~ ONATIONAL ‘SECURITY PoLicy 135

handle such ‘instances of ‘international friction’ and to’ save’ is: from
dilemmas which i in Past often caused us| ‘to resort to unilateral U, S.
intervention. -_ :
In. both of these matters—problem « of £ stability and | Tiberality: of
domestic institutions as well as problem of inter-Americai: relation-
ships—firm, vigorous but tactful U. Ss. ‘Teadership will contintie to D be
essential to real progress. OS ete Lon gee
Oe ‘Europe - 3 pony - re eee
Main problems with European ¢ countries already: covered in n remarks
about cold war and dollar gap problem. a os
“British: exchange position has improved somewhat: since devaluation.
B ritish now have 200~300 million dollars more in kitty than they: had
in September, but nearly half a billion less than at beginning of ERP.
Still too early, however, to state whether this recent increase represents
permanent improvement or not. Presumably, as ERP--gives off, they
will run into further difficulties at some stage, and probably. sooner
than later. We are not through with this problem; and. we e would be
foglish: to think. of.it.as problem for U. K. alone. _

- Continental PECOVETYs re 7 Pgh |

On continent, recovery. has progressed favorably. Production 1 now
in many-instances at all-time ‘high, But we are still concerned. about
ability of OF KC countries to..pay: their.own way ‘in. modern world
when ERP is over. This depends not: only on production. but: also on |
exchange, 1.e., on international trade. They must learn to stick together
as a group,.. to lower their costs, and to go out aggressively after
foreign. markets. We are try: ing to prod them along these lines, Hence
our emphasis on European, integration. | :

Greece. 18

We are highly gratified. by. turn of. events in. "Greece. Only few
hundred. guerrillas left—probably less than at any time since age of
Pericles. We were helped. by I Tito affair ; but. our people al also. deserve
credit. | ate

Spain.*® | | _

As for Spain—importance of problem i is exaggerated, Tt. has been
‘discussed. far more in press’ than i in Government. It is true: UN. resolu-
. tion has not Teves useful in. yeni Franco and establishing more

. “For documentation on political and, economic relations of the United States
with the United Kingdom, see vol. 111, pp. 1598 ff. |
| * Documentation on United States policy, toward Greece is schiéduitea. for pub-
lication in volume v.

“(ba For documentation on United States relations with Spain, ‘see “vol. TI, “pp.
1549 ff. : a