The southernmost country of the Balkans, Greece is surrounded by the Aegean, Ionian, and Cretan seas. Its mainly mountainous territory includes more than 2000 islands. Only one-third of the land is cultivated. There is a strong seafaring tradition, and some of the world's biggest ship-owners are Greek. Greece is rich in minerals – including chromium, whose occurrence is rare. Relations with Turkey, marked by conflict and territorial disputes, have improved in recent years. To the north, however, upheavals in Albania and the conflicts in former Yugoslavia have made for greater instability.

The Greeks were for many centuries a largely agrarian and seafaring nation. The German occupation during World War II, and the civil war that followed, destroyed much of the fabric of rural life and there was rapid urbanization after the 1950s. There was also extensive emigration in the 1950s and 1960s to northern Europe, Australia, the USA, Canada, and southern Africa. However, many people returned to Greece in the 1980s, putting pressure on the labor market. The socialist PASOK governments of 1981–1989 spent large sums, mostly from EU sources, on developing the infrastructure and business life of the rural regions with a view to halting emigration to the cities. The policy was mostly successful, but a majority still lives in or near the capital, Athens, and Thessaloníki in the north.

Some 98% of the population belong to the Greek Orthodox Church. Civil marriage and divorce only became legal in 1982. There are minorities of Muslims, Roman Catholics, and Jews, and a recent influx of illegal immigrants, mainly from Albania.

Strengths

One of the major tourist destinations in Europe. Efficient agricultural exporter. Shipping: the world's largest beneficially owned fleet.

Weaknesses

High levels of public debt. Until recently, interest rates and bureaucratic banking system discouraged private initiative. State-owned sector, often poorly managed, remains large, as does the black economy.

Profile

Greece took longer than most other countries to recover from World War II. It was not until the 1960s that any substantial investment occurred. The Colonels' dictatorship curbed inflationary pressures with a wage freeze. When civilian government was restored in 1974, a spate of high wage settlements and the oil price shocks of 1973 and 1979 drove inflation over 20%. Greece's largest companies made substantial losses, until the socialists' controversial austerity program of 1986–1987 reined in labor costs.

Greece was the only EU country seeking to introduce the euro in 1999 which failed to meet the economic convergence criteria. It then tackled the problems with determination, balancing the budget and bringing inflation under control, although public-sector debt remains high. In January 2001 Greece became the 12th member of the eurozone, and fully adopted the currency in 2002. Unemployment is still high and GDP per capita is the lowest in the EU.

Greece is a multiparty democracy. A military government was in power between 1967 and 1974.

Profile

Although PASOK has held power continuously since 1993, its economic policies differ little from the previous conservative government. Kostas Simitis has led the party since the resignation and death in 1996 of its founder Andreas Papandreou. PASOK only narrowly won the April 2000 election.

Main Political Issues

Closer European union

Greece joined the eurozone in 2001, but only after stringent austerity policies, which evoked widespread protests. Greece favors EU enlargement, and backs EU membership for the Greek part of Cyprus, to the annoyance of Turkey. Currently the poorest EU country, Greece could lose funding to new members, especially if Turkey joins.

Relations with Macedonia

In 1995, Greece finally recognized the sovereignty of the Former Yugoslav Republic of Macedonia. The crisis in Macedonia in 2001 over ethnic Albanian separatism increased Greek regional security concerns.

Albanian refugees

Thousands of Albanians of Greek descent entered Greece illegally after 1990. Willing to work for very low wages, they swelled Greece's thriving black economy. A 1998 legalization program resulted in the registration of 375,000 Albanians.

Although closely allied to the West, Greece has sympathies with Russians and Serbs, who share its Orthodox heritage. Greece withdrew from NATO's military command in 1974, in protest at its failure to prevent the Turkish invasion of Cyprus, but has since rejoined. The island remains a sore point in Greece's otherwise improving ties with Turkey. Friction with Macedonia over the use of the name "Macedonia" (also a province in Greece) has eased, but relations remain tense. The current priority is Greece's role within an expanding EU.

Greece spends a higher percentage of GDP on defense than any other NATO country except Turkey, whose perceived threat is its main concern, although tensions with that country are now less acute. In 1998 a law was passed on the conscription of women (for four days a year) for the defense of border regions. Greece has committed 3500 troops to the planned European rapid response force.

Greece has an oil and gas field off the coast of Thasos island. There may also be exploitable reserves in eastern waters, ownership of which is contested by Turkey. Coal, iron, and other mining contributes less than 2% to GDP. Greece is a leading producer of marble.

Local fishing interests have formed a successful antipollution organization, HELMEPA. Smog in Athens is irritating to the eyes and throat and highly damaging to ancient monuments: the Parthenon in Athens has suffered more erosion in the last two decades than in the previous 2000 years. Forest fires regularly cause havoc, damaging flora and fauna.

The easiest and cheapest method of transportation between the islands and the mainland is by boat or hovercraft. A major ferry disaster in 2000 prompted government moves to improve standards. Greece has 444 ports, of which Piraeus is the main one, and 123 are large enough to handle passenger or freight traffic. A new airport at Spata, 30 km east of Athens, opened in 2001. Greece has a good, if increasingly congested, road network. Two expressway routes are nearing completion, with the help of EU funds, as is the upgrading of the Athens metro. An interurban bus system and a fleet of air-conditioned tourist Pullmans offer an extensive service.

The socialists (PASOK) introduced a national health service and a national pharmaceuticals industry. Some 12% of government expenditure goes on health, and every Greek is entitled to sickness benefit. Greece now has the third-highest number of doctors per head of population in the EU; however, primary care is poor, as is that in state hospitals. In the early 1990s the ND attempted to upgrade private medicine and to incorporate its activities with those in state hospitals. Many Greeks needing major surgery go abroad for treatment.

Some 9% of total government spending is on education, which is free and officially compulsory for nine years. Teachers are poorly paid and qualifications are low. University places are limited and many students go abroad for tertiary education. Technical courses, funded by the EU, have increased since the 1990s.

An influx of migrants is blamed for an increase in violent crime. The terrorist group November 17 has carried out high-profile assassinations. There is corruption in the police force.

Greek society changed dramatically in the postwar period. Formerly a largely agricultural society living in isolated communities, it was rapidly urbanized in the 1950s. Former agricultural workers made fortunes, many by grabbing opportunities presented by the shipping industry. Among these were the now prominent Niarchos and Onassis families.

The advent of the republic in 1973 reflected the social changes which had occurred since the war. New wealth and success became more admired than aristocratic birth or prestige. Greece is now a socially mobile society. Living standards have improved universally since the 1950s.

Tourism is a mainstay of the Greek economy, with an annual turnover of some $10 billion, and is a major source of foreign exchange. Until recently, the state gave grants for hotel development and many third-grade hotels were built, especially on Crete and Rhodes. Smaller islands often lack sufficient water supplies or sandy beaches. To offset falling visitor numbers in the mid-1990s the industry has been encouraged to move upmarket, and is also promoting year-round activity vacations and conference tourism. The 2004 Olympics, to be held in Athens, are a stimulus to upgrade the city's facilities. A museum is planned to house the Parthenon Marbles, currently held in the British Museum (UK).

Greece was occupied by Nazi Germany between 1941 and 1944. After liberation by the Allies, communists and royalists fought a five-year civil war. This ended with communist defeat, and King Paul became the constitutional monarch.

• 1964 King Constantine succeeds his father, King Paul.
• 1967 Military coup. King in exile. Col. Giorgios Papadopoulos premier.
• 1973 Greece declared a republic, with Papadopoulos as president. Papadopoulos overthrown in military coup. Lt. Gen. Ghizikis becomes president. Adamantios Androutsopoulos prime minister.
• 1974 Greece leaves NATO in protest at Turkish occupation of northern Cyprus. "Colonels' regime" falls. Constantinos Karamanlis becomes premier and his ND party wins subsequent elections.
• 1975 Konstantinos Tsatsou becomes president.
• 1977 Elections: ND reelected.
• 1980 Karamanlis president. Georgios Rallis prime minister. Greece rejoins NATO.
• 1981 PASOK wins elections. Andreas Papandreou first socialist premier. Greece joins European Communities.
• 1985 Proposals to limit power of president. Karamanlis resigns. Christos Sartzetakis president. Greece and Albania reopen borders, closed since 1940.
• 1985–1989 Civil unrest caused by economic austerity program.
• 1988 Cabinet implicated in financial scandal. Leading members resign.
• 1989 Defense agreement with USA. Two inconclusive elections lead to eventual formation of all-party coalition.
• 1990 Coalition government collapses. ND wins elections. Konstantinos Mitsotakis prime minister; Karamanlis president.
• 1992 EU persuaded to withhold recognition of Former Yugoslav Republic of Macedonia (FYRM).
• 1993 PASOK wins election, Andreas Papandreou premier.
• 1995 Kostas Stephanopoulos elected president; recognition of sovereignty of FYRM.
• 1996 Andreas Papandreou resigns as prime minister; succeeded by Kostas Simitis.
• 1999 Earthquakes in Greece and Turkey. Sympathetic response shows improvement in relations.
• 2001 Armed conflict in Macedonia.
• 2002 Euro fully adopted.