THE OUTLOOK FOR GREECE

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A005700030001-7
• Release Decision: RIFPUB
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• Document Creation Date: December 27, 2016
• Document Release Date: September 19, 2013
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• Publication Date: January 18, 1955
• Content Type: NIE

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18 January 1955
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 32-55
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THE OUTLOOK FOR GREECE
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following organizations participated in the preparation
of this estimate: The Central Intelligence Agency and the
Intelligence organizations of the Departments of State, the
Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 18 January 1955. Concurring were the Special Assistant,
Intelligence, Department of State; the Assistant Chief of
Staff, G-2, Department of the Army; the Director of Naval
Intelligence; the Director of Intelligence, USAF; and the
Deputy Director for Intelligence, The Joint Staff. The
Atomic Energy Commission Representative to the IAC and the
Assistant to the Director, Federal Bureau of Investigation,
abstained, the subject being outside of their jurisdiction.
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LIBRARY BRAN&I I
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. UN
NOVII a
THE OUTLOOK FOR GREECE
THE PROBLEM
To estimate the current situation and probable developments in Greece over the
next three or four years.
CONCLUSIONS
1. Greece has seldom enjoyed real politi-
cal and economic stability and remains
handicapped by its poverty of natural re-
sources and by the volatility of a political
system in which foreign influences still
play an important part. Since World
War II, however, Greece has with US and
UK assistance crushed the Communist
effort to seize power through force, re-
paired the tremendous damage brought
about by the war, and made a start to-
ward building up the economy. More-
over, since the installation of Premier
Papagos in 1952, the Greek Government
has had a degree of popular support
and political effectiveness unusual since
World War I. (paras. 9-11)
2. So long as Papagos retains active
leadership, we believe that the present
Greek Rally government will remain in
power at least up to the 1956 elections.
Although some deterioration of the
Ralbr's cohesiveness and prestige has re-
cently taken place, probably presaging an
increase in political intrigue, and some
decline in the government's strength and
effectiveness, it is unlikely that sufficient
Rally deputies will defect to overturn
Papagos' now comfortable majority. On
the basis of present indications, if Papa-
gos is still active and on the political
scene, the Rally will probably win the
1956 elections, though as compared with
its showing in 1952 it will inevitably suf-
fer some loss of electoral strength. (paras.
21, 23)
3. If Papagos, who is now 72, should
die or become incapacitated, the Rally
would soon fall apart, and the centrist
Liberal Party would replace it as the
strongest political grouping. Since even
the Liberals would lack a parliamentary
majority in their own right and would
probably be unable to gain one in new
elections, the eventual outcome would
probably be a series of unstable coalition
governments, marked by political frag-
mentation and an increase both in Palace
influence and in Communist opportuni-
ties for political maneuver. Under such
circumstances, there might be an attempt
at dictatorship by the secret military
society, IDEA, although this would de-
pend to a large degree on IDEA's estimate
of the US reaction. (para. 22) ?
4. The Greek economy will probably re-
main fairly stable over the next three or
four years despite a decline in US aid;
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some modest improvements in production
and in Greece's foreign exchange position
may take place. In the longer term it is
improbable that a politically acceptable
standard of living can be maintained
without some form of economic assist-
ance unless there is a reduction in
Greece's contribution to its defense budg-
et. (paras. 29, 30)
5. Regardless of internal political devel-
opments, Greece's strongly pro-Western
orientation is unlikely to change over the
next few years. The US in particular is
likely to retain its present predominant
influence in Greece, although Greek re-
sponsiveness to US advice may decline
somewhat as a result of the progressive
reduction of US aid and the US position
on enosis (union of Cyprus with Greece) .
(paras. 43-45)
6. The British are seeking to restore their
influence in Greek internal affairs. While
they share the basic US interest in main-
tainin'g a stable, non-Communist Greece,
they also desire to protect their special
interests and influences. They desire a
Greek Government more amenable to
their influence than the present one and
have been particularly irritated by Papa-
gos' advocacy of enosis. (para. 17)
7. Although the enosis issue is likely to
be a continuing irritant in Greek rela-
tions with the UK, Turkey, and the US,
it is unlikely that Greece's alliances with
these powers will be strained by this or
any other issue. Greek relations with its
non-Satellite neighbors will probably con-
tinue to improve slowly, though underly-
ing suspicions and conflicts of interest
will remain. (paras. 46, 47)
8. The development of Greek military
capabilities is progressing satisfactorily
with continuing US training and material
assistance, and the Balkan Alliance mili-
tary planning has made satisfactory
progress. However, growing Greek reluc-
tance to maintain present levels of mili-
tary expenditures is likely to make the
maintenance of a military establishment
meeting NATO and US requirements de-
pend increasingly on assistance for meet-
ing military expenses. (paras. 34, 35)
DISCUSSION
10. For nearly a century before World War I
Greece was under the international guardian-
ship of the UK, France, and Russia ? a guard-
ianship in which the UK played the principal
role. Between World Wars I and II the Brit-
ish position was predominant. Greek politics
have reflected these foreign influences, and
Greek parties have often been more or less
openly identified with particular foreign pa-
trons to whom they have looked for the ad-
vancement of national and partisan objectives.
Within this framework, political life has
been dominated by the small upper and
middle classes, and has been substantially
influenced by the palace and by a small group
of wealthy businessmen who dominate most
I. INTRODUCTION
9. Greece has seldom enjoyed real political
and economic stability. Because of its stra-
tegic location in the Balkan-Eastern Mediter-
ranean area, it has been repeatedly subjected
to conflicting great power ambitions and in-
fluences. Moreover, Greece's spirited advance-
ment of its national claims has been a con-
tinuing source of friction with its neighbors.
The basic source of Greek weakness and in-
stability lies in the inadequacy of its arable
land and other natural resources. Despite a
high rate of emigration, overpopulation has
been a constant problem, and the Greek
standard of living remains lower than that
of any other NATO country, including Turkey.
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of the press and are the principal sources of
campaign funds for the major parties. How-
ever, labor and agrarian elements have in-
creased in influence following World War II.
Since the inauguration of the US aid program
in 1947, the majority of Greeks have looked
to the US for support and guidance, although
British political influence is still important.
11. The most immediate threats to Greece's
independence in the post-World War II period
have now been averted, mainly due to US and
UK assistance and support. The Communist
effort to gain power by force was crushed in
1949. The Greek armed forces have been built
up and integrated into the NATO defense
system. The tremendous physical damage
brought about by the war and the subsequent
Communist guerrilla campaign has been re-
paired and a start made toward building up
the Greek economy. The divisive issue of
monarchy versus republic, which contributed
so much to a national cleavage during World
War I and to political instability during the
interwar period, has faded into the back-
ground. Since the victory of Field Marshal
Papagos' Greek Rally in the 1952 Parliamen-
tary elections, the Greek Government has en-
joyed a degree of popular support and shown
a political effectiveness unusual since World
War I. However, various recent developments
have raised a question as to how long this
situation will last.
II. POLITICAL
Present Situation
12. The first five years that followed Greece's
liberation in 1944 were marked by a violent
struggle against the Greek Communist Party
(KKE) which sought to dominate the country
by force with the encouragement and support
of the USSR and the Satellites. In addition
these years were marked by a high degree of
political fluidity, the chief result of which
was the virtual disintegration of the Populist
Party, which had been the principal vehicle
of conservative pro-monarchist sentiment in
prewar Greece, and the decline of the centrist
Liberal Party, its traditional rival. A partial-
ly successful attempt to provide a new focus
of popular support came with the creation
under General Plastiras of the left-centrist
Progressive Union of the Center (EPEK).
This effort was eclipsed, however, with the
entry into active politics of Field Marshal
Alexander Papagos, Greece's leading military
figure. Papagos' conservative Greek Rally
failed to win a decisive victory in its first elec-
toral test in 1951 under the proportional rep-
resentation system then in effect. However,
under the majority system adopted with
strong US advocacy for the 1952 elections,
the Rally not only obtained 49 percent of the
popular vote but also emerged with some 239
out of 300 seats in the National Assembly. A
coalition Liberal-EPEK ticket obtained about
37 percent of the vote but elected only 61
deputies. The Communist-backed United
Democratic Left (EDA) polled about 12 per-
cent of the vote but failed to win any seats.'
13. By and large, the Rally has made a good
record during its two years in office. Papa-
gos has been generally successful in holding
his heterogeneous following together and in
maintaining his personal position of author-
ity. The government has pushed through a
number of economic improvement measures,
including devaluation of the drachma, has re-
duced the foreign exchange deficit sufficiently
to permit some relaxation of import controls,
and has embarked on an extensive economic
development program. It can take much of
the credit for the development of the Balkan
Alliance.
14. Within the last year, however, the Rally's
cohesiveness has deteriorated to some extent.
In April 1954, Spyros Markezinis, who had
been chiefly responsible for organizing the
Rally, resigned from the cabinet as the result
of growing personal friction with Papagos,
and in November he formally withdrew all
support from the government, leading 23
other Rally deputies into opposition. There
have since been continuing indications of fur-
ther friction and dissatisfaction within the
Rally, although Papagos still retains an over-
See annex for additional information on Greek
political parties.
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whelming parliamentary majority and there
is no indication that his control over the mass
of Rally deputies has been seriously weakened.
15. There are also signs that the government's
popular and political prestige has slipped.
While Papagos remains the most widely re-
spected political figure in Greece, some of the
glamor he possessed for the voter in 1952 has
rubbed off. Up to July 1954, when a new elec-
toral law, which virtually abolished by-elec-
tions, was passed, the Rally had won all the
by-elections by a comfortable margin. How-
ever, popular support of the government, par-
ticularly among centrist and left-of-center ele-
ments, has been weakened by continuing
dissatisfaction over the cost of living and by
the government's efforts to establish control
over union activities. Although the govern-
ment's failure to achieve US support in the
UN for Cypriot self-determination has pro-
vided some grounds for criticism, the UN's
implied recognition that Cyprus is not a pure-
ly British domestic affair has redounded to
the advantage of the Rally.
16. Meanwhile the parliamentary opposition
has been having troubles of its own. EPEK
disintegrated after the death of General Plas-
tiras in 1953. The Liberal contingent in par-
liament, though subsequently joined by about
a quarter of the 31 EPEK deputies, has been
torn with doubts as to whether George Papan-
dreou, the party's present titular head, can re-
tain the support of pro-EPEK and other left-
of-center voters. However, Sophocles Venize-
los, former head of the Liberal Party, is now
attempting to form a broad coalition to be
called the United Center. Moreover, increas-
ing cohesion among the left-of-center opposi-
tion was revealed in the November 1954
municipal elections, when five out of six of
the principal urban constituencies were cap-
tured by left-of-center coalition tickets sup-
ported by the Communists. In almost all of
these cases this Communist support was essen-
tial. However, it should be noted that in
accordance with Greek tradition the Rally
and the Liberals refrained from designating
candidates.2
2 reeof these six elections are being contested
In the courts.
4
17. The British are seeking to restore their
influence in Greek internal affairs. They de-
sire a Greek government more amenable to
their influence than the present one and have
been particularly irritated by Papagos' ad-
vocacy of enosis (union of Cyprus with
Greece) . While the UK shares the basic US
interest in maintaining a stable, non-Com-
munist Greece, the British also desire to pro-
tect their special interests and influence.
Most of the UK's military and administrative
advisors to the Greek Government have now
departed, but a British admiral sits alongside
the US MAAG chief on Greece's Supreme
National Defense Council, and the British are
represented on the Currency Control Board.
Moreover, a high proportion of Greek political,
military, and administrative leaders have long
records of association with the British.
Despite a sharp decline in Britain's substan-
tial prewar trade with Greece, the British
continue to play an important role in Greek
financial affairs through their $280 million
investment in banks, utilities, and other enter-
prises, and through the fact that British in-
vestors hold about three-quarters of Greece's
prewar external debt. (In comparison French
investments in Greece total $66 million and
those of Germany $55 million.)
,18. The Greek Communist Party (KKE) is a
small underground organization. Outlawed
in 1947, KKE has been severely hampered by
government antisubversive measures. Pres-
ent party membership within Greece is prob-
ably no more than 35,000. KKE headquar-
ters and several thousand members are in
sanctuary behind the Iron Curtain. The KKE
has gained de facto recognition in Greek poli-
tics through the Communist-controlled EDA,
which has consistently polled 10-12 percent
of the national vote through most of the post-
war period. K.KE's principal objective is to
gain control of the left-of-center voters, who
represent 20-25 percent of the electorate.
19. In a future election the Communist front
will almost certainly increase its vote some-
what by winning a portion of the vote that
had previously been given to EPEK. On the
labor front, the KKE's principal labor arm is
the Communist directed United Syndicalist
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Movement of Greece (ESKE) , which controls
about 15-20 percent of Greek labor. A sig-
nificant recent development is the Commu-
nists' effort to extend their popular front
activities beyond the EDA. On 25 November
the KKE announced that it would for the
time being put aside the objective of estab-
lishing a "Peoples Democracy" and instead
work for the development of a broad united
front. Another potential source of Commu-
nist strength is the increasing number of
Greek refugees and young adults abducted as
children now being returned from the Soviet
Bloc countries. The security burden alone is
such that the US is assisting Greece with the
screening and processing at entry points.
20. Other noteworthy factors in the situation
are the Palace and the Army. The Palace has
been on poor terms with Papagos and prob-
ably hopes for a more fluid situation in which
its own influence would count for more. The
Army has long been a center of pro-Papagos
sentiment and its leadership is dominated by
men personally loyal to the Marshal. Mem-
bers of a secret political organization within
the army known as the Sacred Bond of Greek
Officers (IDEA) were active in attempting to
promote an army mutiny in 1951 with the
stated purpose of reinstating Papagos as
Commander-in-Chief of the armed forces.
Recent information indicates that IDEA has
become sufficiently influential to control
many of the key positions in the armed forces,
including the Army Chief of Staff and the
Chief of the Central Intelligence Service,
which is the keystone of Greece's security
system.
Probable Developments
21. We believe that the Rally will remain in
power at least until the 1956 elections pro-
vided that Papagos retains active leadership.
Papagos remains a commanding figure with
a comfortable parliamentary majority. Polit-
ical maneuvering will increase as the election
approaches, probably leading to some decline
in the government's strength and effective-
ness. However, it is unlikely that Rally dep-
uties will defect in significant numbers unless
they become convinced that the opposition
had gained sufficient strength, cohesion, and
outside support to be able to take over, and
that the US would at least acquiesce in such
a change. These developments they would
now judge to be unlikely. It is also unlikely
that any foreseeable issue would arouse suf-
ficient popular opposition to force the govern-
ment to resign.
22. If Papagos, who is now 72, should die or
become incapacitated, a period of government
instability would ensue, marked by intense
jockeying and deal-making among all political
elements. The Greek Rally would almost cer-
tainly fall apart, in a relatively short time.
We believe that many of its more conservative
-elements would eventually tend to coalesce
into a new group similar to the old Populist
Party, but for the moment the Liberals would
almost certainly emerge as the strongest
political grouping. Since even the Liberals
would not have a parliamentary majority in
their own right and would probably be unable
to gain one in the event of new elections, the
eventual outcome would probably be a suc-
cession of unstable coalition governments,
with a marked increase in Palace influence
and in political fragmentation. This tend-
ency would be confirmed if, as is likely, the
rival party leaders yielded to parliamentary
pressure for a return to proportional repre-
sentation in the new elections. In this situ-
ation, Communist opportunities for political
maneuver would be increased. Should there
be a series of short-lived and ineffectual gov-
ernments, a military dictatorship might be
attempted by IDEA, although this would de-
pend to a large degree on IDEA's estimate
of the US reaction.
23. On the basis of present indications, if
Papagos is still active and on the political
scene the Rally will probably win the 1956
elections, though as compared with its show-
ing in 1952 it will inevitably suffer some loss
of electoral strength, particularly among labor
and traditionally pro-Liberal elements. The
opposition will almost certainly be unable to
defeat the Rally unless the non-Communist
opposition leaders succeed in accommodating
their conflicting partisan ambitions and re-
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ceive substantial British, Palace, or business
support. Moreover, unless there is a sharp
decline in Papagos' popular appeal, even a
"united center" would probably not be able
to defeat the Rally if EDA ran on its own
ticket, thus dividing the opposition vote. Al-
though EDA's Communist backers have advo-
cated a broad united front, it appears unlikely
that they would actively cooperate with the
center parties except on terms which the lat-
ter would be unwilling to accept in view of
the probable adverse reaction of centrist
voters and of the US. Another possibility,
which appears unlikely at this time, is that
EDA might not run as a party, but would
release its supporters to vote for the center.
Under these conditions, the Rally's control of
Parliament would be seriously threatened.
24. Even if Papagos and the Rally were voted
out of office, the Greek Government would
probably remain for the foreseeable future in
the hands of relatively conservative elements
desirous of preserving Greece's US connection.
Any non-Rally government is likely to be
headed by the Liberals, who are essentially
middle-of-the-roaders conscious of Greece's
need for US support. The continuing pov-
erty of the Greek people might eventually
stimulate the development of a strongly leftist
movement, but such a development does not
appear to be in prospect at present.
III. ECONOMIC
Present Situation
25. Greece is the poorest country in free Eu-
rope, with a GNP of only about $1.8 billion
($210 per capita GNP as against $268 for
Spain and $397 for Italy). Although 60
percent of the population of approximately
eight million lives on the land, only about a
fourth of Greece's territory can be used for
farming or grazing and much of this soil is
of poor quality. As a result of this condition,
coupled with the prevalence of archaic meth-
ods and an uneconomical small-holding sys-
tem, agriculture accounts for only 35 percent
of national income. In spite of a remarkable
increase in agricultural production, Greece
must still import between 15 and 20 percent
of its foodstuffs. Nearly all of Greece's fuel
oil and coal requirements must also be im-
ported. The Greek standard of living is fur-
ther held down by population growth, which,
though not high in rate, creates a problem
because of Greece's meager resources. This
has contributed to a persistence of widespread
unemployment and underemployment.
26. With the virtual completion of the pro-
gram of economic rehabilitation undertaken
by the US in 1947 and to date involving
approximately $1.2 billion, the economy has
shown a considerable increase in productivity
and within the past two years has achieved
a reasonable degree of stability. In October
1954 the index of industrial production stood
at 160 percent of 1950 and 185 percent of 1939.
The balance of payments deficit has dropped
from about $200 million in FY 1952 to about
$40 million in FY 1954, even: though a relax-
ation of import controls has swelled the de-
ficit by about $22 million in the last nine
months. In FY 1954 the reserves in gold and
foreign exchange increased by $32 million.
Any deficit in the FY 1955 balance of pay-
ments seems likely to be covered by US aid
(including offshore procurement, direct forces
support, and defense support) , which is ex-
pected:to total about $50 million for the cur-
rent fiscal year as against $307 million at the
height of the US assistance effort. The cost
of living appears to have levelled off at about
150 percent of the 1951 level. Rises in retail
prices, amounting to about four percent dur-
ing 1954, are largely attributable to wage in-
creases made early in the year. The present
stability of the drachma is evidenced by the
fact that there has been no significant dollar
black market since 1950.
27. Early in 1954 the government embarked
on an ambitious $236 minion economic devel-
opment program emphasizing the develop-
ment of hydroelectric power and agricultural
and mineral resources. (Greece has undevel-
oped iron, bauxite, magnesium, chrome,
nickel, lignite, and lead deposits.) The gov-
ernment appears likely to succeed in floating
the domestic loan totalling the equivalent
of approximately $100 million and including
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a dollar clause ? called for under the financ-
ing plan but is having considerable difficulty
In raising projected foreign exchange require-
ments. Although the World Bank has ap-
proved in principle a loan for Greece, it has
postponed action until Greece reaches a satis-
factory understanding with the bondholders
on its external debt, which amounts to about
$200 million. West Germany has recently
appeared as a promising source of foreign
capital and has conditionally made available
$24 million in credits.
28. Greece is currently devoting about seven
percent of its GNP to military expenditures.
Although somewhat less than the NATO aver-
age, this is a higher percentage than those of
Denmark, Portugal, Italy, and Norway. It
represents a heavy economic burden for a
poor country.
Probable Developments
29. The Greek economy will probably remain
fairly stable over the next three or four years,
despite the decline in US aid. Although the
government will probably not be able to raise
all of the funds called for under its economic
development program, it will almost certainly
achieve some increase in production, and the
foreign exchange situation is likely to im-
prove. However, pressures for expansion of
credit and for higher wages and salaries will
pose a continuing threat of inflation.
30. If Greece can maintain or improve its
present rate of capital formation, it can look
forward to moderate increases in total pro-
duction and per capita income. But since
per capita GNP is roughly $210 per year, an
increase of two to three percent, or even an
improbable five percent per year, would pro-
vide no assurance of social stability. More-
over, since 65 percent of Greek export earn-
ings are normally provided by tobacco, fruit,
and olive oil, it can be expected that problems
will arise with the fluctuations which are
fairly common in the markets for these prod-
ucts. In the longer term it is improbable
that a politically acceptable standard of liv-
ing can be maintained without some form of
economic assistance unless there is a reduc-
7
tion in Greece's contribution to its defense
budget.
IV. MILITARY
31. Greece's position in the eastern Mediter-
ranean and the Balkan area gives it a strate-
gic importance out of proportion to its own
military strength. Greece provides valuable
air base facilities for NATO forces, as well as
an important defensive position covering the
NATO Mediterranean flank. Greece's armed
forces are sizable for a small country and
make a significant contribution to the NATO
alliance. The Greek armed forces are gener-
ally loyal and reliable. While some Commu-
nist infiltration almost certainly exists in all
the services, it appears to be a significant
problem only in the air force. Greece's grow-
ing military cooperation with Yugoslavia con-
stitutes a strong potential tie between the
latter's military power and that of the NATO
nations.
32. The Greek Army, numbering 105,000 men,
and organized into four combat-ready divi-
sions, plus additional division cadres and sup-
porting troops, is primarily a defensive force.
By M+30 it can be expanded to 270,000
organized into 12 combat divisions of varying
effectiveness. Greek soldiers are well-disci-
plined, patriotic, and physically hardened.
The chief weakness of the army is that its
reserve training system, a key element in
Greece's defense plans, has only recently been
adopted and is not yet fully developed. Its
other weaknesses include: shortages of AA
and AT weapons, and of armor; poor equip-
ment maintenance; poor training of staff offi-
cers; and a deficiency of career noncommis-
sioned officers. The peacetime army is
capable of maintaining internal security, but
its capabilities against any other external
enemy except Albania are limited to delaying
action and local counterattacks. With the
army expanded to its wartime strength of 12
divisions, Greece could defend the central and
southern parts of the country against an at-
tack by Bulgaria alone. If the Greek armed
forces operated in close coordination with
Yugoslavia, as contemplated in present plan-
ning, these capabilities would be increased.
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Without outside reinforcements and support,
however, Greece would not be capable of sus-
tained resistance against a full-scale attack
Involving Soviet forces.
33. The Royal Hellenic Navy, of about 12,000
men has one cruiser, three destroyers, four
submarines, and 14 escort vessels. It has lim-
ited capabilities for escort operations, and
amphibious, antisubmarine, and mine war-
fare operations in conjunction with other
NATO naval forces.
34. The Royal Hellenic Air Force (RHAF) is
a small compact tactical air force of high
combat readiness. It consists of six fighter
bomber squadrons (approximately 140 F-84
G's) , one reconnaissance squadron, two trans-
port squadrons, and 300-400 miscellaneous
types. The RHAF's most serious operational
deficiency is in air defense. In an effort to
offset this deficiency three intercept day
fighter squadrons (25 F-86's each) are being
organized and probably will become opera-
tional by the end of 1955; concomitantly,
a radar early warning net is scheduled for
completion later in 1956. Both of these im-
provements, however, will fulfill only mini-
mum requirements. During the next 3 to 4
years, the RHAF will assume an even more
integrated role in the NATO defense struc-
ture. Current weaknesses in training as well
as maintenance and supply procedures will
probably be improved; other deficiencies such
as serious shortages of spare parts and the low
level of jet fuel supplies will probably be cor-
rected as storage facilities become available.
The combat capability and operational effi-
ciency of the RHAF during this period will de-
pend largely upon the following factors: (a)
the extent of US assistance; (b) the effective-
ness of the government and top air force
officials in countering Communist infiltration;
and (c) the ability of top level air personnel
to resolve factional differences.
35. The development of Greek combat capa-
bilities appears to be progressing satisfactorily
with continuing US training and materiel
assistance. Considering the inherent difficul-
ties, Balkan Alliance military planning has
developed surprisingly well. There has al-
ready been a considerable exchange of infor-
mation among the staffs, and arrangements
have been made for the entry of Greek troops
into southern Yugoslavia under certain war-
time contingencies.
36. At the same time, however, increasingly
widespread popular and official doubts have
arisen over Greece's ability to sustain the
present level of military expenditures, which
now amount to about 40 percent of its budget
exclusive of US aid. During 1954 the Greek
Army was reduced from 135,000 to 105,000 in
response to internal pressures for an easing
of the defense burden; a further reduction
to 70,000 was averted only by a US commit-
ment to furnish $10 million in direct forces
support, i.e., specifically for meeting military
operating expenses. (Part of the saving re-
sulting from this reduction was offset by an
increase in the RHAF.) The Greek Govern-
ment and people are likely to become increas-
ingly reluctant to maintain even their present
reduced level of military expenditures, partic-
ularly if there is no new intensification of ten-
sions between the Soviet bloc and the West.
Thus the maintenance of a military establish-
ment meeting NATO and US requirements is
likely to depend increasingly on the availabili-
ty of assistance for meeting military expenses.
In any event, the Greek forces will remain de-
pendent on outside help for most of their
equipment and for training assistance.
V. FOREIGN AFFAIRS
Present Situation
37. The Greek foreign policy outlook is char-
acterized by a strong sense of national, reli-
gious, and cultural identity and by keen
awareness of Greece's weak and exposed posi-
tion in world affairs. Up through World War
I, Greek statesmen were preoccupied with a
largely successful effort to build up and con-
solidate the Greek state. More recently, suc-
cessive Italian, German, and Communist
threats to Greek independence have led
Greece to emphasize the quest for security.
However, the earlier irredentist policy still
persists in Greece's latent claims to Northern
Epirus (Southern Albania), in underlying
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differences between Greece and Yugoslavia
over Macedonia, and in the active popular and
political support for enosis.
38. In their efforts to preserve Greek inde-
pendence, Greek leaders have realistically rec-
ognized the need for strong allies. Despite
the easing of the Communist threat, they con-
tinue to regard maintenance of US support
as the cornerstone of their foreign policy.
Greece attaches great importance to collective
safeguards to its security and has been an
enthusiastic participant in the UN and in
NATO affairs since its admission in 1951. It
has also taken a leading role in creation of
the Balkan Alliance, which provides for polit-
ical and military cooperation between Greece,
Turkey, and Yugoslavia over a twenty-year
period. Greece now possesses a realistic basis
for putting up a coordinated defense with its
neighbors.
39. The development of closer relations among
the three Balkan powers has tended to push
into the background the political and territo-
rial differences which have disturbed their re-
lations in the past. Largely as a result of
Greek initiative, relations with Italy have
developed amicably. Trade with West Ger-
many, one of Greece's major prewar trading
partners, jumped from about $52 million in
1950 to $78 million in 1952; despite a slight
decline in 1953, it will probably reach even
higher levels as a result of the West German
credits which were conditionally made avail-
able to the Greek Government in 1954 for its
development program.
40. Relations with the Soviet bloc have gradu-
ally improved. As a result of Soviet initiative,
full diplomatic relations with the USSR were
restored within the last year and a half, and
Rumania, Hungary, Bulgaria, and Albania
have sought to follow suit. Limited nonstra-
tegic trade with the Soviet bloc has been re-
sumed, and there have been some moves from
the Communist side for adjustment of Greek-
Bulgarian border and reparations differences.
41. The only active source of major inter-
national friction for Greece at present is the
enosis issue. There has been persistent agi-
tation for union with Greece among the 80
percent Greek majority in Cyprus, led by the
Orthodox Church. Although the Commu-
nists would be outlawed if Cyprus were united
with Greece, they have exploited pro-enosis
sentiment, counting on the determination of
the British to remain on the island. Thus far
enosis has been stoutly resisted by the British,
who regard the island as an important stra-
tegic asset, particularly with the removal of
their Middle East headquarters to the island.
Enosis has also been opposed by Turkey,
which wants to preserve British interest and
strength in the area and is reluctant to have
the Turkish minority on Cyprus come under
Greek rule.
42. Although the enosis movement originated
on Cyprus, Greek sentiment over enosis has
become strong enough to persuade the Greek
Rally Government to take the initiative in
advancing the issue to the international level.
Following British refusal to discuss the issue
bilaterally, Greece submitted a resolution re-
commending self-determination for Cyprus
to the UN General Assembly in August 1954.
Although Greece was successful in having the
issue inscribed on the UN agenda, considera-
tion of the Cyprus issue was finally postponed
under a compromise resolution of 17 Novem-
ber supported by both Greece and the UK, as
well as by Turkey and the US. The airing of
the enosis issue stimulated some popular feel-
ing, not only against the UK and Turkey, but
also against the US, whose unwillingness to
support the original Greek resolution resulted
in several riots with a distinctly anti-US flavor.
However, no significant weakening of Greece's
ties with these three countries has resulted.
Probable Developments
43. Regardless of internal political develop-
ments, Greece's foreign policy orientation is
unlikely to change over the next few years.
Although some elements may be inclined to
criticize the government for failure to pursue
certain national aspirations with sufficient
vigor, the country's present foreign policies,
including their emphasis on close ties with the
US and the NATO bloc, have the support of all
groups except the Communists and the small
socialistically-inclined Democratic Party of
the Working People (DKEL) .
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44. Greece will almost certainly remain firmly
aligned with the West vis-a-vis the Soviet bloc.
Although the USSR's drive for "normaliza-
tion" of relations between the bloc and the
West will probably result in further improve-
ments in Greek relations with the Communist
powers, a genuine rapprochement will con-
tinue to be precluded by Greece's continuing
suspicion and hostility toward Sofia and Mos-
cow. Greek trade with bloc countries, which
never amounted to more than about 14 per-
cent of the trade of Greece, will be limited by
the absence of a substantial bloc demand for
Greece's 'principal export items. The chief
dangers of the Soviet bloc's pursuit of a soft
policy, therefore, are that it will increase
Greek desire to reduce the burden of defense
expenditures and increase the Bloc's oppor-
tunities for propaganda, subversion, and es-
pionage.
45. The Greeks regard the US as the most
powerful and disinterested member of the
Western Alliance. Accordingly, the US is
likely to retain its present position of pre-
dominant influence in Greece, even though
Greek responsiveness to US advice may de-
cline somewhat as a result of the progressive
reduction of US aid and the US position on
enosis. There may be recurring difficulties
with the US over the extraterritoriality pro-
visions of the military facilities agreement.
However, major Greek-US friction is unlikely
to develop on this or any other issue. British
influence will remain substantial, and German
political influence may eventually emerge
with the growth of Greek-German economic
relations.
46. Greece's relations with Turkey, Yugoslavia,
and Italy will probably further improve to
some extent. Additional progress is likely to
be made in development of a system for coor-
dinated defense of the Balkan area. The de-
velopment of more cordial relations between
Greece and its neighbors, however, will con-
tinue to be hampered by the persistence of
long-standing animosities, suspicions, and
conflicts of interest. Although Greece appears
prepared to leave its Northern Epirus claims
in abeyance so long as Yugoslavia and Italy
take a similarly restrained attitude toward
Albania, each of the three powers will con-
tinue to eye the others' aspirations in this
area with some suspicion. And while Greek
leaders appear convinced that Yugoslavia is
a reliable ally, they are almost certainly con-
cerned about the ultimate effects of the
USSR's current attempts to woo Tito and
about the latter's ultimate intentions regard-
ing the Slavo-Macedonian minority of north-
ern Greece. Greek-Turkish relations will
probably continue to be marked by recognition
of the advantages of cooperation.
47. The Cyprus issue will probably continue
to be a recurrent irritant in Greece's relations
with the UK, Turkey, and possibly the US,
since it appears very difficult to reconcile the
conflicting Greek and British positions. How-
ever, the Greek Government will almost cer-
tainly wish to avoid any serious rift with its
allies, and it is unlikely that popular senti-
ment within Greece will become sufficiently
aroused to produce such a rift.
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ANNEX
GREEK POLITICAL PARTIES
Greek Rally. A conservative group formed in
1951 by Papagos and Markezinis, largely from
elements of the Populist Party. It won a
plurality of the vote in 1951. It has governed
Greece since the 1952 elections, when it re-
ceived 49 percent of the popular vote and
secured 239 out of 300 seats in parliament.
A group including Markezinis and 23 others
defected in late 1954, but have not yet formed
a party of their own.
Liberal Party. The leading opposition party,
appealing to centrist and slightly left-of-
center elements. Formerly one of the two
leading parties with the Populists, it partici-
pated in several coalitions in the years 1944-
1952. It now holds only 36 out of 300 seats
in parliament. Its titular head is George
Papandreou. Sophocles Venizelos, who re-
tired as co-leader about a year ago, is again
active and is trying to form a coalition of
center parties.
National Progressive Union of the Center
(EPEK). A left-of-center party formed by
the late General Plastiras in 1950. In 1951
and 1952 it formed coalition governments
with the Liberals. In the 1952 elections the
coalition's popular vote declined from 43 per-
cent to 37 percent. Since Plastiras' death in
1953, EPEK has lost to the Liberals, EDA, and
DKEL. It has little future as a party.
United Democratic Left (EDA). A commu-
nist-controlled organization, it polled 10-12
percent of the vote in 1951 and in 1952, but
occupies no seats in parliament. In the 1954
municipal elections it supported the "Anti-
Rally" ticket, which won in 5 out of 6 major
cities. Its titular leader is Ioannis Passalides.
Democratic Party of the Working People
(DKEL). A leftist party formed out of EPEK
and Socialist elements in mid-1953. It is rep-
resented in parliament by five former EPEK
deputies. It supported the "Anti-Rally"
ticket in the 1954 municipal elections. Its
leaders are George Kartalis and Alexander
Svolos.
Populist Party. Formerly the leading con-
servative-monarchist party, it is now in politi-
cal eclipse. It commands little popular sup-
port and has no seats in parliament. Its
leader, Constantine Tsaldaris, is largely dis-
credited; Papayiotis Pipinellis, a Palace favor-
ite, is contending for leadership.
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POPULAR AND PARLIAMENTARY STRENGTH OF PARTIES, 1951-1955
PARTY
1951 National Election 1952 National Election Parliamentary
% Popular Parliamentary % Popular Parliamentary Seats Held on
Vote Seats Won Vote Seats Won 18 January
1955
Greek Rally 36.5 114 49.3 239 214
Liberals 19.1 57 30 36
1 36.9
EPEK 23.5 74 31 14
DKEL did not exist did not exist 51
EDA 10.6 10 11.3 0 0
Agrarians 1.2 '1 0.7 0 62
Populists 6.7 2 did not run
Markenzinis Group did not exist did not exist 248
Others 2.4 .0 1.8 0 18
100% 258 100% 300 300
1 Defected from EPEK.
'Defected from Rally & EPEK.
8 Defected from Rally.
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20 22 24 26 28
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CO ENTIAC
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