The Greek Crisis and Its Repercussions on the Balkan Neighbourhood: The End of the Myth /Yunan Krizi ve Krizin Balkanlar Bolgesi Uzerindeki Etkileri: Bir Mitin Sonu.

• Author: Koppa, Marilena
• Position: Essay

Introduction

At the beginning of the 1990s, Greece appeared as the best situated country to contribute to a peaceful transition to democracy and the introduction of a market economy in South-eastern Europe. As the only NATO and EU member state in the region, Athens had the potential to act as a facilitator of economic and political transition with a view to creating a wider consolidated regime of peace and stability in South-eastern Europe. On the other hand, Greece had every interest to transcend decades of geographic isolation, gain access to an emerging and largely unexplored market of 90 million people and emerge as the political broker of Europeanization in South-eastern Europe. Economically, Greece punched above its weight; politically, Greece largely failed to play its role.

With the collapse of the collective security umbrella of the Warsaw Pact and the unravelling of the territorial status quo in former Yugoslavia, Greece had to reflect on its new role in the region. However, Athens failed to play the role of a mediator and a guarantor of stability. The main reason was that Greece never quite had a vision that would transcend regional confrontation to harness regional integration. Athens was absent in addressing the great political challenges of the region, be it state-building in Albania or democratic consolidation in the Former Yugoslav Republic of Macedonia (FYROM).

Moreover, Athens was often part of the problem. In the years of political consensus over economic and social policy, several opinion leaders in Greece succumbed to the temptation of building a political career on the back of a narrative of national triumph over 'the other'. Identity politics in the 1990s allowed individual political entrepreneurs to carve out a patriotic outlook. While Greece had no territorial claims in the Balkans, Athens proj ected a narrative of historical vindication, triumphing over its neighbours rather than emerging as a regional facilitator of a 'Return to Europe' This triumphant narrative was underlined by migrants making their way to Greece, which was unprecedented for a country with no colonial past and a long track record of net emigration.

However, at an economic level, things were different: Athens was instrumental in aiding the region's transition to a market economy. Greek companies moved into strategic sectors - energy, banking, telecommunications, mining, shipping, transport, and construction- bringing with them a cluster of emerging small and medium enterprises that soon gained market share and size, especially in textiles and the food industry. Foreign direct investment from Greece became a key driver of development in South-eastern Europe, especially in labour intensive industries.

At the beginning of the 90s, Greece reacted defensively to the "sea of volatility" that surrounded the country. During that period, relations were strained with practically all neighbouring countries except Bulgaria. As a Thanos Dokos notes, Athens failed to exploit opportunities for multilateral initiatives that would have institutionalized Greece as the broker of Europeanization in the region. (1) It was only in the Thessaloniki Summit in 2003 that Greece took a concrete step towards consolidating its role as a regional catalyst for Europeanization.

Unfortunately, ethno-nationalist rhetoric undermined the political value of Greece's economic role in the region. The metaphor of Greece's 'penetration' of the Balkans underscored the logic and quality of the spirit of the times. At the time, nationalist political entrepreneurs of every ilk and colour were evoking images of a 'drachma zone' and a 'Greek hinterland', appealing to kneejerk patriotism.

The Rise and Fall of a European Economic Power in the Balkans

At an economic level, Greece moved swiftly to consolidate its position as a regional leader. When the system of centrally planned economies collapsed, favourable conditions, like geographical and cultural proximity facilitated the Greek presence at the forefront of economic transition. (2) By 2000, Greece had a larger GDP than all 7 post-communist Balkan countries combined. (3) Both public and private initiative paved the way towards a kind of economic leadership that Greece has never before experienced. Athens led foreign direct investment and remittance flows. For nearly two decades, Greek capital transformed the Balkan economies, which in turn transformed the Greek economy.

In the 1990s, Athens saw South-eastern Europe as an El Dorado of quick margins, minimum regulatory barriers, and cheap labour. (4) That labour boosted Greek productivity, giving a new lease of life in sectors that had been struggling to keep up with competition in the Single European Market, such as textiles. Within a few years, about 3400 Greek companies operated across the Balkans, investing by the mid-90s more than $2.5 billion. (5) This first phase was mainly characterized by the small-scale investment, mainly in the food and garments retail sector. (6) But, the 2000s saw a lift-off of investment. From 2001 to 2011 Greek FDI capital surged 8 times in telecommunications, banks, energy, steel, cement, food, garments, retail, and others.

At the same time, through seasonal and permanent settlement, Greece was transformed from a country of net migration to a host community. As thousands of immigrants made their way throughout Greece, they replenished the social security system of a demographically strained population and boosted productivity. Moreover, the care economy for children and the elderly had wider significance for productivity and social mobility for the Greek middle class. That transformation was mutually constitutive, as migrants also sent home remittances, especially in Albania and Bulgaria, which accounted for 5-to-10% of their GDP for more than a decade. (7) These remittances far outweighed the significance of Official Development Assistance from either individual states or multilateral donors (World Bank, USAID, EU, etc.).

Early on, there was an attempt to integrate Greek investment in the Balkans with a politically significant strategic narrative. State-owned companies and successive governments promoted the notion of 'national champions' in strategic sectors. The political consensus at the time envisaged the reframing of national strategic networks with a regional scope--banking, energy, and telecommunications--creating an ecosystem capable of bolstering a wider cluster of businesses.

Scale was the strategic objective. For Greece, the Balkans was the answer to the perennial failure to go beyond very small and medium businesses to bigger corporations of regional significance. (8) Indeed, for nearly two decades, Greek exports to South-eastern Europe increased, just as its trade deficit vis-a-vis EU member states widened.

However, this vision never quite evolved into a successful master plan, with the small but notable exception of the Hellenic Plan for Economic Reconstruction of the Balkans (HiPERB), presented after the Kosovo war (1999). HiPERB was an instrument designed to fund the creation or maintenance of infrastructure in the Balkan area, as well as to facilitate Greek FDI in the region. (9) The plan had important advantages for Greece: it contributed to the image of a serious regional actor that could act as a guarantor of stability and, therefore, a necessary partner for the transition economies of the Balkans. (10) Through this plan, Greece managed to gain some of the diplomatic capital lost by the Macedonian imbroglio. Unfortunately, bureaucratic obstacles, the lack of coordination between the ministries, as well as problems in the recipient countries resulted in an implementation level in the region of 10-15%. The instrument was formally terminated in 2013. (11)

Ultimately, where the state failed to...