Wayzata World Factbook 1994/World Factbook - 1994 Edition - Wayzata Technology (1994).iso/pc/text/txtfiles/greece.bkg

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#CARD:Greece:Background Notes
US DEPARTMENT OF STATE BACKGROUND NOTES:  GREECE

December 1990
Official Name: Hellenic Republic

PROFILE
Geography
Area:  131,957 sq. km. (51,146 sq. mi.) including islands; roughly the
size of Alabama.  Cities:  Capital-(greater) Athens (3 million).  Other
cities-Thessaloniki (705,000), Patras (154,600), Iraklion (111,000).
Terrain:  Largely mountainous interior, with coastal plains; many
islands.  Climate:  Temperate.

People
Nationality:  Noun and adjective-Greek(s). Population:  10 million (1990
est.).  Ethnic Groups:  Greek 98%, other 2%.  Religions:  Greek Orthodox
97%, Muslim 2%, Other 1%. Language:  Greek.  Education:  Years
compulsory-9.  Literacy-men 96%, women 89%.  Health (1984):  Infant
mortality rate-13.8/1,000.  Life expectancy-men 72 yrs., women 75 yrs.
Work force (1988):  Agriculture-29%. Industry-  27%. Services- 43%.

Government
Type:  Presidential parliamentary republic. Independence:  1827.
Constitution:  June 1975, amended March 1986. Branches:
Executive-president (chief of state), elected May 1990 for 5 years;
prime minister (head of government). Legislative-unicameral parliament
(Vouli) elected April 1990; parliamentary system with 4 year (maximum)
term.  Judicial- supreme court (Areios Pagos). Major Political parties:
New Democracy (ND), Panhellenic Socialist Movement (PASOK), Left
Alliance (Synaspismos)-coalition of communist and leftist parties,
principally the Communist Party of Greece (KKE) and the Greek Left
(EAR).  Suffrage:  Universal, 18 and over. Administrative Subdivisions:
51 prefectures (nomi), 13 regional districts (periferiarchies). Central
Government Budget (1988 projected): $25.3 billion. Defense (1988
projected): approximately 11% of central government budget, 5% of GDP.)
 Flag:  Four white and five blue alternating horizontal stripes, with a
white cross on the upper staff  corner.

Economy
GDP:  $53.8 billion (1989). Annual Growth Rate: -0.5% (1987); 2.4%
(1988); 2.3% (1989) Inflation (1989): 14.8%. Natural Resources:
bauxite, lignite, magnesite, oil. Agriculture (12.8% of GDP, 1989):
Products:  grains, fruits (especially olives, olive oil, and raisins),
vegetables, wine, tobacco, cotton, livestock, dairy products. Industry
(including mining, electricity and construction): Manufactured goods
(30% of GDP, 1989)-processed foods, shoes, textiles, metals, chemicals,
electrical equipment, cement, glass, transport equipment, petroleum
products, construction, electrical power; Services  (57% of GDP,
1989)-transportation, communications, trade, banking, public
administration, defense. Trade: Exports (1989)-$6 billion:  textiles,
metal products, cement, chemicals, pharmaceuticals. Major Markets
(1988)-EC 64.2%, Middle East and North Africa 8.2%, USSR and Eastern
Europe 4.3%, US 6.3%. Imports (1989)-$15 billion:  petroleum, machinery,
transport equipment, chemicals, meat and animals. Major Suppliers (1988)
- EC 65.5%, Middle East and North Africa 4.2%, USSR and  Eastern Europe
5.1%, US 4% (taken from Greek customs statistics, which exclude military
equipment imports). Exchange Rate:  150 drachmas = $1 US (1990). US
Economic and Security Assistance (1946-1989): $9.3 billion.

Membership in International Organizations
 UN, EC, NATO, OECD, INTELSAT, Council of Europe.

PEOPLE
 In ancient times Greece was a mosaic of ethnically similar small
city-states.  During the migrations and invasions of the Byzantine and
Ottoman periods (4th-19th centuries AD), Greece's ethnic composition
lost its homogeneity.  Since independence (1827) and the exchange of
populations with Turkey in 1923, however, Greece has reforged a national
identity whose roots date back to the 13th century BC.  Greece's pride
in these Hellenic roots is reflected in its official name, Hellas or the
Hellenic Republic; the name "Greece" derives from the Latin name.  Greek
society retains its traditional Mediterranean values of family,
education, and personal honor (philotimo), despite the changes wrought
by urbanization and industrialization.
 From earliest times, Greeks have migrated across the country and across
the Mediterranean, eventually creating Greek-speaking communities all
over the globe.  Emigration has  been on such a scale that, by one
count, there are more than 3 million people of Greek heritage in the
United States alone.  Over the past two decades, however, migration
within Greece from rural to urban centers has been more extensive than
emigration abroad.  The 1961 census showed an urban population of 43%
compared to a rural and semiurban population of 57%.  By 1971, the urban
population had grown to 53% and by 1981 to 58%.  About one-third of
Greece's total population lives in the greater Athens area.
 Education is highly esteemed in Greece, not only because it transmits
culture and knowledge but also because it contributes to social and
cultural mobility.
 Orthodox Christianity is the established religion.  The Greek Orthodox
Church is self-governing under the spiritual guidance of the Ecumenical
Patriarch, resident in Istanbul, Turkey.  During the centuries of
Ottoman domination, the church preserved the Greek language, values, and
national identity and became an important rallying point in the struggle
for independence.  The church is under the protection and partial
control of the state, which pays the clergy's salaries.
 The Muslim minority, concentrated in western Thrace, was given legal
status by provisions of the Treaty of Lausanne in 1923 and is Greece's
only officially recognized minority .
 The Greek language dates back at least 3,500 years, and modern Greek
preserves many features of its classical predecessor.  In the 19th
century, after Greece's war of independence, an effort to rid the
language of Turkish and Arabic borrowings and to make it close again to
the language of Homer's Odyssey and Iliad, led to a version known as
Katharevousa.  However, this never became the everyday language of most
Greeks, and in 1976, it was abolished as the language of high school
instruction and of the government.  Today, spoken Greek is generally
termed Demotiki; a more recent reform movement has given rise to Nea
Demotiki, the version that is now considered standard Greek for everyday
usage and for contemporary literature.

HISTORY
 The eastern Mediterranean is one of the "cradles of civilization."
Greece was inhabited as early as the Paleolithic period, and by BC 3000
had become home, in the Cycladic Islands, to a culture whose art remains
evocative.  Early in the second millennium BC, the island of Crete
nurtured the sophisticated maritime empire of the Minoans, evidence of
whose trade stretches from Egypt to Sicily.  The Minoans were challenged
and eventually supplanted by mainland Mycenaeans, who spoke a dialect of
Greek.  Homer's Iliad and Odyssey, composed probably around BC 800, drew
on memories of the Mycenaeans, whose civilization collapsed around BC
1100, shortly after the Trojan war.  This collapse left Greece, except
the fortified citadel of Athens, open to migrating Dorian tribes from
the north.
 During the next few hundred years of political instability, the Greek
polis or city-state came into existence.  The polis included the city
and its surrounding territory, its institutions, its way of life, and
the unique values of its citizens.  When the cities sent their excess
population to found colonies around the eastern and western
Mediterranean and in the Black Sea, the colonies remained linked to the
mother city by common values and traditions.  Despite their differences
and frequent conflicts, the separate city-states shared the epics of
Homer and other poetry; the Olympic and other games; and the same
mythology, religion, and language which unified the Greek world.  They
were conscious of their common identity and called non-Greeks
"barbarians."
 Eventually two city-states emerged to dominate Greece-the Ionian city
of Athens, a democracy and a sea power, and the Dorian city of Sparta,
an oligarchy, a land power, and a militaristic society.  In the fifth
century BC, Persian invasions united the cities briefly, mainly under
the military leadership of Athens.  The subsequent "Golden Age" (BC
446-431) of Pericles, an Athenian leader, reflected an explosion of
cultural and intellectual achievements which has had a profound
influence on Western civilization.
 The conflicting ambitions of Athens and Sparta led to the Peloponnesian
wars (BC 431-404), which Athens lost.  The war caused suffering
throughout Greece but did not immediately diminish Athenian cultural
achievements.  A weakened Greece later fell under the domination of the
Macedonians.  Alexander the Great, whose tutor was the great philosopher
Aristotle, spread Greek culture as he marched east to conquer the world,
but he also adopted much from the Persian Empire he defeated.  The
fusion of Greek and Persian cultures created the Hellenistic
civilization of Asia Minor, which later was an important influence in
the culture of the Roman Empire and on Christianity and subsequent
Western thought.
 Rome conquered Greece in BC 146 and eventually ruled over the entire
Hellenistic world.  As Rome's power declined, one of its emperors,
Constantine, split the empire by establishing his Greek-speaking
capital, later called Constantinople, at the site of the ancient Greek
city of Byzantium in AD 330.
 Although Rome was overrun by migrating tribes and the western part of
the empire fragmented in the fifth century AD, the eastern part
flourished as the Byzantine Empire.  Greek in language and culture, the
empire was Roman in law and administration.  The people called
themselves Romans and tended to set aside the ancient Greek culture
because it was pagan.  Christianity was the official religion, and the
empire was seen as ecumenical, embracing all Christians. By the 11th
century, the Latin-speaking and the Greek-speaking churches split in the
Great Schism, which still continues.  Attacks by fellow Christians
during the Crusades and increasing pressure from Central Asian peoples
weakened the Byzantine Empire.  It collapsed finally with the fall of
Constantinople to the Ottoman Turks in 1453.  The patriarch of
Constantinople (subsequently renamed Istanbul), the capital of the
Ottoman Empire, then became both the head of the Orthodox Church and the
temporal leader of all Greek and many Orthodox subjects of the Sultan.
 The Greek war of independence began in 1821, and the country obtained
independence in 1827.  Under the tutelage of England, France, and
Russia, a monarchy was established with a Bavarian prince, Otto, named
king in 1833.  He was deposed 30 years later, and the European powers
chose a prince of the Danish House of Glucksberg as his successor.  He
became George I, King of the Hellenes.
 The Megali Idea (Great Idea), the vision of uniting all Greeks of the
declining Ottoman Empire within the newly independent Greek State,
exerted a strong influence on Greek political consciousness.  At
independence, Greece had an area of 47,515 square kilometers (18,346 sq.
mi.), and its northern boundary extended from the Gulf of Volos to the
Gulf of Arta.  The Ionian Islands were added 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 and at the
war's conclusion, took part in the Allied occupation of Turkey, where
many Greeks still lived.  In 1922, the Greek army marched from its base
in Smyrna, now Izmir, toward Ankara but was forced to withdraw.  At the
end of the war with the exchange of populations, more than 1.3. million
Greek refugees from Turkey poured into Greece, posing enormous problems
for the Greek economy and society.
 A continuing feature of Greek politics, particularly between the two
World Wars, was the struggle for power between monarchists and
republicans.  Greece was proclaimed a republic in 1924, but George II
returned to the throne in 1935, and a plebiscite in 1946 reconfirmed the
monarchy.  It was finally abolished by referendum on December 8, 1974,
when, by a two-thirds vote, the Greeks supported the establishment of a
republic.
 Greece's entry into World War II was precipitated by the Italian
invasion on October 28, 1940.  That date is celebrated in Greece by the
remembrance of the one-word reply-ochi (no)-given by the prime minister
to a series of demands made by Mussolini.  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 attacked Greece in early April 1941.  By the end
of May, the Germans had overrun most of the country, although Greek
resistance was never entirely suppressed.  German forces withdrew in
October 1944.
 With the German withdrawal, the principal Greek resistance movement,
which was controlled by the communists, sought to take control of the
country and undertook a siege of the British forces in Athens during the
winter of 1944-45.  When the siege was defeated, an unstable coalition
government was formed.  Continuing tensions led to the dissolution of
that government and the outbreak of Civil War in 1946.  First the United
Kingdom, and later the United States, gave extensive military and
economic aid to the Greek government.  Communist successes in 1947-48
enabled them to move freely over much of mainland Greece, but with
extensive reorganization and American material support, the Greek
national army under Marshal Papagos eventually was able to gain
ascendancy.  Yugoslavia closed its borders to the insurgent forces in
1949 after Marshal Tito of Yugoslavia broke with Stalin and the Soviet
Union.  Hostilities ceased in the fall of 1949 with some 80,000 Greeks
killed.  Twenty-five thousand more were either voluntarily or forcibly
evacuated by the Greek communists to Eastern Bloc countries, and there
were 700,000 refugees.
 Greece sought, after the Civil War, to join the Western democratic
alliance.  In 1952, Greece joined the North Atlantic Treaty Organization
(NATO).  From 1952 to late 1963, Greece was governed by conservative
parties (The Greek Rally of Marshal Papagos and its successor, the
National Radical Union (ERE) of Constantine Karamanlis).  In 1963, the
Center Union Party of George Papandreou won the election 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.  Civil liberties
were suppressed, special military courts established, and political
parties dissolved.  Several thousand opponents were imprisoned or exiled
to remote Greek islands.  Papadopoulos' associate, Gen. Dimitrios
Ioannides, took power in November 1973.  Ioannides' decision in July
1974 to attempt to overthrow Archbishop Makarios, the President of
Cyprus, and install a client regime on Cyprus brought Greece to the

brink of war with Turkey, which, in response to the coup, militarily
intervened and occupied almost 40 percent of the island.
 Senior Greek military officers then withdrew their support from the
junta.  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 which resulted in the rejection of the
monarchy, a new constitution was approved by parliament on June 19,
1975, and parliament elected Constantine Tsatsos President of the
Republic.  In the parliamentary elections of 1977, New Democracy again
won a majority of  seats.  In May 1980, Prime Minister Karamanlis was
elected to succeed Tsatsos as president.  George Rallis was then chosen
party leader and succeeded Karamanlis as prime minister.
 In  January 1981, Greece became the 10th member of the European
Community.  In parliamentary elections, held in October 1981, Greece
elected its first socialist government when the Panhellenic Socialist
Party (PASOK), led by Andreas Papandreou, won 172 of 300 seats with 48%
of the popular vote.
 On March 9, 1985, Prime Minister Papandreou announced that PASOK would
not support President Karamanlis for a second term and nominated Supreme
Court Justice Christos Sartzetakis.  On March 29, 1985, Sartzetakis was
elected President by the Greek Parliament, receiving the minimum 180
votes required on the third ballot.
 Greece witnessed two rounds of parliamentary elections in 1989.  In
June, New Democracy won 146 of the 300 seats - not enough to form a
government.  The centrist-conservative party joined forces with the
newly-formed coalition of communist and leftist parties called the Left
Alliance to form an interim coalition government under Prime Minister
Tzannis Tzannetakis (ND).  The Tzannetakis government's mandate was
limited to a program of national "catharsis," or cleansing.  The focus
was parliamentary investigations into crimes allegedly committed by
ministers of the previous government, including former Prime Minister
Papandreou, himself.  Following months of hearings, parliament voted to
lift the parliamentary immunity of most of the ministers incriminated,
including Papandreou, and the Tzannetakis government resigned, turning
the country over to an interim government in preparation for new
Parliamentary elections in November.
 The November elections were, if anything,  even more inconclusive, with
ND and PASOK (with Papandreou at the helm) both picking up additional
seats at the expense of the Left Alliance.  This time ND won 46% of the
vote but still came up three seats short of a parliamentary majority.
The stalemate led to the formation of a short-term, all-party coalition
government tasked with addressing the growing crisis in the Greek
economy under Prime Minister Xenophon Zolotas, an
internationally-respected economist.  The pressures of economic reform
proved too much for the fragile coalition; the party leaders withdrew
their support in February 1990, and elections were held on April 8.
 New Democracy won 150 seats in the April 1990 election.  With the
cooperation of the single deputy elected from the centrist DIANA party,
a New Democracy government headed by ND leader Constantine Mitsotakis
won a vote of confidence in Parliament.  The DIANA deputy subsequently
changed his  affiliation to ND,  and a special Greek electoral court
awarded a contested seat originally claimed by PASOK to ND, bringing
ND's total to 152 seats.

GOVERNMENT AND POLITICAL CONDITIONS
 The 1975 constitution, which describes Greece as a "presidential
parliamentary republic," is similar to the 1952 constitution but has
more extensive and precise guarantees of civil liberties and vests the
powers of the head of state in a president elected by parliament and
advised by the Council of the Republic.
 On balance, the Greek governmental structure is similar to that found
in most Western European countries and has been described as a
compromise between the French and German models.  As in most of Western
Europe, the prime minister and parliament play central roles in the
political process, but the Greek president also performs certain
governmental functions in addition to ceremonial duties.  The extent of
the president's influence in the political process depends to a large
degree on personal qualities and leadership.
 Presidential Powers Elected by parliament to a 5-year term, the
president can be reelected once.  The president has the power to declare
war and to conclude agreements of peace, alliance, and participation in
international organizations; a three-fifths parliamentary majority is
required to ratify such agreements or treaties.  The president can also
exercise certain emergency powers, which must be countersigned by the
appropriate minister.
 On March 7, 1986, parliament amended 11 articles of the constitution,
limiting many of the president's political powers.  The president may no
longer dissolve parliament, dismiss the government, suspend certain
articles of the constitution, or declare a state of siege.  To call a
referendum, he must obtain approval from parliament.  Restricting
presidential authority has given more power to the parliament and prime
minister.  Prime Minister Papandreou's majority party (PASOK) supported
the amendments.
Parliament
 Parliamentary deputies are elected by direct, secret ballot for a
maximum of  4 years, but elections can be called earlier.
 Greece uses a complex, reinforced proportional electoral system.  That
system has discouraged splinter parties and made a parliamentary
majority possible even if the leading party fell short of 51% of the
popular vote.  However, the constitution makes it possible for
Parliament to re-write the electoral law virtually at will.  Prior to
the June 1989 elections, the PASOK-majority parliament wrote a new
electoral law that took a big step toward simple proportional
representation, giving more power to the smaller parties and making it
more difficult for any one party to win a majority in Parliament. In
November 1990, parliament revised the electoral law again, lowering the
percentage of the popular vote needed to win an absolute majority in
parliament.

 Political Parties in the Greek Parliament (April 1990)
 Party    Seats
 New Democracy (ND  152
 Panhellenic Socialist Party
  (PASOK)           124
 Left Alliance         21
 Muslim Independent (GUVEN      2
 Ecologists/Alternatives     1
 Total    300

Local Administration
 Greece is divided into 51 prefectures (nomi), each headed by a prefect
(nomarch) appointed by the minister of the interior; 13 regional
governments (periferiarchis) were established in 1987, headed by
regional governors (periferiarchs), appointed by the minister of the
interior.  Although municipalities and villages have elected officials,
they do not have an adequate independent tax base and must depend upon
the central government for a large part of their financial needs and are
subject to numerous central government controls.

    Principal Government Officials
 President  Constantine Karamanlis
 Prime Minister  Constantine Mitsotakis
 Foreign Minister  Andonis Samaras
      Ambassador to the United States - Christos  Zacharakis
      Ambassador to the United Nations -  Antonios Exarchos

 Greece maintains an embassy in the United States at 2221 Massachusetts
Avenue NW, Washington, DC 20008 [tel. [phone]].  There are
consulates general in San Francisco, Chicago, and New York, and
consulates in New Orleans, Boston, and Atlanta.

ECONOMY
 The Greek economy began modernizing in the late 19th and early 20th
centuries with the adoption of social and industrial legislation and
protective tariffs, along with the creation of the first industrial
enterprises larger than artisan shops.  Industry at the turn of the
century was based primarily on food processing, shipbuilding, textiles,
and simple consumer products.  Greek economic progress was severely
affected from the 1920s to the 1950s by an influx of refugees from Asia
Minor, the global depression, Axis occupation, and civil war.  Recovery
began in 1953 with a drastic currency devaluation and reduction in
government spending which brought greater price stability and increased
exports.  From 1955 to 1963, under Prime Minister Karamanlis, Greece's
gross domestic product (GDP) almost doubled.  Greece achieved high rates
of growth in the late 1960s and early 1970s, which also saw some major
foreign investments in Greece.
 Since the 1970s, however, Greece has suffered a decline in its rate of
GDP growth of output, ratio of investment to GDP, and productivity of
investment.  Between 1963 and 1988:
 --  Real GDP growth fell from 10% to less than 4% per year;
 --  Investment as a share of GDP fell from 27% to 16%; and
 --  The productivity of investment (inverse of incremental capital
output ratio) fell from an average of  0.36 to .08  in the 1980s.

 There were several reasons for this.  Beginning in the mid-1970s, real
labor costs and oil prices rose.  In 1981, falling protective barriers
as Greece entered the European Community (EC) hurt company profitability
and private investment.  Government policies also created structural
supply-side problems which hampered development.  The government elected
in 1981 at first pursued expansionary policies, which in the face of
supply-side constraints, caused inflation and balance-of-payments
problems rather than growth in output or employment.  Between 1980 and
1985:
 --  Net public-sector borrowing requirement (PSBR) on a cash basis rose
from 8% to 18% of GDP;
 --  The current account deficit went from 5.5% to 10% of GDP; and
 --  Inflation accelerated from an annual average of 13% percent during
the 1970s to over 20% percent between 1981 and 1985.
 Non-debt capital inflows also fell and external debt increased from 15%
to 48% of GDP.  This economic performance compared poorly with the rest
of the EC.
 Growing public sector deficits were financed by direct borrowing.  This
was either domestic, crowding out the private sector, or in foreign
markets, adding to the country's debt position.  By mid-1985, the
government was faced with rising inflation, a ballooning public sector
deficit, and growing balance-of-payments problems.
 Greece turned to the EC for help.  In October 1985, supported by an ECU
1.75 billion loan from the EC, the government implemented a 2-year
"stabilization" program with limited success.  Incomes policy bore the
brunt of the effort, and real wages fell by 13% in 1986-87.  PSBR was
cut from 18% of GDP in 1985 to 13% in 1987.  Tighter monetary policy cut
the growth of bank credit, pushed the public sector to borrow more from
non-bank sources, and gradually established positive real interest rates
on deposits and loans.  The current account deficit fell from $3.3
billion in 1985 to $1.2 billion in 1987, and non-debt capital inflows
(plus the EC loan) almost entirely financed the deficit, halting the
growth of external debt.
 Inflation remained a problem, and GDP growth remained sluggish.
Inflation fell from 25% in 1985 to 16% in 1987, well above the target of
12%, and very high compared to EC norms.  Real GDP growth lagged and was
less than 1% during 1986 and 1987.  Nonetheless, by December 1987, a
good start had been made.  Profits, private investment, and non-debt
capital inflows all increased; net external borrowing ceased; and real
interest rates were positive.  External factors favored these
improvements.
 However, the good results did not last long, mainly because the program
did not address underlying structural problems.  Public sector
inefficiencies and excessive spending continued to strain the economy.
And, in 1988 the government relaxed incomes and financial policies.
 The results were unfortunate.  Real wages grew by 5%,  twice the target
rate.  PSBR hit 16 percent of GDP due to high public spending and
revenue shortfalls.  Government borrowing was above target and, by the
end of 1988, total public sector debt exceeded 100% of GDP.  The money
supply grew by 23%, and the drachma appreciated in real terms as
exchange rate policy was used to dampen inflation.  In the short term,
this expansionary policy brought growth.  Domestic demand soared and
real GDP grew by 4.3%.  Total investment increased by 9.3% in real
terms, with public investment up 1.6% and private  by 12% (although
investment was low by historical standards).
 But over the longer term, the economy was to suffer significantly.
Strong inflationary pressures remained during 1988.  Unit labor costs
rose more than the GDP deflator, eroding profit margins.  Based on
relative labor costs, the drachma appreciated by 8.5%, hurting
competitiveness.  The current account deficit fell to 2% of GDP between
1987 and 1988, but this improvement was due entirely to lower world oil
prices.  The non-oil trade deficit as a percentage of GDP reverted to
its pre-1985 peak, and the current account deficit, excluding oil,
widened by 0.6% of GDP.
 Greece continues to rely on foreign borrowing to finance its
balance-of-payments deficit.  Total external debt was $21.5 billion by
the end of 1989, and may top $23.5 billion by the end of 1990.  This is
40% and 42% of GDP respectively.  Greece faces a heavy repayment burden
over the next 5 years.
 The decrease in consumption caused by the stabilization program limited
the rate of economic growth to 1.4% in 1986.  In order to encourage
third country investment, the Bank of Greece in July 1986 significantly
liberalized repatriation regulations for dividends and profits for all
new investment in "productive" activities made by US and other non-EC
investors.  However, EC investors still receive more favorable
treatment.
 The Greek economy is characterized by a strong services sector (56% of
GDP) and a relatively large, inefficient agricultural sector (12% of
GDP) which represents 26% of the labor force.  Principal agricultural
products are olive oil, fruits and vegetables, cereals, tobacco, and
wines.  Agricultural output increased by 1.5% in 1989 but is expected to
decline in 1990 due to adverse weather conditions.  The manufacturing,
mining, electricity, and construction sector (30% of GDP) represents 20%
of the labor force and accounts for 45% of Greece's exports-primarily
textiles, cement, basic metals, petrochemicals and pharmaceuticals.
Manufacturing output rose by 2% in 1989, and is expected to show a small
increase in 1990.  Construction registered a 10% increase in 1990.
About half of the labor force is self-employed.

EC Membership
 Greece is being forced to gradually align itself with EC economic and
commercial practices during an extended transition period that began in
1981 following an 18-year period of associate membership.  Greece has
been granted derogations from certain aspects of the 1992 single-market
program, which means delays in full liberalization until at least 1995.

 EC membership is affecting all aspects of the Greek economy.  Small
Greek businesses will have to adjust to the strong competition of large
EC firms, while the government will need to liberalize its economic and
commercial practices.  Also, the Greek agricultural sector has had to
adjust to the lower intervention price set by the EC for Mediterranean
products.  Overall, however, Greece has been a net beneficiary of the EC
budget.  Net payments to Greece increased from $550 million by the end
of 1982 to $1.4 billion in 1986 and to a $2.5 billion in 1989.  The
European Investment Bank has provided development financing of
approximately $300 million annually.  Together, these funds contribute
significantly to Greece's current account balance, reduce the state
budget deficit, and provide resources for investment-primarily in the
public sector.
 The EC's integrated Mediterranean programs (IMP), announced in 1985, in
part to meet Greek objections to the entry of Spain and Portugal into
the EC, will increase the flow of development funds to less developed
regions of the community, including approximately $1.4 billion in grants
for Greece over 7 years.  Currently, Greece cannot fully draw on
available EC structural funds, which require matching, because of a
shortage of public funds.
Energy Petroleum is Greece's largest single import.  Based on import
statistics for the last 5 years (1984-89), Greece imports an average of
about 10 million tons of crude oil per year.
 About 75% of imported crude is processed by the two state-owned
refineries:  Aspropyrgos and EKO, and the remaining 25% by the 2
privately owned refineries:  Motoroil and Petrola (mainly
export-oriented).  The 4 Greek refineries produced about 16 million tons
of petroleum products in 1988, of which about 2 million tons were
exported.
 Greece's main suppliers of crude are Saudi Arabia, Libya, the Soviet
Union, and Kuwait.  Greece began pumping oil from a modest oil field off
the island of Thassos in the northern Aegean Sea in 1981 and is
exploring and developing oil reserves found in the Ionian Sea.  In 1988,
Greece produced 1 billion tons of crude oil from its own fields.
 Agreements on future purchases of natural gas are being negotiated with
the Soviet Union and Algeria.  The Soviet natural gas project will
require the construction of a pipeline to be completed in 10 years at a
cost of about $1 billion.  Algerian liquefied natural gas could be used
in the Athens region by 1992.  Greece also plans to expand its use of
hydroelectric power and lignite burning in power plants.  Lignite, a
soft, coal-like fuel widely available in Greece, provides about
three-quarters of the country's electricity.

Tourism
 Tourism is a major source of foreign exchange earnings.  More than 8.4
million tourists visited Greece in 1989, injecting more than $2 billion
into the Greek economy.  US tourists (315,000 in 1989) covered about 4%
of total tourist arrivals.  Although US tourism increased in the last 3
years, it is still far behind the 1979 levels (600,000 arrivals from the
US).

Commerce
 Greece's location, maritime tradition, proximity to the Middle East and
continuing unrest in that area have attracted regional marketing offices
to Athens.  The Greek government provides incentives to foreign
enterprises conducting business exclusively outside of Greece (so-called
"Law 89 companies").  Greece remains a net importer, in part because of
its petroleum needs, but exports are significant, constituting about
11.5% of GNP.  In 1989, Greece imported $15 billion worth of goods,
while it exported $6 billion.  Leading exports were textiles, metal
products, cement, chemicals, petroleum products  and  pharmaceuticals.
 More than 60% of Greece's trade is with other EC countries.  EC
membership has obliged Greece to eliminate or adjust many of its tariffs
and quotas, making Greek businesses compete more directly with their EC
counterparts.
 The Middle East (including North Africa) is an important trading
partner for Greece, due to Greece's reliance on foreign petroleum.  In
1986 14% of its imports came from Middle Eastern oil-producing nations
which purchased 11.7% of Greek exports.  Greek firms continue to be
involved in major projects in the Middle East.  However, depressed oil
prices have reduced Greece's exports to the Middle East.
 In 1989, the United States supplied about 4% of Greece's non-military
imports, led by machinery and transport equipment, coal, tobacco, corn,
soybeans, fur skins, and iron and steel scrap, and purchased about 6% of
its exports, with tobacco, petroleum products, antiques, iron and steel
products, and fur apparel the major items.
Shipping Greece is traditionally a seafaring nation and has built a
successful shipping industry due to its geographic location and the
entrepreneurial ability of its shipowners.
 In the 1980s, Greek shipowners began to abandon their national flag in
favor of flags of convenience to cut costs and to avoid rigid government
policies.  The Greek flag fleet shrank from 3,896 ships displacing 42.5
million gross tons in 1981 to 2,002 ships and 20.6 million gross tons in
February 1990.  The Greek fleet thus dropped from first to fifth in the
world league table.
 Greek shipping does not play a central role in the domestic economy in
that it trades internationally and is only marginally taxed on ship size
and not on income generated.  Nonetheless, it provides employment, and
brings in invisible earnings which help Greece's balance-of-payments
problems.
 Greece's membership gives the EC 15% of the world's tonnage.  The Greek
fleet is the largest in the EC, with a third of the community's vessels
and about 5% of the world's total tonnage.

FOREIGN RELATIONS
 In addition to belonging to the European Economic Community, Greece is
a member of NATO and, thus is a defense partner of the United States.
Historically, Greece's foreign policy has focused on the eastern
Mediterranean, particularly relations with Turkey, Cyprus, and the
Balkans.

Greece, Turkey, and Cyprus
 The 1974 coup against Cypriot President Makarios, inspired by the Greek
military junta in Athens, and the subsequent Turkish military
intervention in Cyprus, led to the junta's downfall, the creation of a
large Cypriot refugee population, and a divided island.  The Greek
Cypriot community elects  the government of the Republic of Cyprus,
which is recognized by most other countries; only Turkey recognizes the
regime in the Turkish-occupied territory north of the UN-controlled
buffer zone.
 The UN Secretary General has a mandate from the Security Council to use
his "good offices" to help the Greek and Turkish Cypriot communities
reach a mutually beneficial negotiated settlement to the Cyprus problem.

 The Republic of Cyprus has received strong support from Greece in
international fora.  Greece has a military contingent on Cyprus, and
Greek officers fill some key positions in the  Greek Cypriot national
guard.  Greece and Turkey enjoyed good relations in the 1930s, but
relations began to deteriorate in the late 1950s, sparked by the Cyprus
independence struggle.  Other issues dividing Greece and Turkey center
on the Aegean, involving delineation of the continental shelf,
territorial waters, territorial airspace, air traffic control, NATO
command and control arrangements, and military forces in the area.
Greek and Turkish officials held meetings in the 1970s to discuss
differences on Aegean questions, but Greece discontinued these
discussions in the fall of 1981.  In 1983, Greece and Turkey held talks
on trade and tourism, but these were suspended by Greece when Turkey
recognized the Turkish-Cypriot declaration of independence of November
15, 1983.  After a dangerous dispute in the Aegean in March 1987
concerning oil-drilling rights, the prime ministers of Greece and Turkey
exchanged messages exploring the possibility of resolving the dispute
over the continental shelf.  Greece argues for an International Court of
Justice decision.  Turkey proposes bilateral political discussions.  In
early 1988 the Turkish and Greek prime ministers met at Davos in
Switzerland and later in Brussels and agreed on various measures to
reduce bilateral tensions and encourage cooperation.  The Mitsotakis
government has initiated a revitalization of the Greek-Turkish dialogue.

Central and Eastern Europe
 Greece maintains full diplomatic, political, and economic relations
with its eastern European neighbors.  Efforts to promote multilateral
Balkan cooperation and understanding began in the mid-1970s, and the
Papandreou government supported a Balkan nuclear-free zone in these
talks.  Greece generally has had good relations with Yugoslavia since
the early 1950s.  Diplomatic relations with Bulgaria were restored in
1965, after a 24-year break, when Bulgaria renounced its claim to Greek
Thrace and Macedonia, an obstacle to Greek-Bulgarian cooperation since
World War I.  Diplomatic relations were restored with Albania in 1971,
but the Greek government did not lift the declared state of war with
Albania until September 1987.  In early 1990, relations between Greece
and Albania were strained by reports of mistreatment of the ethnic Greek
minority in Albania and an incident in which Albanian police reportedly
entered the Greek embassy in Tirana and forcibly  removed an asylum
seeker.
 Greek governments in recent years have pursued improvements in
Greek-Soviet relations.  Soviet Prime Minister Tikhonov's 1983 visit to
Greece reciprocated an official visit by then Prime Minister Karamanlis
to Moscow in 1979.  Prime Minister Papandreou visited the Soviet Union
in February 1985, but a reciprocal visit by Soviet President Gorbachev
has yet to take place.  Trade with Central and Eastern Europe and the
Soviet Union accounted for about 4.3% of Greek exports and 5% of its
imports in 1989.  The Tikhonov visit concluded with the signing of a
10-year economic and technical cooperation agreement, including  Soviet
assistance in financing and building a $500 million alumina plant in
Greece.  The Soviet Union will purchase the plant's entire planned
annual production of 600,000 tons for a period of 10 years.  The plant
is scheduled to be in operation by 1992.  In June 1987 the Soviet Union
and Greece agreed in principle to the construction of a $1 billion gas
pipeline through which the Soviets would supply 80% of Greece's natural
gas needs.  The two countries also signed a shipping protocol agreement
in May 1987.

Middle East Policy
 Greece has a special interest in the Middle East because of its
geographic position and its economic and historic ties to the area.
Greece maintained relations with Israel at a level just below that of
full diplomatic representation since 1948, until May 1990, when full
recognition was extended.  In December 1981, the Greek government raised
the status of the office of the Palestine Liberation Organization (PLO)
in Athens to a similar level.  Greece cooperated with the United States
and other countries in the PLO evacuation from Beirut in 1982 and from
Tripoli in 1983.

DEFENSE
 The Greek armed forces number about 185,000 active duty personnel, of
which 142,000 serve in the army, 19,500 in the navy, and 23,500 in the
air force.  The army includes 1 armored division, 1 mechanized division,
11 infantry divisions, 1 parachute/commando division, and a variety of
smaller specialized formations.  The navy has 10 submarines, 14
destroyers, 7 frigates, 27 fast attack craft, and other vessels.  There
are almost 300 combat aircraft in the air force.  All Greek males must
serve approximately 2 years of military service, depending on the
branch.
 The United States has had 4 major and 12 secondary defense facilities
in Greece which serve important missions, including strategic airlift,
training, naval support for the US Sixth Fleet, reconnaissance, storage
of reserve materials, and communications.  Some 3,700 US servicemen are
stationed at these facilities, primarily at Hellenikon Air Base in
Athens, the Nea Makri Communications Station at Marathon, and Souda Air
Base and the Iraklion Communications Station on the island of Crete.  As
part of a worldwide structural readjustment, in early 1990 the US
announced plans to withdraw from Nea Makri in 1990 and to close
Hellenikon in 1991.
 Greece joined NATO in 1952.  Bordering on the Warsaw Pact and
strategically located along the air and the sea lanes of the eastern
Mediterranean, Greece plays a key role in the defense of the alliance's
southern flank.  Following the 1974 Cyprus crisis, the Greek government,
in protest, withdrew from NATO's military wing but remained a member of
the alliance.  In October 1980, an arrangement with NATO provided for
Greece's reentry into the alliance's military structure.  Nevertheless,
Greek-Turkish differences led Athens to withdraw from NATO exercises in
the Aegean.

US-GREEK RELATIONS
 The United States and Greece have longstanding historical, political,
and cultural ties based on a common heritage and shared values.
Following World War II, when Greece was threatened by the communist-led
civil war, the United States proclaimed the Truman doctrine and began a
period of substantial financial and military aid: more than $8.5 billion
in economic and security assistance since 1946.  Economic programs were
phased out by 1962, but military assistance has continued.  In FY 1987,
Greece was the fifth largest recipient of US security assistance,
receiving $343 million in foreign military sales credits.
 Relations between the United States  and Greece were strained at times
during the Papandreou/PASOK years.  As Prime Minister, however,
Papandreou signed a new Defense and Economic Cooperation Agreement  with
the United States in 1983 allowing for the continued operation of US
bases in Greece and was negotiating toward a new one when talks were
recessed in May 1989 for Greek elections.  Prime Minister Mitsotakis,
shortly after taking office in April 1990, told parliament that his
government would attach "particular importance to the normalization of
relations with the United States."  He added that the conclusion of a
new defense agreement would be mutually beneficial.  US-Greek
negotiators signed a new mutual defense cooperation agreement in July.
This entered into force in November 1990.

TRAVEL NOTES
 Climate and clothing:  Lightweight clothing May-September; woolens
October-April. Customs:  Greek visas are required of holders of official
and diplomatic US passports, but not of visitors holding US tourist
passports and intending to stay less than 2 months.  Visitors wishing to
extend their stay must submit an application 20 days before the
expiration of the 2-month period.  No special inoculations  are
required, but health requirements change.  Travelers should check the
latest information.
 Telecommunications:  Telephone service within Athens is satisfactory,
and calls to the US may be made easily.  Athens is 7 standard time zones
ahead of the eastern US.

 Transportation:  Streets and highways in Greece are hard-surfaced;
smaller roads are sometimes rough and ungraded.  Tourists wishing to
drive must have an international driver's license.  The international
car insurance card is valid if Greece is listed on the card.  Intercity
and local public transportation is adequate, inexpensive, and crowded at
rush hours.  Taxis are numerous in Athens, but because they are
relatively inexpensive they are difficult to find during rush hours.

Principal US Officials
  Ambassador-Michael G. Sotirhos
 Deputy Chief of Mission-James A. Williams
 Chief, Military Advisory Group-BG  Edmond Solymosy
 Counselor for Political Affairs-Samuel C. Fromowitz
 Counselor for Political Military Affairs-Laurel M. Shea
 Counselor for Economic Affairs-J. Michael Cleverley
 Counselor for Commercial Affairs-Jerry K. Mitchell
 Counselor for Consular Affairs-Danny Root
 Counselor for Administrative Affairs-Peter Flynn
 Counselor for Public Affairs-Arthur Guiliano
 Regional Security Officer-Art Manuel
 Defense Attache-Stanley Kozlowski
 Labor Affairs Officer-John L. Klekas
 Consul General, Thessaloniki-Larry  C. Thompson

 The US Embassy is located at:  91 Vasillisis Sophias Avenue, Athens 101
60 (tel. [phone]).  The Consulate General is at:  59 Leoforos Nikis
(Nikis Avenue), Thessaloniki (tel. 266-121).

 Published by the United States Department of State--Bureau of Public
Affairs --Office of  Public Communication -- Washington, DC -- December
1990 -- Editor:  Peter A. Knecht.
 Department of State Publication 8198.  Background Notes Series -- This
material is in the public domain and may  be reprinted without
permission; citation of this source is appreciated. For sale by the
Superintendent of Documents, US Government Printing Office, Washington,
DC  20402.(###)


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