATO North Atlantic Treaty Organization
Orgamsation for European Economic Co-operation OEEC Office of Special Representative in Paris OSRJP Organismos Telepikoinonion Ellados (Greek Telecommunications 0Th Authority)
UNRRA United Nations Relief and Rehabilitation Administration or Agency USPHS US Pharmaceutical Society "The Economic Dimensions of the Marshall Plan in Greece, 1947-1952:
The Origins of the Greek economic miracle"
this change were: the creation and the policy of the Liberal Party by the Cretan politician Eleftherios Vemzelos in 1910, the doubling of Greek territory after the end of the Balkan Wars (1912-13) and again following World War I (1914-18).
Another reason was the accession of one and a half million Greeks according to the terms for the exchange of population of the Lausanne Treaty. This was concluded in July 1923 between Greece and Turkey after the defeat and pullout of the Greek army from Asia Minor in August 1922. Finally, the consequences of World War II and the Greek Civil War, followed by the official American involvement in Greece in July 1947 through the Greek-Turkish Aid Program and the Marshall Plan later on, influenced crucially the Greek economy, politics and society.
During the inter-war period Greece, while badly affected by the Great Depression in 1928, coped with the integration of refugees into the economy and society only with a large increase in its foreign debt Furthermore, the rural and backward Greek economy, combined with the rivalries and complexities of the political system, caused the deterioration of political, economic and social conditions. This precarious and unstable situation brought about deadlock, which led to the Metaxas dictatorship in August 1936. Under the dictatorship Greek foreign policy was characterized not only by British influence but also by German, because the economic intercourse between Greece and Germany increased. From 1930 to 1938 Greek exports to Germany rose from 23.5 to 38.8 percent of the total, and imports from Germany increased from 10.1 to 28.8 percent of the total. This was the result of clearing agreements between Greece and Germany into which the former was forced because it lacked foreign capital after the repercussions of the Great Depression.
Following the outbreak of World War U Greece found itself under Axis occupation in April 1941. During the occupation the Greek political situation became extremely complicated both within and outside of Greece. Parallel to the Greek government-in-exile in Cairo the National Liberation Front (EAM) tried to seize power in the country. Although in this political group the Communist Party of Greece (KKE) was one out of six parties, it "succeeded in maintaining tight control over EAM".' The National Popular Liberation Army (ELAS), one group of the resistance movement in the mountains, found itself under the domination of the EAM, while the other important resistance group, the National Republican Greek League (EDES), was under the influence of the Greek government-in-exile in Cairo.
The EAM-ELAS tried to monopolize the resistance movement and at the same time to defy the authority of the legal Greek government to cooperate with the Western Allies, resulting in the outbreak of the Civil War in September 1943. It lasted for six years, and was highlighted by crucial military conflicts among the resistance groups.
Despite this continuing conflict, in September 1944 at Cazerta in Italy the EAM finally agreed with the government of National Unity, which included EAM 'Andreas Papandreou, Democracy at Gunpoint the Greek Front (Garden City, New York Doubleday & Company Inc., 1970), p. 48.
representatives, under the leadership of George Papandreou to place the ELAS forces under the command of the Greek government of National Unity. Although this agreement was concluded because the Soviets participated in the Alliance against the Axis and encouraged such a development, it did not materialize. This complicated the situation in Greece and in the other Eastern European countries in which the Red Army marched, and forced Churchill to reach the 'percentages' Agreement with Stalin in Moscow in October 1944. Although Greece belonged to the British sphere of influence and indirectly to that of the US according to this agreement, Soviet policy towards Greece was vague because it did not discourage the Greek Communists from their attempt to seize the government by force of arms.