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Crisis Will Not Shake Fundamentals of Greek Diplomacy March 18, 2010

Posted by Yilan in Macedonia, Yunanistan.
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In spite of its current economic troubles,  the broad thrust of Greek foreign policy – on the  Macedonia name dispute and other issues – will remain unaltered.

Greece is confronting an historic financial crisis that will inevitably influence the country`s foreign policy. There are situations in which for things to remain the same, everything must change; but in the case of Greece, everything must change and things might still never be the same again.

Saddled with an external debt of some 300 billion euros and having admitted to an unacceptably high budget deficit of 12.7 per cent, Athens is forced to implement a long-term programme of far-reaching and painful economic reforms.
As events unfold, nothing less than a new social contract is being decided that will define and permeate the future of Greek society. But how exactly might the debt crisis affect the realm of diplomacy?

First, it should be taken into account that Greece`s credibility and prestige have already been battered. As is the case with someone`s personal life, achieving a «good name» in diplomacy requires lengthy and arduous efforts but may be «lost» almost overnight. However, the situation is not as dire for Athens as may first appear. This is because government and society at large are already behaving responsibly, by pursuing serious changes.

Furthermore, there exist a series of mitigating circumstances to Greece`s woeful financial situation: the shady role of speculators and international banks, the inadequacy of European institutions to deal with fiscal crises, the failure of the European Commission to successfully act as a watchdog over Greece’s accounting shenanigans, the realization that other European states have at times ignored or «bent» eurozone rules.

There is also the fact that Greece`s economy was hit by an international financial crisis (and especially the key sectors of tourism and shipping) which was unrelated to any decisions made in Athens (significantly, Greek banks never held toxic assets). It is thus reasonable to expect a partial rehabilitation of Greek credibility in the medium-term, assuming that the country follows rules honestly and continues along the path of a rational, efficient and equitable national reorganization.

Secondly, it will be harder, but not impossible, for Athens to resist pressure emanating from significant EU member-states on various issues. More specifically, the crucial and constant need for EU political and perhaps eventually financial support, especially from France and Germany, means that Greece might want to placate them on various issues linked to the stability of South Eastern Europe.

However, Greece will continue to be a European Union member with full membership privileges that include that of veto power. Matters and positions perceived in Athens as being of high national priority or over which the populace is deeply concerned will not be simply abandoned or compromised, despite possible European admonitions to the contrary.

Third, the debt crisis will not lead to the abandonment of Greece`s «red line» on the Macedonian name dispute: a name with a geographic connotations, such as Northern Macedonia. Athens has already adopted an unpopular position on the name issue, which a majority of the Greek people oppose, not wishing to monopolize the term Macedonia.

Considerations of regional stability, pressure emanating from Brussels and Washington and a more flexible attitude from Skopje may perhaps produce a settlement on a more restricted scope or lead to certain interim scenarios. But there is no political space or willingness to further change or compromise the fundamentals of the new name position, which in all likelihood will remain unchanged.

Fourth, the Greek government and people will be especially appreciative of countries that will be perceived as having aided them in the debt crisis. Expect Athens to support their positions on issues of concern to them, as well as conclude various agreements to purchase military material.

Fifth, Greek businesses will not be able to continue to play to the same extent their positive role of investing, trading and creating jobs in South East European countries. Although this will have a somewhat negative regional impact, Greek firms and banks will not vanish from the picture but remain active, albeit at a reduced degree.

Finally, it is an open question whether Greece can continue to keep defence spending at the same levels as before, and whether such concerns might affect relations with Turkey. In this author`s view, Greek society will make all the necessary sacrifices in order to maintain a credible deterrent capability against any potential military threat. However, it is in the best interest of both Athens and Ankara to mutually reduce offensive weapons at similar levels, thus saving considerable sums and simultaneously contributing to stability.

Based on all of the above, it becomes evident that in terms of Greek foreign policy, the debt crisis will present Athens with both opportunities and challenges. The United States and the European Union can play a constructive role here, undertaking initiatives based on shared interests with Greece and aiming to facilitate regional stability and prosperity. «A crisis is a terrible thing to waste.»

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