The Modern Greek State: 1975–1996 – Three Elephants, Two Tigers and a Lioness

On March 25, 2021, the Modern Greek State celebrated the 200th anniversary of the War of Independence, which ultimately led to its establishment. It is thus an excellent opportunity to reconsider some of the main events of Greek history over these 200 years and how they shaped the character of modern Greece.

This series of articles on the history of modern Greece started when the country was celebrating the 200th anniversary of the War of Independence. This article starts by looking at what happened after the end of dictatorship, and takes us through the changing 1980s and 1990s. Thomas P. Papageorgiou explains.

You can read part 1 on ‘a bad start’ 1827-1862 here, part 2 on ‘bankruptcy and defeat’ 1863-1897 here, part 3 on ‘glory days’ 1898-1913 here, part 4 on ‘Greeks divided’ 1914-22 here, part 5 on the issues of clientelism here, part 6 on World War2 and a new divide here, and part 7 on the road to dictatorship and retreat here.

Prime Minister Andreas Papandreou with United States President Bill Clinton in April 1994.

The fall of the dictatorship in Greece in 1974 (Papageorgiou, 2024) coincided with the restoration of democracy in the whole of the European south. Salazar’s dictatorship in Portugal, established in 1932-1933, and Franko’s dictatorship in Spain, established in 1939, came to an end with a counter coup in 1974 that led to free elections in 1976, in the first case, and Franco’s death in 1975 in the second. In all three countries the armed forces would now submit to the political establishment, ending a long tradition of involvement in politics. The Church would also lose much of its prestige because of its identification with the military regimes. Their people were influenced from the success of the European west and north that combined financial prosperity with parliamentarism, which was also consolidated in Greece, Portugal and Spain with their entry in the European Economic Community in the 1980s. (Close, 2006, pp. 219-221)    

I Part of the European Economic Community

The first free elections after the coup d’etat of 1967 took place in November 1974. Konstantinos Karamanlis, leader of the national unity government formed after the fall of the junta a few months earlier, had meanwhile transformed the former National Radical Union into a new party under the name New Democracy (ND) (Close, 2006, p. 236) representing the biggest part of the conservatives to this day. He won the elections and a few days later he called for a referendum on whether the junta’s decision to abolish constitutional monarchy would be retained or the king would be allowed to return to Greece. 69.2% of the voters decided for a Presidential Republic that also remains to this day. (Wikipedia, 2023)

Apart from parting with the king, Karamanlis found himself in a rather peculiar position also in the economy. The private interests establishment that for many years benefited from state subsidies and protectionism proved inadequate to cope with the consequences of the oils crises of 1973 and 1978. (Karakousis, 2006, p. 29) Thus, in spite of its conservative nature, Karamanlis’ government had to step in and started nationalizing private companies. It also had to renegotiate or even cancel deals signed by junta officials with terms highly unfavourable for the state. (Eleftheratos, 2015, pp. 313-314) (Rizas, 2008, pp. 493-494) (Close, 2006, pp. 248-249) In fact, the demand for more freedom and representation, after the fall of the junta, indicated that renegotiation and, where needed, cancelation of established norms in the public life was also needed at that time, much to the dislike of a conservative government. (Karakousis, 2006, p. 30)

A possible way out of all these seemed to be the assumption of full membership in the European Economic Community (EEC). Karamanlis was pursuing it already from the 1960s (Papageorgiou, 2024) and in 1979 he made it happen. Thus, soon after the fall of the junta, of the four power pillars that defined the post-civil war period, (Papageorgiou, 2024) the army and the palace were completely removed from the political scenery of the country, the role of the Americans had to be redefined after accession to the EEC and only that of parliamentarism remained untouched and in fact reinforced. (Close, 2006, p. 226)

In the following, we will see how the political parties managed the sweeping demand for change from the beginning of 1980s. At that time, Karamanlis assumed the rather ceremonial role of the President of the Republic, (Close, 2006, p. 225) but real power was now in the hands of Andreas Papandreou. His Panhellenic Socialist Movement (PAnelinio SOsialistiko Kinima – PASOK) won the national elections in autumn 1981.  

II Change

The beginning

So, the political change came. And it brought with it an increase of 35% to salaries, that were further to be automatically adjusted according to the price index. Pension increases and tax exemptions were also established. Karamanlis had already made the Communist Party legal again, (Close, 2006, p. 223) but in the PASOK era political refugees were allowed to return and pensions were handed out to members of the (also Left) resistance during WWII. (Close, 2006, p. 224) A national healthcare system was set up. (Close, 2006, pp. 250, 251-252) Nationalization of private companies continued and more than a 100 once dominant enterprises active, among others, in mining metallurgy, shipbuilding and petrochemicals came under the Business Restructuring Organization. These and the public sector were utilized so that thousands of people could find a job. Indeed, large sections of the population literally switched their status in those early years of PASOK, rapidly climbing the ladder of social stratification and gaining income, power, and authority. (Karakousis, 2006, pp. 32 - 35)

Too much, too quickly and with no real plan. The spirit of clientelism, ever present in the political and social life of modern Greece, made sure that hiring was based on personal or political relations without evaluation. (Close, 2006, p. 242) This immobilized the Administration, destroyed any concept of hierarchy, eroded values such as those of duty and productivity, made the state apparatus synonymous to that of the political party and  favoured to the maximum degree tendencies of graft and corruption. (Karakousis, 2006, p. 35) (Close, 2006, p. 250)

Furthermore, all the above policies were based on borrowed money and EEC resources. (Close, 2006, pp. 260, 269)They contributed to the deindustrialization of the country (Close, 2006, pp. 264, 265, 273-275) and as the agricultural subsidies also, instead of being used for the modernization of agriculture, were turned into apartments in the urban centres and luxury vehicles, (Close, 2006, p. 266) Brussels had already started to feel uncomfortable and characterize Greece as a bad example of a new member state. The Americans were also prejudiced against Papandreou because of his opening to the Arab world, his participation in the Non-Aligned Movement and his anti-American rhetoric with references to the removal of the American bases from Greece, which he never implemented, but with which he constantly exercised pressure to the superpower. (Karakousis, 2006, p. 44)

For the Americans another issue was terrorism. During the early years after the fall of the junta, the discussions of armed struggle were revived mainly among members of left-wing organizations and groups. The infamous terrorist organization ‘17th of November’ (17N) was formed during this time and intensified its activity in the mid-1980s hitting American and western targets, businessmen, right-wing politicians, judges, policemen and publishers of traditional conservative newspapers that were now intensifying the criticism against PASOK. (Karakousis, 2006, p. 44) (Close, 2006, pp. 234-235)

The Security Services and the Americans were thus prone to investigate conspiracy theories that linked terrorism with PASOK as well as the official and extra-parliamentary Left. For those who spent time at the University those years, however, there was the certainty that the faces of terrorism, those who carried out the bloody acts, could only have come out of the student movement. There was the certainty that these were common, ordinary people. (Karakousis, 2006, p. 24) This partly explains also the longevity of groups like 17N. Another reason was that after the fall of the junta governments relied less to the police and the security forces and more to material benefits for their longevity. (Close, 2006, p. 229) The Greek police after 1974 were paralyzed by a lack of resources, an absence of professionalism and a low level of competence. In the prevailing anti-authoritarian atmosphere, it did not even have the public support that it needed. (Close, 2006, p. 235)

The turn 

For the common people though, what mattered most were the benefits they enjoyed under Papandreou’s government. Thus, the latter won triumphally the elections of June 1985. Nevertheless, during that summer the country’s foreign exchange reserves had already fallen unbelievably low, deficits and public debt had ballooned, inflation was high and persistent, the loss of competitiveness great and the inadequacy of productive investments evident. EEC officials were also expressing their displeasure for the course of the Greek economy.  The time for major revisions had come. (Karakousis, 2006, pp. 52-53)

The turn was to be carried out by Costas Simitis (Wikipedia, 2024), who assumed the position of Minister of National Economy. Along with a group of technocratic advisors, Simitis presented a three-year stabilization program, which included a devaluation of the drachma, a wage freeze in the public and private sectors, hiring, borrowing, spending and price controls, restructuring of public enterprises, and, most importantly, initiatives and measures to free the economy and markets from government intervention, combined with the liberalization of the financial sector and the capital market. The implementation of the program was bound by a European emergency loan, which designated the European Commission as an auditor of the Greek economic course. (Karakousis, 2006, pp. 55-57) (Close, 2006, p. 244)

The program shocked PASOK supporters and brought great turmoil within it, as it meant a complete revision of the until then physiognomy of the populist movement. (Close, 2006, p. 245) It run with difficulties for a couple of years starting the opening to the market economy, (Karakousis, 2006, p. 63) laying the foundations for the rebirth of the stock market and promoting plans to restructure the whole public sector (Karakousis, 2006, p. 65), but Andreas Papandreou eventually denounced it from the parliament floor on 25 November 1987. Simitis resigned the next day. (Karakousis, 2006, p. 74)   

Lifestyle, shadow economy and scandals

Indeed, the formerly unprivileged who in the early years of PASOK gained space and incomes were not willing to return to their previous situation. They were getting used to a new way of life, influenced also by lifestyle magazines, (Karakousis, 2006, pp. 59-60)    based on a pattern, which required owning a house, a country house, cars, travel, vacations and a lot of expenses for the children. (Karakousis, 2006, p. 104) As money in the public sector, where as described above the clientelist state accommodated many of its supporters, were not enough, they turned to multiple employment to support it. The bank clerk and the tax official were employed in the afternoon as accountants in the private sector, the schoolteacher gave private lessons and so on. This did not only have implications on the integrity of the public servants regarding the balance of interests between their dual occupations. (Karakousis, 2006, p. 106) The extra salaries were not declared anywhere.   

Thus, the new way of life was not supported by borrowed state money only. The private sector followed suit and calculations during the implementation of the Value Added Tax (VAT) in 1987 recorded that the shadow (black) economy amounted to 40% of GDP. A rate extremely large and able to distort any economic policy effort, as a large part of economic activities remained out of control, operated by their own rules and formed their own levels of profitability and incomes, which, to a certain extent, explain the inexhaustible endurance of the citizens of the country, despite the continuous pressure with economic measures and regulations to this day. (Karakousis, 2006, p. 70) (Close, 2006, p. 259)

PASOK also sought to continue the tradition of intertwining business interests with state power. (Papageorgiou, 2024)Micro-entrepreneurs, like the Kouris brothers, offered services and support already from the early years of PASOK in power through publications such as the populist newspaper Avriani, (Karakousis, 2006, pp. 36-37) but the most famous case was that of George Koskotas. With many university degrees, later proven to be fake, he started his carrier as accountant at the Bank of Crete. He will progress, become a chief accountant, and one morning he will appear to the owner of the bank with a takeover proposal. The trick was that he used the bank’s own money for the takeover, without anyone noticing. Koskotas moved energetically after that and wanted to play the role of PASOK’s banker. As phenomena of arrogance and corruption had already made their appearance from the first years of the government (see above), Koskotas found fertile ground for his activities. (Karakousis, 2006, pp. 60-61)  

Nevertheless, Koskotas’ aggressive policies, including attempts to expand in the banking and media sectors as well as in football, where he bought the country’s probably most popular team, Olympiakos Piraeus, (Karakousis, 2006, pp. 79-80)eventually attracted the attention of The Bank of Greece’s legal counsel regarding the origin of the money and the overall management of the Bank of Crete. (Karakousis, 2006, p. 83) It was finally revealed in February 1989 that the government’s vice president Menios Koutsogiorgas attempted to hinder the investigation by law, after a bribe of 2 million dollars. (Karakousis, 2006, p. 100) (Close, 2006, p. 245)       

The situation for PASOK continued to worsen as during this period the press published evidence for additional scandals in the procurement of military equipment as well as for the surveillance of the telephones of Leftist officials as well as that of Konstantinos Karamanlis, (Karakousis, 2006, p. 81) (Close, 2006, pp. 245-246) who in the meantime Papandreou had ensured that he was replaced in the Presidency of the Republic by judge Christos Sargetakis. (Karakousis, 2006, p. 52)The newspaper reports caused the intervention of the judiciary while the opposition also hardened its stance. Significant strongholds of the opposition action at that time were the three largest municipalities of the country, Athens, Piraeus, and Thessaloniki, that New Democracy had won in the municipal elections of October 1986. A basic instrument was the free radio that the three conservative mayors, M. Evert, A. Andrianopoulos and S.Kouvelas launched in May 1987 against the state monopoly until then. (Karakousis, 2006, pp. 71-72)

The fall

Papandreou was at a very tough spot. Physically, he was ill and was rushed to London in August 1988 where he remained for almost two months and underwent heart surgery. Personally, he found himself in a turmoil as his affair with a former stewardess of Olympic Airways, Dimitra Liani, became publicly known. (Karakousis, 2006, p. 84) Politically, the scandals led many PASOK officials to resign or distance themselves from the party and triggered scenarios of succession in its leadership. (Karakousis, 2006, pp. 92-96) (Close, 2006, p. 246) Furthermore, during the judicial investigations into the scandals, 17N escalated its action against judges, which rekindled the rumours about PASOK’s ties to terrorism. (Karakousis, 2006, pp. 98-99)

Despite all this, Papandreou fought hard to turn the tide against him. Before the elections of June 1989 he used the standard trick, we have often seen in this series, of changing the electoral law to make it difficult for the Right to come to power. Moreover, in an outburst of populism during a pre-election rally in Athens, he will openly urge Finance Minister D. Tsovolas to ‘give everything’, meaning benefits to the electorate to vote for PASOK. (Karakousis, 2006, p. 107) (Close, 2006, p. 246) And he succeeded. New Democracy won, but its 44,25% of the votes was not enough to give its leader Konstantinos Mitsotakis the absolute majority in the parliament, but only 145 of the 300 seats. (Karakousis, 2006, p. 113)

III Co-government of Right and Left

It was obvious that Mitsotakis had to deal harder blows against PASOK to seize power. At the same time the leadership of the Left saw in PASOK’s destruction the opportunity to expand its electorate audience. Thus, the memories of the civil war and the junta were put aside and the unthinkable happened: a co-government supported by the Right and the Left. (Close, 2006, p. 247) Mitsotakis’ son-in-law, Pavlos Bakoyiannis, played a catalytic role as mediator, using the connections he developed with many Leftist officials during the junta years in Germany, where all had taken refuge. At the head of the government, formed in July 1989, was Tzanis Tzanetakis, o former officer of the Navy, and its goal was ‘Katharsis’. (Karakousis, 2006, pp. 115-116)

Indeed, by September, Andreas Papandreou and other PASOK officials, including the former ministers Koutsogiorgas and Tsovolas, were refereed by the Parliament to the Special Court for the Koskotas scandal and the wiretapping (see above). Another former minister, Nikos Athanasopoulos, was send to court for the ‘Corn Scandal’, accused of misleading EEC officials by presenting Yugoslavian corn as Greek to collect higher subsidies. (Karakousis, 2006, pp. 120-121, 130)(Close, 2006, p. 246)

Nevertheless, the ordinary voters of the Left were once again not reconciled to the games of their leadership (Karakousis, 2006, p. 116) In fact, the youth of the Communist Party openly expressed its disagreement with the Tzanetakis’ government. (Karakousis, 2006, p. 128) To make things worse, Papandreou’s new admission to the hospital with respiratory problems at the beginning of the summer had created a wave of sympathy that reinforced the dilemmas of the Left. (Karakousis, 2006, p. 114) Thus, New Democracy’s proposal for yet another commission of inquiry to look into possible scandals in the procurement of weapons systems was not accepted by the coalition of Left parties. (Karakousis, 2006, p. 131) At the same time though, 17N reappeared and murdered Pavlos Bakoyiannis on the way to his office the day before the Parliament decided to send Papandreou to the Special Court for the Koskotas scandal. This reignited the conspiracy theories regarding PASOK’s connection to terrorism. (Karakousis, 2006, pp. 128, 130)

Coexistence of Right and Left in the Tzanetakis’ government was thus becoming uncomfortable. Nevertheless, the latter seemed to have achieved its main political objective, ‘Katharsis’, by sending PASOK officials to court. It did not do much else, except for allowing the establishment of private television stations breaking another state monopoly, after that of radio broadcast (see above). The new development brought with it kitsch, subculture, the keyhole screen, a spectacle of second-rate, intellectual poverty and degradation of everything. (Karakousis, 2006, pp. 122-127) Furthermore, the different perspectives of Right and Left combined with benefits generously handed out by the Finance Minister Antonis Samaras (Right) and the Minister of the Interior Nikos Konstantopoulos (Left), to the delight of the electorate, worsened public finances and brought the country to the brink of yet another fiscal crisis. (Karakousis, 2006, pp. 118-119) It was time for another round of elections.

IV The Right Comes to Power

The elections took place on the 5th of November 1989 and New Democracy increased its percentage of the votes to 46.2%. Nevertheless, this was again not enough to bring Mitsotakis to power. New Democracy elected only 148 out of 300 parliament members. PASOK was once again proved very resilient increasing its power to 40,7% of the votes, while the Left coalition lost 2% receiving 11% of the votes. Obviously, its plan to substitute PASOK through the participation to Tzanetakis’ government did not work well. (Karakousis, 2006, p. 136) (Close, 2006, pp. 247-248)

In view of the critical condition of the economy the solution of an ecumenical government finally prevailed under the leadership of the then 90 years old former Governor of the Bank of Greece Xenophon Zolotas. The period of indifference was over, and the political establishment, at that juncture, understood that it could not play with the economy. It was convinced that the crisis conditions had to be controlled at any cost. (Karakousis, 2006, p. 140) It was also centrally agreed that the only way forward for Greece was Europe: Greece should claim its inclusion in the new system of the single currency, which was then being planned, but it was clear that it would be the European answer to the new form that the world would take after the collapse of the Soviet Union. (Karakousis, 2006, p. 144) (Close, 2006, pp. 287-288)

Nevertheless, Mitsotakis was becoming impatient. After all, his party found itself in an ecumenical government together with PASOK, whose leaders were prosecuted from Right and Left just a few days before. Indeed, Papandreou was recovering quickly politically, also with interventions like that of France’s president François Mitterrand, who invited him to Paris already before the November elections and thus took him out of the Greek isolation showing that he maintained an international base and was not finished as many would like him to be. (Karakousis, 2006, p. 133) As Zolotas’ freedom for action was limited by the need to reconcile the Right, Center and Left elements of the ecumenical government and he had to resort to desperate measures, like borrowing with an interest rate greater than 27%, in order to meet the cash needs of the state, (Karakousis, 2006, pp. 139-140) Mitsotakis stressed the need for absolute majority in the Parliament and a one party government to meet the country’s needs. Another international intervention helped him to this end. It was a letter from the President of the European Commission Jacques Delors that was publicized by Mitsotakis and conveyed to the Greek society the need to obtain a decisive government, capable of handling the economic affairs in a clear manner. Thus, another round of elections was scheduled for the 9th of April 1990. (Karakousis, 2006, pp. 157-158)(Close, 2006, p. 361)

New Democracy’s 46.88% of the votes gave 150 seats in the parliament, again one less of the minimum needed for it to rule. The missing vote came with the defection to New Democracy of the only representative elected with Democratic Renewal (Dimokratiki Ananeosi – DIANA). The latter was a party founded by Konstantinos Stefanopoulos, a former New Democracy member and then internal party rival of Mitsotakis. (Karakousis, 2006, p. 161)

New Democracy’s accent to power at the beginning of the 1990s coincided with the long retreat of the interventionist state from the commanding heights of the economy accelerated in the previous decade with a conservative counterattack spearheaded by Ronald Reagan in the US and Margaret Thatcher in the UK. (Allawi, 2024, p. 131) The collapse of the Soviet Union was considered the most striking verification of this process. Thus, privatizations were at the core of the Right’s liberal agenda. Nevertheless, the clientelist state was ever present (Karakousis, 2006, p. 173) and privatizations were not viewed by the government as a development tool for the economy, but as a mechanism of wealth and state assets distribution to friends and acquaintances. (Karakousis, 2006, pp. 182-183)

Furthermore, privatizations were faced with strong opposition from the employees of the enterprises involved. The same was true for the pension, (Karakousis, 2006, pp. 167-168) tax (Karakousis, 2006, p. 166) and education reforms (Karakousis, 2006, pp. 175-177) that the government tried to introduce. By 1992 the treaty of Maastricht with the Euro convergence criteria (Wikipedia, 2024), following Greece’s decision to be part of the European Union and the common currency zone (see above), hardened the position of the government (Karakousis, 2006, pp. 212-215). This brought it into conflict with the society (Karakousis, 2006, pp. 219-221) that was not going to easily give up the privileges obtained during the PASOK years described previously. In fact, the overall climate was very tense and involved extreme incidents like the murder of the high school teacher Nikos Temponeras during clashes at a school in Patras (Karakousis, 2006, pp. 176-177) and the death of former minister Koutsogiorgas that suffered a stroke during the trial for the Koskotas scandal. (Karakousis, 2006, pp. 185-187) 17N also reappeared attempting unsuccessfully to kill the businessman Vardis Vardinogiannis (Karakousis, 2006, pp. 177-178) and the finance minister Giannis Palaiokrassas. In the second case though, a civilian, the young Thanos Axarlian, who happened to be passing by the area of the attack was killed. (Karakousis, 2006, pp. 221-222) (Close, 2006, pp. 362-363)

As if these were not enough, ‘Katharsis’ was also turning into a fiasco for Mitsotakis. Although some former PASOK ministers, like the above-mentioned Athanasopoulos, served prison sentences, (Karakousis, 2006, pp. 183-185) its leader Andreas Papandreou was declared not guilty (with 6 votes against 5). (Karakousis, 2006, p. 197) The old Konstantinos Karamanlis, who was again elected President of the Republic, after Mitsotakis’ ascend to power, (Karakousis, 2006, p. 163) had warned that one ‘does not send a prime minister to court, but simply home’. Mitsotakis ignored him and the court verdict came to reinforce Papandreou’s (and PASOK’s) feeling that he could dominate again. (Close, 2006, p. 350)

New Democracy’s fall came from the field of foreign affairs though. Although, after the fall of the Soviet Union the major international incident of the time was the first Iraq war – in the coverage of which the dominance of television over all other media became obvious for the first time- (Karakousis, 2006, p. 172) Germany’s recognition of the independence of  Croatia and Slovenia in late 1991 triggered the process of Yugoslavia’s disintegration. One of the emerging states in former Yugoslavia’s south, bordering to Greece, then claimed for itself the name ‘Macedonia’ touching upon the national feelings of the Greek people, who were not willing to give up the heritage of Alexander the Great, ruler of ancient Macedonia, to the Slavs without a fight. Mitsotakis’ government was literally caught sleeping. It had made no preparation to deal with the possibility of recognition of a Macedonian state on Greece’s northern borders and the disturbance that such a thing would cause inside the country. (Karakousis, 2006, pp. 190 - 191) (Close, 2006, pp. 405-406)     

Indeed, demonstrations, mostly in Thessaloniki with more than one million participants, hampered efforts to find a compromise solution by using a composite name prepared by the European Union (Karakousis, 2006, p. 196) (Close, 2006, p. 406) while there were internal party reactions as well that led to the dismissal of the at that time Minister of Foreign Affairs Antonis Samaras from the government. The reason was his differentiation from the views of Mitsotakis and Karamanlis at a meeting of the political parties’ leaders under the President, in April 1992, to discuss national policy on the name issue. By autumn 1993 Samaras had formed his own party (Political Spring – Politiki Anixi) and several of new Democracy’s members of Parliament followed him bringing down Mitsotakis’ government. (Karakousis, 2006, p. 237) (Close, 2006, p. 408)

V Andreas Papandreou Returns to Power

Parliamentary elections were held on 10th of October 1993 and PASOK took 46% of the votes corresponding to 170 seats in the parliament. But Papandreou now knew that he could not continue the policy of benefits to the people he exercised in the past. The economy had to meet the Maastricht convergence criteria, if Greece was to remain part of the European Union including the adoption of the common currency (Euro). (Close, 2006, p. 363) This was not easy at all with inflation at 15%, double digit interest rates, public deficits reaching 15% of the GDP, the widespread shadow economy and the corresponding tax evasion. (Karakousis, 2006, p. 263)   

Thus, brave policies were necessary and, in view of the intense pressure from the society for financial aid of any type, conflicts with numerous groups of citizens. Nevertheless, the latter were at the same time convinced that PASOK would do the job at the lowest possible cost, without the atrocities of Mitsotakis and the heavy feeling of social analgesia the accompanied him. (Karakousis, 2006, p. 248) (Close, 2006, p. 364) Furthermore, the element of external imposition made things easier politically as it allowed the government officials to invoke Brussels and through this invocation to legitimize measures and policies that were in conflict with society. (Karakousis, 2006, p. 263) (Close, 2006, p. 364) At the same time though, Andreas Papandreou knew that the acceptance of the convergence process with Europe would be accompanied by a significant package of European Union funds. (Karakousis, 2006, p. 247) The idea was simple. The European funds would be directed to large scale public works and through them any development and income deficit caused be the fiscal adjustment would be covered. (Karakousis, 2006, p. 249) (Close, 2006, p. 283)

Thus, as prescribed in the treaty of Maastricht, at the beginning of 1994 already, the Greek state had to give up the so called ‘monetary financing’ and come out competitively to the market to raise financial resources. Indeed, before 1994, several mechanisms constituted this so called ‘monetary financing’ that allowed the state to raise funds with small or at least controllable cost. For example, at the beginning of each year, the Bank of Greece provided an advance payment of 10% on the increase of the state budget expenditure with a symbolic interest rate of 1.5%. Furthermore, it obliged banks to place 40% of their deposits on interest-bearing Treasury bills, whereas in times of crisis the central bank bought government securities, often to a large extent. (Karakousis, 2006, pp. 254-255)

If this was not enough, the government could always turn to the so-called bondholder class offering two to three-year government bonds with high interest rates exceeding 20% per year (see also the previous section). This way, a mood of laziness and idleness was transmitted to society, as an available savings capital was sufficient to offer high profits and large incomes. (Karakousis, 2006, p. 245)   

In the three years 1994-96 all this will change. The state will acquire a reliable Treasury service and gradually be freed from its dependence on the bondholder class. Interest rates will fall, and the banking system will find itself with freed up resources and new opportunities to grow and develop new financial tools. (Karakousis, 2006, p. 256)

In 1994, a new law also attempted to limit the political parties’ power for appointments in the public sector. It introduced the rule of one recruitment for every five departures and mandated both the establishment of the Supreme Personnel Selection Board as an independent body responsible for recruitment and the establishment of rules and procedures so that these are invariable. (Karakousis, 2006, p. 269)

In 1995, a new tax law tried to address the issue of tax evasion. The so called ‘objective criteria’ for the taxation of small and medium enterprises and freelancers were established. (Karakousis, 2006, p. 267) (Close, 2006, p. 354) Parameters like the kind of activity, area of operation, operational costs and others were used to define a minimum level of tax for the legal or physical entity in question. When the entity declared an income corresponding to a tax level lower than this minimum, then either the minimum had to be paid, or the entity would be subject to extensive tax scrutiny. In fact, measures to enhance tax revenues were put in place from the very first days of this new term of PASOK increasing indirect taxes on cigarettes and alcohol, taking measures to crack down on smuggling and putting pressure on traders to return the value added tax, incorporated by PASOK already back in 1987 following directives of the EEC. (Karakousis, 2006, pp. 70, 246)

Nevertheless, these attempts do not mean that clientelism was suddenly over and that the political parties were over their fear of the political cost. For example, construction and the public works mentioned earlier as expression of hope, as a mechanism of development and progress will become hotbeds of corruption, scandals and money waste, dragging politics with them. (Karakousis, 2006, p. 254)

In fact, Papandreou’s government acrobated between the old habits and the need for modernization. Things got worse as the latter’s health deteriorated once more in the summer of 1995 leaving plenty of space for a group of people close to his former mistress and by this time wife and secretary, Dimitra Liani, to run the game. A typical example of this period is the former Olympic Airways stewardess’ resistance to the consolidation of the company, which had accumulated debts of 600 billion drachmas, because of the political cost. (Karakousis, 2006, p. 265) Other of Liani’s doings included the purchase of a villa in Ekali, the most prestigious neighbourhood of Athens, under economically uncertain conditions and an entourage of astrologists and priests, who brought miraculous talismans with them in the hope that the patient Papandreou would regain his health. This was a third world government structure that infuriated PASOK’s executives that were now discussing openly Papandreou’s succession. (Karakousis, 2006, pp. 259, 261)

This eventually came in January 1996, when Papandreou resigned from office. The inter party elections named Costas Simitis as the new president of PASOK and prime minister, who will make Modernization his flag. (Karakousis, 2006, p. 277) Papandreou died in June.

VI Conclusions

In this series of articles on the history of modern Greece reference has been made to the work of Acemoglu and Robinson (Acemoglu & Robinson, 2013) and it has been pointed out that the country is suffering from non-inclusive political and economic institutions. Within this framework, some additional characteristics, obvious in the present part of the series, should not go unnoticed: 1) An over-sized public sector and bureaucracy, as seen in the clientelism approach of serving the political parties’ clients/voters with jobs. 2) Economic statism, as seen in the handling of nationalized/state owned companies and attempts to boost the economy through public works. 3) Corruption, as seen in the political/economic scandals described above.

Special reference should also be made to: 4) tax evasion, as seen in the size of the shadow economy, resulting in 5) over taxation, as seen in the establishment of the ‘objective criteria’.  

And finally, 6) populism, as seen in Papandreou’s ‘give everything’ cry, before the elections of June 1989.     

Dimitrios Lakasas proposes that the Greek economy today in undermined by three elephants (bureaucracy, statism and corruption), five tigers (tax evasion, over taxation, high insurance contributions for employees and businesses, high cost of money and unserviced loans) and a lioness (populism) . (Lakasas, 2021, p. 289) The three elephants, two of the tigers and the lioness are clearly seen already in the period studied in this article.

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References

Acemoglu, D., & Robinson, J. A. (2013). Why Nations Fail. London: Profile Books ltd.

Allawi, A. A. (2024). Rich World, Poor World: The Strugle to Escape Poverty. New Haven and London: Yale University Press.

Close, D. (2006). Greece since 1945: Politics, Economy and Society. Thessaloniki: Thyrathen (in Greek, available also in English by Routledge).

Eleftheratos, D. (2015). Diddlers in Khaki, Economic 'miracles' and victims of the junta. Athens: Topos Eds. (in Greek).

Karakousis, A. (2006). Hovering Country. From the society of need to the society of desire (1975 - 2005). Athens: Hestia Bookstore (in Greek).

Lakasas, D. (2021). Human 4.0. For a Wise Management of the 4th Industrial Revolution . Athens: Klidarithmos.

Papageorgiou, T. P. (2024, April 20). History is Now Magazine. Retrieved from http://www.historyisnowmagazine.com/blog/2024/4/20/the-modern-greek-state-19501974-the-road-to-dictatorship-and-retreat

Rizas, S. (2008). Greek Politics after the Civil War. Parliamentaryism and Dictatorship. Athens: Kastaniotis (in Greek).

Wikipedia. (2023). Retrieved from https://en.wikipedia.org/wiki/1974_Greek_republic_referendum

Wikipedia. (2024). Retrieved from https://en.wikipedia.org/wiki/Costas_Simitis

Wikipedia. (2024). Retrieved from https://en.wikipedia.org/wiki/Euro_convergence_criteria

The Modern Greek State: 1923–1940 – The Issues of Clientelism

On March 25, 2021, the Modern Greek State celebrated the 200th anniversary of the War of Independence, which ultimately led to its establishment. It is thus an excellent opportunity to reconsider some of the main events of Greek history over these 200 years and how they shaped the character of modern Greece.

This series of articles on the history of modern Greece started when the country was celebrating the 200th anniversary of the War of Independence. In 1922 Greece suffered probably the worst catastrophe of its modern history and the decades that followed brought political instability, economic crisis, and foreign intervention. But, as Thomas Papageorgiou explains, clientelism caused significant issues in the country.

You can read part 1 on ‘a bad start’ 1827-1862 here, part 2 on ‘bankruptcy and defeat’ 1863-1897 here, part 3 on ‘glory days’ 1898-1913 here, and part 4 on ‘Greeks divided’ 1914-22 here.

Eleftherios Venizelos in 1935. He was Prime Minister of Greece multiple times.

The previous article of this series on the history of modern Greece concluded the discussion of the first 100 years after the beginning of the War of Independence in 1821. According to G. B. Dertilis we find ourselves at the end of the third period of bankruptcies and wars (1912-1922) – the first being 1821-1880 and the second 1880-1912. Two more will follow (1923-1945 and 1946-2012). (Dertilis, 2020, pp. 11-17) The proposed cyclability indicates specific features present in modern Greece that significantly hinder the escape from the vicious cycles described by Dertilis. (Dertilis, 2020, p. 29) Here I will discuss these features and describe how they affected the developments in Greece during the interwar period. Clientelism is proposed as the main source of Greece’s problems. But let’s start with one of its consequences, that will better suit us to present the major events of this period: namely, division and civil war.

I Division & civil war

Division and civil war are present in modern Greek history already since the War of Independence. (Papageorgiou, History Is Now Magazine, 2021) The latest quarrel we examined that once more divided the Greeks was that between the prime minister Venizelos and king Constantine. (Papageorgiou, History is Now Magazine, 2022) The division to Venizelists and anti-Venizelists continued even after the king’s resignation, following the catastrophe of the Asia Minor Campaign in September 1922, and eventual death three months later in Palermo.

This period of modern Greek history starts with a gruesome event in November 1922, which is known as ‘the execution of the six’. These were leading figures of the anti-Venizelists including former prime minister Dimitrios Gounaris, that defeated Venizelos in the elections of 1920 preceding the disaster in Asia Minor. The execution took place under a military regime led by the Venizelist colonel Nikolaos Plastiras following a revolt of the defeated Army in September 1922. Despite international reactions calling for an annulment of the execution, Venizelos, at the time negotiating piece terms with Turkey in Lausanne as representative of the dictatorship in Greece (Mavrogordatos, 2019, p. 29), did very little to prevent it. (Dafnis, 1997, pp. 25-35)

The Treaty of Lausanne (Wikipedia, 2022) marked the end of the Great Idea aspirations for Greece (Papageorgiou, History Is Now Magazine, 2021) bringing the country to its current borders, more or less, as the Dodecanese would be the last territorial gain of modern Greece after the end of World War II. The loss of the territories in Asia Minor and especially Eastern Thrace caused the nagging even of some officers within the military regime like major general Theodoros Pangalos, who criticized Venizelos’ handling. (Dafnis, 1997, p. 65) In fact, it was not unusual for members of the Venizelist or anti-Venizelist space to change sides because of a political disagreement or pure interest.

It was this mixture of political disagreement on an electoral law that favoured the Venizelist candidates in the elections prepared by the regime for December 1923 (Mavrogordatos, 2019, pp. 33-34) and disappointment of officers feeling ignored by the Plastiras’ regime that led to a counter-revolt in October 1923. (Dafnis, 1997, p. 129) This was soon crushed by the Venizelists. The latter found the opportunity to purge the army from their rival officers (Mavrogordatos, 2019, p. 34) and as the palace identified itself with anti-Venizelism to rid themselves of the successor king George II. After the elections of December 1923, from which the anti-Venizelists abstained (Mavrogordatos, 2019, p. 35), the National Assembly declared the fall of the dynasty and the establishment of unreigned democracy on the 25 March 1924. (Mavrogordatos, 2019, p. 38)

This decision was further supported by a referendum held in April (70% for the unreigned democracy) (Dafnis, 1997, p. 262) but the anti-Venizelist leader Tsaldaris expressed his reservations for the new status quo. Thus, under the pretext of the protection of democracy, prime minister Papanastasiou passed a law aiming at the silencing of the anti-Venizelist propaganda with severe punishments imposed by military courts. (Mavrogordatos, 2019, p. 42) In his book, Mavrogordatos points out the similarity of the establishment of the unreigned democracy in Greece with that of the Weimar Republic in Germany as the result of the opportunistic partnership of the Liberals (Social – democrats in Germany) with the military. (Mavrogordatos, 2019, p. 39)

Indeed, the grip of the military on the Greek political life during this period is marked by 43 different interventions between 1916 and 1936. (Veremis, The Interventions of the Army in Greek Politics 1916-1936, 2018, pp. 291-299) Soon after the handover of the government to the politicians in December 1923, major general Pangalos came to power by force in June 1925 exploiting the reluctance of the government and of the leaders of the political parties to act decisively against him. In fact, he managed to obtain a vote of confidence from the parliament and to give this way a lawful mantle to his government. (Veremis, The Interventions of the Army in Greek Politics 1916-1936, 2018, p. 162) His turn towards the anti-Venizelists worried the democratic officers and following a series of blunders in domestic and foreign policy, including an invasion in Bulgaria on the occasion of a border incident involving the killing of three Greeks by the Bulgarians, he was finally removed from government and imprisoned in August 1926. (Mavrogordatos, 2019, pp. 45-47) He remained in prison till July 1928, when the Venizelists ordered his release. (Dafnis, 1997, p. 350)   

The year 1928 marks the return of Eleftherios Venizelos himself to the premiership. Before that, Greece was under ‘’ecumenical government’’ following a public demand for, at last, collaboration between the parties, after the fall of Pangalos’ dictatorship (Mavrogordatos, 2019, p. 48) This did not last long though and, apart from some success in laying the groundwork for a sound economic policy (Dafnis, 1997, p. 395), it did not do much to cure the schism between the rival factions. Eventually, the Venizelists won a striking victory during the elections of August 1928: 226 out of 250 seats in the parliament. (Mavrogordatos, 2019, p. 54)

Venizelos’ new term was one of the longest in modern Greek history lasting for 52 months till November 1932. His government is credited with the approach to Italy, that, under Mussolini briefly occupied the island of Corfu in August 1923 (Dafnis, 1997, pp. 83-125), Yugoslavia and Turkey, the retainment of good relations with the Great Powers, and especially Great Britain, the settlement of the war reparations after World War I to the benefit of Greece, an extensive investment program in new infrastructure mostly in the new lands (that is territories added to Greece after 1912), a satisfactory financial situation with consecutive surpluses of the state budget, the strengthening of the rural credit with the creation of the Agricultural Bank, an educational reform focusing on the reinforcement of the productive occupations, the establishment of the Council of State to restrict government arbitrariness, and the continuation of the effort for the integration and assimilation of the refugees that flooded Greece after the Asia Minor catastrophe in 1922. (Dafnis, 1997, pp. 463-514)

One of Venizelos’ statements though, after his stunning victory in 1928, is characteristic of his intentions towards the opposition at that time. ‘The People of Greece made me a parliamentary dictator’, he said to his wife. (Mavrogordatos, 2019, p. 57) Thus, the most famous law of this time was that of summer 1929 ‘against the pursue of the implementation of ideas aiming at the overthrow of the social regime’. (Mavrogordatos, 2019, p. 58) It was introduced against the declared views of the Communist Party, although there was never a real communist threat during the interwar period (Dafnis, 1997, p. 505) (the Communists never received more than 5-6 % of the votes at the elections that took place between 1926 and 1936). (Mavrogordatos, 2019, p. 29) Nevertheless, it served, indiscriminately, the purpose of suppressing public protest during Venizelos’ term and later as well. (Mavrogordatos, 2019, p. 58)

The global economic crisis of 1929, that undermined Venizelos’ ambitious program, led to his call for the formation of an ecumenical government in March 1932, (Mavrogordatos, 2019, p. 59) but the failure, once more, of Venizelists and anti-Venizelists to reach a compromise rendered any such attempt short lived and a failure. Short lived was also Venizelos’ last government in January 1933 and he was finally defeated in the elections of March 1933. (Mavrogordatos, 2019, p. 64)

The military branch of the Venizelists did not take this development well. The former colonel Plastiras, leader of the army revolt in 1922 (see above), now a Lieutenant General, attempted to militarily cancel the passing of power to the anti-Venizelists. He failed and had to flee abroad in April to avoid the consequences. It is suggested that Venizelos did not act decisively to cancel Plastiras’ plans or that he even ordered the action. (Dafnis, 1997, pp. 620-622) Nevertheless, he was not prosecuted.

The fact that Venizelos was not prosecuted by the parliamentary and judicial authorities does not mean that he was spared from the vengeful fury of the anti-Venizelists. On the night of the 6th of June 1933, a cinematic attempt on his life took place, when he was returning to Athens from dinner at a friend’s house in Kifissia. Venizelos escaped, but during the manhunt involving the car carrying Venizelos and his wife, his bodyguards’ car, and the attackers’ car, one of his guards was killed, his driver was seriously wounded, and his wife suffered minor injuries. (Dafnis, 1997, pp. 636-640)

The acute confrontation between the two factions continued for twenty months after the assassination attempt. The sources of tensions included a systematic government: i) cover-up of the assassination attempt, ii) manipulation of the command of the army to end its control by Venizelist-democratic elements, iii) effort to change the electoral law to its benefit, iv) disregard of parliamentary procedures. (Mavrogordatos, 2019, p. 68) Eventually, in March 1935, Venizelos poured fuel on the flames backing an insurrection across northern Greece and the islands. It failed and Venizelos fled into exile in Paris. He died a year later. (Heneage, 2021, p. 178)

The failed coup gave the anti-Venizelist the opportunity to lead in front of a court martial 1,130 Venizelist members of the army, politicians, and civilians. Sixty of them were sentenced to death of which 55 had already escaped abroad. Of the remaining five, two were finally pardoned and three were executed including generals Papoulas and Koimisis, protagonists during the trial that led to the ‘execution of the six’, that had never been forgotten by the anti-Venizelists. Nevertheless, the latter avoided a wider purge to avoid a prolonged conflict. Furthermore, the executions met the opposition of France and Great Britain. (Dafnis, 1997, pp. 772-779)

The same way that a successful Venizelist coup led to the fall of the dynasty in 1924, the unsuccessful coup of 1935 led to its restoration. In fact, it took yet another coup, within the anti-Venizelist ranks this time, led by lieutenant general Kondilis, for the recall of king George II. The restoration was confirmed with a Soviet-style highly questionable referendum, held in November 1935, that gave it 97.8 % of the votes. (Dafnis, 1997, p. 803) The king pardoned the participants in the March coup and elections were called for January 1936. (Dafnis, 1997, pp. 811-814)

Venizelists and anti-Venizelists emerged from the elections as equals. Although this was indicative of the public will for a coalition government (Dafnis, 1997, p. 816), the two factions once again failed to work together. Furthermore, the contacts of both with the Communist Party (Mavrogordatos, 2019, p. 81), holding 5.76 % of the votes and 15 sits in the parliament (Dafnis, 1997, p. 815), for the formation of a government backed by communist votes caused worries in the army. Thus, the king appointed in March major general Ioannis Metaxas, who we have met before as an emblematic figure of the pro-royalists and the anti-Venizelist ranks, minister of the military to restore discipline. (Dafnis, 1997, p. 818) He was promoted to the premiership the next month, when the prime minister Demertzis died suddenly of a heart attack. Public unrest and the need for seamless war preparation, as the clouds of war were gathering over Europe, provided Metaxa with the arguments that persuaded the king to allow for a dissolution of the parliament and the suspension of civil liberties in August. (Dafnis, 1997, p. 837) So began the 4th of August Regime.

The 4th of August Regime was Greece’s rather unconvincing experiment in fascism. There were, for example, organizations like the National Youth Organization, promoting self-discipline for the boys and preparing girls to be dutiful mothers, anti-communism propaganda and political arrests, but at the same time Metaxas was not racist and repealed some of the anti-Semitic legislation of previous regimes. (Heneage, 2021, pp. 179-180) Furthermore, the king remained strong and autonomous (Mavrogordatos, 2019, p. 85) and the country was not linked to the Axes Powers. On the contrary, Metaxas was a supporter of Great Britain. (Mavrogordatos, 2019, p. 90) Thus, when, on the night of 28 October 1940, the Italian ambassador Grazzi demanded that Greece surrender key strategic sites or else face invasion, Metaxas answered in French, the language of Democracy, ‘Non’, No, in Greek, ‘Ochi’. (Heneage, 2021, p. 183) Greece was at war. Again.

II Clientelism

For division and civil war to flourish, one needs at least two factions, in the case presented here Venizelists and anti-Venizelists, each with members ready to do whatever is necessary to prevail. This, in return for specific benefits. The phenomenon is called clientelism – namely, the distribution of benefits by politicians and political parties to their supporters in return for their votes, campaign contributions and political loyalty. (Trantidis, 2016, p. xi)

The origin of clientelism in modern Greek history goes back to the Ottoman occupation. Indeed, Ottoman oppression strengthened the importance of the family as an institution that more securely guaranteed the protection of its members, relatives, and friends. (Veremis, The Interventions of the Army in Greek Politics 1916-1936, 2018, p. 287) The phenomenon expanded when the newly founded modern Greek state, as we have seen in the previous parts of this series, failed to create institutions that would earn the trust of its citizens. Everyday experience taught that a relationship with a powerful patron was better guarantee of service than trust in an indifferent state apparatus. Thus, the individual was connected to the institutions of power through some powerful patron-mediator in order to promote his interest rather than waiting for the state institutions to function properly. (Veremis, The Interventions of the Army in Greek Politics 1916-1936, 2018, pp. 278-279)

Although individual clients are, more or less, powerless, they can form networks and become important and valued for their patrons. Clients may be members of formally autonomous social institutions such as labor unions. Through this membership, they undertake overlapping roles: they are both political clients claiming individual patronage benefits and members of an organization claiming ‘collective’ or ‘club’ goods. Rather than isolated individuals, clients organized in party bodies, trade unions or other professional organizations can find in them the infrastructure by which they could hold patrons accountable. (Trantidis, 2016, p. 12)

Thus, for the interwar period studied here, the phenomenon of clientelism was probably most profound in the army. Already before the Balkan Wars, the then crown prince Constantine had created a small entourage of officers, which he promoted based not so much on their military performance but mostly on their loyalty to the dynasty. (Veremis, The Interventions of the Army in Greek Politics 1916-1936, 2018, p. 21) The ten years war period from 1912 to 1922, though, created a plethora of officers forged at the battlefield, outside of the military academy in Athens and the king’s cycle. In fact, by 1922 these officers made three quarters of the officer’s corpse. (Veremis, The Interventions of the Army in Greek Politics 1916-1936, 2018, p. 102) Probably the most astonishing example of rise in the army ranks during this period was the mutineer Plastiras, whom we met in the previous section, and who had started his career as corporal back in 1903.

For the conscripts that made it to the officers ranks the army also became a means of livelihood, but when the wars were over, they had the fewest guarantees of permanence (or further promotion). Thus, patronage was particularly important for those officers that came from the ranks of the reservists. (Veremis, The Interventions of the Army in Greek Politics 1916-1936, 2018, p. 102) The officers that could not find a patron within the royalists’ ranks, naturally, turned to the Venizelist – democratic space for protection.

It is certainly a paradox that parties competing for parliamentary rule within a nominally democratic framework possess military client-branches and that that they use these branches dynamically to influence the election process or even to overturn its results, when considered unfavorable. In fact, from the 43 military interventions between 1916 and 1936 only two presented the army as a supporter of liberal reform, a defender of the country’s territorial integrity and a punisher of those responsible for a national catastrophe. These were the revolt of the National Defense Committee in Thessaloniki in 1916 (Papageorgiou, History is Now Magazine, 2022) and the army’s revolt of 1922 discussed above. Both gained national significance and were supported by a large portion of the public. The rest were only intended to serve private interests or were an expression of discontent of some military faction. (Veremis, The Interventions of the Army in Greek Politics 1916-1936, 2018, p. 280)

It should be noted though that the officers do not always work in coordination with their political patrons. Movements like that of 1922, when the military for the first time fully assumes the exercise of government, contribute to the emancipation of some military factions from political patronage towards an autonomous claim of the benefits of power. (Veremis, The Interventions of the Army in Greek Politics 1916-1936, 2018, pp. 118-119)   

The effect of clientelism on the social, political, and economic life in Greece has been discussed in more detail recently, because of the most recent economic crisis that started in 2010. Thus, we will return to it when recounting later periods of modern Greek history. Before I close this short reference to the subject here though, I further note that clientelism should not be seen as a political choice that is alternative to campaign strategies that seek to attract voters with programmatic commitments and ideology. In addition, clientelism must not be seen simply as a strategy of vote buying. Instead, organized clientelism, as described above, strengthens the capacity of political parties to recruit groups as campaign resources in order to appeal to voters via the conventional means of programmatic and ideological messages. (Trantidis, 2016, p. 10)

Clientelism as a method of political mobilization creates a strong preference for a political party in government to preserve policies that cater to clientelist demands and avoid policies that could limit the allocation of benefits and resources to their clients. (Trantidis, 2016, p. 17) This, in turn, limits the capacity for reform, especially during political and economic crises, as politicians in a highly clientelist system will try to preserve clientelist supply as much as possible. (Trantidis, 2016, p. 19) This will help us understand the problems of the Greek economy presented in the next section.

III Economy in crisis

Although the ten-year war period, between 1912 and 1922, ended with a catastrophe, interwar Greece was different from Greece before the Balkan Wars. Its population and territory had doubled: before the war Greece was made up of 2,631,952 inhabitants and its territory amounted to 63,211 square kilometers. By 1920 the population reached 5,531,474 and its territory 149,150 square kilometers. Finally, the census of 1928 recorded 6,204,684 inhabitants and a territorial expanse, after the catastrophe of the Asia Minor Campaign and the settlements that followed, of 129,281 square kilometers. (Kostis, 2018, pp. 272-273) Of course, most of these gains had already been achieved by 1913 and the expansion of the war period, including internal turmoil, to 1922 simply postponed the integration of the new territories to the country and its economy. Not only that, but it made it more difficult as by the end of the war the country was left much poorer and in a much less favorable international position.

The situation was made worse by the arrival in Greece of more than 1.2 million refugees as the result of the uprooting of the Greek communities in the East, following the defeat of the Greek army there. (Mavrogordatos, 2019, p. 157) The number represented 20 percent of the total national population and the country had to import significant quantities of goods in order to meet the emergency needs of these new populations. (Kostis, 2018, p. 279)

The arrival of the refugees was decisive for the ethnic homogeneity of Greece though. Following the treaty for the obligatory exchange of populations signed between Greece and Turkey in Lausanne in January 1923, and another one, this time for an exchange on a voluntary basis, between Greece and Bulgaria earlier, in 1919, 500,000 Muslims and 92,000 Bulgarians left Greece in the period that followed. (Kostis, 2018, p. 275) Thus, about 70% of the refugees that remained in Greece (about 200,000 left Greece to seek their fortunes elsewhere (Kostis, 2018, p. 275)) was settled in rural areas of Macedonia and Thrace taking up the fields and the houses of the Turks and Bulgarians that left. (Mavrogordatos, 2019, pp. 159-160)

The properties of the minorities that left Greece though could make for no more than 50% of what was necessary for the refugees in the rural areas. The other 50% came from a significant reform under the military regime of Plastiras in February 1923. That was the obligatory expropriation of the large country estates and real estate in general, without the requirement that the owners be fully compensated first. (Mavrogordatos, 2019, pp. 30, 369-373) This Bolshevik-like approach created many small owners in the countryside and actually kept the refugees away from the grasp of the Communist Party that additionally adopted the policies of the Communist International and promoted the autonomy of Macedonia and Thrace. (Mavrogordatos, 2019, pp. 383-391)

In fact, as the catastrophe of the Asia Minor campaign took place under anti-Venizelist rule and the rehabilitation and assimilation of the refugees is credited to the Venizelists, most of the refugees became clients of the Venizelist parties affecting the results of elections to a significant degree. (Mavrogordatos, 2019, pp. 134-140,152,154 ) Indeed, when a small percentage of the refugees abandoned the Venizelist camp in 1933, it reshaped the political balance and eventually led to an anti-Venizelist victory.

One more conclusion can be drawn at this point. The inability of a clientelist state for reform explains why, in several cases, this (the reform) comes from authoritarian regimes or dictatorships, like that of Plastiras that brought the agricultural reform. Consequently, these regimes remain practically unchallenged by the political establishment, like that of Metaxas after 1936 (Dafnis, 1997, pp. 880-881), that introduced a full social security plan and imposed compulsory arbitration in labor disputes to prevent social unrest. (Veremis & Mazower, The Greek Economy (1922 - 1941), 2009, p. 85) In any case, for reform or private interest (see section II), the collaboration between the politicians and the military officers (often based on a patron – beneficiary, that is clientelism, relationship) explains also why many military interventions went practically unpunished or why amnesty was very often granted to the protagonists during the periods of modern Greek history we covered so far.

The agricultural reform alone was not enough to settle the refugee’s problems. The country was lacking raw materials, equipment, and the necessary infrastructure to integrate the new territories to the state. As usual, Greece resorted to external borrowing to cover these needs. A 12,000,000-franc loan was granted to Greece on humanitarian grounds by the Refugee Settlement Commission under supervision of the League of Nations to be spent on rehabilitating refugees (Kostis, 2018, p. 279). Venizelos’ investment program (see section I) between 1928 and 1932 also increased the external national dept from 27,8 billion drachmas to 32,7 billion drachmas. (Veremis & Mazower, The Greek Economy (1922 - 1941), 2009, p. 77) This insured that a disproportionately large portion of the national budget would be used for debt payments: 25.6% of public revenue in 1927-28, 40.7% in the following year, while in the last of Venizelos’ four years the figure settled at 35%. These figures left little room for flexibility in the government’s budget. (Kostis, 2018, p. 286)

Flexibility was further reduced by the fact that more than 100 years after the establishment of the modern Greek state 70-80% of the country’s export profits was still coming from the cultivation of currant and tobacco. (Veremis & Mazower, The Greek Economy (1922 - 1941), 2009, pp. 77-78) The industry’s share to the GDP increased from 10% in 1924 to 16% in 1939, nevertheless, this development was carried out under protectionism conditions and did not introduce qualitative improvements in the Greek industry that would prepare it for international competition. (Veremis & Mazower, The Greek Economy (1922 - 1941), 2009, p. 87) Both remarks are indicative of the effect of clientelism on the lack of economy reforms and as an observer put it, positive developments in economic growth were more the result of the efforts of individual cultivators and industrialists rather than of a planned government policy. (Veremis & Mazower, The Greek Economy (1922 - 1941), 2009, p. 84)

Eventually, one more of the vicious cycles of the Greek economy, proposed by Dertilis (Dertilis, 2020, p. 29), was repeated in the interwar period. Once again it started with war or preparation for war (military spending took 18% of the GDP between 1918 and 1822 (Dertilis, 2020, p. 99)) and culminated to the suspension of national dept servicing on 1 May 1932. The government also abandoned the gold standard, and the value of the drachma began to fluctuate freely. Strict measure for limitations on currency followed that would affect the Greek economy for many decades. (Kostis, 2018, p. 287)   

The Greek economy then turned inwards and seeked to develop by exploiting its domestic resources and more centralized forms of economic management made their appearance as the state took on a leading role. The economy recovered, but this recovery did not solve the country’s economic woes. (Kostis, 2018, p. 287) By 1937, the deficit in Greece’s trade balance reached 5,649 million drachmas. A year later, Greece imported three quarters of the raw materials used by its industry, one third of the cereals needed for domestic consumption and significant amounts of machinery and capital goods. By March 1940, the nominal public dept had reached 630 million dollars, equivalent to 9.25% of the national income for Greece (this reflected to a great extent the prevailing situation till 1932, as since then borrowing was significantly reduced) compared to 2,98% for Bulgaria, 2,32% for Rumania, and 1,68% for Yugoslavia. (Veremis & Mazower, The Greek Economy (1922 - 1941), 2009, pp. 88-89) Military spending was reduced to 6.2% of the GDP between 1934 and 1939 (Dertilis, 2020, p. 99) but the imminent second world war did not allow for further reductions. In fact, at the end of 1939, when the war in Europe began, the Greek government spent an additional amount of 1,167 million drachmas for military purposes. This unexpected expense burdened the state budget by 10%. Between July 1939 and October 1940, when Italy attacked Greece, the circulation of banknotes increased from 7,000 million to 11,600 million drachmas and the wholesale price index increased by 20%. (Veremis & Mazower, The Greek Economy (1922 - 1941), 2009, p. 90)

Thus, the Italian attack in October 1940 found Greece’s economy in a fragile state and as is very often the case, an economy in crisis invites foreign intervention. (Dertilis, 2020, p. 29)

IV Foreign intervention

Foreign intervention refers basically to that of the Great Powers of the time (Great Britain, France, Russia, Austria – Hungary, the German Empire/Germany, Italy, and the United States of America). That is because the interaction of modern Greece with its Balkan neighbors was rather antagonistic, if not hostile, and more often than not determined by the dispositions of the Great Powers. (Divani, 2014, σσ. 82 - 119) Exception is the short period of the Balkan Wars, when skillfully chosen alliances with its Balkan neighbors resulted in the doubling of Greece’s territory at that time. (Papageorgiou, History is Now Magazine, 2022) A significant improvement in the relation with its neighbors, Albania, Yugoslavia, Italy and Turkey, was also achieved, again under the premiership of Venizelos, between 1928 – 1932, allowing     for a significant cut in military spending to the benefit of investments in infrastructure and the rehabilitation of the refugees. (Divani, 2014, pp. 207-208) (see also section I above). In fact, a treaty of friendship was signed between Greece and Turkey in October 1930.

It goes without saying that state characteristics like the ones presented previously (division, civil war, economy in crisis) facilitate, if not invite, foreign intervention. Furthermore, the term (‘foreign intervention’) is perceived, in most cases, with a negative sign. It is synonymous to the limitation (or even loss) of a state’s sovereignty at the interest of a foreign power. Nevertheless, let us remember, at this point, some cases of foreign intervention that we have come across in this series on the history of modern Greece: i) at a critical point of the War of Independence, when defeat seemed imminent, the combined fleets of Great Britain, Russia and France defeated the Ottoman-Egyptian forces at Navarino Bay and later signed the Protocol of London granting autonomy to Greece (Papageorgiou, History Is Now Magazine, 2021), ii) the first territorial expansion of Greece to the Ionian Islands came as a ‘dowry’ to the new king George I in 1864, (iii) the second territorial expansion of Greece to Thessaly in 1881 came after the Great Powers intervened to revise the Treaty of St Stefano and cancel the creation of the ‘Great Bulgaria’, and (iv) when Thessaly was retaken by the Ottomans after the Greek defeat in the 1897 Greco-Turkish war the Powers once again intervened to keep Greece’s territorial losses to a minimum. (Papageorgiou, History is Now Magazine, 2021)

Are we then to conclude, following the previous remarks, that foreign intervention was out of pure concern for the well-being of Greece? By no means. Great Britain’s intervention at Navarino, together with France and Russia, intended to the limitation of the latter’s influence in the region. That is why immediately afterwards Great Britain worked to preserve the integrity of the Ottoman Empire by keeping Greece’s original territory very limited. The Ionian Islands were also given to Greece at a period when their value for Great Britain was deemed limited and under the condition that they would be rendered demilitarized. The limitation of Russia’s influence in the Balkans was also behind the revision of the Treaty of St Stefano. And there were also cases, as for example during the Asia Minor Campaign, that the Great Powers simply abandoned Greece to suffer a disastrous fate. (Papageorgiou, History is Now Magazine, 2022) Thus, the remark that foreign intervention is synonymous to the limitation (or even loss) of a state’s sovereignty at the interest of a foreign power remains valid. Indeed, with some exceptions, e.g. during the Balkan Wars, Greece failed to keep its fate in its own hands.  The previous discussion serves only to show that foreign intervention was also positive when, by mere chance, foreign interests coincided with those of Greece.

But is it generally easy for a small state to draw an independent policy? Certainly not. Things are even worse though, when clientelism governs its political, social, and economic life. In fact, during the interwar period, the small states had the chance to participate to an international forum where, for the first time, instead of being subjected to the decisions of the Great Powers, they could, even to a small extent, co-shape them. This was the League of Nations (LoN). (Divani, 2014, p. 134)

Greece’s initial experiences with the first global intergovernmental organization, founded in 1919, were not good though. When Italy invaded Corfu in August 1923 (see section I) the LoN did very little to contain Mussolini. This was the first indication of the flaws of the LoN that eventually failed to work effectively against the fascist aggression that culminated to the Second World War. On the contrary, when Greece, under Pangalos’ dictatorship invaded Bulgaria (see section I) the LoN moved swiftly to condemn and punish it. The feeling of injustice was strong, but Greece, once again at a weak spot, could not do much to expose the handlings of the LoN. It needed the latter for technical and financial support for the rehabilitation of the refugees following the disaster of the Asia Minor Campaign. (Divani, 2014, pp. 159-173)

Indeed, as the former prime minister A. Michalakopoulos’ put it in 1929, regarding the work of the LoN in Greece: ‘if the State attempted to do the work of the Refugee Settlement Commission the errors would be tenfold, and the work imperfect, and there would be multiple embezzlements and the costs would be greater’. (Mavrogordatos, 2019, p. 138) This was because the LoN took special interest in ensuring that the loan money would not be spent for reasons other than the productive and developmental settlement of the refugees. The Financial Committee of the LoN also demanded reforms aiming at the stabilization and modernization of the Greek economy. (Divani, 2014, p. 242) In fact, the financial control of the LoN coexisted with the International Financial Committee controlling the Greek finances already since 1897, after the military defeat by the Ottomans following the bankruptcy of 1893. (Papageorgiou, History is Now Magazine, 2021)

International financial controls mainly aim to serve the interests of Greece’s creditors. No doubt. Nevertheless, even to this end, they often introduce necessary economic, political (and consequently even social) reforms that have been repeatedly postponed and avoided by the local political establishment as they collide with the interests of the stakeholders of the clientelist state. Thus, foreign intervention represents an alternative to authoritarian regimes for the introduction of reform (see section III). Similarly though, it is used as scapegoat from the clientelist establishment, usually under the veil of an alleged insult to national sovereignty or democracy. As such it is hated by the Greeks that, in such a way, miss (or turn away from) the real origin of their troubles. Once again: a satisfactory solution of the refugee problem would have been impossible without the help of the LoN. (Divani, 2014, p. 293) As the Refugee Settlement Commission worked independently though, keeping the available resources (especially the refugee loans) away from the grasp of the local political establishment, its work was repeatedly discredited by the press and the Greek parliament in consecutive sessions discussed accusations against it. (Divani, 2014, p. 299)

V Conclusion

At the heart of all this trouble lies clientelism. The Greeks fought the War of Independence (1821 – 1830) to free themselves from the Ottomans only to become serfs to a clientelism system that significantly hinders their ability to develop and exploit the full capacity of themselves and the resources of their country. This is because the system demands unquestionable loyalty to the party or the ‘clan’. So unquestionable that one should be prepared to harm even its fellow Greek members of the opposite ‘clan’. Thus, civil war is a phenomenon often met in modern Greek history. This often takes the classical form of armed conflict, but, more often than not, is present in the form of ‘exchanges’ in critical administration positions. Members of one ‘clan’ are usually kicked out when the next ‘clan’ comes to power and needs to ‘accommodate’ its own clients. This non-meritocratic system of course guarantees that the country almost never has the needed capacity in these positions and if this, by coincidence, happens, it is never for a long time. Thus, Greece’s ability to keep up with the signs of each time is crippled. After all, with clientelism it is never about long-term planning and reform. Thus, the often bankruptcies. Then reform comes, usually violently, from inside or the outside. Because a divided nation invites foreign intervention.

It is not to be considered that all Greeks participate or are being favored by the clientelism system. Many have individually thrived inland or abroad when they found themselves in a healthier environment. And indeed the country has made progress since its establishment. Nevertheless, I dare to say that this was and remains slow, and it was and still is more coincidental. Sometimes because its interests coincided with those of the Great Powers of the time. Sometimes because it was lucky enough to have great individuals in power.

At this point, as the period we are discussing coincides with the death of Eleftherios Venizelos, some remarks about the Cretan politician are necessary. As we have seen he was not a role model for parliamentarism. He did not hesitate to resort to arms or even divide the country when necessary. So should he be condemned as, at least at times, anti-democratic? Maybe. I propose though that, at the same time, he was simply being realistic. Venizelos knew how the system works. He saw the opportunity for Greece’s expansion and he wanted to take it. He knew that clientelism would slow things down and the opportunity might have gone missing. So he played by the real rules of the game. That of clientelism. Not “parliamentarism” or “democracy”. And if, for example, Napoleon of France squandered French power and prestige leaving France smaller than he found her and is still called ‘The Great’, (Kissinger, 2022, pp. 61-62) Venizelos was proved to be ‘Great’.

So, should the country continue to rely on chance and a few good, or even ‘Great’, men or women for its progress? That would be a great risk. Because clientelism is like the cancer developed in a certain part of the body. If not treated properly, it will soon drag the healthy parts of the body to death as well.

What do you think of the period 1923-40 in the Modern Greek State? Let us know below.

References

Dafnis, G. (1997). Greece Between Two Wars 1923-1940. Athens: Cactus Editions (in Greek).

Dertilis, G. B. (2020). Seven Wars, Four Civil Wars, Seven Bankruptcies 1821-2016. Athens: Gutenberg (in Greek).

Divani, L. (2014). The Treacherous Caress, Greece and foreigners, 1821 - 1940. Athens : Kastaniotis Rublications (in Greek).

Heneage, J. (2021). The shortest history of Greece. Exeter: Old Street Publishing ltd.

Kissinger, H. (2022). Leadership. London: Allen Lane.

Kostis, K. (2018). History’s Spoiled Children, The Formation of the Modern Greek State. London: Hurst & Company.

Mavrogordatos, G. (2019). After 1922, The continuation of the schism. Athens: Patakis (in Greek).

Papageorgiou, T. P. (2021, September 5). History is Now Magazine. Retrieved from http://www.historyisnowmagazine.com/blog/2021/9/5/the-modern-greek-state-18631897-bankruptcy-amp-defeat#.YVH7FX1RVPY

Papageorgiou, T. P. (2021, May 16). History Is Now Magazine. Retrieved from http://www.historyisnowmagazine.com/blog/2021/5/16/the-modern-greek-state-1827-1862-a-bad-start#.YLe-yqFRVPY

Papageorgiou, T. P. (2022, May 20). History is Now Magazine. Retrieved from http://www.historyisnowmagazine.com/blog/2022/5/20/the-modern-greek-state-19141922-greeks-divided?rq=Papageorgiou#.Yw-AoxxBy3A

Papageorgiou, T. P. (2022, January 20). History is Now Magazine. Retrieved from http://www.historyisnowmagazine.com/blog/2022/1/20/the-modern-greek-state-18981913-glory-days#.YhPK6JaxW3A

Trantidis, A. (2016). Clientelism and Economic Policy, Greece and the crisis. New York: Routledge.

Veremis, T. (2018). The Interventions of the Army in Greek Politics 1916-1936. Athens: Alexandria (in Greek).

Veremis, T., & Mazower, M. (2009). The Greek Economy (1922 - 1941). In T. V. (Editor), Metaxas and His Era (pp. 73-90). Athens: Eurasia Publications (in Greek).

Wikipedia. (2022). Retrieved from https://en.wikipedia.org/wiki/Treaty_of_Lausanne

The Modern Greek State: 1914–1922 – Greeks Divided

On March 25, 2021, the Modern Greek State celebrated the 200th anniversary of the War of Independence, which ultimately led to its establishment. It is thus an excellent opportunity to reconsider some of the main events of Greek history over these 200 years and how they shaped the character of modern Greece.

This series of articles on the history of modern Greece started when the country was celebrating the 200th anniversary of the War of Independence. There was not much to celebrate one hundred years earlier though, when the first centenary was completed. Indeed, in 1922 Greece suffered probably the worst catastrophe of its modern history. Its origin can be traced back to after the triumph of the Balkan Wars. Thomas Papageorgiou explains.

You can read part 1 on ‘a bad start’ 1827-1862 here, part 2 on ‘bankruptcy and defeat’ 1863-1897 here, and part 3 on ‘glory days’ 1898-1913 here.

King Constantine I of Greece in the early 1920s.

I After the Balkan War was over

Defeat is an orphan, whereas victory is claimed by many fathers. King Constantine and his entourage of officers at the general staff, blamed by the Military League for the defeat at the Greco-Turkish of 1897, (Papageorgiou, History is Now Magazine, 2021) saw their redemption at the triumph of the Balkan Wars. Their approach though was that of complete denial of any credit to the prime minister Venizelos. The latter and his environment, similarly, but more moderately, exalted their contribution against the deficiencies of the pro-royals. (Malesis, 2017)

This was a rather petty quarrel and a bad sign for the future in view of the effort required to integrate the recently acquired territories. Significant minorities (the census of April 1913 shows that in Thessaloniki, for example, out of the 157,000 inhabitants, 39,956 were Greeks, 61,439 Jews, 45,867 Muslims, 6,263 Bulgarians and 4,364 Europeans and other ethnicities) (Papadakis (Papadis), 2017) constituted a potential problem that could be solved neither easily nor quickly. Furthermore, efficient exploitation of the new lands required the build of infrastructure in areas recently devastated by war. The fiscal sufficiency though was slim. By 1913, expenses for military operations amounted to 411,485, 000 drachmas in addition to 280,000,000 of collateral costs. The nation’s public dept had risen by 755,000,000 drachmas. These were dizzying figures considering the state of the Greek finances at the time (GDP before the war is estimated at 735,000,000 drachmas).

The prevailing expectations in Western Europe about the future of the Greek State, after its victorious military campaigns, allowed for the takeout of a 500,000,000 francs loan in February 1914, under favorable terms, to settle the pending depts. Nevertheless, the budget of the same year amassed a deficit of 170,000,000 drachmas, while immediate needs to be covered (not included in the budget) were estimated at over 300,000,000 drachmas. Thus, even before the outbreak of the First World War, issuance of the whole 500,000,000-franc loan proved impossible. The government turned to the National Bank and internal borrowing to supplement the required funds.

In any case, the needs could not be met with continuous borrowing. Payments of salaries and pensions were not being made on time and this gave room to the opposition to criticize the government. Even basic military needs, like the supply of food to the army, were only possible thanks to the advances from the National Bank. (Kostis, 2018)

II The First World War (WWI)

Thus, the outbreak of WWI found Greece facing significant challenges. These suggested that staying neutral was probably the most preferable option. At the beginning of the war, this was also the preference of the Central Powers and the Entente. Both were wooing Bulgaria and the Ottoman Empire to join their ranks and taking up their foe during the Balkan Wars could hinder their efforts. King Constantine favored neutrality also for strategic reasons (exposure to a possible naval blockade by the British Empire in case of an alliance with Germany). (Rizas, 2019)

On the other hand, Greece was bound by an alliance with Serbia (Papageorgiou, History is Now Magazine, 2022) which was under attack from Austria-Hungary since July 1914. Furthermore, when the Ottomans and Bulgarians signed treaties of alliance with Germany in September 1914 and September 1915 respectively, (Glenny, 2012) Venizelos, convinced that the British Empire would prevail, saw an opportunity for further territorial gains, if Greece joined the Entente.

The defeat of Germany, though, was by no means a certainty, especially during the early stages of the war. By the end of 1917 Soviet Russia concluded an armistice with the Central Powers followed by the Treaty of Brest – Litovsk with favorable terms for the latter. It was the late entry of the USA into WWI that tilted the scale in favor of the Entente. (Efthimiou)

Thus, steering the country within this complicated framework of international relations by carefully considering Greece’s fiscal and military capacity as well as its political (diplomatic) options required the setting of clear goals and a close collaboration between the prime minister and the head of state and the army. Venizelos and Constantine did exactly the opposite.

At first, Venizelos suggested that the Greek army should undertake the landing at the Dardanelles in February 1915, in return for territorial gains in Asia Minor promised by the Entente. The king seemed fascinated by the idea (considering a possible capture of Constantinople, where his synonymous emperor Constantine died, when the city was taken by Turkey in 1453), but the pro-royal chief of staff Metaxas considered the campaign too risky, leaving the northern border exposed to a Bulgarian attack and resigned his post. Venizelos then proposed the limitation of the Greek participation to only one division raising the king’s doubts about the success of the undertaking. Finally, Constantine refused to give his approval and Venizelos resigned. (Mavrogordatos, 2015)

The prime minister’s Liberal Party, though, won again in the elections of May 1915. The opposition, gathered around the king, refused to interpret the result as a vote for the participation to WWI proposing that it only showed the people’s trust to Venizelos. The king’s refusal to complement led Venizelos to resign again in September and abstain from the new elections of December 1915. (Malesis, 2017)

Meanwhile Bulgaria joined the Central Powers and the attack on Serbia was imminent. To implement the Greco-Serbian alliance treaty Venizelos, in the brief period before his resignation, invited the Entente to send troops to aid the Serbians through the port of Thessaloniki. The revocation of the invitation by the pro-royals and Greece’s protest could not prevent the landing of French troops in October 1915. (Mavrogordatos, 2015)

The presence of the allied forces in Thessaloniki allowed for the formation there of the National Defense Committee by Venizelos’ supporters aiming to confront the Bulgarian threat and align foreign policy with that of the Entente. When the Bulgarians took the Greek fortress of Ruper in May 1916 and later advanced in Eastern Macedonia by August, the government in Athens did not react in the name of a questionable neutrality as foreign armies were now clearly violating national sovereignty. This caused the armed reaction of the National Defense Committee on the 17th of August and when the city of Kavala was lost to the Bulgarians on the 29th, Venizelos, although hesitant at first, decided to lead the revolt. (Malesis, 2017)

Thus, Venizelos was now leading yet another revolt and the country was split in two with one government in Athens in charge of the ‘Old Greece’ and another one in Thessaloniki in charge of the ‘New Greece’ (territories acquired after 1912 except Epirus). (Mavrogordatos, 2015) The military presence of the Entente helped Venizelos to reunite the country though. On November 18, a detachment of 3,000 allied troops landed in Piraeus and advanced to Athens, but they were repelled by forces loyal to Constantine. After that, the royalists turned against Venizelos’ supporters in Athens killing dozens of them, arresting others and committing all kinds of atrocities. On the 26th, the allied fleet implemented a strict naval blockade of the ‘Old Greece’ causing food shortages and other catastrophic consequences for the population. Eventually, the king was forced to leave the country in June 1917 leaving his son Alexander at his place but did not resign. (Malesis, 2017) Venizelos returned to Athens and ‘resurrected’ the parliament elected in May 1915 (thus described as ‘Lazarist’). It was time for his supporters to retaliate against the opposition. Venizelos might have united the country again territorially, but the Greeks were now divided to Venizelists and Anti-Venizelists.

The prime minister’s harsh measures included the exile of this opponents (his former adjutant Metaxas and the leader of the Anti-Venizelists Gounaris, for example, were sent to Corsica) and the cleansing of the public sector, including that of justice and the church, as well as the army from the opposition supporters. Nevertheless, during the last phase of WWI Greece managed to field 10 divisions, that is about 180,000 men, that performed well in the Macedonian front, where they constituted about 1/3 of the total allied forces. To compensate for the late entrance in the war and in order to have the best possible treatment during the peace negotiations in Paris, Venizelos also sent the 1st Army Corps (23,000 men) to fight against the Communists in Ukraine in January 1919. (Malesis, 2017). The campaign was unsuccessful for the allies and they withdrew in April of the same year. The Greek communities in the Crimean suffered the retaliation of the Bolsheviks and many of their members were forced to seek refuge in Greece. Nevertheless, for Greece, the worst was yet to come.

III The Asia Minor Campaign

The story of the Greek expansion to western Asia Minor goes back to 1914. It was offered by the Entente in exchange for Greek concessions to Bulgaria of some of the territorial gains of 1912-1913 so that the latter would join the allies. These amounted to about 5,000 square kilometers including the port city of Kavala affecting 35,000 Greeks living in the area. In return, Greece was claiming a territory of about 125,000 square kilometers with the city of Smyrna at its center and a significant minority of 810,000 Greeks. (Stamatopoulos, 2020) By the end of the war, though, no concessions were necessary as Bulgaria was on the side of the defeated.

Such offers, backed by mostly secret treaties, in order to lure one country or the other to their side, was a standard tool used by both camps during WWI. In April 1915, for example, southwestern Asia Minor was also promised to Italy with the treaty of London. (Stamatopoulos, 2020) The overall situation in the Middle East was further complicated by the antagonism between Great Britain and France as the Sykes – Picot agreement was challenged by the Young Turks of Mustapha Kemal, who was not willing to comply to any agreements of the defeated Ottoman Empire he deemed as harmful for the interests of the Turkish nation. To make things worse, President Wilson, representing the late entrant USA at the peace negotiations of Paris, was not aware of this covert diplomacy and was thus indifferent to any claims over peoples unless those peoples wanted them. (Churchill, 2021)     

Nevertheless, Italy proceeded with the occupation of Antalya in southern Asia Minor. The claims and ambitions of the Italians to lay hands upon the Ottoman Empire resulted to a complete breach between them and President Wilson. This led to a temporary withdrawal of Italy from the peace conference in Paris. When reports reached the conference that the Italians were going to proceed further with the occupation of Smyrna, combined with stories of Turkish maltreatment of the Greek population, it was proposed that the Greeks should be allowed to occupy Smyrna at once for the purpose of protecting their compatriots there. (Churchill, 2021) Although Venizelos was earlier warned by the chief of the British General Staff Sir Henry Wilson that he could not rely on any military or financial aid for the undertaking and that this would result in a long war with Turkey  and a rapid depletion of Greece’s financial and human resources, he decided to take the offer. (Richter, 2020)

At the time of the Greek landing in Smyrna, on May 15, 1919, the Ottoman Empire was under the spell of defeat in WWI. It was surrendering arms and munitions. But as soon as Greece, the enemy of generations, landed its troops, Turkey arose and the leader of the Young Turks, Mustapha Kemal, was furnished with the powers of a Warrior Prince. (Churchill, 2021) Not unfairly. Whereas the Greeks had the sea on their backs and Smyrna was not protected by any natural defensible border, Kemal could exploit the strategic depth of Anatolia, where he could safely withdraw, after every strike. (Mavrogordatos, 2015) Furthermore, Italy was clearly hostile to the Greek presence in Asia Minor and France also opted for collaboration with Kemal in exchange for peace in Syria, now under the French Mandate. (Wikipedia, 2022)   

Thus, Greece was alone when the treaty of Sevres was signed in August 1920. The treaty ceded Thrace to Greece, which was also to possess the Gallipoli Peninsula, most of the Aegean islands, and to administer Smyrna and its hinterland until a plebiscite could be held there. The British prime minister Lloyd George favoured the Greeks, but the imposition of the treaty on the Turks was entirely up to the Greek army, now showing signs of strain under the influence of protracted financial, military and political uncertainties. (Churchill, 2021)

The situation was difficult, and Sir Henry Wilson again describes Venizelos as hopeless and desperate during this period. ‘The old boy is done’, he remarked. (Llewellyn Smith, 1999) In the internal front the national schism continued to fuel despicable acts of hate. Two days after the signing of the Treaty of Sevres, Venizelos himself narrowly escaped an attempt against his life by two royalist soldiers in a Paris railway station on his way home. His decision to call general elections in November 1920 allowing also for the return and participation of the exiled opposition is still a point of controversy. Venizelos’ opponents claim that he was looking for a way to abdicate his responsibility for the outcome of the Asia Minor Campaign. If this was the case, he was successful, because he lost and now it was the royalists that had to find a solution.

Winston Churchill, who was later to experience himself a surprising electoral defeat after the triumph of WWII (Gilbert, 1991), gives a different account though. On October 2, 1920, Prince Alexander (at this point king of Greece) was bitten by a monkey during a walk in the royal garden. The wound festered and after three weeks Alexander died. It was decided to offer the throne to Prince Paul of Greece. The latter was living with his exiled father in Switzerland and, as Churchill puts it, was inspired to reply that he could only accept after the Greek people had at an election definitely decided against his father. This forced a General Election.

Venizelos, with the Treaty of Sevres that expanded the triumph of the Balkan Wars, felt confident. He was willing that the issue should be put crudely to the electorate: Were they for the restoration of Constantine or not? But he did not make sufficient allowances for the strain to which Greece had been put; for the resentments which the allied blockade to make Greece enter WWI had planted; for the many discontents which arise under prolonged war conditions; for the oppressive conduct of many of his agents, when during his continuous absence for the peace negotiations the Greek people lacked his personal inspiration and felt the heavy hand of his subordinates; for the complete absorption of his opponents to party politics and for their intense desire for office and revenge. Eventually, he lost. (Churchill, 2021)

The only sane policy arising from Venizelos’ defeat would have been to reduce promptly and ruthlessly the Greek commitments in Asia Minor, negotiating also for the safety and well-being of the Greek minority there. The pro-royal officer Ioannis Metaxas made suggestions along these lines. (Stamatopoulos, 2020) After all, the return of Constantine further dissolved all Allied loyalties to Greece as the king was a bugbear for them second only to the Kaiser himself. Nevertheless, the new regime, under prime minister Gounaris, was determined to show Greece how little Venizelos had had to do with its successes that far. They would strike Mustapha Kemal at the heart of his dominion. They would have the army march to Ankara. (Churchill, 2021)

What about the army then? Winston Churchill again gives a vivid description of the Greek army during the campaign to Ankara (which partly applies for the Greek people as well). He writes: ‘Imagine an army of two hundred thousand men, the product of a small state mobilized or at war for ten years, stranded in the centre of Asia Minor with a divided nation behind them; with party dissensions in every rank; far from home, and bereft of effectual political guidance; conscious that they were abandoned by the great Powers of Europe and by the United States; with scant food and decaying equipment; without tea, without sugar, without cigarettes, and without hope or even a plan of despair; while before them and around them and behind them preyed and prowled a sturdy, relentless and even more confident foe’. And he continues ‘over the Greek Army in Asia Minor there stole an ever-growing sense of isolation; of lines of communication in jeopardy, of a crumbling base, of a divided homeland, and of an indifferent world’. (Churchill, 2021) Nevertheless, the Greek army remained in martial posture for upwards of three years in Asia Minor. But, after the triumphs of the Balkan Wars and WWI, eventually it was defeated. On September 16, 1922 the last Greek Soldiers left Asia Minor. The Hellenism of Asia Minor followed them to escape the Young Turks’ atrocities.

IV Conclusions

Carl von Clausewitz in his classic On War defines the ‘Culminating Point of the Attack’ as that at which the forces remaining are just sufficient to maintain a defensive, and to wait for peace. Beyond that point the scale turns, there is a reaction; the violence of such a reaction is commonly much greater than the force of the blow. Everything then depends on discovering the culminating point by the fine tact of judgment. (Clausewitz, 1997) His fellow Prussian Otto von Bismarck did exactly that, when, after fighting against the Danes, then the Austrians and finally the French to achieve the unification of Germany in 1871, he stayed put in spite of expectations to storm the rest of Europe. (Steinberg, 2011) A more recent example is Menahem Begin, who, instead of provoking a civil war during Israel’s War for Independence, decided to take the blows of David Ben-Gurion without responding and remained in political exile for thirty years until he became prime minister in the end of the 1970s. (Gordis, 2016)

Obviously, the Greeks did not posses such qualities. As we have seen, civil wars were common during their War of Independence (and more came after that), and now political party quarrels that led to the national schism brought Greece beyond its culminating point of attack, deep in Asia Minor, after ten years of mobilization and war starting in 1912 with the Balkan Wars.

Who was responsible in the present case? Churchill criticized the United States, Britain and France for requesting the presence of the Greek Army in Anatolia, where it had been the foundation of allied policy against Turkey for three years only to fall victim to inter-Allied intrigues at the end. The way for the dissolution of all Allied loyalties to Greece was paved by the Greek people’s choice, at the moment of their greatest hopes and fears to deprive themselves of Venizelos, the commanding personality who had created the situation Greece found itself into and who alone might have carried it to success. (Churchill, 2021)

Several Greek commentators take the same stance (Mavrogordatos, 2015) although there are cases of harsh criticism against Venizelos and his policies and more favourable for the king (Kakouri, 2017). Others blame both Venizelos for his disregard of hard facts (e.g., Greek minority of only 20% of the total population in the disputed area, lack of natural defences etc.) that led to the disaster and the king for not opposing the advance to Ankara - even though he was convinced that the whole undertaking of the Asia Minor campaign would be fatal for Greece. (Stamatopoulos, 2020)

Indeed, in the period discussed here both Venizelos and the king (personally and as head of the anti-venizelists) offered bad service to their country. We have seen in previous parts of this short history of modern Greece that division, violence and civil war characterized its early years. Parliamentarism helped relax the tensions, but now the two rivals were resorting to the old methods again. Not only did they allow/cultivate violence for the (also physical) extermination of the opposition, not only did they allow/pursue foreign intervention for the support of their cause, but they did it with a ‘messianic’ attitude of infallibility that resulted in a complete disregard for the consequences on Greece and its people. This legacy, as we will see, tormented Greece in the following years. In contrast, in the short period of two years (1912-13) that Venizelos and Constantine managed to work together Greece triumphed.      

What do you think of the period 1914-22 in the Modern Greek State? Let us know below.

References

Churchill, W. S. (2021). The world crisis, Volume IV, The aftermath 1918-1928. London : Bloomsbury.

Clausewitz, C. (1997). On War. Ware: Wordsworth Editions Limited.

Efthimiou, M. (n.d.). Global History IV: The Man Against Himself - Part B. Center of Open Online Courses (www.mathesis.cup.gr). Crete University Press, Heraklion (in Greek).

Gilbert, M. (1991). Churchill, A life. London: Heinemann.

Glenny, M. (2012). The Balkans 1804-2012, Nationalism, War and the Great Powers. New York: Penguin Books.

Gordis, D. (2016). Israel, A concise history of a nation reborn. New York: Collins Publishers.

Kakouri, A. (2017). The two beta. Athens: Kapon.

Kostis, K. (2018). History’s Spoiled Children, The Formation of the Modern Greek State. London: Hurst & Company.

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