Athens on the threshold of a new era

Date: 18/07/1996

TAKE a close look at Europe, and you will come to the sad conclusion that no country is spared the burden of historically-founded fear or, at best, lingering mistrust of its neighbours.

And while no member state in the Union escapes this malevolent heritage, none has fallen prey to it more than Greece.

This sprawling country of ten million people, surrounded by a myriad of islands scattered in the Mediterranean, lacks a single border it considers entirely safe and remains deeply scarred by four centuries of occupation by the Muslim Ottoman Empire.

To outsiders, the standard Greek reaction to anything Turkish, Macedonian or Muslim often seems to verge on paranoia.

But even cosmopolitan Greeks with a long experience of living abroad are convinced that western Europeans grotesquely underestimate the potential threat emanating from Greece's overwhelmingly powerful, heavily-armed neighbour, Turkey.

Citing Turkish occupation of Northern Cyprus and Ankara's territorial appetite in the Aegean Sea as evidence, many Greeks believe the centuries-old antagonism between Islamic Turkey and Christian Europe will never recede.

For them, Turkey amounts to a lumbering and undemocratic giant with a nasty militaristic tradition, a contempt for human rights, and a readiness to seize the slightest opportunity to reaffirm its dominance over its weaker neighbours.

But dismissing Greek fears as overblown and detached from modern reality does little to further understanding of a country which, for many years, found more joy than embarrassment in standing out from the mainstream of European politics.

For decades, Greece's charismatic Socialist leader Andreas Papandreou stirred easily aroused nationalist emotions by deriding western institutions such as NATO and the Union, and pursuing a foreign policy partly designed to irritate the Americans.

Yet Papandreou's use of fiery rhetoric - a genre which Greeks love as much as or more than their Mediterranean neighbours - never misled the wily politician into seriously pursuing a course of splendid isolation. Papandreou's many challenges to western political dogma, partly designed to appease his socialist PASOK party's radical wing, were made from the secure basis of membership of NATO and the EU.

And while many officials privately expressed dismay, the Union turned an official blind eye to Greece's systematic infringement of the embargo against Serbia during the Yugoslav war, sometimes using Athens' excellent contacts with fellow-orthodox Serbs to keep in touch with the Belgrade leadership at a time when the Serb President Slobodan Milosevic was viewed by Europe as a political pariah.

While NATO membership has probably made Greece feel as safe as it can ever hope to be, the Union has given the country a spending power far beyond its wildest dreams.

The gradual increase of EU regional aid means that the equivalent of more than 3&percent; of Greece's official GDP actually comes straight out of the Brussels coffers, amounting to 12&percent; of national investment.

The sum would have been even higher had Athens always been able to put forward a sufficient number of spending projects eligible for EU funding.

Yet Papandreou's withdrawal from the political stage early this year, followed by his death a few months later, has opened the way for a generational transformation in Greece's political leadership which many Greeks hope will amount to more than just a change of style.

The new Prime Minister Costas Simitis has vowed to bring Greece closer to the mainstream of European political and economic thinking, and make progress towards meeting the Maastricht Treaty's convergence criteria for economic and monetary union an overriding priority.

The pro-European upheaval in the ruling Socialist party ushered in by Papandreou's departure from the political stage was confirmed a few weeks ago when Simitis was narrowly elected as party leader.

But the resistance of the old PASOK guard to change became apparent as Simitis had to threaten the party congress with fresh elections to secure his victory - and still found 46&percent; of the party delegates voting against him.

Observers in Athens are divided over the extent to which Simitis will be willing or able to bring about serious change.

But they agree that his leadership inevitably marks the end of an era of Greek politics dominated by autocratic leaders with formidable political records and personal experience of the troubled decades of civil war and dictatorship, which was the defining political experience for several generations of Greek citizens.

While some pin their hopes on the technocratic language and appearance of the new prime minister, hoping he will endow Greece's public administration with a taste for the cure of dull rigour the country desperately needs, others doubt Simitis' effectiveness, pointing to his patchy record as economics minister.

Critics focus their attacks on Simitis on his wavering over the privatisation of the Scaramanga shipyards, where long delays resulted in a major political and economic fiasco.

And even if the premier were determined to push change through, say his critics, the division of party and cabinet might well deprive him of the necessary clout to cut public spending, speed up privatisation and put a stop to the typical PASOK practice of buying loyalty in the public service sector with generous hand-outs.

In an early and worrying sign of the continuance of such traditions, Simitis recently agreed to the distribution of

so-called 'productivity grants' to the public sector which amounted to pay increases for everyone.

This led the governor of the Bank of Greece to voice concern over the austerity programme, warning that this year's inflation target of 5&percent; would almost certainly be missed, with the rate of inflation surging above 9&percent; in March.

Echoing such statements, Finance Minister Alekos Papadopoulos warned against a “loss of self-discipline and self-restraint” - a remark which was in stark contrast to the more upbeat assessments of the government's Minister of National Economy Giannos Papandoniou.

In a recent analysis, the Organisation for Economic Cooperation and Development (OECD) declared that austerity policies would have to be reinforced if inflation and the public deficit were to be kept within the limits of the convergence plan.

But other analysts, while acknowledging recent signs of a deterioration of macroeconomic indicators, prefer to stress the positive trends in the Greek economy, which they feel are best expressed in the evident rise in disposable income and the high level of liquidity in the economy.

Since sluggish official growth rates of 1&percent; to 2&percent; a year seem to contrast with other economic developments, these experts conclude that official statistics grossly underevaluate the Greek economy, with a parallel economy made up of “small, cash-based businesses that evolved out of a long tradition of tax avoidance, and which are now estimated to represent 30&percent; to 50&percent; of Greece's GDP”, as market researchers from the investment firm Salomon Brothers wrote in a recent report.

In the minds of many observers, the coming years will serve as a litmus test for Greece's ability to shed some of its historic tradition of difference and move closer to the mainstream of European integration. In a positive development this week, Athens signalled an end to its blockade of a Mediterranean aid package which includes money for Turkey.

“Greece could play a very useful role in our Mediterranean policy,” said one EU official. “But it has to stop trying to hold us to ransom to pursue its national obsessions.”

Whether it will continue to do so remains to be seen.