CURRENT SITUATION IN GREECE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A003800120001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 23, 2016
• Document Release Date: August 15, 2013
• Sequence Number: 1
• Publication Date: February 28, 1950
• Content Type: REPORT

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Sant
Document
NO C ANGE i
CLASSIFI
COPY
40/
CURRENT SITUATION
IN GREECE
ORE 4-50
Published 28 February 1950
Class. CHANGED TS S C
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This document has been
approved for release through
the HISTORICAL R.71M-I PR:C.AM
the Central. Intelligence /.4sacy,
Date .2.-1.?S.4.1 92
HRP gas- 41
TELLIGENCE AGENCY
AR CHI V AL REC?ItTO
PLEASE RE11J
AGENCY ARCSIVES,
STAT
STAT
SOT-
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'Mt
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WARNING
This document contains information affecting the na-
tional defense of- the United States within the meaning
of 'the Espionage Act, 50 U.S.C., '31 and 32, as amended.
Its ;transmission or the revelation of its contents in any
-manner -to an unauthorized person -is prohibited by law.
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?.S.FeC-R-Eurs
CURRENT SITUATION IN GREECE
SUMMARY
The Greek guerrilla war, which started in
1946, virtually ehded in August 1949 with the
victories of the Greek armed 'forces in the
Vitsi and Grammos areas. Sporadic guerrilla
activity will continue, but the number of guer-
rillas now operating in Greece is less than a
thousand as compared with 25,000 in early
1949. As a result, the Greek Government has
been able to lift martial law and undertake a
program of military retrenchment. US-UK
military aid and the termination of Yugoslav
support to the guerrillas were important fac-
tors in the guerrilla defeat.
The Soviet-directed Greek Communist Party
still pursues its objective of communizing
Greece and has embarked on a program of po-
litical and economic subversion in place of
large-scale military activity. Greece will thus
be plagued for some time to come by the new
Communist tactics, but Communist strategists
are not likely to resume the costly war unless
conditions in Greece and the Balkans provide
some assurance of victory. These conditions
will probably not obtain for at least a year or
more.
With the military emergency over, the
Greeks will have greater opportunity for po-
litical readjustment and economic rehabilita-
tion. A return to political "normalcy," how-
ever, does not necessarily include the estab-
lishment of stable government. Already po-
litical leaders who were impelled by the na-
tional emergency to display at least some
measure of cooperation for the common good
are reverting to their old tactics of self-seeking
and of putting party above national interests.
The coalition of Liberals (centrists) and Popu-
lists (rightists) which came into power in Sep-
tember 1947 and managed to survive the guer-
rilla war years broke up in January 1950. It
has been replaced by a non-political "service"
cabinet, now preparing for general elections to
be held in early March.
There have been rumors that Marshal Pa-
pagos, the popular Commander in Chief of the
armed forces, might enter the contest for the
premiership, but the King will probably keep
him in reserve against the?possibility of some
future emergency; the authoritarian implica-
tions of a government headed by such a figure
might have serious repercussions. If Papagos
does not run, the elections are not expected
to produce' significant changes in the political
composition of Parliament. The early post-
election government, probably under Liberal
or Populist domination, may enjoy an initial
period of stability, but eventually major dif-
ferences will tend to make it difficult for the
government to retain the necessary par-
liamentary support. Under such circum-
stances, the inability of the government to act
effectively may necessitate new elections,
while pressure may recur in some quarters for
the establishment of "strong government."
Although Greece made progress in economic
rehabilitation even during the guerrilla emer-
gency, serious problems remain. Population
growth and the need to reduce the heavy trade
deficit will require maximum utilization of
the limited Greek natural resources, a sub-
stantial increase over prewar foodstuff and in-
dustrial production, and strenuous efforts to
promote exports. Financial stability, a pre-
requisite for an intensive reconstruction and
development program, is threatened by long
pent-up inflationary pressures, including the
demand of labor for higher wages. Neverthe-
less, with ECA allocations in prospect through
the fiscal year of 1952, and in the absence of
new Communist threats from the north,
Note: The intelligence organizations of the Departments of State, Army, Navy, and the Air
Force have concurred in this report. It contains information available to CIA as of
31 January 1950.
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2 seen
Greece may be expected to attain prewar pro-
duction levels and a generally more stable
economy during the next two years.
During their period of reconstruction, the
Greeks will continue to depend heavily on ad-
vice and aid from the West, particularly the
US. With its large military and other aid
missions, the US has already contributed im-
measurably to the survival of Greece without
becoming excessively involved in Greek in-
ternal affairs.
While the Greeks are prepared for the
gradual reduction of US aid, the problems
they still have to solve are so difficult that
abrupt and complete termination of outside
assistance might well produce general disillu-
sion and chaotic conditions. Such circum-
stances would signal the full-scale renewal of
the Communist bid for power.
SeCiWIFF--`
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SE.Gaser
CURRENT SITUATION IN GREECE
1. Military Situation.
The Greek guerrilla war, which over-
shadowed all non-military developments in
Greece from 1946 to 1949, began to draw to a
close with the rout of the math guerrilla force
from the Vitsi and Grammos areas in August
1949. Although sporadic guerrilla activity
continues, the general situation justifies both
the lifting of martial law in Greece and a pro-
gram of military retrenchment. The three
main factors in the survival of an independent
Greece have been US-UK military aid, the
Greek military effort, and Tito's defection
from the Cominform. The Greek Communist
leadership, admitting defeat in the critical op-
erations of 1949 and professing "peaceful" in-
tentions for the time being, has shifted to a
new program which stresses exploitation of
economic and political weaknesses rather than
military activity in Greece, thus relieving the
USSR of its responsibility of providing mate-
rial support to the rebels. In view of the
present weakness of Greek Communism, the
uncertainties in the Balkan situation, and the
prospect of the reduction of US aid to Greece,
Soviet strategists will probably not attempt to
revive large-scale Greek guerrilla operations
within the next year or more but will continue
the struggle for Communist supremacy by
other means.
Guerrilla strength and activities within
Greece have receded to a very low level during
recent months. As a result of attrition
throughout the year and evacuation of the
major forces into Albania and Bulgaria, the
number of guerrillas operating in the country
has dropped from a high of approximately
25,000 in early 1949 to less than a thousand.*
? Approximately one-half of the guerrillas within
Greece are in small scattered groups south of the
Bulgarian border (the "C" Corps area) ; a few re-
main In the area to the west where the main
strength of the Greek Government forces is main-
tained ("A" and "B" Corps areas) ; and small scat-
tered groups are found elsewhere in the country and
on some of the islands. See map.
Casualties among guerrilla leaders were rela-
tively high throughout the year, and large
stocks of heavy weapons and other materiel
were lost at Vitsi and Grammos. Yugoslav
aid, which had been dwindling for some time,
was to all intents and purposes shut off by
mid-1949. The outlawed Greek Communist
Party (RICE), which has aided the guerrilla
forces with funds, supplies, intelligence, and
recruits, has now had its network almost to-
tally disrupted by Greek Army and security
action.
Although the guerrillas may constitute a po-
tential danger to Greece because of their 25,-
000 or more reserves outside the country, these
reserves are not now prepared for sustained,
large-scale operations. Except for the 5,000
or so remaining in Albania and Bulgaria, these
reserves have been moved to the northern
satellite states where the Kremlin evidently
intends that most of them, along with large
numbers of Greek children and non-combat-
ant sympathizers, should settle down for the
time being to non-military pursuits. If Yugo-
slavia were re-integrated into the Cominform
bloc, the Greek guerrilla manpower potential
would, of course, be strengthened by some
of the several thousand Greek guerrillas and
families now sheltered in Yugoslavia.
During the next six to twelve months, how-
ever, Greek guerrillas can hardly expect more
than a minimum of outside material support.
Although their strategy probably calls for the
continuation of a limited program of sabo-
tage, terrorism, raids, and recruiting by small,
armed squads often led by local political com-
missars, their capabilities will be held in check
by continued casualties. Meanwhile the
Greek Cominunist Party is apparently trying
to move ahead in a way that .will make the
Greek nation relax its measures against Com-
munism, while the Communists themselves
emphasize "political and economic struggles"
and the internal rehabilitation of their party.
In contrast to the drop in the capabilities
of the Greek guerrillas, those of the Greek
elter- 3
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armed forces rose considerably in 1949, as a
result mainly of US military aid and concerted
US-UK-Greek efforts to remedy Greek mili-
tary deficiencies. When Alexander Papagos
was appointed Commander in Chief in Janu-
ary 1949, he insisted on freedom from parlia-
mentary interference in his exercise of com-
mand, while he demanded increased aggres-
siveness from Greek forces conducting search-
and-pursuit tactics throughout the country.
The comprehensive operational plan which
had been put into effect in December 1948
with the Peloponnesus operation reached a
climax with the northern frontier operations
in August 1949. Before and during important
ground operations, there was effective local
security action, and naval and air cooperation
was excellent at all times. Efforts to improve
the efficiency of the armed forces further dur-
ing the retrenchment program will tend to off-
set scheduled personnel reductions and the
demobilization of many combat veterans.
The projected changes in the personnel
strengths of the various Greek armed forces
during the course of military retrenchment
are shown in the table below.
Among the measures being taken to offset
the reduction in the personnel strength of the
Greek armed forces are the replacement of
materiel worn out in battle and the supplying
of other necessary equipment, including ar-
tillery, light automatic weapons, armored ve-
hicles, and trucks. The ECA-sponsored pro-
gram of road improvement (see map) will be
of some help in improving the mobility of the
Greek Army. The projected new road across
the Pindos Range not far from the Albanian
border will for the first time give Greek forces
a route for rapid east-west movements in that
critical area.
Meanwhile, the gradual return of more
nearly normal conditions will still leave Greece
with certain problems concerning military
preparedness and internal security. Although
the morale of the Greek armed forces is still
good, a drop in vigilance has been part of the
psychological letdown following the past sum-
mer's victories and the beginning of demobili-
zation and reorganization. Furthermore,
command of the army will fall to men of less
prestige when Marshal Papagos retires?an
event foreshadowed by his attempt to resign
early in January 1950. It is doubtful whether
Papagos' successor will be able to carry on his
firm command policy or to maintain freedom
from political interference. In addition, the
PERSONNEL STRENGTH, GREEK ARMED FORCES
31 JULY 49
(actual)
1 JAN. 50*
(authorized)
1 JAN. 51**
(authorized)
Army
143,504
147,000
80,000
National Defense Corps (under
army command)
46,443
0
0
Category "C" (politically unrelia-
ble, from both army and NDC)
13,250
.10,000
0***
Gendarmerie
24,958
23,200
23,200
Civil Police
7,477
8,000
8,000
Ground Force Total
235,632
188,200
111,200
Navy
13,584
12;000
7,000
Air
7,484
6,500
5,700
Grand Total
256,700
206,700
123,900
? At first stage in retrenchment.
? * After conclusion of retrenchment.
? ?? Responsibility for this category is to be transferred to a civilian agency.
Declassified
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earunrfer 5
problem of training will still offer difficulties
as the Greek armed forces endeavor to adapt
themselves to their peacetime role.
As a result of these factors and the Commu-
nists' avowed program of primarily non-mili-
tary activity in Greece during coming months,
the responsibilities of the Greek gendarmerie
will be greater than heretofore. Although its
problem in maintaining internal security will
be complicated somewhat by the existence of
armed villagers and a few small extreme
rightist bands, the gendarmerie is tradition-
ally better constituted than the army for the
permanent assignment of controlling local dis-
orders and Communist terroristic and sub-
versive activities. In the event that the guer-
rilla command attempts a large-scale resur-
gence at some time after Greek military re-
trenchment has been completed, the gendarm-
erie will be the Greek Government's most ex-
peditious means of taking preventive action
before the other forces are fully mobilized.
2. Political Situation.
The passing of the military emergency
has given Greece the opportunity to prepare
for the 1950 elections and has paved the way
for a gradual return to a more nearly normal
political atmosphere. This does not neces-
sarily assure Greece of political stability,
however, because political maneuvering, fre-
quent governmental changes, and extremist
tendencies are all traditional, and are likely to
become increasingly common now that mili-
tary operations have virtually ceased. Recent-
ly reawakened tendencies toward partisan
politics hastened the break in the coalition
government and the installation of a tempo-
rary non-political "service" cabinet, which is
charged with holding elections. The elec-
tions are not likely to produce a particularly
effective government with a clear parliamen-
tary majority. It is possible that the King
may eventually intervene to replace the regu-
lar leadership with an authoritarian regime
under the popular Marshal Papagos.
The relative political stability of the past
few years has been achieved mainly because
the politicians and the country at large re-
sponded to a compelling appeal to patriotism
in the face of the Communist bid for power.
Even so, the US and UK have had to exert
pressure from time to time to prevent party
differences from endangering the national
anti-Communist effort and undermining the
coalition of Liberals (centrists) and Populists
(rightists) which governed from September
1947 to January 1950. Outbursts of faction-
alism at times caused the King to consider
setting up a government with authoritarian
powers, but this very possibility spurred the
major party leaders to keep the coalition alive
as long as possible with relatively few changes.
Beginning in early 1949, the coalition actually
gained effectiveness in meeting day-to-day
needs by centralizing its policy-making func-
tion. No essential change in policy followed
the elevation of 74-year-old Alexander Dio-
medes, a nominally independent, Liberal-
minded financier, from his post as Deputy
Prime Minister after the death of Liberal
Prime Minister Themistocles Sophoulis in
June 1949.
Political preoccupations began to assume
prominence soon after the rout of the guer-
rillas' main forces in August and threatened
to interfere with the execution of important
government policies, but the Populist-Liberal
coalition still continued. On 5 January 1950,
however, Liberal chief Venizelos withdrew
from the cabinet with the other Liberal min-
isters, and the coalition cabinet was dissolved.
The almost simultaneous resignation of Com-
mander in Chief Papagos was subsequently
withdrawn, as the King on 6 January ap-
pointed John Theotokis to head the pre-elec-
tion "service" cabinet. Elections have now
been scheduled for 5 March, with the first
meeting of the new Parliament set for 30
March. In spite of initial suspicion of Theo-
tokis' intentions and of possible dabbling by
King Paul in the field of politics, the "service"
cabinet has apparently proceeded promptly
with election preparations.
The outcome of the elections and the future
of the Greek Government will depend not only
upon the way in which the Theotokis Cabinet
carries out its mandate, but also upon the atti-
tude of Marshal Papagos, who enjoys con-
siderable popularity as the result of his mili-
tary leadership. Most of the regular Greek
political leaders are strongly opposed to Pa-
pagos' entry into politics, out of fear that his
ere-Ft-Bala?I
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prestige would win him overwhelming popular
support, enabling ambitious men such as Spy-
ros Markezinis, capable young political friend
of Papagos and King Paul, to ride to power.
They fear such a development might result,
furthermore, in the extension of governmental
powers beyond constitutional limits?to the
detriment of the established political parties
and the nation's reputation abroad. Al-
though a government under Papagos would
probably enjoy the initial support of many
Greeks, its authoritarian implications would
have unfavorable repercussions on world opin-
ion and, if borne out by subsequent develop-
ments?such as the abrogation of Parliament
or the coming to power of men less beneficent
than Papagos?would eventually alienate
most Greeks as well. The failure or unpopu-
larity of such a government would, in addi-
tion, reflect on the King's position and prob-
ably revive the traditionally disruptive conflict
between monarchism and republicanism. Pa-
pagos himself, approaching the age of retire-
ment, not in the best of health, and lacking
zest for the turmoil of politics, has maintained
an ostensibly aloof attitude. While dissatis-
faction with the regular political leadership
has at times prompted the King, as well as in-
fluential political, financial, and newspaper
elements, to consider drafting Papagos for
the premiership, the King has recently indi-
cated an intention to hold him in reserve for
some future crisis;
If Papagos does not enter politics before the
elections, no single candidate of outstanding
vote-getting ability can be expected to appear,
and the changes in the political composition
of the Parliament are not likely to be great.
The rightist Populists, who won a plurality in
the 1946 elections, are likely to lose some
strength to center and minor rightist groups,
while the second-ranking Liberals will prob-
ably gain from the moderate right and from
other centrist elements. Total Liberal-Popu-
list strength in the new Parliament will prob-
ably not differ greatly from the present figure
of about 60 percent. The early post-election
government, probably under Liberal or Popu-
list domination, may enjoy an initial period
of stability in view of its new mandate. Sub-
sequently, however, as differences over policy
and execution become more acute, the govern-
ment will have greater difficulty in command-
ing an assured majority, and new elections
may have to be called. Meanwhile, the ma-
neuvering of minor groups such as those of
the extreme rightist Maniadakis and the left-
centrist Plastiras may take on increasing sig-
nificance, perhaps leading temporarily to new
political combinations under either Populist
or Liberal domination, but tending in the long
run to encourage any government to take
strong measures so that it could remain in
power. It will become increasingly difficult
to carry out Western moderating advice as the
amount of foreign aid gradually goes down and
internal Greek political pressures rise.
No matter what its complexion after the
1950 elections, the Greek Government will
have great difficulty in executing the political,
economic, and military measures that Greece
needs. Post-election political tensions and
the desire for party spoils may seriously
hamper governmental reorganization and de-
centralization, and will tend to lower the sta-
bility of the government itself. Although
most Greek political leaders will reflect the
popular determination not to re-legalize the
old Communist organization, the degree of
leniency to be tolerated in the anti-Commu-
nist program is likely to cause controversy,
adding to the difficulty of again achieving
major party cooperation.
3. Economic Situation.
With military operations virtually ended
and the gains of the past two years of US aid
and advice beginning to register, Greece is
now in a position to concentrate on economic
recovery and development. Nevertheless, the
country faces serious handicaps. Most of the
$1.9 billion (equivalent) of aid received from
foreign sources since the liberation of Greece
in late 1944 has perforce been used up in meet-
ing immediate military, consumer, and relief
needs. Thus the country must exert strenu-
ous efforts to make up for lost time in utilizing
its $263.3 million fiscal year 1950 ECA alloca-
tion and the subsequent two years of ECA aid
still in prospect. Moreover, the economic in-
heritance of Greece is a troublesome one, in-
volving population stresses, agricultural and
industrial backwardness, heavy wartime and
rs-rs-eirrt''
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r -E-C S'Enr 7
guerrilla destruction, and postwar dislocations
in trade and foreign exchange patterns.
While notable improvements should now be
forthcoming, it is doubtful whether the Greek
economy will be functioning at a sufficiently
high level by 1952 to obviate some further for-
eign assistance.
Significant economic progress has been
made during the past year, but most of it has
been in the fields of transport reconstruction,
and refugee resettlement, and in generally
laying the groundwork for later phases of the
development program. Under the US-fi-
nanced program for reconstruction of impor-
tant rail and road facilities, now in its second
year, the key railways from Athens to Sa-
lonika and from Salonika north to the Yugo-
slav border have been reopened, and some
1,200 kilometers of highway have been recon-
structed. More ambitious projects were post-
poned because of guerrilla interference and
the need for funds to finance the relief and
rehabilitation of the 700,000 refugees of the
guerrilla campaign. The improvement in in-
ternal security during recent months has per-
mitted the return to their homes of perhaps
500,000 of the refugees, and the rest will prob-
ably be resettled in the spring. Their re-
settlement and rehabilitation will eventually
prove of great importance to the economy, not
only by removing an important budgetary
drain (estimated at $42 million for the fiscal
year 1950) but also by restoring the productive
contribution of this group, which constitutes
almost one-tenth of the population.
The Greek economy has thus far made only
limited advances in productivity. AgricuP
ture, on which the economy rests, made an
early postwar recovery, and 1949 production
will perhaps exceed the 1948 level (87 percent
of prewar) . Nevertheless, population growth
and the need to economize on imports will re-
quire a substantial increase over prewar food-
stuff production. In part, the need for greater
production will be taken care of by refugee
resettlement, land reclamation, a more wide-
spread distribution of fertilizers and equip-
ment, and other measures to improve agricul-
tural production. There is great necessity,
however, for price incentives, which until re-
cently have been held in check in order that
the general cost of living might be held down.
Industrial production?hampered by high
costs, inadequate capital, limited consumer
purchasing power, business uncertainty, and
guerrilla destruction?has lagged behind agri-
culture, although the general industrial index
?
has risen to about 90 percent of prewar. (But
for the disproportionately large increases in
the production of electric power and certain
consumer items, the industrial index would
be nearer 80 percent.) The mining industry,
faced with problems similar to those of the
manufacturers, achieved only 18 percent of
the prewar production rate through most of
1949.
Greek export trade has meanwhile suffered
under a number of handicaps. The competi-
tive position of Greece has been weakened by
low production, high costs, and (until re-
cently) overvaluation of the drachma. The
country has also suffered because of loss of
its prewar markets in Germany and central
Europe and because of its difficulties in sell-
ing abroad the two semi-luxury products, to-
bacco and dried fruits, which represent the
principal Greek exports. The barter and sub-
sidy measures used thus far in stimulating
exports have been relatively ineffective.
Devaluation of the drachma, on the other
hand, has facilitated Greek export promotion,
and by the end of the fiscal year 1950 Greek
export totals will probably be somewhat
higher than in any other year since World
War II. The greater measure of internal sta-
bility, together with devaluation of the drach-
ma, has generally improved the country's
chances of recovering more of the invisible
foreign exchange earnings (such as emigrant
remittances and shipping profits) which, in
prewar years, helped bridge the equivalent
$50 million gap between imports and exports.
Nevertheless, strenuous efforts will be needed
to expand Greek foreign exchange and to de-
velop internal sources of such presently im-
ported necessities as foodstuffs, fuel, and fer-
tilizers. Since liberation, Greece has needed
an average of over $200 million in foreign
subsidy each year to meet its balance-of-pay-
ments deficit, which, although it may be re-
duced in the fiscal year 1950, will still be con-
siderable.
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Despite the economic instability and huge
expenditures generated by the guerrilla war,
the Greek Government, with US aid and ad-
vice, has managed to head off runaway infla-
tion. The value of the drachma has been sup-
ported periodically by government sales of
gold on the open market. Credit controls, a
partial wage freeze, and a limited amount of
rationing and price control have been main-
tained, and special efforts have been made to
improve the flow of consumer goods from
abroad and to defer reconstruction projects
which might have inflationary effects. The
early after-effects of devaluation, moreover,
have been surprisingly favorable: the cost of
living has been held relatively stable by an
import subsidy, while increased public confi-
dence in the currency has been marked by
the influx of hoarded foreign exchange into
government hands.
Inflationary pressures, however, are still
present. With the fading of the guerrilla
threat, Greek labor has raised long-deferred
demands for an increase in wages, and it ap-
pears more and more unlikely that govern-
ment efforts to forestall the issue on patriotic
grounds will prove effective for very long.
Spurring labor's demands is the fact that
wages have lagged about 30 percent behind
the steadily mounting cost of living, now
about 300 times the prewar level. Neverthe-
less, the granting of a general wage increase
would not only tend to inflate prices but would
also place a serious burden on a national
budget already overloaded with refugee, mili-
tary, and import subsidy costs. Even if the
contemplated cuts in the military budget and
probable reductions in the import subsidy are
effected, the 1950 fiscal year budget deficit
may run as high as 1,500-2,000 billion drach-
mas ($100-133 million) ; this will necessitate
the further diversion of ECA counterpart
funds (some 60 percent have already been
transferred to cover budget deficits) which
would otherwise be available for reconstruc-
tion.
? Meanwhile, however, plans for the accelera-
tion of reconstruction and rehabilitation
measures are going forward. If other budget
expenses can be held down, 1 trillion drach-
mas ($66.6 million) may be used during the
fiscal year 1950 for such varied purposes as
housing, transportation, agriculture, irriga-
tion and land reclamation, rehabilitation of
the tourist and mining industries, and devel-
opment of civil air facilities. Further efforts
will be made to advance the long-term pro-
gram for industrial expansion, already initi-
ated with German reparations, as a means of
absorbing the surplus agricultural population
and decreasing the dependence of Greece on
imported fuels, fertilizers, and manufactured
goods. Work will be initiated on the impor-
tant 6-year program for the development of
hydroelectric power, for which a preliminary
survey was completed this year. In general
ECA will continue its efforts to bring about a
reformation in the outmoded and chaotic gov-
ernmental, financial, administrative, business,
labor, and trade structure, and to train se-
lected Greeks in a variety of technical skills.
The success which the program will have in
making the Greek economy more stable, more
efficient, and more nearly self-supporting is
clearly limited by the immensity of the obsta-
cles it faces and the uncertainty of the Greek
political and military future. ECA/Greece
has recognized that the program itself will
tend to increase the already great inflationary
pressures, unless coupled with an increase in
the supply of consumer goods. Should seri-
ous inflation threaten as a result of general
wage increases or lessened confidence in the
government, the program might have to be
retarded in the interests of financial and polit-
ical stability. However, given a steady ap-
plication of US aid and advice, a gradually in-
creasing flow of private investment, and an
absence of new Communist threats from the
north, Greece should, during the next two
years, be able to repair the ravages of war, at-
tain prewar levels of production, and make
substantial progress toward a more stable
economy.
4. International.
The strategic value of Greece to the USSR
and the country's heavy dependence on US
moral and material support continue to be
he major factors in Greek internal and for-
feign affairs. While Greek Communist set-
backs and the Kremlin's preoccupation with
rig-g?Garia.
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4WD/Mr 9
the Tito problem in recent months have re-
duced the immediacy of the USSR's designs on
Greece, the Soviet aim of eventually bringing
Greece under Communist control seems un-
modified. Greece still .remains highly vul-
nerable to pressure and penetration along its
northern frontier. Despite the native vigor
of the Greek people, they. must for some years
to come rely on Western support to rebuild
their economy and to deter further Commu-
nist aggression.
Official relations between Greece and the
USSR have been very cool, and diplomatic
representation has been left to charges d'af-
faires ever since 1946 when the Kremlin re-
fused to participate in observing the Greek
elections and denounced the elections and
plebiscite which put the present parliament in
office and restored the Greek monarchy.
Since then, Soviet hostility toward Greece has
been demonstrated not only through Soviet
backing of the three-year-long guerrilla cam-
paign but also through persistent vilification
of the Greek Government. In recurrent
"peace" proposals, ,notably the oft-repeated
terms advanced by Gromyko in April-May
1949, the USSR has attempted to obtain entry
into Greek affairs as the price for calling off
the guerrilla war.* Relations between the
USSR and the US-oriented Greek Government
will undoubtedly remain hostile. Should the
internal situation of Greece again deteriorate,
the Kremlin might turn more of its attention
back toward stimulating unrest in Greece even
if the Soviet-Yugoslav conflict remains un-
resolved.
Greek relations with the Satellites have
been at least equally strained; even in the case
of Czechoslovakia, which has a charges d'af-
faires in Athens, commercial relationships
have been virtually terminated by Greek can-
cellation of Czech air transit rights within
Greece. Relations with Albania and Bulgaria
have been particularly hostile because of the
? These terms included a general amnesty for
guerrillas, the holding of elections under interna-
tional (including Soviet) supervision, the dissolution
of UNSCOS (which the USSR has consistently con-
sidered illegal), the inclusion of the USSR on any
new border commission, and withdrawal of the US
and UK military missions from Greece.
preeminence of these countries in furnishing
active help to the guerrillas, but also reflect
the history of World War II and certain long-
standing territorial differences, including Bul-
garian aspirations regarding Thrace and East-
em Macedonia, and Greek claims to part of
southern Albania (Northern Epirus). The
latter issue is currently the more explosive.
Albania and Bulgaria, which have firmly re-
sisted UN efforts to restore their normal
diplomatic ties with Greece, have demanded
that Greece first make a formal renunciation
of its claim to Northern Epirus.
In the summer of 1949, Greek bitterness to-
ward Albania (with which Greece is still tech-
nically at war) threatened to produce open
hostilities when, with the reduction of the
guerrilla strongholds in the Grammos-Vitsi
area, the idea of pursuing the guerrillas across
the Albanian frontier gained sudden currency
both in military circles and among the Greek
public, while the hope of obtaining Northern
Epirus was scarcely concealed even among the
moderates. The government, however, offi-
cially pledged itself, after Western moderating
advice, to take no such action. Although the
Greeks are not likely to engage in adventures
in Albania without Western acquiescence, the
creation of a political vacuum by a marked
deterioration of the Albanian regime's internal
authority or a major revival of Greek guer-
rilla activity based on Albania would again
raise the question of Greek intervention..
Thus far, no significant strains have de-
veloped in the relationship between Greece
and the US and UK, a relationship based on
long-standing cultural and economic ties as
well as on present practical necessities, and
major differences between Greece and its
Western associates are not likely to develop.
The US has been generally successful in mak-
ing its influence felt without becoming unduly
involved in the conduct of Greek internal af-
fairs. US counsel has contributed materially
to the new emphasis on professional pro-
ficiency in the armed forces and to the initia-
tion of important economic measures. While
Greece has generally gone its own way in the
UN, the Greeks have followed the US lead in
affairs of direct mutual concern. Even in
such touchy matters as the current reduction
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10 CrCtET
in size of the army the Greeks have usually
acquiesced fairly readily to the US position.
Now that the immediate threat of Commu-
nism has abated, however, the Greeks will
tend to be less sympathetic toward US pleas
for political and economic reform and may ex-
pect greater freedom in handling the aid re-
ceived.
The traditional Greek-British friendship
has not been impaired by the fact that the
UK's role in Greek affairs has since 1947 been
secondary to that of the US. While the UK's
active participation in Greek matters has re-
cently been reduced even further by the de-
parture of the 3,000-man token force that re-
mained in Greece during the guerrilla war and
by the initiation of reductions in the British
military mission, British influence will con-
tinue to be exercised through its naval and
police missions and through its commercial
interests in Greece. Recurrent expressions of
Greek aspirations in Cyprus will probably
place some strain on Anglo-Greek relations,
but it is unlikely that the Greek Government
will risk the loss of British friendship by press-
ing the issue in the near future.
The development of the Tito-Cominform rift
has caused Yugoslavia to leave the ranks of
the avowed foes of Greece but has not yet
made it into a friend. Once the chief backer
of the Greek guerrillas, Yugoslavia grew cooler
toward them as it became clearer that the
guerrilla leadership would be ranged with
Tito's Cominform opponents. Signs of a pro-
gressive reduction in Yugoslav shipments of
arms and equipment to the guerrillas began
to appear by the spring of 1949, after the
Greek Communist leadership (by then com-
pletely dominated by the Cominform) had
made its abortive bid for Slavo-Macedonian
support. On 10 July 1949 Tito cut off the guer-
rillas from all active Yugoslav assistance by
closing his border with Greece. Since then
the Greek Communist Party has been openly
hostile to the Tito government; the party has
not only made Tito the official scapegoat for
its military setbacks but has accused him of
plotting with the Greek authorities to create
a rival, anti-Cominform Communist organiza-
tion in Greece.
Despite some actual easing of Yugoslav-
Greek relations, grounds for mutual suspicion
between Athens and Belgrade still exist.
From the Greek point of view, Tito's continu-
ing sponsorship of Slavo-Macedonian aspira-
tions implies a perpetuation of Yugoslavia's
old claims to Aegean (Greek) Macedonia,
while his efforts to portray himself as a friend
of "true" Greek Communism?including the
? sheltering of nearly 10,000 Greek children,
numerous Greek Slavo-Macedonian refugees,
and several thousand guerrilla reserves?
underlines the bias in his attitude toward
Greek internal affairs. On his part, Tito must
act cautiously in moving toward even a lim-
ited rapprochement with a government he was
wont to denounce as "monarcho-fascist," in
view of the delicacy of his position as Soviet
propagandists accuse him of collaboration
with the West. Because of the basically dif-
ferent ideologies of Tito and the Greek Gov-
ernment, as well as basically different atti-
tudes toward the Albanian and Macedonian
questions, full rapprochement between the
two countries is out of the question.
Yugoslavia has, nevertheless, been slightly
more cooperative of late in the UN discus-
sions of the Greek issue. Diplomatic contacts
between the two countries and the relations
of their border forces have improved some-
what in recent months, but official represen-
tation in the two capitals is still in the hands
of charges d'affaires. Some revival of mutual
trade now seems to be a distinct possibility.
The reopening of Yugoslavia's rail link to the
Aegean has been advanced by the reconstruc-
tion of the Greek section of the railway and
the partial repair of the connecting Yugoslav
line. Yugoslavia may make possible the re-
sumption of international service over this
route by the summer of 1950, with some eco-
nomic benefit to both countries and potential
strategic value to Yugoslavia.
Further progress toward improved Yugo-
slav-Greek relations may well take place as the
Tito-Cominform conflict continues its pres-
ent course. The Greek Government, recogniz-
ing the heightened dangers which a Comin-
form victory over Tito would present, appears
willing to deal with Tito realistically, a policy
the more feasible because of prewar Greek-
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ra.E?clitEr 11
Yugoslav friendship, in contrast to the tradi-
tional Greek-Bulgarian animosity and Greek-
Albanian territorial differences. For his part,
Tito also seems desirous of improving Yugo-
slav-Greek relations, not only for the economic
and strategic benefits which may result, but
also as part of his long-range policy of gen-
erally bettering, as unobtrusively as possible,
his relations with the West.
Greek ties with other Mediterranean coun-
tries have been slightly strengthened in the
past year. Rapprochement with Italy, a ma-
jor rival during the prewar era, has been fur-
thered by the conclusion of an economic
agreement settling outstanding peace-treaty
issues. Diplomatic representatives have been
exchanged with Israel; negotiations for the
resumption of trade with Spain have taken
place; and cultural and air agreements have
been signed with Lebanon and Syria respec-
tively. Although friendly relations have been
somewhat dampened by new Egyptian efforts
to place restrictions on Greek nationals resid-
ing in Egypt, greater trade with Egypt is in
prospect.
Official relations between Greece and Tur-
key have continued good in spite of occasional
outcroppings of popular antagonism. Turkey
has extended somewhat greater freedom to the
Greek minority in Istanbul, and a project is
under way to promote cultural exchanges. Al-
though some demonstrations have resulted in
Turkey from the agitation in Cyprus for union
with Greece, the common interests of Greece
and Turkey as recipients of Truman Doctrine
aid and as neighbors on the Soviet periphery
will continue to override other considerations.
Indeed, inasmuch as these two countries are
not included in the North Atlantic Pact, the
governments of both will probably seek to
strengthen their friendly relations, and will
also continue their efforts to interest the US
in a regional security arrangement.
Since the Greek appeal to the Security
Council in late 1946, the UN has played a sym-
bolic and moral role in Greece, and over-
whelming evidence collected by successive UN
Balkan committees has convinced world
opinion of the reality of the Soviet-sponsored
aggression against Greece. The attention
focused on Greece in the UN discussion may
have helped deter the Soviets from more bla-
tant forms of aid to the guerrillas, although it
did not curb the less openly aggressive sup-
'port that maintained the guerrilla movement.
Various UN efforts to work out a formula for
normalizing diplomatic and border relations
between Greece and the neighboring Satel-
lites have met with little success. Since the
1948 UN recommendation (reaffirmed in 1949)
for the repatriation of the 28,000 Greek chil-
dren now in the Communist countries, no chil-
dren have yet been released, and present Com-
munist stalling tactics indicate that scarcely
more than token numbers can be expected to
return. Continuation of UNSCOB (UN Spe-
cial Committee on the Balkans) for another
year is an assurance of sustained international
awareness of Soviet designs in Greece, but the
Greeks have been disappointed in the effec-
tiveness of UN support and still look directly
to the US and UK for moral and material
guarantees.
5. Probable Future Developments.
Freed of the immediate Communist menace
and the restrictions of martial law, Greece will
achieve considerable further internal improve-
ment in the next few years, but will need some
time to reach relative political and economic
stability. The conflict between the concepts
of a parliamentary or a dictatorial solution to
the political problems of Greece will undoubt-
edly flare up again, and there is a distinct pos-
sibility that it will be resolved in favor of dic-
tatorship, despite Western moderating advice,
if parliamentary delays and political maneu-
vering should prompt the King to name a
strong personality to head a government with
extraordinary powers. The still more funda-
mental issue between monarchism and re-
publicanism, almost entirely dormant since
the 1946 plebiscite which brought back the
monarchy, may gradually re-emerge as King
Paul evinces a bent for dabbling in politics
and as the nation undergoes a general slight
shift from right toward center. Controversial
economic issues such as the present unsatis-
factory wage-price relationship, tax and other
financial reforms, and the general difficulty
of maintaining financial stability are likely
to vex any government for the next few years.
seeettlit.41,%.
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12 4-841-e-ltEr
Although the actual reduction of the armed
forces can probably be carried out without
political repercussions so long as the Commu-
nists remain quiescent, political interference
in military matters will undoubtedly be rea
newed when Commander in Chief Papagos re-
signs, an event that may take place soon after
the 1950 elections.
The kind of military emergency that threat-
ened Greek independence during the 1946-49
guerrilla war is not likely to recur during the
next year or more unless the Greek internal
situation deteriorates greatly and Greece
again becomes available as a major staging
area for guerrilla operations. Greek Govern-
ment forces are not likely to be vitally affected
by the retrenchment program as currently en-
visioned and will probably remain able to keep
Communist pressure within Greece from be-
coming a serious ?military threat. Although
effective control of the border against groups
that may seek to filter into Greece will be im-
possible, the present outstanding weaknesses
of the Greek Communist Party make it un-
likely that the requisite support within Greece
for a new guerrilla movement could be built
up in a short period of time. Limited guer-
rilla activities of nuisance value are, never-
theless, likely to continue. Though there may
be an attempt at increased activities during
the coming summer, continued casualties will
hold them in check. The Greek Communists'
main efforts will probably be devoted to non-
military activity at least a year or more.
No great change is to be expected in the re-
lations of Greece with other countries, al-
though a moderate improvement of Greek-
Yugoslav economic relations appears to be in
prospect. It will probably be almost impos-
sible to translate into action the vague af-
firmations of the various Communist states,
including Yugoslavia, to the UN's plan for the
repatriation of Greek children taken abroad
by the Communist rebels; the Greeks them-
selves will probably display less eagerness to
call for the return of either children or adults
who have been thoroughly indoctrinated in
Communism. The USSR will continue to be
unfriendly to Greece, but Greece will prob-
ably not again become the primary target of
Soviet hostility in the Balkan peninsula while
the Kremlin is faced with Titoism. Greek
claims to southern Albania will probably
remain subdued under Western moderat-
ing advice, but a major revival of guerrilla ac-
tivity based on Albania, or a political vacuum
resulting from the marked deterioration of
the Albanian regime's internal authority,
would again make this problem most serious.
Aspirations in Greece and in the British
Crown Colony of Cyprus for the union of Cy-
prus with Greece are likely to result in grow-
ing agitation, despite the willingness of the
Greek Government to try to keep this issue
from impairing the traditionally very friendly
Greek-British relations.
The US aid program will continue to be the
most important single factor helping the
'Greeks to help themselves. In practically all
phases of Greek policy, US aid and advice will.
continue to loom large as moderating factors.
The well-being of the Greek economy will de-
pend upon US aid to a considerable extent for
several more years, and probably to some ex-
tent even after the end of the ECA program in
1952. The Greeks will be concerned about
US intentions beyond the limits of the present
aid program, and will seek assurances of con-
tinued, though curtailed, US aid for the years
after 1952. While the gradual reduction of
US aid through 1952 will be of real benefit in
spurring the Greeks to become less dependent
on outside help, the termination of the pro-
gram at that time would probably leave them
with certain residual problems that might, if
untended, seriously undermine the relative
stability achieved up to that time. The fun-
damental orientation of Greece toward the US
and the UK will probably remain unchanged
so long as the Greeks feel that they will re-
ceive US-UK support against Balkan or Com-
munist encroachment.
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S ET
11449
/VAYLOV(RALc))
?
XANTHI
T? HRAK I
KOMOTINI
ROADS
Asphalt surface highway completed with American aid
Highway to be surfaced (asphalt) with American aid
Projected highway
Other principal road
RAILROADS
?i?i? Standard gauge
AIRFIELDS AND HARBORS
O Principal airfield
Airfield reconstruction with American aid
? Reconstruction of ports, harbors and canals with American aid
ARMY COMMAND AREAS AND GUERRILLA STRENGTH (As of 31 Jan.,
avalgewata Boundary of Greek Army Command Area
"A" A Corps-10
B" B Corps-20
" C Corps-372
(2.G. Higher Military Command, Central Greece-152
A.& I. Higher Military Command, Attica and Islands-90
Total Guerrilla Strength in Greece-644
11449 Map Division, CIA, 2-50
CIA Reproduction
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GPO?State Serv.-50-4774
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