Created: 2/28/1950

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Greek guerrilla war, which startedirtually ended in9 with the victories ol the Greek armed forces in thc Vital and Grammas areas. Sporadic guerrilla activity will continue, but the number ofnow operating in Greece is lesshousand as compared0 inesult, the Greek Government has been able to lift martial law androgram of military retrenchment. US-UK military aid and the termination of Yugoslav support to the guerrillas were Importantin the guerrilla defeat.

The Soviet-directed Greek Communist Party still pursues its objective of communtzing Greece and has embarkedrogram ofand economic subversion In place of large-scale military activity. Greece will thus be plagued for some time to come by the new Communist tactics, but Communist strategists are not likely to resume the costly war unless conditions in Greece and the Balkans provide some assurance of victory. These conditions will probably not obtain for atear or more.

With the military emergency over, the Greeks will have greater opportunity forreadjustment and economicA return to political "normalcy,"does not necessarily include tbeof stable government. Alreadyleaders who were impelled by theemergency to display at least some measure of cooperation for the common good are reverting to their old tactics of self-seeking and of putting party above national interests. The coalition of Liberals (centrists) and(rightists) which came into powernd managed to survive thewar years broke up in It

has been replacedon-political "service" cabinet, now preparing for general elections to be held in early March.

There have been rumors that Marshal Pa-pagos. the popular Commander in Chief of the armed forces, might enter the contest for the premiership, but the King will probably keep him in reserve against the possibility of some future emergency; theovernment headed byigure might have serious repercussions. If Papai;os docs not run, the elections are not expected to produce significant changes In the political composition of Parliament. The earlygovernment, probably under Liberal or Populist domination, may enjoy an Initial period of stability, but eventually majorwill lend to make it difficult for the government to retain the necessarysupport. Under suchthe inability of the government to act effectively may necessitate now elections, while pressure may recur in some quarters for the establishment of "strong government."

Although Greece made progress in economic rehabilitation even during the guerrillaserious problems remain. Population growth and the need to reduce the heavy trade deficit will require maximum utilization of the limited Greek natural resources, aincrease over prewar foodstuff andproduction, and strenuous efforts to promote exports. Financial stability, afor an intensive reconstruction arid development program, is threatened by long pent-up inflationary pressures, Including the demand of labor for higher wages.with ECA allocations In prospect through the fiscal yearnd Ul the absence of new Communist threats from thc north,

orGa"fc*tionSthe Department of Slate, Army. Navy and the Air


may be expected to attain prewarlevelsenerally more stable economy during the next two years.

During their period of reconstruction, the Greeks will continue to depend heavily onand aid from the West, particularly the US. With Its large rnllitary and other aid missions, the US has already contributedto thc survival of Greece without

becoming excessively involved In Greekaffairs.

While the Greeks are prepared for' the gradual reduction of US aid, the problems they still have to solve are so difficult that abrupt and complete termination of outside assistance might well produce generaland chaotic conditions. Suchwould signal the full-scale renewal of the Communist bid for power.


Miliiary Situation.

The Greek guerrilla war, which over-shadowed all non-military developments ln Greece6egan to drawlose with thc rout of the main guerrilla force from the Vital and Grammes areas In Although sporadic guerrilla activity continues, the general situation Justifies both the lifting of martial law In Oreece and aof military retrenchment The three main factors In the survival of an independent Greece have been US-UK military aid. the Greek military effort, and Tito's defection from the Comlnform. The Greek Communist leadership, admitting defeat In tho9 and professing "peaceful"(or the time being, has shiftedew program which stresses exploitation of economic and political weaknesses rather than military activity in Greece, thus relieving the USSR of ils responsibility of providingsupport to the rebels. In view of the present weakness of Greek Communism, thc uncertainties in the Balkan situation, and the prospect of thc reduction of US aid to Oreece. Soviet strategists will probably not attempt to revive large-scale Greek guerrilla operations within the next year or more but will continue the struggle for Communist supremacy by other means.

Guerrilla strength and activities within Greece have recededery low level during recent monthsesult of attrition throughout lhe year and evacuation of the major' forces into Albania and Bulgaria, the number of guerrillas operating In the country has droppedigh of0 ln9 to lesshousand.'

Approximately one-half of thc guerrillas within Greecemall scattered groups touth of the Bulgarian tx.rdrt ithe CorpsewIn the area to thc west where the mam strength ol the Oreek flovernmenl forces isand "B" Corps areasl; and smallgroups are found elwwheie In the country and onof the iilanris See map.

Casualties among guerrilla leaders werehigh throughout the year, and large stocks of heavy weapons and other materiel wore lost al Vltsl and Grammas. Yugoslav aid. which had been dwindling for some time, was to all Intents and purposes shut off byhe outlawed Greek Communist Partyhich has aided the guerrilla forces with funds, supplies, intelligence, and recruits, has now had its network almostdisrupted by Greek Army and security action

Although the guerrillas may constitute adanger to Oreece because ofr more reserves outside the country, these reserves are not now prepared for sustained, large-scale operations. Except forr so remaining In Albania and Bulgaria, these reserves have been moved to the northern satellite states where the Kremlin evidently intends that most of them, along with large numbers of Greek children andsympathizers, should settle down for the tunc being to non-military pursuits. Ifwere re-integrated into the Comtnform bloc, the Oreek guerrilla manpower potential would, of course, be strengthened by some of the several thousand Oreek guerrillas and families now sheltered In Yugoslavia.

During the next six lo twelve mouths,Greek guerrillas can hardly expect moreinimum of outside material support Although their strategy probably calls fur the continuationimited program ofterrorism, raids, and recruiting by small, armed squads often led by local politicaltheir capabilities will be held In check by continued casualties. Meanwhile the Greek Communist Party Is apparently trying to move aheaday that will make the Greek nation relax Its measures againstwhile the Communists themselves emphasize "political and economic strugnlfs" and the internal rehabilitation of their party.

In contrast lo the drop In the capabilities of the Greek guerrillas, those of thc Greek


forces rose considerablyesult mainly of US military aid and concerted US-UK-Qreek efforts to remedy Oreekdeficiencies. When Alexander Papagos was appointed Commander ln Chiefo Insisted on freedom fromInterference Ln his exercise ofwhile he demanded increasedfrom Greek forces conducting search-ond-pursuit tactics throughout the country. The comprehensive operational plan which had been put into effect Ln8 with the Peloponnesus operationlimax with the northern frontier operations in Before and during Important ground operations, thore was effective local security action, end naval and air cooperation was excellent at all times. Efforts to improve the efficiency of thc armed forces furtherthe retrenchment program will tend toscheduled personnel reductions and the demobilization of many combat veterans.

Thc projected changes in thc personnel strengths of the various Greek: armed forces during the course of military retrenchment are shown in the table below.

Among the measures being taken to offset the reduction in the personnel strength of the

Greek armed forces are the replacement of, materiel worn out Ln battle and the supplying of other necessary equipment, Includinglight automatic weapons, armoredand trucks. The ECA-sponsoredof road improvement (see map) will be of some help Ln Improving the mobulty of the Greek Army. The projected new road across the Plndos Range not far from the Albanian border will for the first time give Greekoute for rapid east-west movements In that critical area.

Meanwhile, the gradual return of more nearly normal conditions will still leave Greece with certain problems concerning military preparedness and Internal security. Although the morale of the Greek armed forces is stillrop in vigilance has been part of the psychological letdown following the pastvictories and the beginning ofand reorganization. Furthermore, command of the army will fall to men of less prestige when Marshal Papagosevent foreshadowed by his attempt to resign early Lnt Ls doubtful whether Papagos' successor will be able to carry on his firm command policy or to maintain freedom from political interference. In addition, the



National Defense Corps {under army command)

Category "C" (politicallyfrom both army and NDC)


Civil Police

Ground Force Total Navy

Air Grand Total

uly 49

At first stape In retrenchment.lter conclusion of retrenchment.*Runwnsibiuty for this category is to be transferredivilian agency.

problem of training will still oUcr difficulties as tbe Greek: armed forces endeavor to adapt themselves to their peacetime role.

esult of these factors and theavowed program of primarilyactivity in Orecce during coming months, the responsibilities of the Orcek gendarmerie will be greater than heretofore. Although Its problem in maintaining internal security will be complicated somewhat by the existence of armed villagersew small extreme rightist bands, the gendarmerie Isbetter constituted than the army for the permanent assignment of controlling localand Communist terroristic andactivities. In the event that thecommandarge-scaleat some time after Greek militaryhas been completed, thcwill be the Greek Government's mostmeans of taking preventive action before the other forces are fully mobilized. 2. Politico! Situotion.

The passing of the military emergency has given Greece the opportunity to prepare for0 elections and has paved the wayradual returnore nearly normal political atmosphere. This docs notassure Greece of political stability, however, because political maneuvering,governmental changes, and extremist tendencies are all traditional, and arc likely to become increasingly common now that milt tary operations have virtually ceased.reawakened tendencies toward partisan politics hastened the break hi the coalition government and the installationempo rary non-political "service" cabinet, which Is charged with holding elections. Theare not likely toarticularly effective governmentlearmajority. It Is possible that the King may eventually intervene to replace theleadership with an authoritarian regime under the popular Marshal Papagos.

The relative political stability of the past few years has been achieved mainly because the politicians and the country atompelling appeal to patriotism in the face of the Communist bid for power. Even so. thc US and UK have had to exert

pressure from time to time to prevent party differences from endangering the national anti-Communist effort and undermining thc coalition of Liberals (centrists) and Populists (rightists) which governed from7 to Outbursts ofat times caused the King to consider settingovernment with authoritarian powers, but this very possibility spurred the major party leaders to keep tho coalition alive as long as possible with relatively few changes. Beginning inhe coalition actually gained effectiveness In meeting day-to-day needs by centralizing Its policy-making No essential change in policy followed the elevationycar-old Alexanderominally independent, Liberal-minded financier, from his post as Deputy Prime Minister after the death of Liberal Prime Minister Themlstoclcs Sophoulis in

Political preoccupations began to assume prominence soon after the rout of themain forces In August and threatened to interfere with the execution of important government policies, but the Populist-Liberal coalition still continued.owever, Liberal chief Venlzelos withdrew from thc cabinet with the other Liberaland the coalition cabinet was dissolved. The almost simultaneous resignation ofin Chief Papagos was subsequently withdrawn, as the Kinganuary ap pointed John Theotokls to head the"service" cabinet. Elections have now been scheduledarch, with the first meeting of the new Parliament set forarch. In spite of initial suspicion of Theo-lokis" intentions and of possible dabbling by King Paul in the field of politics, the "service" cabinet has apparently proceeded promptly with election preparations.

The outcome of the elections and the future of the Greek Government will depend not only upon the way in which the Theotokls Cabinet carries out its mandate, but also upon thcol Marshal Papagos. who enjoyspopularity as the result of hisleadership. Most of the regular Greek political leaders are strongly opposed toentry into politics, out of fear that his

prestige would win him overwhelming popular support, enabling ambitious men such as Spy-ros Markezinis. capable young political friend ot Papagos and King Paul, to ride to power. They fearevelopment might result, furthermore. In the extension of governmental powers beyond constitutionalthc detriment of the established political parties and the nation's reputationovernment under Papagos would probably enjoy the Initial support of many Qreeks, its authoritarian Implications would have unfavorable repercussions on worldand. If borne out by subsequentsuch as the abrogation of Parliament or the corning to power of men less beneficent than eventually alienate most Greeks as well. The failure orofovernment would, Inreflect on the King's position andrevive the traditionally disruptive conflict between monarchism and republicanism.himself, approaching the age ofnot in the best of health, and lacking zest for the turmoil of politics, has malntaintid an ostensibly aloof attitude. Whilewith the regular political leadership has at times prompted the King, as well aspolitical, financial, and newspaper elements, to consider drafting Papagos for thc premiership, thc King has recentlyan intention to hold him in reserve for some future crisis.

If Papagos does not enter politics before tlic elections, no single candidate of outstanding vote-getting ability can be expected lo appear, and the changes in the political composition of the Parliament arc not likely to be great Thc rightist Populists, wholurality in0 elections, are likely to lose some strength to center and minor rightist groups, while the second-rankIng Liberals willgain from the moderate right and from other centrist elements. Totalist strength in the new Parliament willnot differ greatly from the present figure of aboutercent The early post-election government, probably under Liberal ordomination, may enjoy an initial period of stability in view of ils new mandate. Sub sequently, however, as differences over policy

and execution become more acute, thewill have greater difficulty fnan assured majority, and new elections may have to be called. Meanwhile, theof minor groups such as those of the extreme rightist Maniadaxis and the left-centrist Plastlras may take on increasingperhaps leading temporarily to new political combinations under either Populist or Liberal domination, but tending In tbe long run to encourage any government to take strong measures so that It could remain ln power. It will become Increasingly difficult to carry out Western moderating advice as the amount of foreign aid gradually goes down and internal Greek political pressures rise.

No matter what Its complexion after0 elections, the Greek Government will have great difficulty in executing the political, economic, and military measures that Greece needs. Post-election political tensions and the desire for party spoils may seriously hamper governmental reorganization andand will tend to lower theof the government Itself. Although most Greek political leaders will reflect the popular determination not to re-legalize the old Communist organization, the degree of leniency to be tolerated in the antl-Commu-nlst program Is likely to cause controversy, adding to the difficulty of again achieving major party cooperation.

3. Economic Situation.

With military operations virtually ended and the gains of the post two years of US aid and advice beginning to register, Greece is nowosition to concentrate on economic recovery and development. Nevertheless, the country faces serious handicaps. Most ol lheillion (equivalent) of aid received from foreign sources since the liberation of Greece in4 has perforce been used up In meet -lug immediate military, consumer, and relief needs Thus the country must exerlefforts to make up for lost tunc in utilizingillion fiscal0 ECAand the subsequent two years of ECA aid still Ui prospect. Moreover, the economicof Greeceroublesome one. in volving population stresses, agricultural and industrial backwardness, heavy wartime and

guerrilla destruction, and postwar dislocations In trade and foreign exchange patterns. While notable improvements should now be forthcoming, it is doubtful whether the Greek economy will be funcUccingufficiently high level2 to obviate some furtherassistance.

significant economic progress has been made during the past year, but most of ft has been In the fields of transport reconstruction, and refugee resettlement, and In generally laying the groundwork for biter phases of the development program. Under the program for reconstruction ofrail and road facilities, now In its second year, the key railways from Athens toand from Salonika north to Iheborder have been reopened, andilometers of highway have beenMore ambitious projects werebecause of guerrilla interference and thc need for funds to finance the relief and rehabilitation ofefugees of the guerrilla campaign. The improvement insecurity during recent months hasthe return to their homes off the refugees, and the rest willbe resettled in the spring. Theirand rehabilitation will eventually prove of great importance to the economy, not only by removing an important budgetary drain (estimatedillion for thc fiscalut also by restoring the productive contribution of this group, which constitutes almost one-tenth of the population.

Thc Greek economy has thus far made only limited advances in productivity.on which the economy rests, made an early postwar recovery,9 production will perhaps exceed8ercent ofevertheless, population growth and the need to economize on Imports willa substantial increase over prewar food-stun production. In part, thc need for greater production will be taken care of by refugee resettlement, landoredtstriuutkm of fertilizers andand olher measures to improveproduction. There is great necessity, however, for price incentives, which untilhave been held in check in order lhal

tho general cost of living might be held down. Industrialby high costs, inadequate capital, limited consumer purchasing power, business uncertainty, and guerrillalagged behindalthough the general Industrial index has risen to aboutercent of prewar. (But for the disproportionately large Increases In the production of electric power and certain consumer Items, thc industrial Index would be nearerercent-) The mining Industry, faced with problems similar to those of the manufacturers, achieved onlyercent of thc prewar production rate through most

Orcek export trade has meanwhile sufferedumber of handicaps. Theposition of Greece has been weakened by low production, high costs, and (untilovervaluation of the drachma. The country has also suffered because of loss of its prewar markets in Germany and central Europe and because of its difficulties Inabroad the two semi-luxury products,and dried fruits, which represent the principal Greek exports. The barter andmeasures used thus far in stimulating exports have been relatively meffectlve.

Devaluation of the drachma, on thc other hand, has facilitated Greek export promotion, and by thc end of the fiscal0 Greek export totals will probably be somewhat higher than in any other year since World War 11 The greater measure of internaltogether with devaluation ot thehas generally Improved the country's chances of recovering more of the invisible foreign exchange earnings (such as emigrant remittances and shipping profits) which, in prewar years, helped bridge theillion gap between imjwrts and exports. Nevertheless, strenuous efforts will be needed to expand Orcek foreign exchange and tointernal sources of such presentlynecessities as foodstuffs, fuel, and Since liberation. Greece has needed an average of0 million In foreign subsidy each year to meet Itsdeficit, which, although lt may bein the fiscalill still be


tbe economic Instability andgenerated by the guerrillaOreek Government, with DS aid andhas managed to head off runawayThe value of the drachma has beenperiodically by government saleson the open market. Credit controls,wage freeze,mountand price control have beenod, and special efforts have been modethe flow of consumer goodsand to defer reconstructionmight have Inflationary effects.after-effects of devaluation,been surprisingly favorable: the costhas been held relatively stable bysubsidy, while Increased publicin the currency has been markedinflux of hoarded foreign exchange

Inflationary pressures, however, are still present. With thc fading of the guerrilla threat, Oreek labor has raised long-deferred demands for an Increase In wages, and Itmore and more unlikely thatefforts to forestall the Issue on patriotic grounds will prove effective for very long. Spurring labor's demands ls the fact tliat wages have lagged aboutercent behind the steadily mounting cost of living, nowimes the prewar level.the grantingeneral wage increase would not only tend to inflate prices but would alsoerious burdenational budget already overloaded with refugee,and import subsidy costs. Even if the contemplated cuts in the military budget and probable reductions in the Import subsidy ore effected, the liibo fiscal year budget deficit may run as highhis will necessitate Lhe further diversion of ECA counterpart funds (someercent have already been transferred to cover budget deficits) which would otherwise be available for

Meanwhile, however, plans for thcof reconstruction and rehabilitation measures are going forward. If other budget expenses can be heldillion) may be used during the

fiscal0 for such varied purposes as housing, transportation, agriculture,and land reclamation, rehabilitation of the tourist and mining industries, andof civil air faculties. Further efforts will be made to advance the long-termfor Industrial expansion, alreadywith German reparations,eans of absorbing the surplus agricultural population and decreasing the dependence of Greece on imported fuels, fertilizers, and manufactured goods. Work will be initiated on the6-year program for the development of hydroelectric power, forreliminary survey was completed this year. In general ECA will continue Its efforts to bringeformation in the outmoded and chaoticfinancial, administrative, business, labor, and trade structure, and to trainGreeksariety of technical skills.

The success which the program will have Ln making the Greek economy more stable, more efficient, and more nearly self-supporting Ls clearly limited by the Immensity of theit faces and the uncertainty of the Greek political and military future. EC Ay Greece has recognized that thc program Itself will tend to Increase the already great inflationary pressures, unless coupled with an increase in thc supply of consumer goods. Shouldinflation threatenesult of general wage Increases or lessened confidence tn lhc government, thc program might have to be retarded in the interests of financial andstability. However,teadyof US aid andraduallyflow of private investment, and an absence of new Communist threats from the north. Greece should, during the next two years, be able to repair the ravages of war,prewar levels of production, and make substantial progressore stable cvun uny

A. Into' national.

The strategic value of Greece to the USSR and the country's heavy dependence on US moral and material support continue to be the major factors in Greek Internal andaffairs. While Greek Communistand the Kremlin's preoccupation with


Tito problem in recent months havethe immediacy of the USSR's designs on Greece, the Soviet aim of eventually bringing Greece under Communist control seemsGreece still remains highlyto pressure and penetration along its northern frontier. Despite thc native vigor of the Greek people, they must for some years to come rely on Western support to rebuild their economy and to deter fartheraggression.

Official relations between Greece and thc USSR have been very cool, and diplomatic representation has been left to Charges tVaf-/aires ever6 when the Kremlinto participate in observing the Greek elections and denounced the elections and plebiscite which put the present parliament in office and restored the Greek monarchy. Since then, Soviet hostility toward Greece has been demonstrated not only through Soviet backing of thc thrcc-ycar-long guerrillabut also through persistent vilification of the Greek Government. In recurrent "peace" proposals, notably the oft-repeated terms advanced by Gromyko inhe USSR has attempted to obtain entry into Greek affairs as the price for calling off the guerrillaelations between the USSR and the US-orlented Greek Government will undoubtedly remain hostile. Should the internal situation of Greece again deteriorate, the Kremlin might turn more of Its attention back toward stimulating unrest in Greece even if the Soviet-Yugoslav conflict remains

Greek relations with thc Satellites have been at least equally strained; even in the case of Czechoslovakia, whichhargesin Athens, commercial relationships have been virtually terminated by Greekof Czech air transit rights within Greece. Relations with Albania and Bulgaria have been particularly hostile because of the

* Tliest: termseneral amnesty forbc holding or elections under(including Soviet) supervision, the dissolution of TJNSCOB (which thc USSR hashe inclusion of the USSR on any new border commission, and withdrawal of thc US and UK military missions from Greece.

preeminence of these countries In furnishing active help to the guerrillas, but also reflect the history of Worldnd certainterritorial differences, Includingaspirations regarding Thrace andMacedonia, and Greek claims to part of southern Albania (Northernhe latter Issue Is currently the more explosive. Albania and Bulgaria, which have firmlyUN efforts to restore their normal diplomatic tics with Greece, have demanded that Greece firstormal renunciation of its claim to Northern Eplrus.

In the summerreek bitternessAlbania (with which Greece Is stillat war) threatened to produce open hostilities when, with the reduction of the guerrilla strongholds In the Grammos-VltsI area, the Idea of pursuing the guerrillas across the Albanian frontier gained sudden currency both in military circles and among the Greek public, while the hope of obtaining Northern Epirus was scarcely concealed even among the moderates. The government, however,pledged itself, after Western moderating advice, to take no such action. Although the Greeks are not likely to engage hi adventures in Albania without Western acquiescence, the creationolitical vacuumarked deterioration of the Albanian regime's internal authorityajor revival of Greekactivity based on Albania would again raise the question of Greek intervention.

Thus far, no significant strains havein the relationship between Greece and the US andelationship based on long-standing cultural and economic ties as well as on present practical necessities, and major differences between Greece and its Western associates arc not likely to develop. The US has been generally successful Inits influence felt without becoming unduly involved in the conduct of Greek InternalUS counsel has contributed materially to the new emphasis on professionalin the armed forces and to theof important economic measures. While Greece has generally gone its own way in the UN. the Greeks have followed the US lead in affairs of direct mutual concern. Even in such touchy mutters as the current reduction

in size of the army the Greeks hare usually acquiesced fairly readily to the US position. Now that the immediate threat ofhas abated, however, the Greeks will tend to be less sympathetic toward US pleas for political and economic reform and maygreater freedom In handling tbe add

The traditional Greek-British friendship has not been impaired by the fact that the UK's role In Greek affairs has7 been secondary to that of the US. While the UK's active participation in Greek matters hasbeen reduced even further by theofan token force thathi Greece during the guerrilla war and by the Initiation of reductions In the British military mission, British Influence willto be exercised through Its naval and police missions and through Its commercial Interests in Greece. Recurrent expressions of Greek aspirations in Cyprus will probably place some strain on Anglo-Greek relations, but lt is unlikely that the Greek Government will risk the loss of British friendship bythe issue in the near future.

The development of the Tito-Cominform rift has caused Yugoslavia to leave the ranks of the avowed foes of Greece but has not yet made itriend. Once the chief backer of the Greek guerrillas. Yugoslavia grew cooler toward them as it became clearer that the guerrilla leadership would be ranged with Tito's Cominform opponents. Signs of areduction in Yugoslav shipments of arms and equipment to the guerrillas began to appear by the springfter the Greek Communist leadership (by thendominated by the Cominform) had made Its abortive bid for Slavo-Macedonian support. On9 Tito cut off tbcfrom all active Yugoslav assistance by closing his border with Oreece. Since then the Greek Communist Party has been openly hostile to the Tito government; thc party has not only made Tito the official scapegoat for its military setbacks but has accused him of plotting with the Greek authorities toival, onti Cominform Communistin Greece.

Despite some actual easing of Yugoslav-Greek relations, grounds for mutual suspicion between Athens and Belgrade still exist. From the Greek point of view. Tito'ssponsorship oferpetuation of -Yugoslavia's old claims to Aegean (Greek) Macedonia, while his eflbrta to portray himselfriend of "true" Greektiding the sheltering of0 Greek children, numerous Greek Slavo-Macedonian refugees, and several thousand guerrillaunderlines thc bias In his attitude toward Greek Internal affairs. On his part, Tito must act cautiously In moving toward even arapprochementovernment he was wont to denounce asn view of the delicacy of his position as Soviet propagandists accuse him of collaboration with the West. Because of the basicallyideologies of Tito and the Greekas well as basically differenttoward the Albanian and Macedonian questions, full rapprochement between the two countries is out of thc question.

Yugoslavia has, nevertheless, been sllgbtly more cooperative of late in the UNof the Greek issue. Diplomatic contacts between thc two countries and the relations of their border forces have improvedbi recent months, but officialin the two capitals is still In the hands of charges d'affaires. Some revival of mutual trade now seems toistinct possibility. The reopening of Yugoslavia's rail link to the Aegean has been advanced by theof the Greek section of the railway and the partial repair of the connecting Yugoslav line. Yugoslavia may make possible theof International service over this route by the summerith somebenefit to both countries and potential strategic value lo Yugoslavia.

Further progress toward Improved Yugo slav-Greek relations may well take place as thc Tilo-Cominforni conflict continues Itscourse The Greek Government,thc heightened dangers which avictory over Tito would present, appears willing to deal with Titoolicy the more feasible because of prewar Grcek-


friendship, In contrast to theQrack-Bulgarian animosity and Greek-Albanian territorial differences. For his part, Tito also seems desirous of Improvingrelations, not only for the economic and strategic benefits which may result, but also as part of his long-range policy ofbettering, as unobtrusively as possible, his relations with the West.

Greek ties with other Mediterraneanhave been slightly strengthened In the past year. Rapprochement with Italy, arival during the prewar era, has beenby the conclusion of an economic agreement -settling outstanding peace-treaty Issues. Diplomatic representatives have been exchanged with Israel; negotiations for the resumption of trade with Spain have taken place; and cultural and air agreements have been signed with Lebanon and SyriaAlthough friendly relations have been somewhat dampened by new Egyptian efforts to place restrictions on Greek nationalsin Egypt, greater trade with Egypt Is in prospect.

Official relations between Greece andhave con turned good in spite of occasional outcropping* of popular antagonism. Turkey has extended somewhat greater freedom lo the Greek minority in Istanbul,roject Is under way to promote cultural exchanges.some demonstrations have resulted in Turkey from the agitation in Cyprus for union with Greece, the common interests of Greece and Turkey as recipients of Truman Doctrine aid and as neighbors on the Soviet periphery will continue to override other considerations. Indeed, inasmuch us these two countries are not included in the North Atlantic Fact, the governments of both will probably seek to strengthen tticir friendly relations, and will also continue their efforts to Interest Ihc USegional security arrangement.

Since the Greek appeal to thc Security Council Inhe UN has played aand moral role in Greece, andevidence collected by successive UN Balkan committees has convinced world opinion of the reality ot the Soviet-sponsored aggression against Greece. Thc attention focused on Greece in the UN discussion may

have helped deter the Soviets from moreforms of aid to the guerrillas, although lt did not curb the less openly aggressivethat maintained the guerrilla movement Various UN efforts to workormula for normalizing diplomatic and border relations between Greece and the neighboringhave met with little success. Since8 UN recommendation (reaffirmedor the repatriation of0 Greeknow In the Communist countries, nohave yet been released, and presentstalling tactics Indicate that scarcely more than token numbers can be expectedturn, continuation of UNSCOB (UNCommittee on the Balkans) for another year is an assurance of sustained International awareness of Soviet designs in Greece, but the Greeks have been disappointed in tbeof UN support and still look directly to the US and UK for moral and material guarantees.

5. Probable Fuluro Developments.

Freed of the Immediate Communist menace and thc restrictions of martial law, Greece will achieve considerable iurther internalIn the next few years, but will need some time to reach relative political and economic stability. The conflict between the conceptsarliamentaryictatorial solution to the political problems of Greece willflare up again, and thereistinctthat ll will be resolved in favor ofdespite Western moderating advice, if parliamentary delays and politicalshould prompt the King totrong personality toovernment with extraordinary powers. The still moreissue between monarch ism and re pubikanhmi almost entirely dormant since6 plebiscite which brought back the monarchy, may gradually re-emerge as King Paulent for dabbling in politics and as the nationeneral slight shift from right toward center. Controversial economic Issues such as thc presentwage-price relationship, tax and other financial reforms, and the general difficulty of main laming financial stability are likely to vex any government for the next few years

Although the actual reduction of the armed forces can probably be carried out without political repercussions so long as theremain quiescent, political Interference In military matters will undoubtedly bewhen Commander In Chief Papagosan event that may take place soon after0 elections.

The kind of military emergency thatOreek Independence duringuerrilla war ls not likely to recur during the next year or more unless the Oreek internal situation deteriorates greatly and Oreece again becomes availableajor staging area for guerrilla operations. Oreekforces are not likely to be vitally affected by the retrenchment program as currentlyand will probably remain able to keep Communist pressure within Greece froma serious-military threat. Although effective control of the border against groups that may seek to filter Into Greece will bethc present outstanding weaknesses of the Greek Communist Party make Itthat the requisite support within Greeceew guerrilla movement could be built uphort period of time. Limitedactivities of nuisance value are,likely lo continue. Though there may be an attempt at increased activities during thc coming summer, continued casualties will hold them in check. The Greek Communists' main efforts will probably be devoted to non-military activity atear or more.

No great change is to be expected in theof Oreece with otheroderate improvement of Greek-Yugoslav economic relations appears to be In prospect. It will probably be almostto translate into action the vagueof the various Communist states, including Yugoslavia, lo the UN's plan for the repatriation of Greek children taken abroad by the Communist rebels; the Greekswill probably display less eagerness to call for the return of either children or adults

who have been thoroughly Indoctrinated in fJommunism. The USSR will continue to be unfriendly to Oreece, but Oreece willnot again become the primary target of Soviet hostility In the Balkan peninsula while the Kremlin Ls faced with Titoism. Greek claims to southern Albania will probably remain subdued under Westernadvice,ajor revival of guerrillabased on Albania,olitical vacuum resulting from the marked deterioration of the Albanian regime's Internal authority, would again make this problem most serious. Aspirations In Greece and in thc British Crown Colony of Cyprus for thc union ofwith Greece are likely to result inagitation, despite the willingness of tbe Greek Government to try to keep this Issue from Impairing thc traditionally very friendly Greek-Biittsh relations.

The US aid program will continue to be the most Important single factor helping lhe Greeks to help themselves. In practically all phases of Greek policy, US old and advice will continue to loom large as moderating factors. The well-being of the Greek economy willupon US aidonsiderable extent for several more years, and probably to someeven after the end of the ECA programhe Greeks will be concerned about US intentions beyond the limits of the present aid program, and will seek assurances ofthough curtailed, US aid for the years2 While the gradual reduction of US aid2 will be of real benefit in spurring the Greeks to become less dependent on outside help, the termination of the pro gram at that tune would probably leave them with certain residual problems that might. If unlendcd, seriously undermine the relative stability achieved up to that lime. Thcorientation of Greece toward the US and thc UK will probably remain unchanged so long as thc Greeks feel that they willUS-UK support against Balkan orencroachment.

Original document.

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