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    Greece Introduction
    Source: The Library of Congress Country Studies


    Figure 1. Administrative Divisions of Greece, 1994


    Figure 2. Geographic Setting, 1994

    FOR GREECE, THE TWENTIETH CENTURY has been a period full of violence and uncertainty. The last years of the century, however, have brought the potential for political stability in a slowly maturing democratic system, and for economic prosperity as a part of a European continent undergoing unprecedented unification. Democracy, the theoretical basis of governance since the foundation of the modern Greek state in 1832, has had its longest and most consistent application in the era that began with the toppling of the military junta in 1974. Economic growth, which virtually stopped in the 1980s, showed signs of revival in the early 1990s, aided by substantial infrastructural aid programs and strict economic guidelines from Greece's partner nations in the European Union (EU--see Glossary). On the negative side, Greece's traditionally difficult relations with neighbor Turkey remained extremely tense as a series of territorial issues were still unresolved in the mid-1990s. And the violently unstable regions of the former Yugoslavia, just to Greece's north, renewed the threat that the wider Balkan turmoil of earlier decades might begin a new chapter.

    Rooted in the Minoan and Mycenaean civilizations of the third millennium B.C., the cultural heritage of Greece has evolved without interruption despite four centuries of Ottoman rule (fifteenth through nineteenth centuries) over the entire Greek peninsula. In the eighth century B.C., Greeks began establishing colonies throughout the Mediterranean and Black sea regions, spreading a cultural influence that remains in modern times. Following the development of the Greek polis as the dominant political entity on the Greek peninsula, for several decades in the fifth century B.C. Athens was the center of unparalleled political and cultural accomplishment. Among the contributions to modern civilization that emerged from Greece in that period are the art forms of a group of great sculptors and dramatists, the philosophical approaches of three great thinkers, and the governmental innovations of the great Athenian leader Pericles. After the fall of the Athenian Empire around 400 B.C., Alexander the Great extended his short-lived empire deep into Central Asia. Between his death in 323 B.C. and the Ottoman occupation in the 1450s, Greece was a culturally influential part, first of the Roman Empire, then of the Byzantine Empire.

    The Greek War of Independence (1821-32) resulted from a convergence of internal and international circumstances that simultaneously revived the Greek national consciousness and weakened the hold of the Ottoman Empire. The modern Greek state emerged from its struggle for liberation under close control of the European Great Powers and with quite vivid irredentist longings. In the nineteenth century, the West placed men from noble families of two countries, first Bavaria and then Denmark, on the new throne of Greece. For more than a century after independence, nationalist expansionism and extreme political factionalism hindered smooth development and brought frequent intervention by Britain and France. Progressive regimes such as those of Prime Minister Eleutherios Venizelos, in the first decades of the twentieth century, were interspersed with heavy international debt, military juntas, struggles between the monarch and elected government officials, and chaotic changes of government. Although the size of the Greek state increased in several stages in the nineteenth and early twentieth centuries, Greek irredentism suffered a serious blow in 1922 when Turkish forces drove the Greeks out of the Smyrna enclave that had been established along the west coast of Asia Minor, causing a huge refugee movement that changed Greece's demography.

    Greece was directly involved in the two world wars, suffering devastating damage from the Nazi occupation of 1941-44. The political schism that had begun in the early 1900s between royalists and republicans then fueled a disastrous civil war immediately following World War II.

    Greece emerged from the calamitous 1940s shattered economically, socially, and politically. Recovery was remarkably fast in the economic sphere and to some degree in society, but for another thirty years the left side of the political spectrum was suppressed in the wake of Civil War anticommunism, enabling conservative factions to dominate. The final stage of that domination, the totalitarian military regime of 1967-74, gave way to a broad spectrum of political activity and parliamentary representation that has prospered since 1974.

    In the postwar period, Greece's foreign relations have been determined by the need for economic and military security, provided first by Britain, then by the United States and the European Community (EC--see Glossary). In that period, two aspects of international geopolitics dominated Greece's foreign policy: the Cold War between the Soviet Union and its allies and the West and the latest stages of Greece's long-term struggle with Turkey over control of the two countries' overlapping territorial claims in the Aegean Sea. The Cold War ended with the collapse of the Soviet Union and its alliances in 1991, but the tensions with Turkey, represented most concretely in the dispute between Greece and Turkey over control of the island of Cyprus, continued unabated into the mid-1990s. Turkey took control of part of the island in 1974 in response to a Greek nationalist coup attempt. The autonomous state declared at that time in northeast Cyprus on behalf of the Turkish minority remained a major irritant to relations into the mid-1990s. In several instances in the 1980s and the 1990s, the two nations narrowly averted war over control of territory or resources in the Aegean Sea. The presence of vocal nationalist factions in Greece and Turkey pushed the respective countries away from positions of conciliation on the issues of the Aegean and Cyprus, despite substantial sentiment for harmonious relations between the two members of the North Atlantic Treaty Organization (NATO--see Glossary).

    After Greece achieved full EC membership in 1981, economic and political ties with more prosperous European nations grew steadily and greatly benefited Greece. However, in 1991 the emergence of new independent states from the collapsed Republic of Yugoslavia on Greece's northern border caused strains in this relationship. In opposition to EC policies, Greece defended the aggressive actions of traditional ally and trading partner Serbia toward Bosnia and Herzegovina, and in the same period Greece waged a vigorous campaign against recognition of Slavic Macedonia.

    Greek society is characterized by substantial ethnic and cultural homogeneity. An estimated 98 percent of citizens are of Greek descent, with small minorities of Albanians, Armenians, southern Slavs, Turks, and Vlachs. In the 1990s, the foremost minority problem has been the influx of illegal Albanian immigrants from across the northwestern border.

    Migration within the borders of Greece has assumed definite patterns. Although the net shift of Greek citizens from rural to urban areas began with the first wave of industrialization before 1900, the economic growth of the post-World War II period was accompanied by a more intense urbanization that moved more than 2 million residents out of rural areas in the postwar decades.

    Greece's religious homogeneity matches its ethnic makeup and reflects tradition born in the earliest years (fourth century A.D.) of the Byzantine Empire. The Orthodox Church of Greece, the established state religion, is the professed faith of 97 percent of Greek citizens. In recent decades, the church, which maintains substantial influence outside the strictly theological realm, has defended its doctrine in disputes with secular groups over social issues such as the legalization of abortion and civil marriages. Freedom of religion is a constitutional guarantee, although proselytization by some groups has been restricted.

    Both the education and the health care of Greek citizens are overwhelmingly dominated by state agencies. Greek society affords great respect to education because of Greece's venerable classical heritage and because Greeks traditionally have seen education as the key to social advancement. The centralized education system, the lower levels of which underwent major reform in the 1970s, oversees most of Greece's postsecondary institutions. The shortage of university positions has put great pressure on secondary students and created a "brain drain" by forcing many to attend universities abroad.

    Health care in Greece also has undergone substantial reform in the last two decades, although uneven distribution of health resources such as doctors, nurses, and clinics is still considered a major problem. The National Health Service, established in 1983 to centralize health care, has exerted varied degrees of control according to the political complexion of the government in power. This variation changes the ratio of public and private health care; since 1990, however, private medical practices and private hospitals have increased.

    The economic progress of modern Greece has been very uneven, with few periods of sustained growth. Despite periodic modernization programs that began in the late nineteenth century, until the middle of the following century Greece remained predominantly an agricultural nation. Then, following the destruction of much of its infrastructure in World War II and the Civil War of 1946-49, the Greek economy grew, with substantial Western aid, at a phenomenal rate in the 1950s and the 1960s. An important aspect of this growth was the development of the industrial sector into a significant part of the national economy, which was bolstered by a number of large investment projects backed by West European nations. The most important elements of this growth were the shipping, chemical, pharmaceuticals, metallurgy, and electrical machinery industries. By the early 1970s, however, a major economic crisis developed. Caused by the inept economic policies of the military regime, an international fuel crisis, and excessive borrowing in the public sector, the crisis brought production growth in many parts of the economy to a standstill for the next fifteen years. Budget deficits and inflation climbed in the 1980s, bringing a series of stabilization policies that included tax reform and privatization of state enterprises.

    Among the continuing structural problems of the Greek economy are the substantial size of the underground economy, the predominance of small enterprises, the need for more efficient taxation procedures, the failure of privatization programs, and excessive spending by the public sector. However, in the early 1990s closer integration of national economies in Europe and stringent EU requirements for continued participation in union aid programs spurred reforms and streamlining by Greek economic policy makers. By 1994 inflation had dropped significantly, and growth occurred in several long-stagnant manufacturing industries, spurring the hope that private investment might stimulate another period of growth.

    In the postwar period, Greece's traditional trade partners were consistently European (the top three were Germany, Italy, and France), with the United States the most important partner outside the EC. In the early 1990s, major gains were made in trade with nations of Eastern Europe and the former Soviet Union. Nevertheless, the most important aspect of Greece's foreign trade policy was increased integration into the EU system, a process that had entailed liberalization of trade policy in the late 1980s and meeting stringent standards for deficits, production growth, inflation, and unemployment by 1998 under the EU Convergence Plan.

    Beginning with the military regime of General Ioannis Metaxas (1936-41), the left wing of Greek politics was forcibly excluded from participation in government--a policy bred in the Great Schism between royalists and republicans and reinforced after World War II by the bitterness of the Civil War fighting between communist guerrillas and the national government. Although the exclusion ended technically with legalization of the Communist Party of Greece in 1974, the Greek left took control of the government for the first time in 1981 with the triumph of Andreas Papandreou's Panhellenic Socialist Movement (Panhellinion Socialistiko Kinima-- PASOK). In the fourteen years that followed, PASOK and the main conservative party, New Democracy (Nea Demokratia--ND), gained alternating majorities in the unicameral legislative Assembly. Although the two parties started the 1980s with drastically opposed positions on issues of national security and domestic economics, both positions had moved toward the center in many respects. This centrist drift was especially true of PASOK, which during the 1980s dropped much of its socialist program as well as its opposition to Greek participation in NATO. In this period, political campaigns were waged more on accusations of corruption and malfeasance than on divergent policy approaches. Under these conditions, experts pointed to the disenchantment of the Greek electorate as a major cause of the two changes in majority control between 1989 and 1993 and the inability of either party to form a government after the 1989 elections.

    Meanwhile, even lacking significant policy differences, the two major parties maintained a hold on power that made emergence of significant new political groups increasingly difficult. The strongest new party to emerge in the early 199Os, Political Spring, was dedicated to the single issue of preventing world recognition of independent Macedonia. At the same time, the next-largest party, the Communist Party of Greece, lost significant support. Both PASOK and the ND expected a new generation of leaders to emerge in the mid-1990s once long-time stalwarts Papandreou and Konstantinos Karamanlis retired.

    Even in the more liberal political climate that has prevailed since 1974, the free exchange of political ideas has been hampered by a long tradition of individual patron-client relationships that took the place of the Western-style interaction of coherent interest groups. For example, labor unions are not permanently active in pursuing their members' goals, and environmental groups have exercised rather inconclusive influence over government policy toward consumption of natural resources and pollution.

    The focus of Greek foreign policy changed somewhat in the early 1990s with the curtailment of Greece's strategic responsibilities in NATO, although the resentment of the 1980s toward Western domination had dissipated in most political circles. Despite Greece's enthusiastic support of EU unification goals, however, its policy toward the fragmented states of the former Yugoslavia caused friction with other member states. The main sources of friction were Greece's lobbying to prevent recognition of an independent state of Macedonia and Greece's refusal to honor the UN embargo on its erstwhile ally and major trading partner Serbia, in response to Serbian actions in Bosnia and Herzegovina. Both positions had substantial support in the Greek electorate and influential parts of the Greek media. As a result, in 1993 and 1994 Greece struggled to prevent isolation within the European body.

    Another major source of regional friction, the refugee movement from Albania into northern Greece, raised tensions with that neighbor and temporarily halted the large-scale aid initiative that Greece had begun after the fall of Albania's last communist regime. By the end of 1994, however, Greece had made gestures of reconciliation that improved relations, and the border situation was under negotiation.

    In 1947 the United States initiated a large aid program to prevent communist guerrillas from defeating Greek government forces in the Civil War. With that program, the United States replaced Britain as Greece's most important source of material aid and national security protection--a relationship that was to last until the end of the Cold War in the early 1990s. Greece joined NATO in 1952 as an extension of the anticommunism policy established as a result of the Civil War. Beginning in the mid-1970s, Greece's most immediate national security problems have been associated with a variety of conflicts with Turkey. The major components of that clash have been the Turkish occupation of part of the island of Cyprus; conflicts over sea and air jurisdiction in the Aegean Sea; and the existence of a substantial Muslim population in Greece's easternmost province, which borders on Turkey. Since Turkey's invasion of Cyprus in 1974, a number of international forums and individual arbiters have failed to resolve the fundamental conflict of national security positions between the two neighbors.

    Greece's designated Cold War role in NATO was the support and basing of United States and West European forces in the eastern Mediterranean, considered a crucial location in the event of a land attack in Europe by Warsaw Pact (see Glossary) forces. After 1991, Greek national security policy concentrated more heavily on defense against a possible Turkish attack in the Aegean Sea or in Cyprus. In that period, Greek military policy has been to seek diversification of its foreign support and supplies; accordingly, the United States presence has waned although bilateral defense agreements remain in place. In the early 1990s, military doctrine turned fully toward smaller units with enhanced mobility and firepower and modernization of specific types of equipment seen as most supportive of that approach.

    A number of economic indicators provided a generally positive outlook for Greece in 1995. The strong likelihood that the PASOK government would not have to face an election for the next two years improved the prospects of reducing the budget deficit and the inflation that for many years had combined to impede economic growth. In mid-1995, experts predicted that the annual inflation rate would be slightly below 10 percent at the end of 1995 and 8.5 percent in 1996. Given increased public investment (including the start of construction on the Spata international airport), Greece's gross domestic product (GDP--see Glossary) could rise by 2 percent in 1996. (Between 1992 and 1994, average annual GDP growth was 0.4 percent.)

    The public-sector deficit was generally identified as Greece's most pressing economic problem at the beginning of 1995. The 1994 national budget projected a deficit of Dr2.4 trillion (for value of the drachma--see Glossary), a figure that was exceeded in that year by about Dr360 billion. Despite the overshot on Greece's borrowing requirement, the final figure was well within EU requirements for that stage. The 1995 budget, which includes government borrowing equal to 10.7 percent of GDP, also met the targets of the EU's Greek Convergence Program. Experts did not expect Greece to exceed its 1995 public borrowing estimate, but they believed that budgeted expenditures for 1995, based on anticipated revenue increases of 26.9 percent from newly stringent tax enforcement policies, were unrealistically high. The budget also relies on a very low 1995 interest payment on the public debt, 3.6 percent. Overall, government debt was expected to rise from its 1994 level of 116.9 percent of GDP to 117.4 percent of GDP in 1995.

    The government's inability to collect taxes from the many self- employed Greek citizens has been a major cause of Greece's high public debt. In 1994 more than 70 percent of personal tax income came from salaried individuals. A series of measures devised by the Ministry of Finance to curtail rampant tax evasion by companies and individuals encountered obstacles early in 1995. After a court ruled the ministry's suspension of trade privileges an unconstitutional punishment for corporate tax evasion, the process of naming violators slowed noticeably, although the ministry's close monitoring of transaction documents continued in the first half of 1995.

    Plans were announced for a special tax police force with the power to arrest offenders, expediting the lengthy court procedures that had hindered enforcement in the past. At the same time, new excise taxes went into effect on tobacco products and gambling establishments. To improve collection of taxes on self-employed citizens, a new law bases assessments on presumed rather than reported earnings. In early 1995, farmers, merchants, and other self-employed Greeks demonstrated and struck against the new system, and the powerful General Confederation of Greek Merchants claimed that it would cripple Greece's retail market. Despite resistance, revenue collection rose substantially in the first half of 1995.

    Privatization remained a key economic issue in the first half of 1995. After 1993 PASOK policies, which had alienated the business community in the 1980s by favoring nationalization, shifted to a more pragmatic stance toward privatization and gained support from the Association of Greek Industrialists and other business groups. Experts cited opposition from labor organizations and the ND's failure to support PASOK privatization programs as the causes of Greece's generally slow progress in this area; little privatization of any kind was achieved in the first half of 1995.

    The privatization of state enterprises, a program that received a serious blow in November 1994 with the suspension of sales of shares in the state-owned Greek Telecommunications Organization (Organismos Tilepikoinonion Ellados--OTE), was scheduled to continue in 1995. Plans called for shares in OTE and the Public Petroleum Corporation to become available on the Athens Stock Exchange sometime in 1995. However, poor performance and high levels of indebtedness by OTE were expected to decrease the value of its shares. The emergence of private competition was expected to challenge OTE and another government monopoly, the Public Power Corporation (Dimosia Epicheirisi Ilektrismou--DEI). Plans called for two privately owned wind-energy plants to be built on Crete in 1995, providing the first major test of private power production in Greece by more than doubling Greece's installed capacity of wind energy.

    Several EU assistance programs targeting Greece offered an average of US$10 billion per year from 1995 through 1999. Disagreements between Greek authorities and the European Commission (see Glossary) about supervisory control of EU public works projects prevented utilization of much of the money allocated for the first half of 1995, however. Most of the large projects for which such assistance had been designed (most notably in the so- called Second Delors Package) never got underway; the main exception was the new Spata international airport near Athens, which was scheduled to begin construction in the fall of 1995 after an agreement was signed with the German Hochtief corporation in July. That deal creates a private-public joint venture that will manage the airport for its first thirty years.

    In June 1995, the Ministry of National Economy reported increased private investment in Greek industry. With the aid of substantial government subsidies, investment amounts for 1995 were already three times the total amount for all of 1994. Concentrated on machinery and commercial building, the investment trend was expected to continue into 1996. Experts warned, however, that investment must focus more strongly on infrastructure and retraining of the labor force to achieve long-term growth.

    In mid-1995 the Ministry of Labor reported declining investment and rising unemployment in some sectors of the economy, mostly traditional industries that were unable to apply new technology, attract investors, and find new markets as other industries were restructuring. The most notable losses occurred in the garment and textile industries. The latter industry, which accounts for 40 percent of Greece's industrial exports and 25 percent of its overall industrial product, has declined because of outmoded equipment and competition from imported materials. Meanwhile, expansion continued into the mid-1990s in the food and beverage industries, mining, services, trade, transportation, and banking. The tourism industry, whose growth in the early 1990s had been an important part of the national economy, suffered setbacks in the summer of 1995. In July an official recommendation by the United States Department of State of an indefinite terrorist threat against American tourists in Greece, together with similar warnings in the German media, seriously reduced the normally substantial summer tourist movement from those countries. Such publicity exacerbated Greece's reputation as a haven for terrorists, which had worsened with the assassinations and bombings of 1994. Long- standing friction with United States antiterrorist intelligence agencies resulted in dismissal of the chief of the national police's Antiterrorist Service in early 1995.

    As 1995 began, a number of political issues and questions were on the agenda for Greek policy makers. A key question, the prospect of parliamentary elections being forced by a stalemate over the choice of a new president, was avoided when Andreas Papandreou withdrew from presidential consideration in November 1994 and compromise candidate Konstantinos Stefanopoulos was elected and inaugurated in March 1995. That outcome, which avoided a fifth national election in a period of six years, was a great relief to all parties and to the Greek public as well.

    The compromise ensured that the present government would remain in power until the next scheduled parliamentary elections in October 1997. Such stability would greatly improve Greece's chances of meeting the long-term requirements of the EU's Convergence Program, which provides the guidelines for full participation and benefits in that organization. Experts believed that PASOK would now feel free to take some of the unpopular steps (such as reductions in public-sector spending) needed to gain control of the economy.

    At the beginning of 1995, both parties proposed a number of constitutional amendments. Among the fifty-two changes to be discussed were proposals to prescribe specifically the separation of church and state; strengthen privacy rights by prohibiting storage of data on an individual; and formally abolish the death penalty (which has not been applied since 1972). Also on the table were proposals to reinforce the constitutional status of the Assembly and the political parties; specifically state Greece's commitment to the EU and to European unity in general; strengthen the independence of the judiciary and establish a Supreme Judicial Council; and reform conditions of employment in the public sector. ND leaders submitted many similar amendments, adding a proposal upgrading the president's power to convene meetings and to issue proclamations (the last constitutional amendments in 1986 had weakened presidential powers substantially) and a proposal for reform of election campaign financing. PASOK declared all amendments except for the presidential powers provision open for negotiation.

    By the end of 1994, both major political parties were seriously divided into two or more factions, threatening the ability of each to make headway between 1995 and the next elections. Experts viewed the conflicts as a healthy sign of democratic change as a new generation debated the proper direction for the future. The public also was uncertain about its political direction: in a national poll in mid-1995, the ND and PASOK, still the two leading parties, each received only 25 percent support, with 30 percent of respondents declaring themselves undecided.

    In 1995 the parties faced the imminent retirement of three long-time leaders belonging to the pre-World War II generation-- Papandreou, who had led PASOK for the entire twenty-one years of its existence, President Konstantinos Karamanlis, an ND leader active in Greek governance since 1951, and former prime minister Konstantinos Mitsotakis, also of the ND.

    The compromise selection of Konstantinos Stefanopoulos--former leader of the now-defunct Democratic Renewal Party and at age sixty-nine also a veteran politician--as president in March 1995 was a pragmatic move by both sides and a great relief to observers who feared a bloody and indecisive battle over the successor to Karamanlis. In the event, Stefanopoulos received 181 votes, eleven more than the required number, on the third and decisive ballot, and PASOK party discipline enforced the party's official support for a one-time ND rival. Also vital to this result was the support of the nationalist Political Spring party, which held eleven seats in the Assembly.

    Throughout the first half of 1995, Papandreou vowed to remain as prime minister--although he was physically able to work only briefly each day, and his young wife received substantial criticism from within PASOK and in the media for her increasingly visible role in everyday policy making. Papandreou's professed aim was to bind together PASOK's two increasingly opposed factions, which were labeled the loyalists and the reformists. The dissident faction of PASOK, favoring closer ties with the EU and openly calling for Papandreou to step down, was led by a group of ambitious younger politicians including Minister of Industry, Energy, and Technology Konstantinos Simitis, former EU Commissioner Vasso Papandreou (no relation to the prime minister), and former Deputy Minister of Foreign Affairs Theodoros Pangalos. As Papandreou continued to hold power in mid-1995 without naming a successor, several candidates jockeyed for position, and Pangalos emerged as the most outspoken critic of Papandreou. Among Papandreou loyalists, the most likely candidates to succeed the prime minister were Minister of Foreign Affairs Carolos Papoulias and Assembly Speaker Apostolos Kaklamanis.

    The ND, meanwhile, faced a rebellion against party leader Miltiades Evert, who was portrayed by a dissident faction as out of touch with the party's political base and accountable for the ND's perceived loss of influence. The leaders of this movement were the former minister of industry, energy, and technology, Andreas Andrianopoulos, and a group of little-known younger politicians. Evert was able to consolidate his position in the first half of 1995 because of his party's generally favorable results in the local and regional elections of late 1994 and because of his victories in various skirmishes with the internal opposition. Former Prime Minister Konstantinos Mitsotakis, who had criticized some Evert policies and to whom many dissidents had looked as a possible replacement for Evert, remained uncommitted in the first half of 1995. Experts believed that wiretapping and bribery charges, which had stood against Mitsotakis until Papandreou dropped them in January 1995, would prevent Mitsotakis from mounting a challenge to Evert.

    At the beginning of 1995, Greece's four main foreign policy problems were its tense relations with neighboring Albania and Turkey, continuing conflict in the states of the former Yugoslavia, and Greece's unresolved objections concerning the name and certain policies of the Macedonian state to the north (recognized internationally since 1993 under the cumbersome name Former Yugoslav Republic of Macedonia--FYROM). Thus Greece continued to find itself in a dangerous national security position between a powerful and influential historical enemy, Turkey, and a chronically unstable region, the Slavic Balkans, at a time when the United States military presence in Greece had been greatly reduced.

    Relations with Albania improved early in 1995 with the release of four Greeks jailed in Albania under sedition charges in 1994. In March a meeting between Papandreou and Albanian Prime Minister Sali Berisha yielded a mutual commitment to sign a treaty of friendship before the end of 1995. Such a treaty would provide human rights guarantees for the Greek minority in Albania, improve the status of illegal Albanian refugees in Greece, resolve border issues, and address issues of banking and economic cooperation. Relations improved further when Greece arrested a group of Greek extremists planning an attack on an Albanian border post.

    On the issue of Macedonia--or Skopje in the official Greek terminology that uses the capital city as the country name--Greek officials continued to complain that the government of President Kiro Gligorov remains adamantly opposed to constructive dialogue. However, the elimination of spring elections from the political scene improved the prospects that Greece could make concessions on the Macedonia issue. In the first half of 1995, negotiations by the United Nations (UN) and other intermediaries failed. The use of the term Macedonia in the name of the new nation that emerged from Yugoslavia to Greece's north is objectionable to Greece because that name (and the sunburst design that FYROM included in its national flag) is associated with the Greek empire of Alexander the Great and the present-day northern province of Greece. In conjunction with reckless nationalist rhetoric in FYROM, the name usage has conjured fears of irredentist expansionism into Greek territory. Although compromise was reached on secondary issues, the name question did not yield to any compromise suggested in the first half of 1995.

    Meanwhile, Greece's unilateral embargo of non-humanitarian goods crossing into FYROM, imposed in 1994 in response to that nation's use of the name Macedonia, yielded negative results for Greece as well as for FYROM. The European Commission brought suit against Greece in the European Court of Justice for unjustified restraint of European trade, world opinion was decidedly against the Greek move, and Greek businesses complained of lost revenue and markets. As the court prepared a verdict in mid-1995, Greek diplomats had ample incentive to find a compromise that would avoid two potential sources of embarrassment: an international verdict against a key foreign policy of the Papandreou government and the admission that Greek diplomacy could not resolve a major foreign policy question independently without Western assistance.

    Although preliminary indications were that the court would declare the issue outside its jurisdiction, in May Greek and FYROM diplomats proposed an interim "small package" of mutual concessions, including changes in FYROM's flag and in the description of the country in the FYROM constitution and a lifting of the Greek embargo. Amid criticism that such a package would be an admission of failure for Greece, this strategy was abandoned. The Greek blockade of FYROM thus continued through the first half of 1995, as France, Germany, and other EU member countries intensified their objections and UN-sponsored negotiations made no progress. The blockade's severe impact on FYROM's national economy exacerbated ethnic tensions in that country, where hostility between the growing Albanian minority and the Slavic majority threatened to further destabilize Greece's northern border.

    A second embargo issue, the international blockade on trade with Serbia imposed by the UN in 1992, also hurt the Greek economy by eliminating an important trading partner except for illegal shipments. Besides commercial ties, Greeks also carried into the 1990s their historical loyalty to Serbia on cultural and religious grounds. In a 1995 poll, over 60 percent of Greeks named Serbia the foreign country for which they had the highest regard. After years of vocal opposition to the UN policy and violation of the embargo at various levels, in May 1995 Greece joined five other regional trading partners of Serbia to lodge an official protest and demand compensation from the UN.

    The diplomatic stalemate and Serbian advances in Bosnia and Herzegovina, which in 1995 continued to threaten the Balkans with a wider war, offered Greece an opportunity to repair its international diplomatic image and hasten the end of the UN embargo by acting as a neutral negotiator--provided that the Western powers found some diplomatic value in Greece's close ties with Serbs in Belgrade and in Bosnia. In June 1995, the Greek Ministry of Foreign Affairs was very active in negotiating the release of UN hostages taken by Bosnian Serb forces in Bosnia. In mid-1995, the official Greek position was that the UN peacekeeping force should remain in Bosnia and Herzegovina, but that any NATO rapid-reaction force, under consideration as a potentially anti-Serbian military unit of the Western powers, must remain under the peacekeeping mandate of the UN. At the same time, the Greek government reiterated that its NATO forces would aid in a withdrawal of UN forces from Bosnia but would not participate in a NATO attack on Serbian positions in Bosnia.

    Experts expected that the summer of 1995 would be significant in Greek-Turkish relations because of recent expansion of Turkey's navy, the conflict within NATO over location of the organization's Aegean headquarters at the Greek city of Larisa, the prospect of Cyprus's achieving membership in the EU, and increased tension over control of the continental shelf in the Aegean.

    Greek-Turkish reciprocal funding vetoes in NATO continued to hinder the financial and strategic planning of that organization, as they had in the early 1990s. Fearing loss of leverage over negotiations on Aegean Sea issues, Turkey vetoed funding for the Larisa base of NATO ground forces, part of a NATO package proposal that also included Multinational Division Headquarters and Air Subheadquarters in Greece. Greece responded with a veto of funding for the Izmir NATO base in western Turkey. In June the United States intensified its pressure on Turkey and revised the proposal on Land Forces headquarters, the most urgent of the issues, to better accommodate the Turkish position.

    In June the issue of Aegean control heated up when Greece ratified the United Nations Convention on the Law of the Sea, which establishes a twelve-mile continental shelf--giving Greece the legal right to extend its current six-mile limit and in effect nullifying Turkish claims to territorial waters in the Aegean Sea between the Turkish mainland and the Greek islands adjacent to the coast. Having lost this stage of its long-standing battle for control of the Aegean, Turkey, besides Israel and Venezuela the only country not to sign the treaty, threatened war if Greece applied the treaty in this way.

    In March 1995, the EU made a commitment to begin discussion of proposed membership for Cyprus and Malta (strongly urged by Greece) to begin within six months of the end of the EU's Intergovernmental Conference in 1996. The commitment also provided Cyprus the same political links with the EU as other prospective members such as the Czech Republic, Hungary, Poland, and Slovakia. Although Greeks initially hailed the commitment as a step toward the withering of the Turkish enclave in Cyprus, a later EU clarification indicated that only the Greek portion of Cyprus would be under consideration for membership.

    After the EU made its Cyprus commitment, Greece withdrew its veto of a proposed customs union between the EU and Turkey, which Turkey had eagerly sought to improve commercial ties in Europe and which was scheduled to go into effect in 1996. Greece's approval carried with it the requirement that a review be made after one year of implementation to determine the union's effect on the Greek textile industry. In any event, Turkey's prospective new position was jeopardized in 1995 by the European Parliament's disapproval of human rights practices in Turkey.

    The Greek Assembly's June 1995 ratification of the United Nations Convention on the Law of the Sea authorized the Greek government to extend at will the country's territorial waters de facto from the current six-mile limit to the twelve-mile limit allowed by the law. When Turkey reiterated earlier threats that such an extension would be a casus belli, an exchange of harsh language and accusations extended through the summer. The Turkish government repeated its claim that Greece was harboring, training, and exporting some of the Kurdish terrorists whose bombs and violent attacks have destabilized Turkey--a claim that Greece denied categorically.

    In the first half of 1995, nationalist rhetoric in Greece continued to describe Turkish plots to stir irredentism in the Turkish minority in western Thrace as a base for a Turkish invasion and capture of that Greek province. That strategy was seen as one of three elements of Turkey's offensive position toward Greece, the other two being Cyprus and the Aegean Islands. In May the Turkish navy's acquisition of nine new naval vessels--whose identity was a matter of dispute--brought accusations that Turkey planned to attack the Greek Aegean Islands and Cyprus and become a naval superpower in the Mediterranean. Although overall Turkish military superiority is assumed in all Greek national security doctrine-- since 1970 the Turkish army has been the largest NATO force in Europe, and since the mid-1970s its military expenditures have been the highest percentage of gross national product (GNP--see Glossary) aside from Greece's--nationalist factions in Greece used this assertion to urge additional weapons development programs for the Hellenic Navy, which now is building a full-sized navy yard in Cyprus.

    In mid-1995, the Greek government, assured that it would remain in power until 1997, announced a set of guidelines as initial bargaining positions on major European issues at the EU Intergovernmental Conference in 1996. Together with overall strong support of social, financial, and political cohesion in Europe, the statement supported EU membership for Cyprus and Malta; dismissed the concept of categorizing EU member nations according to varying speeds of development (a proposed standard of measurement by which Greece would be in the third and most disadvantaged group of nations); and insisted that the EU must achieve unanimous positions on foreign policy issues that are vital to the national interests of member nations.

    In 1995 the government moved toward reform in its national defense establishment. In 1990 and 1993, the incoming Mitsotakis and Papandreou administrations had recalled retired generals with connections to the party in power to assume high staff positions, causing resentment and resignations among senior officers who lost promotion opportunities. New legislation would appoint chiefs of the general staff and service chiefs to fixed terms, and it would strengthen the Assembly's oversight of the Ministry of Defense. Through its Foreign Affairs and Defense Committee, the Assembly would have to be consulted in long-term defense and spending policy as well as changes in the command structure.

    Domestic security organizations also were involved in controversies in the first half of 1995. In March the minister of justice, Georgios Kouvelakis, resigned in a dispute over alleged corruption in the administration of the national prison system. Kouvelakis, whose investigations had led to charges against an influential senior official, claimed in his resignation statement that his activities had been obstructed by the undersecretary to the prime minister. Also in March, the police beating of pensioners demonstrating for improved benefits brought the resignation of high police officials in Attica Province. Later that month, the minister of public order, Stelios Papathemelis, resigned rather than ordering police to break up a blockade by farmers striking against the new tax policy.

    August 31, 1995
    Glenn E. Curtis

    Data as of December 1994

    NOTE: The information regarding Greece on this page is re-published from The Library of Congress Country Studies. No claims are made regarding the accuracy of Greece Introduction information contained here. All suggestions for corrections of any errors about Greece Introduction should be addressed to the Library of Congress.

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