Your telegram 12, 11th January. [1]

1. We are grateful to you for your views on the three problems
dealt with in your telegram under reference. We hope that the
following comments will be of assistance in explaining our
attitude.

2. Yugoslavia
Our attitude is governed by two factors which make it very
difficult for us to adopt the course which you propose. These are
:

(a) In April, 1941, King Peter was generally accepted by the
Yugoslav people as the legitimate head of the Yugoslav state. When
he came into exile we welcomed and recognised him as such and he
has ever since consistently behaved as a loyal ally. We cannot,
therefore, dissociate ourselves from him unless we are convinced
beyond any doubt that the Yugoslav people no longer want him. This
cannot be until the whole country has been liberated and the
people are in a position to decide freely their future form of
Government.

(b) Serbia is the heart of monarchist feeling in Yugoslavia and as
far as we can judge the great majority of Serbs are still
completely loyal to their young king. It is not for us to throw
him over on their behalf and perhaps against their wishes.

3. On the other hand, we recognise the Partisans as a formidable
military movement fighting side by side with the Allies against
the Germans and on this basis we shall continue to send them all
possible military assistance irrespective of political
developments.

4. The only way which we can see of reconciling this military
necessity with our political obligations to King Peter and the
Serbian people is to try to bring the King and the Partisans
together. We do not intend to force the pace but it is our duty to
do everything in our power to reconcile the two groups since there
is no other prospect at present of unifying the various political
and military forces in Yugoslavia in a common war effort.

5. As for Mihailovic [2], we agree that sooner rather than later
he will have to go. We do not feel, however, that we can advise
the King to take the risk of destroying his one remaining link
with his country and of alienating the loyalty of a large
proportion of his subjects unless we know what we can offer him in
return. We propose, therefore, to wait for the result of Brigadier
MacLean's [3] approach to Tito before deciding how we can best
withdraw our support from Mihailovic and persuade the King to do
likewise.

6. Greece
The position of the King of Greece [4] is very similar to that of
King Peter as stated in paragraph 2 (a) above. It is the Greeks
themselves who are responsible for raising the constitutional
issue and we have felt bound to make it clear that the King as our
ally and as the constitutional head of the Greek state is entitled
to our support until the Greek people themselves can pronounce on
the future regime of Greece. We are, however, most anxious that
the question of the King's position should not prejudice unity in
Greece and we know that the King himself shares this view. In his
broadcast of 4th July he declared that the constitutional issue
would be submitted to the Greek people after liberation and in the
letter to M. Tsouderos [5] of 8th November, which has recently
been published, he agreed to reconsider at the moment of
liberation the date of his return to Greece in agreement with his
Government. We trust that these two statements will satisfy all
reasonable Greek opinion, both in Greece and abroad, and that the
question of the monarchy will cease to be a cause of disunity.

Meanwhile, the prospects of unity between Greek bands have
improved.

7. Italy
It remains our intention to encourage the formation of a widely-
based Government as soon as practicable and Badoglio [6] has, in
fact, stated that the present Government would resign as soon as
Rome falls. But we very much doubt whether any of the political
personalities now assembled at Naples will play a prominent part
in whatever Government succeeds the present one. Macmillan [7]
describes the majority of them as 'typical small-town
politicians'.