The Greek government, from the time that it took office, had been desperately short of money. There were contributions from abroad, taxes and duties imposed, but all these were far too little to finance a country at war. The only way of raising sums to continue the war was through commercial loans from abroad. And the best possible place to raise a loan of the size needed by the Greeks was London. On 14 January 1824, the Greek deputies Andreas Louriotis and Ioannes Orlandos reached London and on 9 February they signed the loan agreement with the bankers Loughman and O'Brien. The amount was 800000 pounds but only 280000 were actually given to Greeks. The total interest was 520000 pounds plus the 8.5% on the nominal value, which was a huge sum for those people who fought for a decent life. Finally the loan money arrived in Navplion, in July, but unfortunately they were used by the government more to harm the political opponents, than to equip the troops with the proper means to fight the enemy. The first civil war had just ended and the government which was controlled by Mavrokordatos, Kolettis and Georgios Koundouriotis, had its seat in Navplion. Their first thought was to buy some secondary military captains, to ensure the loyalty of their troops and to use them against Kolokotronis and Androutsos. They ignored the Ottoman and the Egyptian fleets which had started a new naval campaign in the Aegean Sea, with main objective to crash the islands of Kasos and Psara. According to Psarian Konstantinos Nikodimos, the government had sent a false message to Psara saying the the Greek fleet had already sailed to help the Psarians face the enemy fleet. The document was signed by Georgios Koundouriotis, Panagiotis Mpotasis, Ioannis Kolettis and Anagnostis Spiliotakis and no Greek fleet had sailed to help the islands of Psara and Kasos from the holocaust that would follow.
By the beginning of 1824 the Ottomans had achieved virtually nothing in three years of warfare, and Sultan decided to change strategy. He asked the help of the powerful pasha of Egypt, Mehmet Ali. Mehmet Ali had imposed reforms which had transformed the country. His main innovation was the creation of modern army and navy. He achieved that by bringing in Egypt hundreds of French officers and experts who set up military schools and opened military factories. Therefore, Sultan Mahmut asked his ally to bring Egyptian forces to Peloponnese, crash the revolution, transfer all the christians in Egypt and colonize the Greek lands with musulmans from Africa. All the conquered lands where to stay under Mehmet's authority. The general who took charge of this attempt was the son of Mehmet, Ibrahim Pasha. Egyptians had already crushed the rebellion in Crete, and the next objective was the destruction of the island of Kasos, fifty miles north of Crete. The Kasian ships had been of great help for the Cretan revolutionaries, and Kasos was a strong naval force. On 27 May 1824, a huge egyptian naval force, under Ismael Givraltar, reached Kasos. Among the enemy forces, there were 4000 veteran Albanian soldiers and the general commander was Husein Bey. The Greek government was long ago informed for the military preparations of Egypt, by the Italian agent A. Giusti, but her only preoccupation, was to exterminate the political opponents, the rebels, as she used to call them. Kasos was left alone. After two days of fight, enemy forces landed to the island and greek forces were overran. Then started the massacre of the population. The orders were 'All the male over eight years old are to be slaughtered, and the women and children are to be sold'. The legend says about a brave Kasian captain Markos Malliarakis, who him alone killed over thirty Turks. When he was captured, and taken to Husein Bey, he managed to take the knife of a guard, kill some Turks, before himself was killed. Those events took place in Kasos, on May, while the greek fleet under Georgios Sahtouris, was sent by the governement on 21 June, just to observe the destruction. Sahtouris didn't receive any order by Kolettis and Koundouriotis to sail to Psara to help them against the imminent danger.
The next step was the elimination of Psara. The Ottoman fleet of 80 ships, under admiral Hosref, reached Psara island on 20 June 1824. 14000 troops landed on the island and managed to defeat the
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