THE OUTLOOK FOR GREECE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A007500020001-8
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• Document Page Count: 24
• Document Creation Date: December 27, 2016
• Document Release Date: August 9, 2013
• Sequence Number: 1
• Publication Date: June 26, 1956
• Content Type: NIE

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Jul. 1958 NIE 3 2 ? 5 6
CONFID IAL 26 June 1956
-ET- 4N3
VAT"`" ?
NATIONAL INTELLIGENCE ESTIMATE
NUMBER. 32-56
(Supersedes NIE 32-55)
THE OUTLOOK FOR GREECE
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence 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 26 June 1956. Concurring were the Special Assistant, In-
telligence, Department of State; the Assistant Chief of Staff,
Intelligence, 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 Assist-
ant Director, Federal Bureau of Investigation, abstained, the
subject being outside of their jurisdiction.
DOCUMENT NO. 1
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AUTH: HR 7)2
DATE: JotJJi REVIEWER:
COIJFT NTIAL
257
COPY NO.
ANT DIRECTOR,OE
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CENTRAL INTELLIGENCE AGENCY
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June 1953.
WARNING
This material contains information affecting
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within the meaning of the espionage laws,
Title 18, USC, Secs. 793 -and '794, the trans-
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THE OUTLOOK FOR GREECE
THE PROBLEM
To estimate the present situation and probable developments in Greece over
the next three or four years, with particular reference to Greece's probable role as a
member of the Western alliance.
CONCLUSIONS
1. The next three or four years will prob-
ably see an increase in internal contro-
versy and political maneuvering, in which
leftist and neutralist elements will almost
certainly gain strength. A return to a
pattern of unstable multiparty coalition
governments would provide the strength-
ened left with further opportunities for
developing influence and popular sup-
port, particularly if new strains developed
with the Western powers or economic
conditions deteriorated. Nevertheless, it
is unlikely that a Communist or Com-
munist-oriented government will come to
power in Greece during this period.
(Paras. 24, 27-29)
2. Despite serious setbacks on the Cyprus
issue, we believe the chances are better
than even that the present Karamanlis
government will be able to ride out op-
position criticism between now and the
next meeting of the UN General Assembly
in November. Karamanlis' chances for
survival over a longer period will depend
on his ability to show progress toward
an understanding on Cyprus. (Para. 25)
3. Given a continuation of US aid at ap-
proximately present levels and sustained
S F
demand for Greece's major export prod-
ucts, the Greek economy will probably
remain relatively stable over the next
few years. Its average annual rate of
growth even with the continuation of
present US aid will probably not exceed
three percent, an increase insufficient to
accomplish much toward raising the ex-
tremely low standard of living or reliev-
ing endemic unemployment and under-
employment. There appears to be little
likelihood that any Greek government
will be able to carry out a program of
economic development large enough to
cause significant improvements in em-
ployment or in Greek living conditions
during the period of this estimate.
(Paras. 38-40)
4. Given a continuation of the Bloc's
present tactics of conciliation, some ex-
pansion of Greece's economic dealings
and other relations with the Bloc will
take placer though not to the extent of
making Greece economically dependent
on the Bloc or of compromising Greece's
NATO status. (Paras. 42, 64)
5. Military facilities on Greek territory
will probably remain available to the US
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and NATO. Present US military influ-
ence may decline as a result of the Cyprus
and Turkish issues, although such loss
would be counterbalanced to a large ex-
tent by Greece's military interest in
NATO and by its dependence on the US
for military assistance. If fears of Com-
munist aggression continue to recede,
military expenditures are likely to be re-
duced somewhat within the next few
years. (Paras. 40, 48-49)
6. Greece will probably retain its basic
pro-US and pro-Western orientation, at
least for the period of this estimate.
Nevertheless, the absence of a Cyprus
settlement will impose serious strains on
the relations between Greece and its
ET 2
allies, particularly the UK and Turkey.
Moreover, even if an understanding on
the Cyprus issue is achieved, Greece will
probably pursue a more independent
policy toward the US and UK. (Paras.
57-58, 63)
7. We believe that there is about an even
chance that some formula for the solu-
tion of the Cyprus problem will be
agreed upon within the next year or two.
Achievement of a Cyprus settlement,
however, will at best be a difficult and
delicate process which could easily be set
back by insufficient flexibility on the part
of the principals concerned or new flare-
ups of popular feeling. (Paras. 60-61)
DISCUSSION
I. INTRODUCTION
8. Modern Greece's history as a nation has
been a, chronically troubled one. A country
with limited amounts of arable land and
other natural resources, Greece has from its
inception had serious problems of overpopula-
tion despite a high rate of emigration. Its
standard of living is lower than that of any
other country of non-Communist Europe.
Greece's spirited and generally successful ad-
vancement of its territorial claims has been
a recurrent source of friction with its Balkan
neighbors and other states having interests
in the area. Because of its strategic location
in the Balkan-Eastern Mediterranean area, it
has been repeatedly subjected to conflicting
great power influences and pressures.
9. These factors have contributed to the vol-
atility of a political system in which personal-
ities have played a dominant role. While the
influence of labor and agrarian organizations
has increased considerably since World War
II, political life continues to be generally
dominated by the middle classes, and to be
substantially influenced by the Palace, the
military, and a small group of wealthy busi-
nessmen who largely control the press and are
the principal sources of party campaign
funds. Greek politics have reflected Greece's
vulnerability to foreign pressures and its
need for foreign protection, and Greek parties
have often been more or less openly identified
with particular foreign patrons.
10. The structure of Greek political and eco-
nomic life was severely shaken by World War
II and the five years of guerrilla warfare
which followed. Over and above the tremen-
dous physical damage and widespread dis-
ruption of economic activity which took place,
the years of occupation and Communist re-
bellion witnessed a disintegration of many old
political patterns. By the time the guerrilla
revolt was crushed in 1949, the Populist Party,
which had been the principal vehicle of con-
servative, promonarchist sentiment in prewar
Greece, was close to extinction, and the Liberal
Party, its traditional rival, was in a state of
decline. While these developments marked
the waning of feeling over the issue of mon-
archy-versus-republic, which had been largely
responsible for Greece's internal divisions and
political instability from the early years of
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S VA'rET
World War I down to the beginning of World
War II, they also resulted in a high degree of
political fluidity and governmental weakness.
11. By 1952, the situation had stabilized to
some extent. Most of the economic damage
of the war and the rebellion had been repaired
and a start made toward building up the
Greek economy. The Greek armed forces
were strengthened and integrated into the
NATO defense system. With the entry into
active politics of the almost universally re-
spected Field Marshal Alexandros Papagos,
whose Greek Rally encompassing a wide range
of rightist and center elements won a decisive
parliamentary majority in 1952, Greece ob-
tained for the first time in many years a
government with the energy and political
strength to give Greece an effective admini-
stration. Even before Papagos' long final
illness, however, the essentially highly con-
servative nature of his regime had become
evident, causing it to lose popular support,
particularly among working class elements.
With the progressive decline of the Marshal's
physical condition during 1955, political
maneuvering over the succession, both among
Papagos' lieutenants in the Rally and among
opposition groups, became intense. Mean-
while, the worsening of the Cyprus situation
was having an increasingly unsettling effect
on the Greek political scene.
II. POLITICAL 1
Present Situation
12. The death of Papagos in October 1955
brought the struggle for political control out
in the open. In an effort to preserve an
effective and reasonably cohesive government
with conservative leanings, King Paul ignored
the wishes of the opposition for a pre-election
"service" government and the claims of some
of Papagos' more senior associates to the
premiership. Instead, he called on the young
and energetic Konstantinos Karamanlis, Pa-
pagos' strongly pro-US Minister of Communi-
cations, to form a new government.
1See Chart for the alignment of Greek political
parties and Annex A for a description of Greek
parties and groupings.
3
13. Karamanlis promptly set about preparing
for elections, which he called for February
1956. He succeeded in obtaining the support
of most of the Rally deputies and of a few
disgruntled Liberals for a total of more than
180 members of the outgoing parliament.
Most of these deputies joined him in establish-
ing a new party, the National Radical Union
(ERE). On the assumption that he could
not repeat Papagos' 1952 electoral victory,
Karamanlis also pushed through parliament
a complicated and partisan new electoral law.
The law set up voting districts and procedures
in such a way as to maximize the effects of the
expected pro-Karamanlis vote in certain areas
and to minimize the effects of opposition votes
in others. It also provided that only those
two parties receiving the most votes could
share in the distribution of seats.
14. These moves created new pressures for
unity among center opposition elements,
whose previous efforts to get together had
been frustrated by continuing personal rival-
ries and by differences of opinion over the
advisability of cooperating with the fellow-
travelling left. The provisions of the law vir-
tually forced the opposition elements into an
electoral coalition. What finally emerged
was an unwieldy political grouping calling
itself the Democratic Union. This grouping
embraced four center parties, three leftist
parties?including the Communist-controlled
United Democratic Left (EDA) ? and the
remnants of the highly conservative Populist
Party. The center elements, united in a sub-
coalition of their own ? the Democratic Cen-
ter ? included the two rival branches of the
old Liberal Party under Sophocles Venizelos
and Georgios Papandreou respectively, the
slightly more left-of-center EPEK, and the
small, conservative Agrarian Party. Two dis-
affected ex-Rally leaders, Spyros Markezenis
and Stephanos Stephanopoulos, entered in-
dependent rightist tickets of their own.
15. The ensuing campaign was a confused
one, in which the opposition, united by little
more than a common desire to defeat Kara-
manlis, attacked the Greek Rally and its
domestic policies, as well as its inability to
gain international support for Greece's posi-
S EyriT
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tion on the Cyprus issue. Karamanlis' prin-
cipal campaign issue, in turn, was the threat
of a Communist-dominated popular front.
16. As a result of the balloting on 19 February
1956, Karamanlis' ERE, with the blessing of
the Palace and the support of substantial ele-
ments of the press, obtained 165 of the 300
parliamentary seats. However, this margin
reflected ERE's special advantage under the
new electoral law and included a critical 8-10
seats made possible by the suspiciously high
80 percent majority rolled up for the Kara-
manlis ticket in the armed forces voting.
ERE polled 47.5 percent of the popular vote,
one percent less than the 48.5 percent regis-
tered by the Democratic Union opposition
coalition.
17. Of the 135 seats won by the Democratic
Union, the four center opposition parties ob-
tained 91. The leftist parties, which had
failed to win any seats in the 1952 elections,
won 40 seats; of these 18 went to the Com-
munist-controlled United Democratic Left
(EDA) , which made a strong showing in the
cities, particularly in Athens, Piraeus, and
Salonika.
18. Thus Greece is currently ruled by a con-
servative party which enjoys the backing of
the Palace and the army, but is dependent for
continued parliamentary control on the abili-
ty of a new and inexperienced leader to hold
the party together. Karamanlis stands to
benefit by the inherent disunity of the opposi-
tion. Following the elections the center op-
position, as permitted by the pre-electoral
agreement of the Democratic Union, broke off
its alliance with the left and reaffirmed its
support of pro-Western policies. While basic
personal cleavages within the center opposi-
tion still exist there are also signs of stress
within the governing party.
19. The elections demonstrated that conserva-
tive sentiment in Greece continues to be
strong. Right wing elements now constitute
a clear theoretical majority of about 54 per-
cent. This includes not only the Karamanlis
supporters, but also about six percent of the
traditionally rightist voters who opposed him.
On the other hand, the center parties lost
votes to the left group in the Democratic
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4
Union. The Communist-controlled EDA not
only held on to the traditional 10-15 percent
of hard core leftist voters but also appears to
have made substantial inroads among the
followers of EPEK and the Liberals.
20. The Greek Communist Party (KKE) is
still outlawed and subject to strong police
antisubversive measures. Within Greece ac-
tive membership probably amounts to about
20,000, mainly in urban areas. The party's top
leadership and several thousand ex-guerrillas,
probably including many of its most deter-
mined members, are still in exile at various
places behind the Iron Curtain. Although
outlawed, the KKE has re-emerged in Greek
political life through its fronts, the United
Democratic Left (EDA) and United Syndical-
ist Movement (ESKE) , its labor arm. The
KKE has laid great stress on promoting a
broad leftist coalition in which a relegalized
Communist Party could assume open leader-
ship. The recent demotion from the KKE's
top post of Nikos Zachariades, a hard-bitten
exponent of Stalinist militancy and ruthless-
ness who had ruled the party since the early
1930's, almost certainly presages further
efforts to re-establish the KKE's respectability
and pave the way for its relegalization.
21. IDEA. An off-stage influence of great im-
portance in Greek political life is the Sacred
Bond of Greek Officers (IDEA) , a secret or-
ganization within the armed forces. Its mem-
bership now controls many of the top posts
in the Greek military hierarchy and the Cen-
tral Intelligence Service (KYP). Founded
during World War II with the professed aim
of protecting Greece against Communism,
IDEA has concentrated on making the armed
forces a bulwark of conservative strength.
It gave strong support to the late Field Mar-
shal Papagos in his political activities and was
solidly behind Karamanlis in the recent elec-
tion. IDEA will probably intensify its efforts
to increase its political influence and its re-
action against any government inimical to its
interests would probably be strong. A move
for a military coup, however, would depend
on IDEA's estimate of the Palace attitude,
public opinion, and the US reaction under the
circumstances then prevailing.
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22. The Palace is an important conservative
influence in Greek political life. In theory
the king is a limited, constitutional monarch
on the British pattern who appoints the prime
minister and exercises only nominal execu-
tive power through the cabinet, which is re-
sponsible to parliament for the government's
actions. In reality, although the degree of
power which the Palace can exercise varies
with the type of government in power, under
normal political conditions the king and
queen -frequently exercise considerable be-
hind-the-scenes influence on policy matters.
While the monarchy as an institution has not
been in question since the plebiscite of 1946,
King Paul's partisan political activities have
been a source of political dissension.
23. The Orthodox Church of Greece,2 whose
adherents constitute about 97 percent of the
Greek people, plays an important role in
Greek society. The Church, which is strong-
ly anti-Communist, is generally regarded as a
guardian of Greece's national integrity and
as a spokesman for the country's national in-
terest. In this sense, the Church's present
efforts on behalf of self-determination for
Cyprus leading to its union with Greece is in
the tradition of leadership expected by the
public. Short of an attempted Communist
takeover, the church will probably not adopt
an open political stand in opposition to any
party and will probably respect any govern-
ment's authority in dealing with national
issues, domestic or foreign.
Probable Developments
24. The political situation over the next three
or four years will probably be marked by con-
siderably greater controversy and partisan
maneuvering than was the case under Papa-
gos. Despite his electoral victory, Karamanlis
is still politically vulnerable. His government
faces a number of serious problems which can
be exploited by the numerically strong opposi-
tion in parliament. Setbacks on the Cyprus
issue3 have probably already reduced his pop-
See Annex B, Paragraph 4, regarding the Ortho-
dox Church of Cyprus.
See Annex B, "Development of the Cyprus Prob-
lem."
5
ular support. Greece's low standard of living
and unemployment are continuing sources of
popular discontent. Karamanlis' strong pro-
West position will make him a particular tar-
get of the leftists who favor a shift toward a
neutralist foreign policy. Karamanlis lacks
the commanding prestige of his predecessor
and is therefore in a less strong position to
defend himself against charges of having
failed to safeguard Greek interests on the
Cyprus issue with sufficient vigor. The oppo-
sition has already sought to exploit this situa-
tion by demanding that Karamanlis form a
broad coalition government of national unity
to undertake thern responsibility of resolving
the Cyprus issue. Opposition elements are
also likely to intensify their demands for new
elections on the basis of proportional repre-
sentation.
25. Despite serious setbacks on the Cyprus
issue -which have increased popular frus-
tration and dissatisfaction, we believe the
chances are better than even that Karamanlis
will be able to ride out increasing pressures
from the opposition between now and the next
meeting of the UN General Assembly in
November. However, in order to retain power
over a longer period, Karamanlis will have to
show progress toward an understanding on
Cyprus.
26. Except with respect to the Cyprus ques-
tion, Karamanlis is likely to discover that the
elements on which he depends for support
may at the same time constitute obstacles to
the carrying out of the long-range policies
needed to achieve economic, political, and
social stability in Greece. The prime mini-
ster's obligations to the Palace, the armed
forces, and certain conservative press and
financial interests may hamper his ability to
undertake economic development on a scale
sufficient to result in a significant increase in
the standard of living. With his ability to
maneuver restricted by the same elements
which support him, Karamanlis will probably
be forced to base his appeal for popular sup-
port on reiteration of the Communist threat,
the amount of US military, economic, and
technical aid that his government is able to
obtain, and especially on the all-important
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argument that his government is able to gain
US support for Greece's objectives in Cyprus.
In following such a course his task will be in-
creasingly difficult. The unifying effect of
the Communist threat is no longer as great
as in the past, US aid has been diminishing,
and the psychological dividends from Kara-
manlis' strong stand on Cyprus during the
electoral campaign are beginning to disap-
pear. Finally, despite the country's recovery
and postwar gains, many Greeks, especially
on the lower income level, are increasingly
discontented because their actual standard of
living has remained extremely low.
27. In view of these circumstances, the
strength of leftist and neutralist elements in
Greece will almost certainly increase over the
next three or four years. The acceptability of
the "popular front" concept and even of the
extreme left was greatly enhanced in the re-
cent elections; it is evident that fear of Com-
munism among left-of-center elements is de-
clining. The Communist-controlled and fel-
low-travelling deputies will probably follow a
moderate line in parliament, which offers
them increased opportunities to exert their
influence on Greek public opinion. In this
they will probably be considerably assisted by
Soviet economic and diplomatic gestures to-
ward Greece.
28. The Karamanlis cabinet, if it fell, would
probably be succeeded by a coalition of ERE
and center opposition elements. Despite the
increased willingness of the latter groups to
cooperate with the extreme left for tactical
political purposes, most of its members will
probably retain their basic racial and ideologi-
cal prejudices against the Slavic Communist
world and its partisans in Greece and a strong
sense of Greece's need for Western friends.
Nevertheless, a return to a pattern of unstable
multiparty coalition governments would pro-
vide the strengthened left with further op-
portunities for developing influence and pop-
ular support, particularly if new strains de-
veloped with the Western powers or economic
conditions deteriorated.
29. We nevertheless consider it unlikely that
a Communist or Communist-oriented govern-
ment will come to power in Greece during the
period of this estimate. If it became appar-
ent, however, that an extreme leftist bid for
power had good prospects for success, this
would produce a strong reaction from military
and conservative elements, which would prob-
ably set up an authoritarian government.
III. ECONOMIC
Present Situation
30. Greece is the poorest country in free Eu-
rope, with an estimated GNP in 1955 of only
about $1.97 billion ($235 per capita as against
$254 for Spain and $442 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 farm-
ing methods and an uneconomic system of
small holdings, agriculture accounts for only
35 percent of national income. In spite of a
remarkable postwar increase in agricultural
production, Greece must still import between
15 and 20 percent of its foodstuffs. Nearly
all of its oil and coal requirements must also
be imported. In addition, the country must
purchase abroad a majority of its manufac-
tured consumer goods and industrial require-
ments. Greece's dependence on such a high
volume of imports has made it particularly
dependent on favorable export markets to
maintain balance in its economy. Though
the rate of population growth is not high,
emigration ? which was extensive before
World War II? has been greatly reduced
since that time and unemployment and un-
deremployment are widespread.
31. The economic dislocations attributable to
World War II and the subsequent guerrilla
war have been largely overcome. Agricul-
tural production in 1954-1955 has been esti-
mated at 126 percent of the prewar level,
and industrial production had by the end of
1955 reached 155 percent of the prewar level.
Power production also expanded, primarily as
a result of US aid and at the end of 1955 the
new power plants and the completion of a
transmission system that extends throughout
the country brought power production to 460
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percent of the very low and inadequate prewar
level. Export markets have been largely re-
gained in considerable measure after the
1953 currency devaluation removed monetary
handicaps and made Greek products again
competitive in world markets. Confidence in
the currency, which had been badly shaken
by a series of inflationary upsurges since 1941
has been to some extent restored, as evidenced
by increased private bank deposits and by
some repatriation of Greek capital. More-
over, the balance of payments, a key factor
in stability, was brought into approximate
balance by the end of 1955. Including utili-
zation of US aid of about $70 million, foreign
exchange reserves actually increased by $62
million during 1955 and totalled $213 million
by the end of the calendar year. Increased
exports, larger revenues from tourism, a rise
in invisible assets, and some return of shipping
to the Greek flag have all contributed to the
improvement in the Greek balance of pay-
ments.
?32. These economic improvements were made
possible only through the massive financial
and technical aid extended by the US between
1948 and 1952 and in much reduced, but still
considerable amounts since then.4 However,
another factor of great importance has been
the increased demand for Greek agricultural
products, particularly tobacco, created in the
past several years by the growth and liberali-
zation of trade in the Western European econ-
omy and capitalized on by the drastic devalua-
tion of the drachma.5
33. The government has sought to restrain an
upward movement of prices through a series
of fiscal and financial measures. In 1955 the
government slowed down its rate of invest-
ment expenditure and increased the income
7
tax, as well as a wide range of indirect taxes.
Subsequently the government cut duties on
imports of primary necessities to reduce the
pressure on prices. The new Karamanlis gov-
ernment recently announced that while it
plans to impose no new taxes this year, it will
enforce existing levies more rigorously. It
may also seek to call in certain long-standing
government loans to private industries.
34. While the ambitious economic develop-
ment program announced by the government
in 1954 has not made the desired headway,
progress is being made in the development of
hydroelectric power. In addition, there has
been some development of mineral resources,
particularly lignite and bauxite, and further
progress may be expected in the near future.
(Greece also has undeveloped iron, magne-
sium, chrome, nickel, lead, and possibly other
mineral deposits.) As Minister of Communi-
cations in the Papagos cabinet, Karamanlis
pushed ahead vigorously on the construction
of roads and other public works. His new
government has indicated it will continue to
press forward with various programs of eco-
nomic development.
35. Despite Greece's recent economic gains,
there are still a number of weaknesses in the
economic situation which are likely to con-
front the government with major problems
over the course of the next three or four years.
With a yearly addition of 50,000-60,000 to the
labor force the existence of extensive unem-
ployment, particularly in the cities, presents a
formidable problem. Moreover, the standard
of living of the average Greek remains the
lowest in non-Communist Europe and con-
stitutes a continuing problem to every Greek
5The drachma was devalued in April 1953 by 50
percent.
NON-MILITARY US AID TO GREECE
(Thousands of US dollars)
3 April 1948
through
(US Fiscal Years)
30 June 1951
1952
1953
1954
1955
1956*
Obligations
527,476
179,276
81,144
21,865
34,110
33,300
Expenditures
389,827
198,523
109,007
60,983
46,055
60,500
*estimates
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SE
government. The gains in national income
during the past five years have been largely
absorbed by reconstruction needs, investment
requirements, and the expanded cost of sup-
porting the armed forces, or have accrued as
windfalls to favorably placed groups as a re-
sult of inflation.
36. With the sharp cutback in US aid in 1952
and 1953, the rate of investment in the fields
of agriculture and industry declined. Indus-
trial production has already shown signs of
slackening. In 1955 (excluding power) it
exhibited no over-all increases and in the case
of the important textile industry declined by
10 percent. However, the effects of the de-
clining rate of investment in the major sectors
on the rate of economic growth have not yet
been fully felt.
37. A further weakness in the current situa-
tion is the slow rise in wholesale and retail
prices. There has been an increase of about
six percent in 1955 in the cost of living index.
Although this movement of prices reflects the
accumulation of exchange reserves ? a tem-
porary factor ? it also reflects governmental
resort to deficit financing. Consequently,
maintenance of relative internal price stabili-
ty remains a significant problem, but it is one
which a Greek government determined to
maintain stability should be able to control.
The continued upward movement of prices is
an index of the limited area of maneuverabili-
ty open to the government in any attempt to
significantly increase its investment outlay
while maintaining existing defense expendi-
tures.
Probable Developments
38. Given a continuation of US aid at approx-
imately present levels and sustained demand
for Greece's major export products, the Greek
economy will probably remain relatively sta-
ble, with economic growth running at the rate
of about three percent a year. Such modest
advances, however, would do little to improve
the extremely low living standards of the bulk
of the population or to deal with the endemic
problems of unemployment and underemploy-
ment. Moreover, popular and political pres-
sure for improvement of these conditions is
ET 8
likely to increase. Should Greece suffer a
sharp decline in world demand for its export
products, economic stability would be seri-
ously threatened.
39. The rate of economic growth may be in-
creased if the government is successful in en-
couraging the flow of private savings into
productive investment, in persuading foreign
investors to capitalize on existing opportuni-
ties for developing Greek natural resources
(especially minerals), and in carrying out its
announced plans for tightening up on tax
assessment and collection. However, great
progress along these lines is unlikely.
40. The current reluctance of Greek investors
to invest in long term productive projects prob-
ably cannot be readily overcome by the means
politically open to the present government.
Foreign private investment seems unlikely to
be a major factor in the Greek economy over
the next few years. It seems unlikely that
the government will increase taxation or be
able to float public loans to support an ex-
panded investment program. Military ex-
penditures, now totalling about $130 million,
amount to about three times present govern-
mental investment outlays. Even with a more
effective collection of taxes, only a substantial
reduction of military expenditures would en-
able the government to increase its invest-
ment program significantly. Although some
cuts may be made, any substantial reduction
would run counter to the present govern-
ment's indebtedness to the military, its judg-
ment of the country's defense needs, and its
desire to meet NATO preparedness standards.
In summary, there appears to be little likeli-
hood that any Greek government will be able
to carry out a program of economic develop-
ment large enough to cause significant im-
provements in employment or in Greek living
conditions during the period covered by this
estimate.
41. Economic Relations with the Bloc. Al-
though Greece now has regular trade rela-
tions with the USSR and all of the Satellites
except Albania, trade with the Bloc has thus
far been relatively small. In 1954 and 1955,
dealings with the Bloc accounted for only
about four percent and three percent, respec-
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SE
tively, of total Greek foreign trade.6 The Bloc
countries have repeatedly failed to fulfill their
delivery quotas under their trade agreements
with Greece and have also irritated Greece to
some extent by their refusal to meet their
commitment to settle in dollars at the end of-
each trade year. However, indications are
that during the latter half of 1955 the Bloc
began to fulfill delivery quotas under these
agreements.
42. While the Greeks will go slow in making
new commitments, they will probably be re-
ceptive to Soviet Bloc offers of increased trade
and credits similar to those being made in
other areas of the world. The Greeks recog-
nize that the Soviet-Satellite area, which in
1938 accounted for about 16 percent of Greek
foreign trade, is a potentially important mar-
ket for Greek agricultural products and min-
erals and that expansion of trade ties with
the Bloc would provide some protection
against downward fluctuations in Western de-
mand for Greek products. However, Greece is
unlikely to permit its trade with the Bloc to
expand to such an extent as to make Greece
economically dependent on the Bloc. In order
to obtain additional funds for economic devel-
opment, Greece may accept at least small
amounts of Bloc long-term credits. In the
event of the elimination of US aid or a gen-
eral letdown in existing economic barriers be-
tween the Bloc and the West, Greece might
be more willing to accept sizable Bloc credits.
IV. MILITARY SITUATION
43. Greece's armed forces are sizable for a
small country and make a significant contri-
bution to the NATO alliance. The Greek
ET 9
armed forces are generally loyal and reliable,
although some limited Communist infiltration
almost certainly exists in all the services. De-
spite the eclipse of the Balkan alliance and
the currently strained Greek-Turkish rela-
tions, Greek-Yugoslav military cooperation
has continued in a reasonably close manner.
44. The Greek Army, numbering 105,000 men
organized into three combat-ready divisions,
plus additional cadres and supporting troops,
is primarily a defensive force. In theory it
can be expanded by M ? 30 to 278,000 men,
organized into 12 combat divisions of varying
degrees of effectiveness. Greek soldiers are
well disciplined, patriotic, and physically
hardened. However, the army has two criti-
cal weaknesses. First, the three frontline
(M-Day) divisions guarding the northern de-
fense line are undermanned, being main-
tained at no greater than 60 percent of war-
time strength as compared to the minimum
NATO requirement of 75 percent. As a con-
sequence, these divisions are not capable of
fulfilling their primary mission of absorbing
the initial shock of any Soviet or Bloc attack
and allowing the remainder of the army to
mobilize. The second major deficiency is the
lack of a program for systematic refresher
training for reservists. Consequently, the po-
tential combat effectiveness of its wartime
army, almost two-thirds of which would be
reservists, is gradually deteriorating. Other
weaknesses in the army include shortages of
certain weapons; poor maintenance of com-
munications, electronic, and other equipment;
poor training of staff officers; and a deficiency
of noncommissioned officers. The army is
capable of maintaining internal security, but
GREECE'S TRADE WITH THE SOVIET BLOC
(Dollar equivalents at Greek ports)
Jan.-Nov. 1954
Soviet
Total Bloc
% of
Total
Trade
Jan.-Nov. 1955
Total
Soviet
Bloc
% of
Total
Trade
Exports
$126,114,000
$8,519,000
6.7
$152,639,000
$7,027,000
4.5
Imports
300,823,000
8,295,000
2.7
344,622,000
8,519,000
2.4
Total Trade
$426,937,000
$16,814,000
3.9
$497,261,000
$15,546,000
3.1
SRT
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ET 10
its capabilities against any external enemy
except Albania are limited to delaying action
and local counterattacks. Without outside
reinforcements and support Greece would not
be capable of sustained resistance against a
full-scale attack involving Soviet forces.
45. The Royal Hellenic Navy, with a personnel
strength of 12,000 men, consists of 1 cruiser,
3 destroyers, 4 submarines, 20 patrol vessels,
as well as mine and amphibious vessels. It
has limited capabilities for escort and patrol,
amphibious, antisubmarine and mine warfare
duties in conjunction with other NATO naval
forces. The navy's general effectiveness is lim-
ited by obsolescence, lack of modern equip-
ment, and a serious manpower shortage. In
its present state of readiness, the Greek navy
cannot fulfill its NATO commitments.
46. The Royal Hellenic Air Force (RHAF),
with a personnel strength of about 15,000 (in-
cluding 600 pilots) is a compact air force of
high combat readiness. Its basic strength
consists of 6 fighter bomber squadrons (ap-
proximately 150 F-84 G's) , 3 interceptor
day fighter (IDF) squadrons of 25 F-86's
each, 1 reconnaissance squadron, 2 trans-
port squadrons, and several hundred miscel-
laneous aircraft. The RHAF's principal
weaknesses are: (a) the absence of an all-
weather fighter capability; (b) the lack of an
efficient air control and warning network to
direct air defense operations; and (c) the in-
adequacy of control facilities necessary for
close support operations. Existing plans for
overcoming the all-weather deficiency have
not been implemented. However, it is prob-
able that inadequacies in air defense and close
support will be largely overcome by 1959-1960.
47. Construction and improvement of Greek
airfields is progressing at a substantial pace
with primary emphasis directed toward those
facilities which will enhance over-all NATO
air capabilities. Currently, there are eight
important airfields basically suitable for use
by jet fighter and light bomber aircraft, half
of which were built or improved to meet NATO
infrastructure standards. Five additional
NATO airfields (including three new sites) will
be improved over the next 18 months so that
by early 1958 the entire_ NATO airfield com-
plex in Greece will be capable of supporting
sustained air operations. A significant ele-
ment in this capability will be an extensive
system of POL pipelines, storage depots,
pumping stations, and related facilities. Com-
pletion of the airfield program, by 1958, will
improve substantially the over-all air capabili-
ties of the RHAF and at the same time provide
excellent base facilities in an emergency for
other NATO air units.
48. The development and maintenance of
Greek combat capabilities has made reason-
ably satisfactory progress under continuing
US training and material assistance pro-
grams.7 While the Balkan alliance has failed
to achieve its full purpose, there are indica-
tions that Greek-Yugoslav military coordina-
tion will continue. However, the attainment
of full understanding and coordination in all
details of mutual defense arrangements be-
tween the two countries does not seem likely.
Military facilities on Greek territory will prob-
ably remain available to the US and NATO,
although problems will continue to arise with .
respect to the UK and Turkey because of
Greece's strained relations with those coun-
tries. Present US military influence may de-
MILITARY ASSISTANCE TO GREECE
(In Thousands of Dollars)
Fiscal
Years
Fiscal
Year
Proposed
Fiscal
Year
Type of Assistance 1950-1955
1956
1957
Equipment and Supplies
$550,488
$112,735
Repair and Rehabilitation
of Excess Equipment
6,522
- - - -
Training
4,875
1,270
Total
$561,885
$5,5211
$114,005
Proposed
Fiscal Fiscal Fiscal
Year Year Year
1955 1956 1957
Defense Support $33,685 $26,200 $25,000
1 The figure for Fiscal 1956 includes the sum of
$4,028,000, which was allocated by the Depart-
ment of Defense (ISA) on 6 April 1956. A break-
down showing the division of these funds be-
tween equipment, training, and repairs is not yet
available.
Local currency obtained from sale of imported
agricultural commodities and used for military
activities. Figures for 1955 and 1956 are reflected
in the table of nonmilitary aid on page 7.
S71%4 T
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cline as a result of the Cyprus and Turkish
Issues, although such loss would be counter-
balanced to a large extent by Greece's mili-
tary interest in NATO and by its dependence
on the US for military assistance.
49. Maintenance of the military establish-
ment places a heavy burden on the Greek
economy, military expenditures accounting
for about 35 percent of the ordinary govern-
ment budget and about six percent of na-
tional income. Popular and political pressure
for retrenchment has already appeared. Al-
though the present Greek government and
its military supporters will probably be able
to resist such pressure for a time, if fears of
Communist aggression continue to recede mil-
itary expenditures are likely to be reduced
somewhat within the next few years. In any
event, continuation of present equipment and
training programs will remain almost entirely
dependent on foreign aid.
V. FOREIGN AFFAIRS
Present Situation
50. The Greek foreign policy outlook has his-
torically been characterized by a strong sense
of national, religious, and cultural identity
and by keen awareness of Greece's weak and
exposed position in world affairs. Until 1922
Greek statesmen were largely preoccupied
with building up and consolidating the Greek
state. More recently, successive Italian, Ger-
man, and Communist threats to Greek inde-
pendence have led Greece to emphasize the
quest for security.
51. Maintenance of close ties with the US and
strong support of the Western alliance have
been the central elements in Greece's post-
war foreign policy. Greece has been an active
participant in the UN and in NATO, which
it joined in 1951. It took a leading role in
formation of the Balkan alliance with Turkey
and Yugoslavia. It has also sought to patch
up its relations with its World War II enemies.
Largely as a result of Greek initiative, ami-
cable relations with Italy have been developed.
Trade with West Germany, one of Greece's
major prewar trading partners, has increased
considerably, thanks in part to credits ex-
11
tended by Germany for the Greek economic
development program.
52. Within the last year, however, Greece's
relations with its principal Western allies have
been subject to strains, largely because of
growing popular emotionalism over the Cy-
prus issue.8 Although sentiment for union of
Cyprus with Greece is probably far stronger
among the Greek-speaking majority in Cyprus
than among the Greeks themselves and al-
most certainly far stronger with various ele-
ments of Greek public opinion than with
Greek political leaders, the Greek government
has been under increasing pressure to give
vigorous support to Cypriot claims against
their present British rulers. It has experi-
enced increasing frustration and political em-
barrassment over British refusal to meet Cyp-
riot terms and over the increased firmness of
British moves to put down agitation on Cy-
prus. The British, in turn, have become in-
censed over Greek support for the enosis
(union with Greece) movement and Greek
failure to condemn enosis terrorism.
53. Another major by-product of the Cyprus
issue has been the revival of historic suspi-
cions and animosities between Greece and
Turkey, particularly following the extensive
anti-Greek rioting which broke out in Istan-
bul and Izmir in September 1955 in the course
of demonstrations for the cession of Cyprus
not to Greece but to Turkey. Although Greek
anger has been somewhat reduced by Turkey's
ceremonial reraising of the Greek flag torn
down at Izmir and by its belated passage of a
bill to compensate the victims, there is still
considerable popular feeling on both sides.
54. Greek anger has to some extent been
vented against the US and Greece's other
NATO partners for their failure to bring effec-
tive pressure on the UK and Turkey and for
their failure to support Greece on the Cyprus
issue in the 1954 and 1955 UN General Assem-
bly sessions. Although Greek criticism has
been directed mainly at the US, there has also
been some tendency to deprecate Greece's
NATO connection.
See Annex B for a brief resume of the develop-
ment of the Cyprus issue.
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S E5.1rET 12
55. Various factors, including the Cyprus issue,
have contributed to a more independent atti-
tude on the part of Greece toward its Western
allies. With the passage of time, Greek fears
of a revival of the Communist guerrilla cam-
paign or of Bloc military aggression have be-
come less immediate, although most Greek
political leaders still recognize a need to main-
tain adequate defenses against their tradition-
al Slav enemies. Many Greeks feel less be-
holden to the US than in the days of immi-
nent peril and see less justification for sup-
porting the heavy military expenditures
needed to meet Greece's NATO commitments,
particularly in view of the progressive curtail-
ment of US economic and military assistance
to more modest levels. Finally, the energetic
efforts being made by the Soviet leaders to
portray themselves as reasonable and friendly
men who are doing their best to liquidate the
evil ways of Stalin have almost certainly en-
couraged a belief among some Greeks that
they might profitably emulate Yugoslavia,
Egypt, and India in seeking to make the best
of both worlds.
56. Since the end of the guerrilla war in 1949,
successive Greek governments have indicated
an increased willingness to re-establish nor-
mal contacts with the Bloc. Greek relations
with the Bloc, however, are still only partially
restored. Full diplomatic relations were re-
established with the USSR in 1953 and a
limited amount of trade between the two
countries has developed. However, despite
increasing Bloc efforts to cultivate Greek good
will, notably through their UN support of the
Greek case on the Cyprus issue, Greece has
resumed full diplomatic relations only with
Czechoslovakia of the Sino-Soviet Bloc mem-
bers. It has yet to reach an understanding
with Albania regarding termination of the
technical state of war which still exists be-
tween them and at the same time has thus
far been reserved in its response to Bulgarian
overtures for rapprochement because the Bul-
garians have given no assurances that they
would make good their reparations obligations
to Greece. In the absence of an understand-
ing with Bulgaria, Greece has thus far been
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cool toward efforts by Rumania and Hungary
to normalize relations.
Probable Developments
57. Greece will probably retain its basic pro-
US and pro-Western orientation, at least for
the period of this estimate. The present Kara-
manlis government is committed to achieve-
ment of Greek national objectives within the
framework of Greece's present ties with the
US and NATO. Moreover, most of the Greek
people will probably continue to recognize the
need for strong friends and protectors in the
West and will probably continue to look to
the US for political support and as the prin-
cipal source of economic and military aid.
Following the February 1956 election, the
center opposition leaders hastened to reiter-
ate their support of pro-Western policies de-
spite their irritation over apparent US prefer-
ence for a Karamanlis victory and despite
their campaign advocacy of a more independ-
ent "Greek policy" vis-a-vis Greece's allies.
Support for a loosening of Greece's ties with
the West exists only among Communist and
other extreme leftist elements which are sup-
ported by about a fifth of the electorate.
58. The Karamanlis government is under con-
tinuing heavy criticism not only from the
political opposition but also from the powerful
Cyprus Ethnarchy for having failed to push
the Cypriot case with sufficient vigor and ef-
fectiveness. In the face of such opposition, it
will almost certainly increase its already
strong pressure on the US for support in ob-
taining a satisfactory Cyprus solution and is
likely to be less responsive to US counsels of
moderation. Unless the Greek government
reaches an understanding with the UK,
Greece will almost certainly seek to raise the
question again at the UN General Assembly
meeting in the fall of 1956. As long as the
situation remains unresolved, Greece's atti-
tude will gradually harden toward the UK,
Turkey, and NATO. Its willingness to par-
ticipate actively in NATO affairs, especially
in those matters involving direct cooperation
with Turkey or the UK, will probably decline.
If there is a new anti-Greek flareup in Turkey
the Greeks might break relations with the
Turkish government and withdraw their rep-
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resentation from the NATO headquarters at
Izmir. It is unlikely that Greece would with-
draw from NATO or sever relations with the
UK, even if the situation on Cyprus deterio-
rates further. Nevertheless, Greece's relations
with its allies will be under continuing strain
so long as the Cyprus issue continues to dom-
inate Greek political attitudes and popular
aspirations.
59. With US encouragement, the British and
the Greeks have explored the possibility of a
renewal of negotiations. The Greek govern-
ment appears prepared to accept major as-
pects of the British proposals, calling for early
self-government under a Cypriot prime min-
ister responsible to an assembly with an elect-
ed majority, but with foreign affairs, defense,
and internal security still reserved to the
British governor for the present. Should the
British make it clear that the Greek ethnic
majority would be permitted to elect a pro-
portionate number in the assembly and, more
importantly, come forward with a more defi-
nite commitment regarding the right of even-
tual self-determination, the Greek govern-
ment would probably urge the Cypriot leaders
to accept. The Turks, for their part, could
probably be persuaded in time to accept such
a solution provided there were special provi-
sions for the rights of the Turkish ethnic
minority and continued control of military
bases on the island either by the UK or NATO.
60. We believe that there is about an even
chance that some formula for the solution of
the Cyprus problem will be agreed upon with-
in the next year or two. Within the UK, the
government's unbending policy on Cyprus has
come under increasingly heavy criticism from
the Labor and Liberal opposition and from
influential independent circles and appears to
be losing support not only among the general
public but also within the Conservative Party.
There are already indications that some mod-
ification of policy is in the making. The Greek
government, despite the necessity to maintain
a firm public stand, appears genuinely anx-
ious to eliminate the Cyprus issue as a subject
of popular emotionalism and is increasingly
irritated over the pressure tactics being ap-
plied against it by the Cyprus ethnarchy. On
Cyprus itself, British antiterrorist measures
may succeed in weakening the grip which the
extremists now hold over much of the popu-
lation.
61. Achievement of a Cyprus settlement, how-
ever, will at best be a difficult and delicate
process which could easily be set back by
insufficient flexibility on the part of the prin-
cipals concerned or new flareups of popular
feeling. The British government's will and
ability to shift to a significantly more concili-
atory policy will probably continue to be in-
hibited by a number of factors: its belief in
the legal and moral merits of its present posi-
tion; its fear of providing an appearance of
weakness in the face of growing opposition
attacks on the government at home and wide-
spread attacks on the British position
throughout the Middle East; and its lack of
confidence in the good faith of Greek and
Cypriot leaders. While the UK is apparently
becoming reconciled to some concessions on
the self-determination issue, it will almost cer-
tainly continue to insist that restoration of
order in Cyprus is a necessary preliminary to
agreement on a formula for a settlement.
It will probably remain reluctant to release
Archbishop Makarios prior to an agreement,
since his refusal to renounce terrorist support
has been a particular source of irritation to
the British.
62. The Greek government, for its part, will
find it politically difficult to resume formal
discussions so long as Makarios remains in
British custody. The issue of Makarios' pres-
tige as the established spokesman for the
enosis movement will probably continue to
limit Greek freedom of action regarding the
substantive issues in the Cyprus dispute.
While the Greek government will presumably
continue to exercise some influence on the
Cypriots, it will find it extremely difficult to
give open support to any proposals which are
not considered by Makarios and his colleagues
to meet their essential conditions.
63. Even if an understanding on the Cyprus
controversy can be achieved, some weakening
of Greece's ties with the West will probably
take place over the next few years, though not
to the point of seriously altering Greece's posi-
tion as a member of the Western alliance.
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Greece's historic tendency to look to the UK
for guidance and support has now virtually
disappeared as a result of the hardening of
Greek feeling over Cyprus, and even if the
chief source of irritation were removed it is un-
likely that any significant special ties with the
UK would be restored within the period of this
estimate. Greek-Turkish relations will prob-
ably continue to be marked by uneasiness and
suspicion for some time to come despite the
, probable desire of both governments to re-
establish effective cooperation. And while the
Greek government and politicians will prob-
ably continue to place great importance on
the maintenance of good relations with the
US and will probably continue to support the
US on most international issues, it is likely
that they will display a somewhat more inde-
pendent attitude toward the US than in the
past.
64. Given a continuation of the Bloc's pres-
ent tactics of conciliation, some expansion of
Greece's economic dealings and other relations
with the Bloc will take place. Greek cooper-
ation in such a rapprochement will almost cer-
tainly remain contingent on Bloc willingness
to settle various Greek claims against the
Satellites and on a Greek appreciation that
the steps under consideration would not jeop-
ardize its freedom of action or its relationship
with the West. If US aid were eliminated,
the Greeks might be more willing to accept
Bloc economic assistance.
65. As a result of its search for support on the
Cyprus question, Greece might also accept
closer political relations with Yugoslavia and
the Arab states. However, Greek leaders are
almost certainly concerned about the ultimate
effects of the Yugoslav rapprochement with
the Bloc and about Tito's ultimate intentions
regarding the Slavo-Macedonian minority of
northern Greece. At the same time, Greece is
likely to seek closer links with such countries
as West Germany and Italy, not only for
economic reasons but also for the purpose of
making itself less exclusively dependent on
the US.
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ANNEX A
GREEK POLITICAL PARTIES AND GROUPINGS
National Radical Union (ERE) : The conserva-
tive party in power, formed by Prime Minister
Konstantinos Karamanlis in January 1956
largely from elements of the Greek Rally
headed by the late Field Marshal Papagos.
In the elections of February 1956 ERE polled
47.5 percent of the popular vote and secured
165 of the 300 seats in parliament.
Democratic Center (DK) : A loose union of
the principal center political groups contain-
ing the Liberal Party, the Liberal Democratic
Union, the National Progressive Party of the
Center, and the Rally of Agrarians and Work-
ers. It was formed as an electoral coalition
in December 1955, and participated in a broad-
er electoral coalition known as the Democratic
Union, in which most of the opposition par-
ties from left to right took part in an effort
to defeat the governing party. The Demo-
cratic Center comprises four groups which
control 91 of the 135 seats won by the opposi-
tion parties in the February 1956 elections,
including the three independent deputies
from Crete. ?
Liberal Party (KF) : The oldest Greek
political party, founded in 1910 by Elef-
therios Venizelos, who consolidated and
led the country's liberal political forces.
Today, under the titular leadership of
Georgios Papandreou the Liberal Party
represents mainly the conservative ele-
ments of the center. It secured 26 par-
liamentary seats in the last elections.
Liberal Democratic Union (FDE) : A
grouping of Liberal Party elements under
the leadership of Sophocles Venizelos, who
formed this faction as a rallying point for
uniting all center elements. Venizelos
was the co-leader of the Liberal Party,
of which he still considers himself the
President. FDE won 41 seats in the last
elections.
National Progressive Party of the Cen-
ter (EPEK) : A left-of-center party,
15
formed in 1949 by the late General Plas-
tiras, and currently led by Savvas Papa-
politis. Originally supported by 25 per-
cent of the electorate, EPEK has declined
in strength and prestige since Plastiras'
death. It elected 14 deputies on the Dem-
ocratic Union ticket.
Rally of Agrarians and Workers (SAE) :
An agrarian group of the center, often
referred to as the Agrarian Party, under
the leadership of Alexandros Baltadjis.
Its influence is confined mainly to the
tobacco provinces in Northern Greece.
The party is represented by seven depu-
ties.
National Movement for Change (EKA) : A lef t-
ist political grouping, which was formed in
January 1956, including the United Demo-
cratic Left, the Democratic Party of the Work-
ing People, and the Movement of National
Democratic Initiative. It consists of two prin-
cipal political groups and some independent
leftists, but it has no structural organization
or unified leadership. However, it provides the
political framework for a possible Communist-
directed "popular front." EKA participated
in the electoral coalition of the Democratic
Union, and elected 41 of its candidates on the
ticket.
United Democratic Left (EDA): The
legal front for the outlawed Communist
Party of Greece. Under its present lead-
er, Ioannis Passalidies, EDA elected 18
deputies in the last elections ? the num-
ber of seats allocated to it by the Demo-
cratic Union coalition. The 1956 returns
indicated an increase in EDA's popular
support.
Democratic Party of the Working Peo-
ple (DKEL) : A socialist party formed in
July 1953 out of leftist elements of EPEK
and the ELD socialists led by the late
Alexandros Svolos. It cooperates with
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EDA politically under the leadership of
ex-Populist Georgios Kartalis. In the
present parliament DKEL has 20 depu-
ties ? more than its own popular vote
probably justifies.
Movement of National Democratic Ini-
tiative (DP) : A leftist group without an
organizational structure or political lead-
er, formed in November 1955 on the
basis of a manifesto which calls for radi-
cal changes in foreign and domestic poli-
cies. Five of its candidates on the Demo-
cratic Union ticket were elected, two of
whom shortly joined the Democratic
Party (DKEL) and three remain as inde-
pendent leftists in parliament.
Populist Party (LK) : The oldest conservative
party, created in opposition to the Liberal
Party. Since winning the first postwar elec-
tions in 1946 the Populist Party suffered po-
litical-eclipse. In 1956, after four years with-
out parliamentary representation, its leader,
Konstantinos Tsaldaris, and two other Popu-
list candidates were elected on the Democratic
Union ticket.
Party of the Progressives (KTP) and Populist
Social Party (LKK) : These two conservative
opposition parties led respectively by Spyros
Markezinis, architect of the now defunct
Greek Rally, and Stephanos Stephanopulos,
an old Populist and former Rally Minister of
Foreign Affairs, polled about four percent of
the total vote, but failed to elect any deputies.
Communist Party of Greece (KKE) : The Com-
munist Party was outlawed in December 1947.
It has since operated as an underground or-
ganization directed from within the Soviet
Bloc. Its long-time leader, Nikos Zachariades,
was degraded in March 1956, and replaced by
another old-time Communist, Apostolos Gro-
zos, in line with the new Soviet line of col-
lective leadership. The move was probably
designed to facilitate the relegalization of the
KKE, which had previously silenced its clan-
destine radio station "Free Greece." There
are probably about 20,000 Communists in
Greece, but their influence is much greater
than this number would suggest. The KKE
controls EDA, which polls about 15 percent
of the popular vote. It now appears capable
of forming a "popular front" of left-wing par-
ties which would attract a greater number of
voters.
Sacred Bond of Greek Officers (IDEA) : While
it is not a political party, IDEA is an ultra-
conservative secret politico-military society
which controls the most important army and
air force posts, as well as the important civil-
ian Central Intelligence Service (KYP). Its
professed objective is to prevent the Greek
government from slipping into Communist
hands, but its immediate concern is to safe-
guard IDEA's control of the armed forces.
IDEA supported Karamanlis in the last elec-
tions, and appears to have been instrumental
in giving about 80 percent of the military vote
to the National Radical Union.
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S E711T 17
ANNEX B
DEVELOPMENT OF THE CYPRUS QUESTION
1. Background. The British Crown Colony of
Cyprus, the largest island in the Eastern Medi-
terranean, is 40 miles off the coast of southern
Turkey and 60 miles from Syria. The distance
from Athens is 500 miles and the nearest
Greek island is 163 miles away. It is 240 miles
to Port Said, Egypt. The island has an area
of 3,572 miles, about 65 percent of which is
cultivable and about 20 percent forest area.
The population is estimated at 520,000. Agri-
culture is the chief source of income. Mining,
now the colony's second most important in-
dustry, is its principal source of dollars.
2. Eight centuries of Byzantine rule, from 395
to 1191, interrupted by Arab invasions, gave
the Cypriot population a predominantly
Greek Orthodox character which still per-
sists. Later the island changed hands fre-
quently until its capture from the Venetians
by the Turks, who held it from 1571 to 1878.
The Greek Cypriots joined in the Greek revolt
against Turkish rule in 1821, but Cyprus, like
Crete and most of the Aegean and Ionian
islands, was not included in the independent
Greek kingdom which was created in 1830.
The Greeks, however, regard the movement
in Cyprus for enosis, or union with Greece,
as part of the process of Greek independence,
which has been attained by degrees during
the 19th and 20th centuries. The island rep-
resents the largest remaining area against
which modern Greece has active territorial
aspirations.
3. Following 300 years of Turkish rule, which
left it with a Turkish minority now consti-
tuting about 18 percent of the population,
Cyprus was leased by Britain from the Otto-
man Empire in 1878. At the time, the British
were hailed by the Cypriot Greeks, who be-
lieved the new tenants would eventually trans-
fer the island to Greece, as they had done in
the case of the Ionian islands. The British
formally annexed Cyprus following the out-
break of World War I, an action which was
SE
confirmed by the Treaty of Lausanne in 1923.
When the British declared Cyprus a Crown
Colony in 1925, Cypriot hopes for union with
Greece (enosis) waned. Shortly afterward
the enosis movement reasserted itself and cul-
minated in the disturbances of 1931. The
British were obliged to suspend the constitu-
tion, which provided a legislative council, and
established the present system of government
in which the Governor exercises legislative
power with the advice of an appointed Execu-
tive Council. The British in 1948 offered a
limited form of self-government, which was
rejected by the Greek Cypriots, and are cur-
rently preparing a new version of the same
constitution.
4. The Greek Case. The Greek government
has supported Cypriot demands for union with
Greece on the grounds that some 81 percent
of the islanders are of Greek ethnic stock and
thus have strong cultural and racial ties with
Greece. The Cypriot Orthodox Church, which
wields great authority among the islanders,
has provided the leadership for the enosis
movement. Following World War II it ap-
peared that the Cyprus Communist Party
(AKEL) might gain control of the movement.
Cypriots who might otherwise have favored a
more gradual approach have as a result been
forced to take an extreme position in order to
prevent the Communists from assuming the
initiative in the movement. In January 1950
the Cypriot ethnarchy (i. e., the spiritual and
political leadership of the Orthodox commu-
nity) conducted a plebiscite, with a nonsecret
ballot, which was denied official sanction by
the UK, resulting in an almost unanimous
vote favoring union with Greece.
5. British Position. The British point out
that Cyprus has never been under the control
of the modern Greek state established in 1830.
They have placed great emphasis on the main-
tenance of their position in Cyprus, particu-
larly since the transfer of the British Middle
ET
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East military headquarters and key troop de-
tachments to the island following the Suez
settlement. Since World War II, the, UK has
unsuccessfully advanced various proposals to
give the inhabitants of Cyprus a greater meas-
ure of self-government. However, the British
have adamantly opposed any arrangement
which might open the way to early loss of the
island, not only because of its strategic value
but also because of fear that such a retreat
would encourage intensified pressure on other
UK positions in the Middle East. After first
refusing even to discuss the Cyprus question
with Greece, the UK in mid-1955 invited Turk-
ish and Greek representatives to meet in Lon-
don to discuss "political and defense questions
of the Eastern Mediterranean, including
Cyprus." At the three-power meeting, the
Turks insisted on maintenance of the status
quo, the Greeks stood firm for recognition
of the principle of self-determination for the
Cypriots, and the British made it clear that
their strategic interests were paramount. The
UK expressed willingness, however, to discuss
immediately a constitution leading to self-
government "under proper safeguards" and to
leave open for later consideration Cyprus'
future international status. The British en-
visaged a progressive transfer of all govern-
ment departments except foreign affairs, de-
fense, and public security to Cypriot ministers
responsible to a legislative assembly, a major-
ity of whose members (elected and appointed)
would have been Greek Cypriots. The Turk-
ish community would have received a propor-
tion of reserve seats in the Assembly and in
the cabinet. A tripartite committee to con-
sider constitutional details, including suitable
guarantees for minorities, was also proposed.
6. Turkish Views. Cyprus contains a Turkish
minority totalling 18 percent of the popula-
tion which ? like the Turkish government ?
prefers a continuation of British rule or, al-
ternatively, reversion to Turkish authority.
The Turks claim a right to participate in any
disposition of the island on the basis of their
interpretation of the Treaty of Lausanne,
their interest in the welfare of the Turkish-
speaking residents of Cyprus, and their con-
cern over its geographical location off the
Turkish coast. The Turks argue, as have the
British, that they cannot run the risk of hav-
ing Cyprus under Greek control, considering
that it might fall under Communist domina-
tion, thus "encircling" Turkey from the sea.
Turkey also maintains that the principle of
self-determination is not the sole determinate
in this instance, citing in support of their
belief the award of the Aland Islands to Fin-
land because of strategic considerations de-
spite their preponderant Swedish population.
To date, both the Turks and the UK have
rejected Greek proposals to make bases on
Cyprus available to NATO and/or the UK.
7. Recent Developments. Inflammatory state-
ments by Turkish officials before and during
the 1955 conference with Greece and the UK
not only made compromise impossible, but
also rekindled old Greek-Turkish animosities.
The bomb explosion in Salonika which slightly
damaged the birthplace of Ataturk, founder of
the present Turkish state, and the almost
simultaneous anti-Greek riots in Istanbul and
Izmir on 6 September 1955 caused a severe
strain on relations between the two countries.
Although the Cyprus issue per se was some-
what submerged in the diplomatic melee
which followed these events, they served to
harden the Greek and Turkish positions on
the issue. Following the UN General Assem-
bly's reluctance to act on a Greek appeal in
1954, the Greeks failed to get the Cyprus
issue inscribed on the agenda in 1955, thereby
adding to their sense of outrage and frustra-
tion.
8. Situation on Cyprus. Following the failure
of the London talks, terrorist activities on
Cyprus were intensified. The "National Or-
ganization of Cypriot Fighters" (EOKA) ap-
parently decided that continued violence
would force the British to make concessions
on self-determination for the island. While
security measures have been imposed, the
terrorists appear well organized and trained,
and operate with considerable popular sup-
port. The British Governor, Field Marshal
Sir John Harding, has estimated that it may
take as long as two years to stamp out the
wave of violence, which has claimed some 164
lives in the past year (including about 60
British servicemen, about 15 police, and 1
S Eyei T
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S2,fdT 19
US consular official) , despite the efforts of
some 20,000 British regular and special secu-
rity forces.
9. The next British attempt to reach an agree-
ment was made through a series of direct talks
with the spiritual and temporal leader of the
Greek Cypriots, Archbishop Makarios, begin-
ning in the fall of 1955. Although it appeared
for a time that agreement might be reached
on the basis of a British formula looking to
the possibility of eventual self-determination
for the island, these talks were suspended on
1 March 1956 when Makarios rejected the final
British offer. The Archbishop apparently
took this stand because of suspicion that the
UK intended to manipulate the subsequent
constitutional negotiations envisaged by the
formula so as to deny the Greek element an
elected proportional majority in a Cypriot
legislature." Makarios also renewed demands
for an amnesty for political offenders and a
time limit on the governor's control over pub-
lic security. While he may have done so as a
means of exerting pressure for a concession
on the proportional representation issue, it is
also possible that more extreme advocates of
enosis forced his hand. On their part, the
British charged that Makarios had refused to
agree to help end terrorism on the island
and, in fact, had aided and abetted it. They
therefore found cause to deport Makarios and
two aides to the Seychelle Islands.
SylE T
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