Wayzata World Factbook 1995/World Factbook - 1995 Edition - Wayzata Technology (1995).iso/mac/text/Build/orig BACKGR/BNOT0047.TXT

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National Trade Data Bank
ITEM ID     : ST BNOTES GREECE
DATE        : Oct 28, 1994

AGENCY      : U.S. DEPARTMENT OF STATE
PROGRAM     : BACKGROUND NOTES
TITLE       : Background Notes - GREECE

Source key      : ST
Program key     : ST BNOTES
Update sched.   : Occasionally
Data type       : TEXT
End year        : 1992
Date of record  : 19941018
Keywords 3      :
Keywords 3      : | GREECE

US DEPARTMENT OF STATE
BACKGROUND NOTES:  GREECE

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)
PartySeats
New Democracy (ND152
Panhellenic Socialist Party
 (PASOK)        124
Left Alliance    21
Muslim Independent (GUVEN)        2
Ecologists/Alternatives    1
Total300

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. (202)
667-3168].  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.