The Percentages agreement was a secret, informal political agreement between British Prime Minister Winston Churchill and Soviet leader Joseph Stalin agreed during the Fourth Moscow Conference, in October 1944. The Percentages agreement established the percentage-division of control over the countries of Eastern Europe into spheres of influence. Moreover, the Percentages agreement also is known as the Naughty document, because Churchill thought that the U.S. would reject a geopolitical agreement with greatly imperialist undertones, although U.S. President Franklin Roosevelt had been consulted and had tentatively agreed to the matter. In 1953, Churchill published the Percentages agreement in the final volume of his memoir, The Second World War.
Churchill's Mediterranean strategy During the Second World War, Winston Churchill became painfully aware that the UK had spent virtually all of its reserve capital on the war and was becoming economically dependent upon American support. He recognised that the Soviet Union would end up being much stronger than it was before the war, while Britain would be weaker. Fearing that the United States might return to isolationism after the war, leaving an economically weakened Britain to face the Soviet Union alone, he sought a preemptive agreement with Stalin that might stabilize the post-war world and tie the Soviets down in a way that was favourable to British interests. In this regard, Churchill was especially concerned about securing the Mediterranean within the British sphere of influence, making it clear that he did not want Communists to come to power in Italy, Greece, and Yugoslavia as he believed that Communist governments in those countries would allow the Soviet Union to establish air and naval bases in those nations, which would threaten British shipping in the Mediterranean.
The Suez Canal and the Mediterranean Sea were key shipping routes between Britain and its colonies in Asia, especially India, together with the Dominions of Australia and New Zealand. It was also the main route that tankers used to carry oil from the Middle East to Britain. Because of the Suez Canal, Churchill and other British officials intended to keep Egypt in the British sphere of influence by continuing to occupy the Suez Canal, which was envisioned in Britain as being permanent. For Churchill, British control of the Suez Canal required British control of the Mediterranean and the Red Sea. Losing control of either would cancel out the advantage of control of the Suez Canal. Thus, for Churchill, it was critical to ensure that the nations on the Mediterranean sea lanes, like Italy and Greece, were in the British sphere of influence after the war. Inconveniently for Churchill, during the war Italy, Greece, and Yugoslavia all had very large and growing Communist parties, and the most effective anti-Axis resistance fighters in those countries were also communist.
Churchill appreciated that the Soviet Union for much of WW2 had been doing most of the fighting against the Wehrmacht. At the same time, he advocated an Anglo-American "Mediterranean strategy" to strike at the supposed "soft underbelly" of the Axis and advance into Eastern Europe, as much to block the Red Army from advancing westward as to win the war. Churchill's Mediterranean strategy, which he supported for political reasons more than military ones, caused much tension with the Americans, who preferred to fight and defeat the Wehrmacht in northwest Europe. British policy after June 1941 was to support the Soviet Union as a Soviet defeat would free the majority of the Wehrmacht to fight in the west. At the same time, Churchill had hopes that the war would end with the Red Army being more or less still within the 1941 borders of the Soviet Union with the Allies liberating the rest of Europe. Churchill, together with other British leaders, believed that Britain could not afford heavy losses in fighting against the Germans, and the fact that the Red Army was doing the bulk of the fighting, inflicting heavy losses on the Germans while taking even more heavy losses itself, was a source of quiet satisfaction for him.
Churchill's Mediterranean strategy called for the Allies to take control of North Africa, and then to invade Italy, which in turn would be used as a base for invading the Balkans. It was described by the historian David Carlton as a strategy largely based upon Churchill's anti-communist ideology as he wished to place the Allied armies as far into Eastern Europe as possible to block the Red Army from moving west. Carlton also noted the contradiction in Churchill's grand strategy that called for the Soviet Union to do the bulk of the fighting and take the heaviest losses while at the same time he assumed that Britain would be able to step in when the time was right to stop the Red Army from moving west. Carlton noted that the Red Army did most of the fighting which also allowed the Red Army to seize most of Eastern Europe in 1944–45.
Eastern Europe As a corollary to his "Mediterranean strategy", Churchill supported plans for a post-war federation of Austria and Hungary as a way to limit Soviet influence in Eastern Europe, favouring a magnanimous peace with the Hungarians. Churchill was notably reluctant to declare war on Hungary, and only did so under heavy Soviet pressure. In 1942, treaties had been signed by the governments in exile for a post-war federation uniting Yugoslavia and Greece, and another federation uniting Poland and Czechoslovakia; Churchill had hopes that the proposed Austro-Hungarian federation would serve as the link for an Eastern European super-state stretching from the Baltic to the Mediterranean that would place much of Eastern Europe in the Western sphere of influence.
The Hungarian prime minister Miklós Kállay was convinced by 1943 that the Axis powers were destined to lose the war, and his main interest was in ensuring that Hungary signed an armistice with Britain and the United States before the Red Army arrived in Hungary. Throughout 1943, Hungarian diplomats in Turkey were secretly in contact with British and American diplomats, telling them that their government no longer wished to be fighting with Germany. On 9 September 1943, aboard a yacht in the Sea of Marmara just outside of Istanbul, the British ambassador to Turkey, Sir Hughe Knatchbull-Hugessen secretly signed an armistice with the Hungarian diplomat László Veress under which Hungarian forces would surrender to British and American forces the moment they arrived in Hungary; significantly, the secret armistice was vague about whether it also applied to Soviet forces.
Though Kállay rejected the armistice when he learned that it included the Allied demand for unconditional surrender, on 10 September the Hungarian consul in Istanbul, Dezső Újvári, told Sir Ronald Hugh Campbell, the British ambassador in Lisbon that his government would abide by the terms of the secret armistice. The willingness of Hungary's ultra-conservative government which was dominated by the aristocracy and gentry to reach out to Britain, with the Anglophile Veress speaking much about his hopes for closer Anglo-Hungarian ties after the war, led to hopes that Hungary would be in the British sphere of influence in the post-war world.
Bulgaria was allied to Germany and had received Romanian, Greek, and Yugoslav territory in 1940–41. In December 1941, King Boris III of Bulgaria declared war on the United States and Great Britain but never declared on the Soviet Union, as the traditional Russophile feelings of the Bulgarian people for their fellow Slavs would have made declaring war too unpopular. In the European Advisory Commission which had the responsibility of drafting armistices with the Axis powers, the Soviet Union, as it was not at war with Bulgaria, was not involved while the United States had no interest in armistices with what were regarded as backward Balkan nations, like Bulgaria. The British thus found Bulgaria was their responsibility by default, and the possibility that the Soviet Union might declare war on Bulgaria never occurred to them, leading them to assume that Bulgaria would be in the British sphere of influence after the war by default.
Churchill's support for retaining the monarchies in both Italy and Greece as the best way to keep the Communists out of power after the war also caused tensions with the Americans, who objected to the behavior of King Victor Emmanuel III in Italy and King George II in Greece who had both supported fascist regimes and had discredited the Houses of Savoy and Glücksburg. In opposition to Churchill, who favoured not only retaining the monarchies in Italy and Greece but also keeping in power men who supported fascism such as Marshal Pietro Badoglio, Roosevelt was much more open to having Italy and Greece become republics after the war while preferring men of liberal and moderate left-wing positions as the future post-war leaders. However, the fact that no Soviet forces were fighting in Italy lessened Churchill's fears of the Italian Communist Party coming to power after the war. Knowing that the Red Army forces in Ukraine were very close to Romania, which suggested the Soviets would probably enter that nation first, in May 1944, the British Foreign Secretary Sir Anthony Eden met with Fedor Tarasovich Gusev, the Soviet ambassador to the court of St. James, to discuss an arrangement under which Greece would be in the British sphere of influence in exchange for Romania being in the Soviet sphere of influence.
Though Yugoslavia was not considered as important as Italy and Greece, Churchill had pressed in June 1944 for a coalition government that would see the Democratic Federal Yugoslavia provisional government proclaimed by Marshal Josip Broz Tito in 1943 unite with the Yugoslav government-in-exile based in London, headed by King Peter II. Churchill had hopes that he with the help of Stalin could persuade Tito to accept King Peter II, believing that retaining the House of Karađorđević would ensure Yugoslavia would remain at least partially in the British sphere of influence after the war. However, unlike Greece and Italy, which British ships using the Suez Canal route had to sail past, this was not the case with Yugoslavia, which therefore led Churchill to place less importance upon that nation.
Towards Greece, British policy as stated in an internal document was "our long-term policy towards Greece is to retain her in the British sphere of influence, and...a Russian-dominated Greece would not be by British strategy in the Eastern Mediterranean". Knowing that the main resistance force in Greece was the Communist-dominated EAM (Ethnikó Apeleftherotikó Metopes-National Liberation Front), British policy was to support EAM as a way to tie down German forces that might otherwise fight against the British, but at the same time to prevent EAM from coming to power and ensure that the Greek government-in-exile based in Cairo returned to Greece. Given the importance which Churchill attached to Greece, he very much wanted an agreement with Stalin under which Moscow would accept Greece as being within the British sphere of influence.
Churchill's appeal to Roosevelt