55. Interagency Intelligence Memorandum1

DCI/NIO 2282–75

[Omitted here is the table of contents.]



This paper focuses on Greek internal problems, with some consideration of foreign policy issues, particularly as they affect domestic politics.


Caramanlis has moved quickly to consolidate his political base in the 15 months since he was called back from 11 years of self-imposed exile to lead a country momentarily shattered by the junta’s disastrous move against Makarios and the subsequent Turkish move onto Cyprus. He has sought to depoliticize the military, transform Greece into a stable democracy, and end the country’s international isolation brought on by seven years of military rule. Caramanlis has made progress on all fronts and the short-term prospects for his government are much more favorable than seemed possible when he took over.

Enjoying considerable popularity and unprecedented control of parliament, Caramanlis has no serious challenger either in his own New Democracy party or within the weak and divided political opposition.

In an effort to reform the Greek political system, Caramanlis has secured the passage of a new constitution designed to eliminate some of the traditional shortcomings of democratic governments in Greece. (The new system, which provides for a sharing of power between president and prime minister, will not be put to a real test, however, so long as Caramanlis remains in complete control.) He has given all political forces, including the Communists, the right to compete freely in the political marketplace, but he will remain sensitive to the military’s concern for maintaining order and will come down hard against anarchical manifestations.

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Most military officers see Caramanlis as the politician best able to govern Greece. Nevertheless, he must continue to cope with a continuing—albeit reduced—threat from those in the military who could become so alarmed over political developments and/or fearful for their own future that they would try to remove him.

With the help of some talented economists and international financial assistance from those anxious to bolster Greek democracy, Caramanlis has the means to weather short-term problems caused by the present unfavorable international economic conditions and the junta’s mismanagement of the economy. Structural reforms will be necessary for sound and steady economic growth.

Caramanlis has moved adroitly to contain strong anti-US and anti- NATO sentiment among Greeks arising from the Turkish invasion of Cyprus and resentment of the junta’s relations with the US. His formula for partial withdrawal from NATO and renegotiation of US bases has gone far to assuage nationalist sentiment, without irretrievably alienating the defense support which is indispensable to Greece.

Caramanlis’ handling of the Cyprus and Aegean issues will have an important bearing on whether his domestic and broader foreign policy objectives can be carried out, and could even affect his tenure. While he has shown flexibility on the Cyprus issue, he sees himself boxed in by Turkish intransigence with little further room for maneuver. Should the Turks show a willingness to compromise—particularly on the territorial question—he would probably press Makarios to reciprocate. Caramanlis has less flexibility on the Aegean issue, which involves the question of Greek sovereignty and Athens could well be drawn into a military confrontation should the Turks again make probes in contested areas.

The longer-term prospects for political stability in Greece, particularly after Caramanlis, are not as promising. His departure may well lead to increased factionalization of his party composed as it is of at least three groups and a similar number of potential heirs. This could eventually split the party. In such circumstances, the opposition may become more aggressive. Greece might then experience another period of political instability, although much will depend on the state of the economy and relations with Turkey. Should the politics of confrontation and mob violence again overshadow parliamentary due process, the military may again feel compelled to intervene either openly or from behind the scenes, unless a political alignment that is able to prevail over the left and right extremes again emerges.


Caramanlis and the New Order in Greece

Greece has made a remarkably smooth transition from military rule to paraliamentary democracy over the past year. Most of the [Page 185] credit goes to 69-year old Prime Minister Caramanlis, who has outmaneuvered his domestic opponents and skillfully begun to institutionalize his predominance. There is at present no serious challenge to his authority from either the extreme left or right; even the once highly politicized army seems for the most part to accept his leadership. There is also no successor in sight who could command comparable popular support and this could spell trouble for Greek democracy once Caramanlis departs the political scene.
Caramanlis returned to Greece following 11 years of self-imposed exile during which he formulated plans for reforming the Greek political system. He hoped to make it capable of sustaining a democratic rule without succumbing to the anarchy and disorder that prompted the military to intervene in 1967. He has pursued this objective first by consolidating his own political base, and then embarking upon a series of institutional changes which he hopes will eventually transform Greece into a stable and progressive democracy along West European lines.
The first stage in Caramanlis’ carefully orchestrated plan to solidify his political base was the holding of parliamentary elections last November, about four months after the Cyprus crisis led the junta to call him back to Greece. His party received almost 55 percent of the vote in the elections, which showed his own popularity, his mastery of electoral dynamics, and the weakness of his opposition. Helped by the crisis atmosphere of the period, Caramanlis imposed on his colleagues a complex system of reinforced proportional representation under which he could have won a slim majority in parliament even if he had gotten only 41 percent of the popular vote. But with his overwhelming victory, Caramanlis’ New Democracy party now has unprecedented control of parliament, holding 216 seats out of 300.
Caramanlis has used this control to push through a new constitution providing for a strong executive. The opposition objected to the substantial powers granted the presidency under the constitution but succeeded only in partially whittling down these powers. The opposition boycotted the final vote on the constitution but let it be known that the boycott did not imply a denial of the validity of the constitution.
Caramanlis created a strong presidency to balance the prime ministry and to provide the additional element of stability and continuity the former monarchy was supposed to provide but often did not. He turned the presidency over to a hand-picked candidate, Constantine Tsatsos, a long-standing follower and personal friend not likely to challenge his authority as prime minister. His critics describe this arrangement as designing a lion’s costume to be worn by a mouse. In any case, the new system is not likely to be put to a real test as long as Caramanlis remains in control.
Believing that no one else has his capabilities for governing Greece, Caramanlis was clearly unwilling to give up the day to day control of party and government affairs he enjoys as prime minister, at least for the time being. In addition, the appointment of someone other than himself as prime minister and party head might have exacerbated factionalism and possibly even have split the New Democracy party. Over time, Caramanlis will doubtless work to build up the party’s organization and articulate an ideology, in order to step up to the presidency while continuing to run the party through a trusted associate.

Political Parties: An Overview

Political parties in Greece have traditionally been extensions of prominent personalities. Political leaders relate to party members and supporters through an informal system of clientelism—personal ties and mutual obligations among constituents, party members, party leaders, and the bureaucracy. Programs and principles are relatively unimportant. The development of modern political parties based on programs rather than personalities was further complicated by the suspension of political life during the seven years of military rule. More fundamentally, however, their evolution has been stunted by the firm grip of tradition and the continued emphasis by Greeks on individual relationships as the key to political institutions.
Caramanlis’ New Democracy fits the typical mold. It is a congeries of diverse interests held together by loyalty to Caramanlis. The party consists of former members of the conservative National Radical Union led by Caramanlis betwen 1955–1963—minus some of its more extreme rightist elements—along with a considerable number of younger men with more liberal and progressive ideas. It includes center-right, rightist, and monarchist elements and draws its support from the upper class, the propertied middle class, and the countryside, particularly the Peloponnese. The party has little formal organizational structure. Its program reflects a vaguely defined conservatism with some liberal and progressive overtones.
Caramanlis’ commanding stature has so far served to foster an unusually high degree of party discipline that has enabled him to get his way in parliament. Although the monarchists in his party resented his calculated neutrality in the referendum in December 1974 (in which 69 percent of the electorate rejected the return of the King), they did honor his request that they avoid campaigning on the King’s behalf. The entire party voted in favor of the new constitution and only four members opposed the election of Constantine Tsatsos to the presidency. Some of Caramanlis’ institutional reforms also contribute to party cohesiveness. The constitution prohibits deputies from changing their party affiliation during their term without resigning their seats in parliament. This provision will discourage the party switching and fractionalization [Page 187] that was the bane of previous Greek parliaments. The weak and divided state of the political opposition also helps Caramanlis enact his programs.

The Opposition

The Center Union–New Forces, with 20 percent of the vote in the November election and 61 parliamentary seats, forms the principal opposition. Headed by George Mavros, it consists of the Center Union Party (founded by George Papandreou in the mid-1950s) and a group of outstanding younger men (headed by John Pesmazoglou) who distinguished themselves by their opposition to the junta. The party has half-heartedly attempted to pass itself off as a socialist party, although it is basically centrist and includes center-right elements. Indeed, it is difficult to distinguish it ideologically from the New Democracy. Mavros and Pesmazoglou served in Caramanlis’ transitional government last fall, and the party has suffered from its lack of an individual identity. Its sources of support are less clear-cut than those of the New Democracy, but its strength is especially high among the urban intelligentsia and the salaried middle class. The party is also strong in Crete and parts of northern Greece. Center Union–New Forces is as poorly organized as New Democracy, but it lacks the leadership Caramanlis gives to his party. An effort is under way, however, to convene a party congress later this year or early next year to outline a program and devise a party apparatus. The reform-minded Pesmazoglou has been leading the effort to make it a modern political party.
The Panhellenic Socialist Movement of Andreas Papandreou received only 13.5 percent of the votes in the last election, finishing third, and now has 15 parliamentary seats. Papandreou’s party consists of elements from his father’s Center Union and some figures active in the resistance against the junta. The party draws its support from elements of the urban intelligentsia, from part of the working class, and from students. Papandreou’s radical Marxist rhetoric, along with the widely held belief that it was his machinations and antics in the 1960s that helped provoke the military intervention, have served to dampen his appeal. Papandreou’s party has also been beset by ideological and personality differences. To meet this challenge he dissolved the central committee and is seeking to rebuild the party from the grass roots. Except for the municipal elections last spring, Papandreou has refused to cooperate with any of the other opposition parties, but he is shrewd enough to do so if and when he thinks it will help him. A fiery orator with a magnetic personality, he could again play a leading role in the personalistic politics of Greece.
The Communist opposition in Greece has been weakened by its fractionalization during the seven years of military rule. Greek Communism is now represented by (1) the pro-Soviet Communist Party of [Page 188] the Exterior led by Harilaos Florakis, (2) the independent, nationalist minded Communist Party of the Interior led by Babis Drakopoulos, and (3) the former Communist front United Democratic Left led by Ilias Iliou. The three parties, though bitter competitors, did unite temporarily to contest the parliamentary elections, but they received only 9.5 percent of the vote and eight seats. All three parties are anxious to appear respectable and are quick to condemn violence as well as the inflammatory rhetoric of Papandreou. Although the “exterior” party is better organized and heavily financed by the Soviets, the other two parties are more dynamic and seem to have been more successful in recruiting younger converts. The legalization of the Communist parties by Caramanlis has enabled them to make some gains within the labor movement, the press, and among students, but their constant infighting reduces their effectiveness as an opposition force. Prospects for growth in the longer term are improving with the trend toward urbanization and industrialization, but the Communists have yet to demonstrate that they will be a major force in Greece.

Manipulating the Opposition

Caramanlis has shown great skill in dealing with the political opposition, taking care not to alienate any important group. Recognizing that there is little his opponents can do to hurt him, he has assumed an “above politics” approach and is slow to respond to the attacks against his government. Although he briefs George Mavros regularly, he generally ignores the other opposition leaders. The Prime Minister also manipulates the opposition press, flattering it with his confidences in return for press cooperation in presenting the issues in a favorable light.
Caramanlis has preempted many of the opposition’s favorite issues with “old pro” dexterity. His announcement last summer that Greece was withdrawing from the military wing of NATO—although he did not follow it up with serious action—took the steam out of that issue as did his decision to renegotiate the status of US bases. His legalization of the Communist parties removed another long-standing complaint from that quarter. His limited purge of junta leaders and supporters from the government and the military has partially defused that issue. Caramanlis remains vulnerable to criticism from the right for doing too much against the junta and from the left for doing too little, but so far he has walked the tightrope between them quite deftly.
Within his own government, Caramanlis has reportedly accused some of his ministers of inefficiency; a minor reshuffle of the cabinet could take place soon. [14 lines not declassified]

The Military

Despite the wide support for Caramanlis and his unassailable position in the parliament, the military remains, at least in an indirect [Page 189] sense, a strong constraining factor. Caramanlis has to cope with the continuing—albeit reduced—threat that elements in the military could become so alarmed over political developments or fearful of their own future that they would try to remove him.
Under the junta, there was a continuing effort during the seven years of power to weed out “politically unreliable” elements in the armed forces. Military divisions from this period have continued: those who support the monarchy, the “hard-liners” who were at the forefront of the revolution, those who were generally in sympathy with the goals of the revolution, and those who opposed the revolution and thought the military should return to the barracks. There were, in addition, factions within the pro-revolutionary officers along lines of personal allegiance as well as ideology. Many of these on the losing side were retired or forced out of service soon after 1967, including most of the senior officers and many of the supporters of the King. And after November 1973, the hard-line supporters of General Ioannides dominated the armed forces.
Upon his return to power Caramanlis was confronted with a military establishment thoroughly screened and purged of active anti-junta elements, and he has since been working to redress this situation. In the past year almost all of the key, hard-core junta supporters have been retired or separated from the military, or are being tried for various crimes against the state. Furthermore, numerous officers who were retired by the junta during its tenure because of their political and anti-junta beliefs have been reinstated. Partly as a result of this manipulation, most officers now support Caramanlis and are willing to allow him his way.
Although political stability has been regained under Caramanlis, and this is a very important factor to the military, there is concern in some circles that he has excessively appeased leftist elements. The legalization of Communist parties, the growth of the leftist movement, and the return of the detested Andreas Papandreou—all developments since Caramanlis’ return—have spurred continuing military concern over liberalizing political trends. The military would not accept or permit a leftist govermment to take office. A deterioration of law and order brought on by student or leftist agitation could also provoke serious coup plotting in Athens. However, most of the restiveness that is now evident seems based more on fear for individual careers than anything else.
Plotting has been endemic in the Greek armed forces. Some senior officers who harbor memories of the Greek civil war are standing in the wings. They see themselves as ready, with the military organization and ability, to save the motherland if that becomes necessary. Also, there still remain a few highly politicized junior officers [Page 190] commissioned during the junta years, who are ripe for exploitation by coup plotters. Many of these would probably be responsive to Ioannides, who is serving a life term for his role in the 1967 coup and awaiting trial for masterminding the 1974 coup against Cypriot President Makarios. There is no evidence that Ioannides has given them the green light, but he is not likely to accept a lifetime of incarceration without some effort, however risky, to regain his freedom.
Defense Minister Averoff has been Caramanlis’ “bridge builder” to the armed forces. He has counseled the Prime Minister to go slow in rooting out junta supporters to avoid alarming the officer corps. At the same time, he has repeatedly assured the officers that their personal careers are secure and that only key figures of the junta will be punished. In this regard, both Averoff and Caramanlis were infuriated by recent newspaper stories questioning the government’s failure to act against several active duty officers named by the papers as having collaborated with the junta. Averoff has voiced his concern that attacks of this type could stir new unrest in the military. Caramanlis’ awareness that there is a continuing current of unrest in the armed forces was demonstrated by the government’s rapid move to commute the death sentences handed down to former junta leaders Papadopoulos, Pattakos, and Makarezos. It was doubtless Averoff who counseled Caramanlis to take this action, and both of them will be closely watching military restiveness.

Students and Labor

On the volatile university scene, the government is proceeding cautiously. It is anxious to avoid violent confrontation with students that could snowball and force it to choose between alienating either the military by tolerating agitation or the political opposition and the broader electorate by using repressive tactics. In an effort to follow a middle course, Caramanlis has acquiesced in some “dejuntization” in the universities: the abolition of decrees that put universities under strict government control and the suspension of suspected pro-junta professors pending an investigation of their performance and activities during the junta period. The government has also promised to look into student grievances on educational reform. Meanwhile, an effort is being made to halt the growing domination of the student movement by an extreme leftist minority. The government has ruled, for example, that all students must participate in school elections.
Labor unrest also has the potential to force Caramanlis into the unpalatable choice between leniency or repression. The laws that brought the trade unions under strict government control have been abolished, and the new constitution confirms the right to strike except for political motives. Upper-level union officials appointed by the junta have been removed from their posts, and special courts have nominated [Page 191] their temporary successors. The labor movement will be in a state of flux until the completion of the elections for union, federation, and confederation officers next year. The government’s relations with labor will certainly be affected by the results, especially since Papandreou and the Communists are making a determined effort to get their supporters elected to union posts. Caramanlis is now working on a law to prevent leftist domination of the labor movement, but labor will continue to be a difficult problem area for the government for a long time to come.

The Economy

On the economic front, the Caramanlis government is grappling with stagnation, inflation, and a serious balance-of-payments problem as a result of junta mismanagement of the economy and adverse world-wide economic developments. Real gross national product declined two percent in 1974. Prices rose at less than half the previous year’s rate but by year end had still climbed 13.5 percent over December 1973. The government did well to hold the current account deficit to about $1.2 billion in light of skyrocketing oil prices, a decrease in invisible earnings from tourism and worker remittances, and greatly expanded defense outlays.
At first inclined to give priority to fighting inflation, the Caramanlis government opted for a policy of mild stimulation aiming at a growth rate of 2 to 4 percent this year. Most indicators now suggest that real growth in GNP will be in that range. The government also seems likely to meet its goal of holding inflation under 15 percent. The balance-of-payments deficit has replaced stagnation as Greece’s most serious economic problem, with Greek officials now estimating they will have to borrow some $500 to $600 million to finance the deficit. Prospects for such borrowing are favorable in the coming months as North American and European states and financial institutions are sympathetic to bolstering Greek democracy. Borrowing may become more difficult later next year because of balance-of-payments and debt-servicing problems.
Structural reforms are necessary to place the economy on the path to sound and steady growth, especially in view of Greek ambition to become a full member of the EC and compete effectively with the other members. Some key elements for the modernization of the Greek economy include the fostering of larger, more efficient enterprises, application of modern technology, a greater emphasis on export trade, a consolidation of the fragmented agricultural sector to increase farm income and output, and exploitation of the country’s energy sources. The government’s recently revealed outline of its five-year economic development plan addresses itself to these problems. But it will take more sustained effort than the amorphous New Democracy seems likely to provide to make much progress toward solving them.
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Problems with Turkey: Cyprus and the Aegean

Caramanlis’ handling of the Cyprus and Aegean issues, and Turkey’s response, will have an important bearing on whether his domestic and broader foreign policy objectives can be carried out; indeed, his performance could also affect his very tenure in office. Caramanlis is faced with a dilemma over the Cyprus situation. Personally, he favors an agreement with Turkey over the island. But because of national honor and fear his government might not survive, he will not accede to what he considers a humiliating settlement. Caramanlis would require some flexibility from Turkey on the territorial question and on the return of Greek Cypriot refugees. While he has not been willing to get out in front of Greek Cypriot negotiator Clerides, Caramanlis privately accepts the tradeoff of bizonality and a weak central government in exchange for Turkish concessions on territory and refugees. He has even said that he will press Makarios to accept these terms.
Caramanlis is pessimistic that the Turks will respond adequately to the Greeks, and probably feels that he has little further room for maneuver. Therefore, rather than offer another Greek concession at this time, which likely would erode his popular support in Greece, he expects the US to try to persuade Turkey to be forthcoming.
Caramanlis sees greater potential danger in the Aegean problem. Provocative Turkish actions here could force his hand in ways that he would prefer to avoid, including military action. This issue involves Greek sovereignty in such a direct way that he has very little scope for compromise. If he does not maintain a tough posture, he is sure to be attacked by his domestic opposition.

The US and NATO

30. In dealing with the US and NATO, Caramanlis also is on the horns of a dilemma. He realizes that Greek security interests require continued close ties with his allies. But he recognizes at the same time that too close association with his allies could hurt him politically at this time because of anti-American sentiment arising out of the Cyprus crisis. While he has considerable flexibility in handling this problem, he is unlikely to move boldly because of these constraints. Caramanlis, in his treatment of the issue, has moved adroitly to contain nationalist public sentiment and to prevent it from driving a wedge between Greece and the West.


The short-term prospects for the Caramanlis government are good. With the support of a solid majority of the electorate and an overwhelming majority in parliament, Caramanlis is in a strong enough political position to provide the country with forceful and dynamic leadership on domestic issues. His domestic and foreign policies to date [Page 193] have served only to confirm the support of those who voted for him, while the behavior of his New Democracy colleagues in parliament thus far suggests they will continue to accord him their loyalty as he moves to make his imprint on Greece.
Nonetheless, Caramanlis will continue to face numerous problems:
  • —Plotting in the military; a desperate move against the government cannot be entirely ruled out, though Caramanlis seems likely to continue to command the guarded support of most Greek officers, who see him as the politician most capable of ruling Greece.
  • —Extremist rhetoric is gradually re-emerging on the part of his civilian political opponents. They are, however, weak and divided, and recognize there is some validity in the slogan “Caramanlis or the tanks.”
  • —Students and labor unions, many under extreme leftist influence, are increasingly prone to agitation. Caramanlis is more concerned about provoking the military by seeming to tolerate anarchy than about alienating the left by infringing on their democratic freedoms. Thus he would probably move quickly to quell disorder from this quarter.
  • —Deterioration of the economic situation could also trigger dissent. But present trends are favorable, and Caramanlis is likely to enjoy further economic success thanks to the help of a group of talented economists and international financial assistance.
The longer-term prospects for stable, progressive, and democratic rule for Greece are less promising. This is particularly true after the Caramanlis era ends—whether through death, electoral defeat, or another self-imposed exile. Despite his efforts, Caramanlis is unlikely to be able to overcome the social and cultural traditions which militate against turning the New Democracy into a modern political party. Increased factionalization of the party into center-right, rightist, and royalist wings seems likely and this could eventually split the party. In this situation, a scramble to fill the political vacuum when Caramanlis departs is all but inevitable. The New Democracy itself contains at least three potential heirs: Minister of Coordination Papaligouras, Minister to the Prime Minister Rallis, and Defense Minister Averoff. The accession of any one of these could alienate the others. As the New Democracy’s cohesion thus erodes and as it loses popular support—as it is likely to do in any event—the kind of political paralysis that helped bring the military to power in 1967 could recur, unless a new alignment of center-left and/or center-right forces capable of overshadowing the left and right extremes comes into being.
  1. Source: Central Intelligence Agency, Executive Registry, Job 80–M00165A, Box 17, Greece. Secret. A note on the first page reads: “This memorandum, prepared under the auspices of the National Intelligence Officer for Western Europe, was drafted by CIA/OCI with contributions from DIA and State. It was reviewed and endorsed by a working group of analysts from CIA, DIA, State/INR, and the services, chaired by a representative of INR.”