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 Vassilakis
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 percent of GDP. As a result of lower post-Olympic spending, the government deficit in 2005 is estimated to have lowered to 4.3 percent of GDP, with a debt to GDP ratio of 107.9 percent. The new administration has pledged to reduce the government debt to 2.6 percent of GDP in 2006 and to tighten fiscal finances, under an EC excessive deficit surveillance program.
The Greek economy is estimated to have grown by 3.6 percent in 2005 and similar growth rates are projected through 2007. These growth rates resulted in a drop in unemployment (to 9.8 percent in second quarter of 2005 from 10.4 percent in the same period in 2004), although it is still significantly higher among women and people under 27. Unfortunately, foreign direct investment 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.
Services make up the largest and fastest-growing sector of the Greek economy. About 14 million tourists are estimated to have visited Greece in 2005 with net revenues of about 10 billion euros. Remittances from transport (mainly shipping) are growing, and actually exceeded tourism receipts in 2004 and 2005. 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 percent 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 3,338 ships in March 2005, 8.7 percent of the world merchant fleet and 16.5 percent 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 2004, EU transfers accounted for 3.6 percent of GDP and are estimated to have been approximately 3.2 percent of GDP in 2005. 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 2004, the U.S. trade surplus with Greece was about $1.5 billion. There are no significant non-tariff barriers to American exports. The United States accounted for 4.4 percent of Greece's imports in 2004, which reached $52.6 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 two-year seat on the U.N. Security Council. In September 2006 Greece held the rotating presidency of 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, usually caused by one side or the other attempting to clarify an ambiguous status quo in the Aegean. 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 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.
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, and the Cold War. 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.
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 (MDCA) 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.
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 Vassilakis
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 percent of GDP. As a result of lower post-Olympic spending, the government deficit in 2005 is estimated to have lowered to 4.3 percent of GDP, with a debt to GDP ratio of 107.9 percent. The new administration has pledged to reduce the government debt to 2.6 percent of GDP in 2006 and to tighten fiscal finances, under an EC excessive deficit surveillance program.
The Greek economy is estimated to have grown by 3.6 percent in 2005 and similar growth rates are projected through 2007. These growth rates resulted in a drop in unemployment (to 9.8 percent in second quarter of 2005 from 10.4 percent in the same period in 2004), although it is still significantly higher among women and people under 27. Unfortunately, foreign direct investment 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.
Services make up the largest and fastest-growing sector of the Greek economy. About 14 million tourists are estimated to have visited Greece in 2005 with net revenues of about 10 billion euros. Remittances from transport (mainly shipping) are growing, and actually exceeded tourism receipts in 2004 and 2005. 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 percent 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 3,338 ships in March 2005, 8.7 percent of the world merchant fleet and 16.5 percent 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 2004, EU transfers accounted for 3.6 percent of GDP and are estimated to have been approximately 3.2 percent of GDP in 2005. 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 2004, the U.S. trade surplus with Greece was about $1.5 billion. There are no significant non-tariff barriers to American exports. The United States accounted for 4.4 percent of Greece's imports in 2004, which reached $52.6 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 two-year seat on the U.N. Security Council. In September 2006 Greece held the rotating presidency of 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, usually caused by one side or the other attempting to clarify an ambiguous status quo in the Aegean. 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 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.
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, and the Cold War. 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.
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 (MDCA) 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.
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