During the second phase of the Lausanne Conference, held between April 24 and July 24 1923, the issue of Greco-Turkish reparations jeopardized peace negotiations and even raised the scepter of war between the two former combatants.
On April 19 the British Charge d’Affaires in Athens, C.H.Bentinck informed Lord Curzon, the British Foreign Secretary, of Eleftherios Venizelos's firm determination to resist Turkish demands for the payment of war reparations. This characterized the Greek resolve on the reparations issue over the next five weeks where the Greek army in Western Thrace stood ready to advance at short notice.
Neville Henderson, the Acting British High Commissioner in Constantinople, reported in early May that Mustapha Kemal , the Turkish Nationalist leader and first President of the Turkish Republic October 1923-1938, wanted peace 'at any price', as the condition of the Turkish army had deteriorated and externally Turkey “faced insecurity on four fronts [in] Syria, Kurdistan, the Caucasus and Thrace.” There was growing dissatisfaction by the intellectual elite and laboring class in Constantinople and the peasants in Anatolia due to the dramatic increase in the cost of living.
Eleftherios Venizelos, the chief Greek delegate at Lausanne, was instructed by the Greek Government to press for a quick solution to the reparation question, otherwise the armistice would be terminated. The Greek Cabinet sent Foreign Minister, Alexandris to Lausanne for the purpose of speeding up the reparations settlement. The bad treatment meted out to Greek prisoners of war, seizure of Greek bank safes at Smyrna and Constantinople and “continual expulsion of Greeks from Asia Minor” only served to inflame Greek public opinion against Turkey. On this score, the Greek Government considered sending an ultimatum to Turkey to refrain from such measures but Venizelos advised against it, as he desired to meet Ismet, the chief Turkish negotiator in Lausanne, to settle the reparations issue.
In order to placate the Turks, Venizelos proposed to cede Karagatch and a small triangle of territory between the Maritza and Arda rivers in return for Turkey waiving her demands for reparations against Greece. Venizelos thought this proposal “would give best means of personal satisfaction to Ismet.” On the other hand, Venizelos was prepared to refer it to arbitration should Ismet reject his proposal. However this concession had to be approved by the Greek Government.
Venizelos met Ismet on May 14 to explain his nation's incapacity to pay an indemnity and recognised Greek responsibility for damages done to Turkish property during the recent war. In return, he requested Ismet to ask Angora to waive its demands for reparations from Greece. Ismet told Rumbold that Venizelos's proposal was unacceptable, but he would consider an alternative plan that provided “something in lieu of cash.” By May 18, the Greek Government approved the Karagatch proposal on the lines suggested by Venizelos. This was as far as the Greek Government was prepared to go on this issue.
The concentration of Greek forces in Western Thrace alarmed the Allied Generals at Constantinople to the point of preparing contingency plans to evacuate Allied forces to the Straits in the advent of Greek advance on Eastern Thrace and Constantinople. They even considered evacuating their own nationals in the advent of renewal of hostilities between Greece and Turkey. Curzon informed Bentinck on May 15 to warn the Greek Government of the folly of launching a military attack. What concerned Politis, the Head of the Political Bureau of the Greek Foreign Ministry, was that Curzon's demarche would encourage Ismet to adopt an uncompromising attitude on the indemnity question and weaken the Greek bluff against the Turks. Politis assured Bentinck that the Greek army would not attack without the authority of the Cabinet and the Allies. The Greeks became impatient and even threatened to withdraw from Lausanne unless the reparations issue was settled quickly. Such a decision meant the Greek Government might renounce the armistice and commence hostilities.
By May 25, the Greco-Turkish reparations issue reached a dangerous point where Ismet still had not received an answer for the Karagatch proposal from Angora. Rumbold, the British delegate at Lausanne, saw it was impossible to separate the two questions of Allied demands for compensation from Turkey and Greco-Turkish reparations. The British wanted to speed up the conference and finalize the peace treaty with Turkey.
General Pelle, the French delegate at Lausanne, received a telephone message on May 25 from French Premier, Raymond Poincaré who agreed to renounce French reparations against Turkey. Nonetheless Montagna, the Italian delegate at Lausanne, did not receive his instructions from Rome until May 26. A few days earlier, Ismet had asked Pelle whether the Allies would drop their reparations against Turkey. Pelle replied that the two questions of Allied reparations against Turkey and Greco-Turkish reparations were totally unconnected. Rumbold thought if the French and Italians waived their reparations against Turkey, then this would remove an impediment in finding a solution to this issue.
On May 24, Venizelos and Alexandris told Rumbold that they would leave Lausanne in two days time, if the indemnity issue was not settled by then. Rumbold told the Greek delegates that if the Turks put up unreasonable demands, then the Allies would seek an adjournment. This put Venizelos in a difficult position and telegraphed Athens for further instructions. The Greek Government consented to a postponement of the indemnity question for a few more days so that Ismet could hear from Angora. The Greeks believed that Angora was withholding its reply in order to prolong the discussions. A Greek army of 150,000 men with 300 field and mountain guns was ready to advance at 24 hours notice.
Ismet experienced difficulties over the Karagatch proposal. He even threatened to return to Angora if this proposal was not accepted. On May 24, Reouf Bey informed Ismet that the claim for reparations could not be renounced in return for Karagatch. Angora sought compensation “partly in cash, partly by surrender of Greek property in Constantinople and partly in merchant ships.” In reply, Ismet urged acceptance of the Karagatch solution as the only viable remedy. Mustapha Kemal supported Ismet's position so long as the important issues of the Ottoman Public Debt, the early evacuation of Turkey by the Allies and judicial formula were settled in Turkey's favor.
Finally on May 26, a private meeting attended by Allied delegates, Venizelos and Ismet witnessed the settlement of the reparations issue allowing the Allies to settle their outstanding questions with Turkey. The Lausanne Treaty was finally signed on July 24, 1923 thus establishing peace between Greece and Turkey.
STAVROS T.STAVRIDIS (M.A) © 2011