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EU: Greece Finds New Role

  • Breffni O'Rourke

Greece, the poorest member of the European Union, has worked hard in recent years to improve its economy. As a new member of the single currency euro-zone, it is hoping for fresh economic impetus. It also aspires to a greater economic and political role in the Balkans. In this second of two features on the smaller EU states, RFE/RL correspondent Breffni O'Rourke examines some of Greece's problems -- and its achievements.

Prague, 16 January 2001 (RFE/RL) -- The problems surrounding Athens' bid to stage the 2004 Olympic Games have almost reached the proportions of a classical Greek drama. In the latest episode, the chairman of the state-controlled company overseeing construction of the Olympic village was sacked this week. He is the 10th senior executive involved in Greece's Olympic effort to leave his job.

The recent sports imbroglio is particularly awkward because it comes at a time when Athens would much prefer to project an image of a new and more efficient Greece rather than one of old-time divisiveness.

Just a few weeks ago (1 January), Greece became the 12th member of the EU's single currency euro zone. Joining the euro has helped the country overcome the humiliation it suffered two years ago when it was excluded from the single currency's launching because it was unable to meet the EU's strict economic terms for membership.

The fact that Greece has now qualified shows the extent of the effort made by this staunchly pro-integration EU member-state.

John Palmer, head of the Brussels-based European Policy Center, puts it this way:

"The Greek economy has been in a process of fairly fundamental root-and-branch reform now for a number of years, certainly since the present government [of Prime Minister Costas Simitis] has been in power. We have seen some basic changes to the structure of the Greek economy, [including] reforms to the public sector, phasing out many excessive state-aid subsidies, and the turnaround in the Greek economy -- [which] I think has enabled Greece to meet the fairly tough criteria demanded by the countries of the EMU (Economic and Monetary Union)."

An economic analyst with the Deutsche Bank in Frankfurt, Jens Waechter, notes Greece achieved economic growth of about 4 percent in 2000, and is predicted to do better than that for each of the next two years. Waechter says:

"The perspective of joining EMU has really helped Greece focus its macroeconomic policy, and then to move toward a more stable economic framework -- not only as far as growth is concerned but especially as far as inflation and fiscal policies are concerned."

This year, in the optimism produced by euro membership, the government is planning a modest budget surplus for the first time in 35 years. It is also planning to reduce public indebtedness in the next few years, a process already underway in the run-up to euro membership.

But the Greek business community, probably mindful of past promises, remains skeptical. The Federation of Greek Industry has criticized the budget as relying on over-optimistic growth rates. And the stock market spent the last year mired in gloom, losing 50 percent of its value in the course of the year.

Aware that many Greek companies are often unable to compete on equal terms with rivals inside the EU, the government has favored the development of trade with Balkan neighbors to the north. Since the fall of communism, Greek companies have reasserted their traditional trade role in Albania, Bulgaria, Romania, and around the Black Sea, as well as in Russia, Ukraine and elsewhere.

Lukas Tsoukalis of the European Institute at the London School of Economics notes that although Greece may represent a relatively insignificant economy inside the EU, within its own region, things look very different. He told RFE/RL:

"Economically, Greece is a regional superpower, because if you [take] countries like Albania, the Federal Republic of Yugoslavia, Bulgaria, Romania, and what is called the Former Yugoslav Republic of Macedonia, and you add them all up, their GDP is slightly smaller than that of Greece, while their population is about five times as big."

Athens also wants to strengthen its political influence in the region by projecting itself as a factor for stability.

John Palmer of the European Policy Center says Greece can serve as an example of the changes required in civil society, and in the functioning of democracy, for those countries in the region aspiring to EU membership. But Greece's role has not been without its controversial side. Palmer says:

"In the past, there have been some differences of approach, at the very least, between Greece and its European Union partners over questions in the Balkans, particularly in the former Yugoslavia. In the eyes of some of Greece's friends and partners, it was a little too close to the former regime in Belgrade [of President Slobodan Milosevic] than was comfortable."

Also, Greece's aspirations for regional influence are marred by the persistent tensions with its regional rival Turkey.

Efforts to improve relations between Ankara and Athens, following their mutual earthquake tragedies in recent years, today appear to have stalled. And much of the historic bilateral rancor has now returned.