Greece (11/07)

For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Hellenic Republic

Geography
Area: 131,957 sq. km. (51,146 sq. mi.; roughly the size of Alabama).
Major cities: Capital--Athens. Greater Athens (pop. 3,566,060), municipality of Athens (772,072), Greater Thessaloniki (pop. 1,057,825), Thessaloniki (824,633), Piraeus (182,671), Greater Piraeus (880,529), Patras (170,452), Iraklion (132,117), Larissa (113,090).
Terrain: Mountainous interior with coastal plains; 1,400-plus islands.
Climate: Mediterranean; mild, wet winter and hot, dry summer.

People
Population (2005 est.): 11,104,000 million. (Immigrants make up approximately 10% of the population.)
Growth rate (2007 estimated): 0.163%.
Languages: Greek 99% (official); Turkish, others. Albanian is spoken by approximately 700,000 Albanian immigrants. English is the predominant second language.
Religions: Greek Orthodox (approximately 98% of citizens), with Muslim (1.3%), Jewish, Catholic, Protestant, and other religious communities.
Education: Years compulsory--9. Literacy--97.5%. All levels are free.
Health: Infant mortality rate--5.43/1,000. Life expectancy--male 76.72 years, female 81.91 years.
Work force: 4.72 million.

Government
Type: Parliamentary republic.
Independence: 1830.
Constitution: June 11, 1975, amended March 1986, April 2001.
Branches: Executive--president (head of state), prime minister (head of government). Legislative--300-seat unicameral Vouli (parliament). Judicial--Supreme Court. Council of State.
Political parties: New Democracy (ND), Panhellenic Socialist Movement (PASOK), Communist Party of Greece (KKE), Coalition of the Left (SYNASPISMOS), and Popular Orthodox Rally (LAOS).
Suffrage is universal and mandatory at 18.
Administrative subdivisions: 13 peripheries (regional districts), 51 nomi (prefectures).

Economy (2006)
GDP: $245 billion.*
Per capita GDP: $22,000.*
Growth rate: 4.2%.
Inflation rate: 3.2%.
Unemployment rate: 9.2%.
Natural resources: Bauxite, lignite, magnesite, oil, marble.
Agriculture (5.4% of GDP): Products--sugar beets, wheat, maize, tomatoes, olives, olive oil, grapes, raisins, wine, oranges, peaches, tobacco, cotton, livestock, dairy products.
Manufacturing (21.3% of GDP): Types--processed foods, shoes, textiles, metals, chemicals, electrical equipment, cement, glass, transport equipment, petroleum products, construction, electrical power.
Services (73.3% of GDP): Transportation, tourism, communications, trade, banking, public administration, defense.
Trade: Exports--$16.15 billion: manufactured goods, food and beverages, petroleum products, cement, chemicals. Major markets--Germany, Italy, France, U.S., U.K. Imports--$51.44 billion: basic manufactures, food and animals, crude oil, chemicals, machinery, transport equipment. Major suppliers--Germany, Italy, France, Japan, Netherlands, U.S.

* Greece is about to revise upward its GDP by 9.6%. This revision resulted from the first fundamental revision of Greek economic statistics since 1988. The European Union (EU) approved the increase on October 30, 2007 but actual figures have not been released yet.

PEOPLE
Greece was inhabited as early as the Paleolithic period and by 3000 BC had become home, in the Cycladic Islands, to a culture whose art remains among the most evocative in world history. In the second millennium BC, the island of Crete nurtured the maritime empire of the Minoans, whose trade reached from Egypt to Sicily. The Minoans were supplanted by the Mycenaeans of the Greek mainland, who spoke a dialect of ancient Greek. During the Roman, Byzantine, and Ottoman Empires (1st-19th centuries), Greece's ethnic composition became more diverse. The roots of Greek language and culture date back at least 3,500 years, and modern Greek preserves many elements of its classical predecessor.

Eastern Orthodox Christianity is the dominant religion in Greece and receives state funding. During the centuries of Ottoman domination, the Greek Orthodox Church preserved the Greek language and cultural identity and was an important rallying point in the struggle for independence. There is a centuries-old Muslim religious minority concentrated in Thrace and an estimated 300,000 Muslim immigrants living elsewhere in the country. Smaller religious communities in Greece include Old Calendar Orthodox, Catholics, Protestants, Jews, Jehovah's Witnesses, and Mormons.

Greek education is free and compulsory for children between the ages of 6 and 15. Overall responsibility for education rests with the Ministry of National Education and Religious Affairs. Private colleges and universities (mostly foreign) do have campuses in Greece despite the fact that their degrees are not recognized by the Greek state. Entrance to public universities is determined by state-administered exams.

HISTORY
The Greek War of Independence began in 1821 and concluded in 1830 when England, France, and Russia forced the Ottoman Empire to grant Greece its independence under a European monarch, Prince Otto of Bavaria.

At independence, Greece had an area of 47,515 square kilometers (18,346 square mi.), and its northern boundary extended from the Gulf of Volos to the Gulf of Arta. Under the influence of the "Megali Idea," the expansion of the Greek state to include all areas of Greek population, Greece acquired the Ionian islands in 1864; Thessaly and part of Epirus in 1881; Macedonia, Crete, Epirus, and the Aegean islands in 1913; Western Thrace in 1918; and the Dodecanese islands in 1947.

Greece entered World War I in 1917 on the side of the Allies. After the war, Greece took part in the Allied occupation of Turkey, where many Greeks still lived. In 1921, the Greek army marched toward Ankara, but was defeated by Turkish forces led by Ataturk and forced to withdraw. In a forced exchange of populations, more than 1.3 million refugees from Turkey poured into Greece, creating enormous challenges for the Greek economy and society.

Greek politics, particularly between the two world wars, involved a struggle for power between monarchists and republicans. Greece was proclaimed a republic in 1924, but George II returned to the throne in 1935. A plebiscite in 1946 upheld the monarchy, which was finally abolished by referendum on December 8, 1974.

Greece's entry into World War II was precipitated by the Italian invasion on October 28, 1940. Despite Italian superiority in numbers and equipment, determined Greek defenders drove the invaders back into Albania. Hitler was forced to divert German troops to protect his southern flank and overran Greece in 1941. Following a very severe German occupation in which many Greeks died (including over 90% of Greece's Jewish community) German forces withdrew in October 1944, and the government-in-exile returned to Athens.

After the German withdrawal, the principal Greek resistance movement, which was controlled by the communists, refused to disarm. A banned demonstration by resistance forces in Athens in December 1944 ended in battles with Greek Government and British forces. Continuing tensions led to the outbreak of full-fledged civil war in 1946. First the United Kingdom and later the U.S. gave extensive military and economic aid to the Greek government. In 1947, Secretary of State George C. Marshall implemented the Marshall Plan under President Truman, which focused on the economic recovery and the rebuilding of Europe. The U.S. contributed hundreds of millions of dollars to rebuilding Greece in terms of buildings, agriculture, and industry.

In August 1949, the Greek national army forced the remaining insurgents to surrender or flee to Greece's communist neighbors. The insurgency resulted in 100,000 killed, 700,000 displaced persons inside the country, and catastrophic economic disruption. This civil war left Greek society deeply divided between leftists and rightists.

Greece became a member of NATO in 1952. From 1952 to late 1963, Greece was governed by conservative parties--the Greek Rally of Marshal Alexandros Papagos and its successor, the National Radical Union (ERE) of the late Constantine Karamanlis. In 1963, the Center Union Party of George Papandreou was elected and governed until July 1965. It was followed by a succession of unstable coalition governments.

On April 21, 1967, just before scheduled elections, a group of colonels led by Col. George Papadopoulos seized power in a coup d'etat. The junta suppressed civil liberties, established special military courts, and dissolved political parties. Several thousand political opponents were imprisoned or exiled to remote Greek islands. In November 1973, following an uprising of students at the Athens Polytechnic University, Gen. Dimitrios Ioannides replaced Papadopoulos and tried to continue the dictatorship.

Gen. Ioannides' attempt in July 1974 to overthrow Archbishop Makarios, the President of Cyprus, brought Greece to the brink of war with Turkey, which invaded Cyprus and occupied part of the island. Senior Greek military officers then withdrew their support from the junta, which toppled. Leading citizens persuaded Karamanlis to return from exile in France to establish a government of national unity until elections could be held. Karamanlis' newly organized party, New Democracy (ND), won elections held in November 1974, and he became Prime Minister.

Following the 1974 referendum, the Parliament approved a new constitution and elected Constantine Tsatsos as president of the republic. In the parliamentary elections of 1977, New Democracy again won a majority of seats. In May 1980, the late Prime Minister Karamanlis was elected to succeed Tsatsos as president. George Rallis was then chosen party leader and succeeded Karamanlis as Prime Minister.

On January 1, 1981, Greece became the 10th member of the European Community (now the European Union). In parliamentary elections held on October 18, 1981, Greece elected its first socialist government, the Panhellenic Socialist Movement (PASOK), led by Andreas Papandreou. In 1985, Supreme Court Justice Christos Sartzetakis was elected president by the Greek parliament. PASOK under Papandreou was re-elected in 1985.

Greece had two rounds of parliamentary elections in 1989; both produced weak coalition governments with limited mandates. In the April 1990 election, ND won 150 seats and subsequently gained 2 others. After Prime Minister Mitsotakis fired Foreign Minister Andonis Samaras in 1992, the rift led to the collapse of the ND government and a victory in the September 1993 elections for Andreas Papandreou's PASOK.

On January 17, 1996, following a protracted illness, Prime Minister Papandreou resigned and was replaced by former Minister of Industry Constantine Simitis. In elections held in September 1996, Constantine Simitis was elected Prime Minister. In April 2000, Simitis and PASOK won again, gaining 158 seats to ND's 125. Parliamentary elections were held March 8, 2004, and ND won 165 seats to PASOK's 117; Konstantinos Karamanlis, ND leader and the nephew of the former prime minister, became Prime Minister. Karolos Papoulias was elected President by Parliament in February 2005. Most recently, parliamentary elections were held September 16, 2007. ND won 152 seats to PASOK’s 102; Karamanlis was re-elected Prime Minister.

Greece's exemplary success in hosting a safe and secure 2004 Summer Olympics in Athens has enhanced its international prestige. The 2004 Olympics and Paralympics left an impressive and expensive legacy of new roads, spectacular stadiums, and modern public transportation systems, which the PASOK government began in 1997 and the New Democracy government of Karamanlis completed in 2004.

GOVERNMENT AND POLITICAL CONDITIONS
Greece is a parliamentary republic whose constitution was last amended in April 2001. There are three branches of government. The executive includes the president, who is head of state, and the prime minister, who is head of government. There is a 300-seat unicameral "Vouli" (legislature). The judicial branch includes a Supreme Court. Administrative subdivisions include 13 peripheries (regional districts) and 51 nomi (prefectures). Suffrage is universal at 18.

Principal Government Officials
President--Karolos Papoulias
Prime Minister--Konstantinos Karamanlis
Foreign Minister--Dora Bakoyannis
Ambassador to the United States--Alexandros Mallias
Ambassador to the United Nations--Adamantios Vasilakis

Greece's embassy in the United States is located at 2221 Massachusetts Ave., NW, Washington, DC 20008; tel: (202) 939-1300; fax: (202) 939-1324. Greece also maintains consulates in Boston, Chicago, Los Angeles, New York, San Francisco, Atlanta, Houston and Tampa.

ECONOMY
Greece adopted the euro as its new common currency in January 2002. The adoption of the euro provided Greece (formerly a high inflation risk country under the drachma) with access to competitive loan rates and also to low rates of the Eurobond market. This led to a dramatic increase in consumer spending which gave a significant boost to economic growth. This credit also led to a more relaxed fiscal policy starting in 2002, which, combined with expenditures associated with the preparation of the Athens 2004 Olympics, resulted in excessive deficits and debt in 2003 and 2004. The government deficit in 2004 is now estimated by the Greek government to have reached 6.6% of GDP. As a result of lower post-Olympic spending and tight public spending, the government deficit in 2006 was 2.6% of GDP, with a debt to GDP ratio of 104.3%. The ND administration has pledged to the European Commission to achieve a balanced budget by the year 2010.

The Greek economy grew by 4.2% in 2006 and similar growth rates are projected for 2007. These growth rates resulted in a drop in unemployment (to 9.2% in 2006, down from 10.4% in 2004), although it is still significantly higher among women and people under 27. Unfortunately, foreign direct investment (FDI) inflow has also dropped, and efforts to revive it have been only partially successful. At the same time, Greek investment in Southeast Europe has increased, leading to a net FDI outflow in some years.

On September 22, 2006 Minister of Finance Alogoskoufis announced a major upward revision of Greece's GDP by 26%. This large revision resulted from the first fundamental revision of Greek economic statistics since 1988. However, Eurostat issued its final assessment of Greece’s proposed revision process in October 2007, revising GDP growth downward to 9.4%.

Services make up the largest and fastest-growing sector of the Greek economy. About 15 million tourists are estimated to have visited Greece in 2006, with net revenues of about $11.4 billion. Remittances from transport (mainly shipping) are growing, and actually exceeded tourism receipts in 2005 and 2006 to about $14.3 billion. Receipts from tourism and transport have covered a significant portion of Greece's large trade deficit. Industrial activity has shown a mixed performance, with certain sectors such as the food industry and high-tech/telecommunications showing healthy increases, while textiles have declined. Agriculture employs about 12% of the work force and is still characterized by small farms and low capital investment, despite significant support from the EU in structural funds and subsidies. Traditionally a seafaring nation, the Greek-owned merchant fleet totaled 3,700 ships in February 2007, 8.5% of the world merchant fleet and 16.5% of world tonnage.

European Union (EU) Membership
Greece has realigned its economy as part of its transition to full EU membership that began in 1981. Greece last held the rotating EU presidency in the first half of 2003. Greek businesses continue to adjust to competition from EU firms, and the government has liberalized its economic and commercial regulations and practices.

Greece has been a major net beneficiary of the EU budget; in 2005, EU transfers accounted for 3.2% of GDP and are estimated to have been approximately 2.6% of GDP in 2006. From 1994-99, about $20 billion in EU structural funds and Greek national financing were spent on projects to modernize and develop Greece's transportation network in time for the Olympics in 2004. The centerpiece was the construction of the new international airport near Athens, which opened in March 2001 soon after the launch of the new Athens subway system.

EU transfers to Greece continued with approximately $24 billion in structural funds for the period 2000-2006. Unfortunately, bureaucratic obstacles have led to significant delays in Greece's absorbing these funds, leading to the real possibility that Greece may have to return a significant portion of them to the EU. The same level of EU funding, $24 billion, has been allocated for Greece for 2007-2013. These funds contribute significantly to Greece's current accounts balance and further reduce the state budget deficit. EU funds will continue to finance major public works and economic development projects, upgrade competitiveness and human resources, improve living conditions, and address disparities between poorer and more developed regions of the country.

U.S.-Greece Trade
In 2006, the U.S. trade surplus with Greece was about $0.58 billion. There are no significant non-tariff barriers to American exports. The United States accounted for 3% of Greece's total imports in 2006, which reached $51.4 billion. The top U.S. exports remain defense articles, although American business activity is expected to grow in the tourism development, medical, construction, food processing, and packaging and franchising sectors. U.S. companies are involved in Greece's ongoing privatization efforts; further deregulation of Greece's energy sector and the country's central location as a transportation hub for Europe may offer additional opportunities in electricity, gas, refinery, and related sectors.

FOREIGN RELATIONS
Greece's foreign policy is aligned with that of its EU partners. Greece gives particular emphasis to its close relations with Cyprus but also has growing political and economic ties with the Balkan countries and the Middle East.

Greece maintains full diplomatic, political, and economic relations with its Southeast European neighbors, except with Macedonia (see below), and regards itself as a leader of the region's Euro-Atlantic integration process. It provides peacekeeping contingents for Bosnia, Kosovo and Afghanistan. Greece has good relations with Russia and has embassies in a number of the central Asian republics, which it sees as potentially important trading partners.

Prominent issues in Greek foreign policy include Greek-Turkish differences in the Aegean, Turkish accession to the EU, the name dispute with Macedonia, the reunification of Cyprus, Kosovo final status arrangements and Greek-American relations. Starting in January 2005, Greece assumed a 2-year seat on the UN Security Council.

Macedonia
The Greek dispute with its northern neighbor over its constitutional name, Republic of Macedonia, has been an important issue in Greek politics since 1992 and has inhibited the establishment of full diplomatic relations. Greece was adamantly opposed to the use of "Macedonia" by the government in Skopje, claiming that the term is intrinsically Greek and should not be used by a foreign country. Mediation efforts by the UN and the United States brokered an interim agreement whereby Greece recognized the country as the Former Yugoslav Republic of Macedonia (FYROM) in September 1995. Talks on the name question continue under UN auspices.

Albania
Greece restored diplomatic relations with Albania in 1971, but the Greek Government did not formally lift the state of war, declared during World War II, until 1987. After the fall of the Albanian communist regime in 1991, relations between Athens and Tirana became increasingly strained because of allegations of mistreatment of the Greek ethnic minority by Albanian authorities in southern Albania. A wave of Albanian illegal economic migrants to Greece exacerbated tensions. In the past several years, however, cooperation between Greece and Albania has improved, with efforts focused on regional issues, such as narcotics trafficking and illegal immigration. However, tensions hover just below the surface. Greece remains host to 600,000-800,000 Albanian immigrants, many of them illegal. Crime in Greece involving Albanians often attracts headlines.

Greece-Turkey-Cyprus Relations
For historical reasons, most Greeks see Turkey as the major potential threat to their security. Greece and Turkey have unresolved disagreements regarding the Aegean maritime boundary, the treatment of the Orthodox Church and Greek minority in Istanbul, and the Muslim (primarily ethnic Turkish) minority in western Thrace. The largest source of tension in their relationship since 1974 has been the Cyprus conflict. Various UN-led efforts over the years to resolve the issue on a bizonal, bicommunal basis have failed. The latest attempt, the Annan Plan, was overwhelmingly rejected by Greek Cypriots in March 2004. Turkish Cypriots voted in favor of the plan and both Greece and Turkey expressed their approval. The Republic of Cyprus entered the EU on May 1, 2004 as a divided island. The UN is currently assessing whether the political will exists among the interested parties to restart negotiations.

At times over the past three decades, tensions between Greece and Turkey have almost reached the point of armed confrontation. In 1996, President Clinton intervened to help avert a possible armed exchange after Greek and Turkish journalists generated a dispute over ownership of a tiny, uninhabited Aegean islet called Imia (Kardak in Turkish.) A significant breakthrough in relations took place when major earthquakes hit Turkey and Greece in 1999. Both countries and peoples responded generously to the other's need, helping turn around official perceptions that rapprochement was too risky politically. Since that time, Greek and Turkish Foreign Ministers have increased the quantity and quality of bilateral exchanges, both official and unofficial.

Greece has endorsed and supported Turkey's bid for candidacy to the European Union since the Helsinki EU Summit in 1999. Despite continuing disagreements with Ankara over Cyprus and the Aegean, Greek opinion leaders across the political spectrum are convinced that Greece's long-term interests are best served by Turkey's successfully fulfilling the requirements for membership and joining the European Union. The EU opened accession talks with Turkey on October 3, 2005. In December 2006, amid continuing dispute over Cyprus, the EU froze talks with Turkey on eight chapters regarding accession and stated that no chapters would be closed until a resolution is found.

The Middle East
Greece claims a special interest in the Middle East because of its geographic position and its economic and historic ties to the area. Greece cooperated with allied forces during the 1990-91 Persian Gulf War. Since 1994, Greece has signed defense cooperation agreements with Israel and Egypt. In recent years, Greek leaders have hosted several meetings of Israeli and Palestinian politicians to contribute to the peace process. Greece has been traditionally supportive of Palestinian claims. However, beginning in the late 1990s, efforts to strike a more balanced relationship with Israel received a boost. Greek-Israeli relations have been complicated by Israel's strategic cooperation with Turkey. Israeli President Moshe Katsav visited Greece in 2006, the first-ever official visit by an Israeli head of state.

U.S.-GREECE RELATIONS
The United States and Greece have longstanding historical, political, and cultural ties based on a common heritage, shared democratic values, and participation as Allies during World War II, the Korean conflict, the Cold War, and now in Afghanistan. The Greek Government responded to the September 11, 2001 attacks with strong political support for the United States, use of Greek airspace, and the offer of Greek military assets in support of the counterterrorism campaign. Its participation in Operation Enduring Freedom included the stationing of a Greek Navy frigate in the Arabian Sea for almost 2 years--the most distant deployment for the Greek Navy since WWII.

In the summer of 2002, Greek authorities captured numerous suspected members of the terrorist group "November 17." In 2003, 15 members of the terrorist organization, which since 1975 had killed many prominent Greeks and five U.S. mission employees, were found guilty and convicted for more than 2,500 crimes, including multiple counts of homicide. In December 2005, a three-judge panel opened an appeals trial for the November 17 convicts, which lasted for 17 months. At its conclusion on May 3, two defendants were acquitted, while at the sentencing for the other 13 terrorists on May 14, 2007, the court largely upheld the results of the initial trial, leaving the leadership of the defunct group serving multiple life sentences and others serving long prison terms. Under the Greek system, however, two of the convicted prisoners were eligible for parole almost immediately (no action taken as mid-November 2007), and another will be eligible 18 months after imposition of the sentence.

In the early morning hours of January 12, 2007, terrorists fired a rocket-propelled grenade through a front window of the U.S. Embassy. A group calling itself Revolutionary Struggle later claimed responsibility for the act. Some see the domestic terrorist organization as a splinter group arising from the remnants of November 17 followers. Revolutionary Struggle also claimed responsibility for attempting to assassinate the Minister of Culture and former Minister of Public Order Georgos Voulgarakis in a bomb blast in May 2006.

There is smooth cooperation between U.S. and Greek counter-terrorism officials. Greek and American diplomatic, law enforcement, and intelligence agencies worked closely together in the build-up to and throughout the 2004 Summer Olympic Games in Athens. In January 2006, the United States and Greece signed protocols updating treaties covering extradition and mutual legal assistance, which further strengthened this cooperation.

An estimated three million Americans resident in the United States claim Greek descent. This large, well-organized community cultivates close political and cultural ties with Greece. There are approximately 90,000 to 100,000 American Citizens resident in Greece. Greece has the seventh-largest population of U.S. Social Security beneficiaries in the world.

The United States has provided Greece with more than $11.1 billion in economic and security assistance since 1946. Economic programs were phased out by 1962, but military financial assistance continued until the early 1990s.

In 1953, the first defense cooperation agreement between Greece and the United States was signed, providing for the establishment and operation of American military installations on Greek territory. The United States closed three of its four main bases in the 1990s. The current mutual defense cooperation agreement provides for the operation by the United States of a naval support facility that exploits the strategically located deep-water port and airfield at Souda Bay in Crete.

Principal U.S. Embassy Officials
Ambassador--Daniel V. Speckhard
Deputy Chief of Mission--Thomas M. Countryman
Management Counselor--Steven Taylor
Regional Security Officer--Timothy Haley
Political Counselor--Robin Quinville
Economic Counselor--W. Clark Price
Public Affairs Counselor--Barry Levin
Consul General--Ann Sides
Defense Attache--CAPT. Michael Morgan
Commercial Counselor--Stephen Alley
Principal Officer, Thessaloniki--Hoyt Yee
Agricultural Counselor--Geoffrey Wiggin (resident in Rome)

The U.S. Embassy in Greece is located at 91 Vasilissis Sophias Blvd., 10160 Athens; tel: [30] (210) 721-2951 or 721-8401, after hours 729-4444; fax: [30] (210) 645-6282. The U.S. Consulate General for Thessaloniki is located at 43 Tsimiski Street, 546-23 Thessaloniki; tel: [30] (2310) 242-905 or 721-2951, ext. 2400; fax: [30] (2310) 242-927, 242-924. The email address for the U.S. Embassy is AthensAmEmb@state.gov. The Embassy's website is athens.usembassy.gov. The Consulate General's website is thessaloniki.usconsulate.gov. The embassy's youth website is www.mosaiko.gr