Post-war Greco-German Relations, 1953–1981: Economic Development, Business Interests and European Integration 3031043707, 9783031043703

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Post-war Greco-German Relations, 1953–1981 Economic Development, Business Interests and European Integration

Christos Tsakas

Post-war Greco-German Relations, 1953–1981 “When people think of Germany’s relation to Greece in the twentieth century, they think of the Nazi occupation and the sovereign debt crisis. But as Christos Tsakas reveals in this stimulating work, in between came West Germany’s sponsoring role in the political integration of Greece in Europe, without which recent austerity debates would never have been possible. The book successfully deconstructs a more simplistic ‘blame game’— as the best history often does.” —Samuel Moyn, Yale University “Christos Tsakas’ book shows how central the Greek-German relation was in the history of European integration, long before the tension that developed between the two countries in the 2010s. Combining an analysis of business and political circles from the 1950s to Greek accession to the European Economic Community in 1981, Tsakas provides a broad picture that effectively recentres the debate on the origins of our current predicament.” —Emmanuel Mourlon-Druol, University of Glasgow “Christos Tsakas’ historical analysis problematizes contemporary narratives of Greco-German relations that focus on conflicts between sovereign debt defaults and austerity measures. By examining the connections between the two countries during crucial years of postwar recovery and political change and by examining the role of economic actors in economic development and policymaking, Tsakas presents a nuanced perspective of the bilateral relationship and sheds new light on the wider dynamics of regional integration in the twentieth century.” —Grace Ballor, Bocconi University

Christos Tsakas

Post-war Greco-German Relations, 1953–1981 Economic Development, Business Interests and European Integration

Christos Tsakas The Robert Schuman Centre for Advanced Studies European University Institute Fiesole, Italy

ISBN 978-3-031-04370-3 ISBN 978-3-031-04371-0 (eBook) https://doi.org/10.1007/978-3-031-04371-0 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover image: West German Minister of Economic Affairs Ludwig Erhard (first row, second from left) and Greek Prime Minister Konstantinos Karamanlis (first row, third from left) chatting during the photo shoot on the occasion of the signing of Greece’s Association Agreement with the Six in Athens, 9 July 1961 (Source Konstantinos Karamanlis Archive, Konstantinos G. Karamanlis Foundation) This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

To Vasiliki, Orestis, and Iris

Preface

On the evening of 28 June 2015, as I searched the deserted center of Thessaloniki for an ATM that still had cash to dispense,1 I kept trying to sort out my thoughts. Would Greece leave the euro? And what would things look like the day after that happened, given that the country was obviously completely unprepared for such an event? Exiting the eurozone would, of course, provide some means of managing the current crisis, but in general such a move promised only disruptions—and many of the preconditions for an eventual happy ending probably did not obtain. The government’s reassuring statements, dismissing the threat of a “Grexit,” gave me little comfort. I took it for granted that either the government had already decided to accept the bailout proposal regardless of the result 1 In the early morning hours of Saturday, June 27, 2015, Greek Prime Minister Alexis Tsipras announced a referendum on acceptance or rejection of the draft agreement which the European Commission, the European Central Bank, and the International Monetary Fund had jointly submitted to a meeting of the Eurogroup on 25 June. On the morning of Sunday, 28 June, the European Central Bank reacted to the prime minister’s announcement by refusing any further increase in the limit on Emergency Liquidity Assistance (ELA) available to Greek banks. That same day, the Greek government was forced to announce the closure of the banks and imposed a maximum daily withdrawal limit of sixty euros. Within a few hours the ATMs had run dry. As the country headed into the referendum, it was essentially insolvent. Despite predictions to the contrary, the outcome of the referendum was a rejection of the troika’s proposal. In the drama of the “Greek crisis,” this was the final act. Immediately after the result of the referendum was announced, the Greek government gave in and accepted the bailout conditions.

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of the referendum that had just been announced, or else it was criminally naive. That evening was the only time I found myself inclining to the second possibility. In those hours, I felt like an unprepared student leafing through the textbook just before the final exam. The question I was trying to answer—and I suspect I was not alone—was whether life would still be possible in a post-Grexit era. For better or worse, we never got an answer to this hypothetical question. Grexit never happened. Greece has now spent forty years in the European Union, and twenty in the eurozone,2 and I am afraid there is still a great deal that we do not know. Although we have testimonies from a number of leading figures, and plenty of journalistic accounts of the eventful decade that has transformed Greece, many essential questions remain unanswered. How did we arrive at the Greek crisis and the German proposal for a “temporary Grexit”? What weaknesses were inherent to the Greek economy, and what problems could be ascribed to the structure of Europe itself? In the shadow of the recent crisis, we tend to forget that for years Greece had been a happy example of a small periphery country’s successful integration into Europe, and that the bailouts, and the stringent conditions associated with them, did not result from some prolonged economic hardship. On the contrary, fiscal derailment was the culmination of a long period of economic growth and modernization. Moreover, the Germans, who hurried to show Greece the exit in the summer of 2015, had long been the most ardent supporters of Community enlargement. It is hard to believe they were unaware of the risks. Greco-German relations have been in the spotlight since the very beginning of the Greek crisis. Surprisingly, however, very little attention has been paid in the public debates to what the history of relations between the two countries tells us about the European project. In large measure, the relevant portion of that history is overshadowed by an earlier past—something that has been particularly evident in moments of heightened tension between the two sides. In the two years 2011–2012, and even more so in 2015, when the Greeks responded to German accusations of “noncompliance with the fiscal rules” by raising the issue of World War II reparations, the dispute was not fundamentally economic but political.

2 Greece joined the European Community in 1981 and the Economic and Monetary Union in 2001.

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When the German side seemed to be questioning the moral character of the Greeks, who had “tricked Europe into letting them join the eurozone” and who now continued to seek exemptions from institutionalized austerity, the Greek side sought to reclaim moral authority by bringing up Germany’s historic guilt. But such an approach, while obviously expedient, does little to help us understand the manifold ways in which the histories of the two countries intersect. Undoubtedly, the German occupation of Greece was a major event, a milestone, but that does not mean that the Greco-German relationship began or ended there. The book you are now reading tells the almost-forgotten story of how a country that suffered under the German occupation found itself reestablishing a connection with West Germany in the first years after the war, and how West Germany, against all expectations, proved to be the sponsor of Greek integration into the European Community. In surveying the three decades between the Greco-German Pact of 1953 and Greece’s entry into the Community in 1981, this book offers a new perspective on the relationship between Europe’s center and its periphery. It also reconsiders conventional wisdom regarding Greece’s entry into Europe and challenges, from a historical perspective, the way in which the socalled North-South divide, with all its moralistic assumptions, has been used as a tool for analyzing European integration. The idea for this book came naturally when, in 2012, I traveled for the first time from an ever more restive Athens to a never-resting Berlin to do research for my doctoral dissertation in the archives of the German Ministry of Foreign Affairs. Writing the book, however, was a much more difficult business, depending as it did on the sort of unpredictable trajectory a young researcher is forced to follow after earning their degree. In the end, however, my adventures only added new dimensions to my topic, since every country where I worked offered new perspectives and brought me into contact with an ever-wider range of non-Greek sources. In October 2015, having just received my Ph.D. from the University of Crete, I returned to Berlin. There, I had the good luck to work at the Free University’s Center for Modern Greece and the opportunity to acquaint myself with the German perspective on the Greek crisis. Over the course of the next two years, I conducted research in the archives of German companies and business associations that had played a leading role in Greece’s postwar reconstruction; among these were Siemens, AEG/Telefunken, and the Federation of German Industry (BDI). I also examined the archives of the West German Ministries of Economy and

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Finance in Koblenz, as well as a small portion of the archives of the Third Reich in Berlin-Lichterfelde. Soon afterward, a stint at the European University Institute in Florence—not only an academic institution unto itself but also an integral part of the larger institutions of the European Union—brought me into contact with a broader European perspective on the recent crisis in the eurozone and prompted me to ask questions about where the crisis fit within the larger European context. Meanwhile, I had the luxury of examining the Historical Archives of the European Union (which are kept at the Institute), and then of filling out my research with a visit to the British National Archives at Kew. Finally, as a Postdoctoral Research Fellow at the Seeger Center for Hellenic Studies at Princeton University and a Visiting Fellow at the EU Program at the same university in 2018–2019, and also as a Visiting Scholar at the Center for European Studies at Harvard the following year, I had the privilege of pursuing my interest in European studies in a non-European environment. This gave me the opportunity to share ideas with colleagues from many parts of the world, without the normative constraints to which debates on European integration are often subject in a European academic context. Meanwhile, during my time in the US, I was also able to visit the US National Archives in College Park, Maryland. There I consulted the unpublished papers of various archival series relating to the Marshall Plan and to US foreign policy generally, thus completing the research I had already done in the digitized collections, both published and unpublished, of the State Department and the CIA. This course of research supplemented considerably the study of numerous Greek sources that I had already carried out during my five years of dissertation research, as well as the information I had already gathered from oral interviews with Greek politicians, government officials, and businessmen. The Greek archives I have consulted include, among others, the Diplomatic and Historical Archive of the Ministry of Foreign Affairs, the collections of the Konstantinos G. Karamanlis Foundation and the Piraeus Bank Group Cultural Foundation (PIOP) and the private collections of leaders of the Greek dictatorship such as Nikolaos Makarezos, the man responsible for economic policy and relations with the EEC; digitized versions of these documents are now available through the Institute for Mediterranean Studies of the Foundation for Research and Technology Hellas (FORTH) thanks to Ioannis Makarezos’s genuine interest and open-mindedness. Many of these sources are used here for the first time as elements of the historical narrative. I am grateful to all

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the employees at those archives who facilitated my access to the documents that I consulted. I would like to mention in particular Christos Anastasiou, who oversees the Historical Archive at the Karamanlis Foundation, and Eleni Beneki of the PIOP Historical Archives, both of whom were extraordinarily flexible in dealing with my research requests under the difficult conditions created by the pandemic. Fiesole, Italy

Christos Tsakas

Acknowledgments

My existence while researching and writing this book was of necessity somewhat nomadic, but it was not always lonely. The finished work is not just the product of an individual academic career but a piece of the collective effort to make sense of the chain reactions triggered by the global financial crisis of 2008. As such, it owes a great deal to a large number of people. For many years, I have been privileged to offer my work to the keen scrutiny of Christos Hadziiossif, and my ongoing dialogue with such a knowledgeable and perceptive reader has often steered me away from difficulties into which I might otherwise have fallen. Perhaps even more importantly, our disagreements made me aware of the risks that my frequent—perhaps too frequent—insistence on my own point of view might entail. Christina Agriantoni has been a very generous reader whose attention to my work gave me the confidence to move ahead with this project, and I have also benefitted greatly from the comparative perspective provided by Hans Otto Frøland and Haakon A. Ikonomou. Kostis Karpozilos has long been a fellow-traveler in a number of endeavors, but in the course of these last two years, and particularly during the lockdowns that coincided with the final phase in the writing of this book, he assumed this role in a more literal sense during the walks that we took together under the auspices of Greece’s “Option 6” (permitting outdoor exercise in pairs under limited conditions). Mogens Pelt posed vital research questions much earlier than I, thus paving the way for my own efforts. Nikolas Pissis was, as ever, an ideal interlocutor, who brought to our

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conversations his profound understanding of German affairs. Dimitri A. Sotiropoulos was magnanimous in helping me to buttress the arguments in this book, even those with which he disagreed. Gelina Harlaftis helped me to recognize the importance of shipping insights to an understanding of the connections between seemingly unrelated events, while Lars Scholl kindly read relevant parts. In addition to the individuals named above, all of whom read all or part of the manuscript, a number of historians have perused my articles, research proposals, and lectures and have discussed with me many of the ideas contained in this book, thus contributing in important ways to the final shape of its arguments. In particular, I wish to thank Nancy Bermeo, Molly Greene, Fernando Guirao, Peter A. Hall, Harold James, Chrysostomos Mantzavinos, Emmanuel MourlonDruol, Panagiotis Roilos, Neil Rollings, Federico Romero, and Janick M. Schaufelbuehl. Miltos Pechlivanos, Richard Bellamy and Federico Romero, Dimitri Gondicas, Art Goldhammer, Elaine Papoulias and Vassilis Coutifaris, Kristina Winther-Jacobsen and Mogens Pelt gave me opportunities when I needed them most and provided me with ideal environments in which to carry out my research. My work would not have been possible without the material support provided to me by the German Academic Exchange Service (DAAD), the Max Weber Programme in partnership with the Greek State Scholarships Foundation (IKY), the Seeger Center for Hellenic Studies at Princeton University, and the Carlsberg Foundation with the Danish Institute at Athens. Nikos Marantzidis responded generously to my last-minute questions about the results of his public opinion polls, and Samuel Moyn and Angelos Chaniotis, among others, gave me advice regarding the publication process. I would like to thank Lucy Kidwell, Lynnie Sharon, and the production team at Palgrave Macmillan for their interest in this book project. In its present form, this book would not exist without my talented translator and copy-editor Christopher Welser, to whom I am grateful for his excellent work and admirable patience with my constant questions, clarifications, and objections. Finally—and at the risk of forgetting someone who should appear on this long list—my dear friends and loved ones Alexandros and Kate, Fotis, Lazaros, Nikos, Maria, Dimitris, and Maro have all offered opinions or comments that were far more valuable than they might perhaps suspect. Alan Milward once wrote that dedicating books to other people is hypocritical, since no occupation is more selfish than writing. As usual,

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he was right. Yet even a self-interested activity can owe so much to other people that a dedication is a small price to pay for the share of the finished product that is rightfully theirs. The best ideas come when the brain finds relief from the overstimulation that characterizes so much of our daily life in the digital age, and when time spent with small children, away from academic life, restores to us a sense of proportion for what is interesting and what is not. Many connections vital to the plan of this work were discovered in the familiar refuge of a conversation with Vasiliki, a walk or an (endless) reading of stories with Orestis and Iris. So this book belongs to them as well.

Contents

1

Introduction

1

Part I From US Aid to West German Credits, 1953 2

Expectations and Frustrations

27

3

Shipowners and Industrialization: Onassis in Hamburg

37

Collaborators and Benefactors: The Connections

45

4

Part II Turmoil, 1953–1958 5

Amity and Secrecy: The 1953 Agreement

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6

Siemens: From the Rally to the ERE

69

7

Reshuffle: Karamanlis’s First Transition

81

Part III Bonn and Brussels, 1958–1963 95

8

Loans and Integration: From Bonn to Brussels

9

Bulwark or Colony?

107

10

Bauxite and Aluminum: A Turn Toward France?

123

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CONTENTS

Part IV Europeanization Under Authoritarian Rule, 1963–1974 11

Catalyst: The Common Market and the Descent into Dictatorship

141

12

Isolation and Cooperation

157

13

Blueprint for Rapprochement

171

14

Growth and Crisis

189

Part V Europe and Democracy, 1974–1981 15

Metapolitefsi: Karamanlis’s Second Transition

205

16

Preconditions and Expedients

215

17

Downplaying Doubts

229

18

1981: Bound by Europe

239

Part VI 19

Conclusion

Epilogue: Crisis, History, Politics

251

Appendix—Chronology of Major Events in Postwar Greece

263

Bibliography

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Index

297

Abbreviations

ACCI AEEXPL AEG AoG BDI BP CAP CIA CoE CSU DIE ECA ECSC EDA EDFO EEC EEE EFTA EIB EMU ERE ERT

Athens Chamber of Commerce and Industry Hellenic Chemical Products and Fertilizers Corporation (Aνωνυμη ´ Eλληνικη´ Eταιρε´ια Xημικων ´ ⊓ρo¨ιo´ ντων και Λιπασματων) ´ Allgemeine Elektricitäts-Gesellschaft Aluminium of Greece Federation of German Industry (Bundesverband der Deutschen Industrie) British Petroleum Common Agricultural Policy Central Intelligence Agency (USA) Council of Europe Christlich-Soziale Union in Bayern German Development Institute (Deutsches Institut für Entwicklungspolitik) Economic Cooperation Administration European Coal and Steel Community United Democratic Left (Eνια´ια Δημoκρατικη´ Aριστερα) ´ Economic Development Financing Organization European Economic Community ´ Union of Greek Shipowners ( Eνωση Eλληνων ´ Eϕoπλιστων) ´ European Free Trade Association European Investment Bank European Monetary Union National Radical Union (’Eθνικη` Ῥιζoσπαστικη` “Eνωσις) Hellenic Broadcasting Corporation (Eλληνικη´ Pαδιoϕων´ια Tηλε´oραση) xix

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ABBREVIATIONS

ETVA EU FBI FCO GATT GDP IDC IMP IOVE KEPE NATO ND OEEC OT OTE PAK PASOK PPC SEV SHI SPD TEE UNICE VAW WEU

Hellenic Industrial Development Bank (Eλληνικη´ Tραπεζα ´ Bιoμηχανικης ´ Aναπτνξεως) ´ European Union Federal Bureau of Investigation (USA) Foreign and Commonwealth Office (UK) General Agreement on Tariffs and Trade Gross Domestic Product Industrial Development Corporation (Oργανισμ´oς Bιoμηχανικης ´ Aναπτνξεως) ´ Integrated Mediterranean Programmes Foundation for Economic and Industrial Research ( I´δρυμα Oικoνoμικων ´ και Bιoμηχανικων ´ Eρευνων) ´ Centre of Planning and Economic Research (Kšντρo ⊓ρoγραμματισμoν´ και Oικoνoμικων ´ Eρευνων) ´ North Atlantic Treaty Organization New Democracy (Nšα Δημoκρατ´ια) Organisation for European Economic Co-operation Oikonomikos Tachydromos (Oικ oν oμικ o´ ς Tαχ υδρ o´ μoς ) Hellenic Telecommunications Organisation (Oργανισμ´oς Tηλεπικoινωνιων ´ Eλλαδoς) ´ Panhellenic Liberation Movement (⊓ανελληνιo ´ Aπελευθερωτικ´o K´ινημα) Panhellenic Socialist Movement (⊓ανελληνιo ´ Σ oσιαλιστικ´o K´ινημα) Public Power Corporation (Δημ´oσια Eπιχε´ιρηση Hλεκτρισμoν) ´ Federation of Greek Industrialists (Σ ννδεσμoς ´ Eλληνων ´ Bιoμηχανων) ´ Siemens Historisches Institut Sozialdemokratische Partei Deutschlands Technical Chamber of Greece (Tεχνικ´o Eπιμελητηριo ´ Eλλαδας) ´ Union of Industries of the European Community Vereinigten Aluminium-Werke Western European Union

CHAPTER 1

Introduction

After the Second World War, Greco-German relations were not built around the recent past of war and occupation. Instead, they looked to the future, with European integration as their main focus. This book highlights West Germany’s role in shaping the Greek development model and argues that Greece’s accession to the European Community in 1981 had a long back story in the modernization strategies adopted by the two countries as early as the 1950s. The success, not the failure, of those strategies lies at the root of Greece’s lingering balance-of-payments problems: the ever-widening trade deficit with Germany, the country’s main trading partner, was the price of Greek economic growth in the first postwar decades. This process had never gone according to a predetermined plan. Critical developments occurred not as the result of political decisions, but as the outcomes of processes which had their own independent dynamics. The first efforts to work out an approach to Greco-German relations awakened unpleasant memories and granted disproportionate influence to small interest groups, and the resulting earthquake reshaped the Greek political and corporate landscapes. It was this same earthquake that, in conjunction with broader international developments, led to the framing of relations between the two countries within the processes of Western European unification. Subordination of bilateral Greco-German relations to the multilateral European framework offered two important advantages. First, from © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_1

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the Greek point of view, it balanced West German influence against the interests of other agents—even if those agents’ interests were sometimes in conflict with those of Greece. Secondly, West Germany’s influence on Greece was mediated by the new European institutions—a welcome development that permitted a loosening of the ties that resulted from the Germans’ return to prominence in Greece after 1953. Greece’s orientation toward Europe, however, did not, as is frequently asserted, guarantee democratization. In fact, the prospect of increased exposure to Western European competition rather contributed to the formation of a pro-coup alliance in the lead-up to April 21, 1967 and encouraged the business world to support the colonels after they staged their coup. Subsequently, the restructuring and Europeanization of Greece’s foreign trade strengthened calls for a transition to democracy under military supervision, in hopes of permitting a rapprochement with the EEC. Ultimately, the decision to hasten Greek membership in the Community after the fall of the junta had less to do with protecting the Third Hellenic Republic from the threat of anti-parliamentary backsliding than with shielding it from the emerging radicalism of the Metapolitefsi (the term signifies both the process of transition from dictatorship to democracy and the post-dictatorship era generally). By calling attention to past cooperation between leading political and business circles in Greece and Germany, this book seeks to contribute to deconstructing the “blame game” that began in the two countries during the recent crisis. This project, of course, does not take the form of a political essay, but of historical research. Although bilateral relations are central to this book, it does not follow the current of traditional diplomatic history and thus deliberately avoids the exhaustive recapitulation of the two sides’ official positions. Nor does it partake of the excessive emphasis that political scientists often place on European institutions. These factors are, needless to say, given their due, and they serve as part of the broader context of our story. What distinguishes this book, however, is its examination of Greco-German relations and their European context from the perspective of the history of corporations, business leaders, and business organizations—a perspective that emphasizes how larger economic and social forces impact the political pressures at play in the arena of international relations and European integration.1 1 N. Rollings, British Business in the Formative Years of European Integration, 1945– 1973 (New York: Cambridge University Press, 2007). Other, more recent, works in this

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This approach discloses a reality whose origin is not to be found in formal international contacts, be they bilateral or at the European level. Yet this parallel reality, frequently perceived, quite wrongly, as narrowly economic, is often fundamental to developments that are directly connected to what happens at level of political institutions. At the end of the day, however, this is a story about two countries. One of these had, from the very beginning, a leading role in the project of regional integration in Western Europe. The other sought to participate in the process. In this asymmetric pairing, Greek officials did not simply court German support, but, as we shall see, sought out German guidance regarding the positions that Greece should take. Greco-German business networks’ active involvement in this effort, sometimes even reaching the point of direct participation in the bilateral negotiations, is an important element in our story. ∗ ∗ ∗ In the years of the crisis, the European public debate was undermined, from the very beginning, by references to the “PIGS”,2 the poor but pleasure-loving countries of the South who devoured the taxes paid by the reliable citizens of the North. In Germany, where the eurozone crisis has seen the resurgence of a nationalism that for decades had been suppressed,3 this discourse has assumed highly toxic forms4 and poisoned even some of the more serious, pragmatic efforts to approach

direction include, for example, G. Ballor, “Agents of Integration: Multinational Firms and the European Union,” Enterprise & Society 21.4 (2020): 886–892; A. Drach, “An Early Form of European Champions? Banking Clubs Between European Integration and Global Banking (1960s–1990s),” Business History (2022), https://doi.org/10.1080/000 76791.2021.2025220; S. M. Ramírez Pérez, “Crises and Transformations of European Integration: European Business Circles During the Long 1970s,” European Review of History 26.4 (2019): 618–635; and J. M. Schaufelbuehl, “‘The Advantage of Being Inside the Wall When It Is Built’: US Multinationals’ Direct Investments in the Common Market, the Balance of Payments Deficit and Bretton Woods (1958–74),” Journal of European Integration 43.6 (2021): 667–682. 2 The pejorative acronym for Portugal, Italy, Greece, and Spain. 3 Ch. Hadziiosif, H ευρωπ α¨ικ η´ εν oπ oι´ησ η, η Γ ερμαν´ια και η επ ισ τ ρ oϕ η´ τ ων

εθ νικισ μων ´ (Athens: Vivliorama, 2017).

4 See for example, the notorious cover of the German magazine Focus, 22/2/2010, with the explicit title: “Betrüger in der Euro-Familie”.

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the problem.5 With some notable exceptions,6 European analyses of the eurozone crisis have not been unaffected by the prevailing atmosphere. Serious scholars have tried to convince us that the causes of the Southern countries’ fiscal problems were corruption, waste, and clientelism.7 In this political and intellectual climate, it is not especially surprising that the most penetrating analyses came mainly from the United States, since American universities’ separation from the European frame of reference permitted a certain detachment from the priorities of Europe’s political leadership. In America, leading students of international political economy did not hesitate to perceive the essential reality of the eurozone crisis: a monetary union of economies not merely with different levels of competitiveness, but with different models of capitalist development.8 Detachment, of course, does not guarantee the correctness or objectivity of one’s conclusions. Reputable economists scrambled to predict the collapse of the eurozone while embracing a romantic vision of European integration as it had existed prior to the introduction of the euro.9 The question of monetary integration has a long history and has been the subject of pivotal debates within the European Community since the 1970s. Today, those debates sound disconcertingly familiar. They were concerned precisely with issues of economic convergence, banking union, and fiscal transfers among member-states.10 Economic historians, 5 On the Greek case, see, for example, U.-D. Klemm and W. Schultheiß, eds., Die Krise in Griechenland: Ursprünge, Verlauf, Folgen (Bonn: Bundeszentrale für Politische Bildung, 2015). 6 From Germany see, for example, A. Nölke, “Economic Causes of the Eurozone

Crisis: The Analytical Contribution of Comparative Capitalism,” Socio-Economic Review 14.1 (2016): 141–161. 7 For a critical review, see M. Matthijs and K. McNamara, “The Euro Crisis’ Theory

Effect: Northern Saints, Southern Sinners and the Demise of the Eurobond,” Journal of European Integration 37.2 (2015): 229–245. 8 See P. A. Hall, “The Economics and Politics of the Euro Crisis,” German Politics 21.4 (2012): 355–371, and the more recent review, P. A. Hall, “Varieties of Capitalism in light of the Euro Crisis,” Journal of European Public Policy 25.1 (2018): 7–30. 9 A. Mody, Euro Tragedy: A Drama in Nine Acts (Oxford: Oxford University Press, 2018); J. E. Stiglitz, The Euro: How a Common Currency Threatens the Future of Europe (New York: Norton, 2016). 10 H. James, Making the European Monetary Union: The Role of the Committee of Central Bank Governors and the Origins of the European Central Bank (Cambridge, MA: Harvard University Press, 2012); and E. Mourlon-Druol, A Europe Made of Money: The Emergence of the European Monetary System (Ithaca, NY: Cornell University Press, 2012).

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however, have studied these controversies almost exclusively through the lenses of Franco-German and Anglo-German relations.11 Still largely unexplored are the ways in which interactions between the economies of Europe’s core and those of its periphery—including those of the Mediterranean countries—helped to shape the different economic models on the European continent long before the establishment of the eurozone.12 It is true that the adoption of the single currency has contributed to a greater divergence in measures of competitiveness and widening inequalities among the member-states of the eurozone and, by extension, of the EU. But these inequalities existed before, and, despite convergence objectives and the provision of support packages for the weakest countries, the causes of divergence have continued to operate. In fact, the roots of those causes go back to postwar reconstruction beginning with the Marshall Plan, which aimed to restore (West) Germany to the role of Europe’s manufacturer of capital goods. West German machinery would be exported to other countries, where they would be used to produce intermediate or consumer goods. These products would in turn be imported by West Germany, the main beneficiary of this division of labor.13 As for the European institutions, they were originally designed to serve as the means by which West Germany’s emerging economic predominance could be kept under political control14 but, as a result of Europe’s gradual economic integration and the unexpected reunification

11 M. K. Brunnermeier, H. James, and J.-P. Landau, The Euro and the Battle of Ideas

(Princeton, NJ: Princeton University Press, 2016); and D. Marsh, The Euro: Battle for a New Global Currency (New Haven: Yale University Press, 2011). 12 On the cases of Norway, Denmark, and Ireland, see H. O. Frøland, “Choosing the Periphery: The Political Economy of Norway’s European Integration Policy, 1948–1973,” Journal of European Integration History 7.1 (2001): 77–103; and A. S. Milward, Politics and Economics in the History of the European Union (London: Routledge, 2005), 39–78. 13 A. S. Milward, The Reconstruction of Western Europe, 1945–1951 (London: Methuen, 1984); H. Berger and A. Ritschl, “Germany and the Political Economy of the Marshall Plan, 1947–52: A Re-revisionist View,” in Europe’s Postwar Recovery, ed. B. Eichengreen (Cambridge: Cambridge University Press, 1995), 199–245. 14 A. S. Milward, The European Rescue of the Nation-State (London: Routledge, 2000 [1992]), 44–45 and 134–167.

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of the two Germanys, they became the safest path to German hegemony in Europe.15 Our attempt to understand the Greek case in this broader context bumps up against the limits of the existing literature on Greece’s path to integration with Europe. The standard point of view in the relevant studies is that Greece’s accession to the EEC in 1981 was the result of internal political calculations and the international incentives created by the Cold War. According to this view, which, surprisingly, is endorsed by some economic historians,16 Greece’s accession took place despite the problematic performance of its economy.17 This perspective, however, does not jibe with the impressive growth of the Greek economy in the previous decades, and it ignores the fact that Greece’s growth potential was a factor in its participation in the Common Market long before the country’s full accession to the Community. But the most fundamental problem with this interpretation lies elsewhere. Geopolitical concerns and domestic policy objectives were both important, to be sure, but they were also much more closely interconnected than historians of international relations and some political scientists would like to admit. And, I hasten to add, both were inextricably linked to the economy. What Greece expected from its participation in the processes of Western European integration obviously went beyond the acquisition of economic benefits in terms of trade, finance, and investment. At the same time, such participation was not just a logical consequence of Greece’s choice of sides in the Cold War. In fact, the Greek state’s strategy with respect to Western Europe represented the intersection between politics and economics in its most perfect form, and offered an opportunity to tackle the acute social question in post-Civil War Greece: how to prevent widespread social discontent from assuming a political form through the implementation of an economic strategy that would facilitate an influx of foreign capital as a basis for growth, and through the emigration of the

15 U. Beck, German Europe (Cambridge: Polity, 2013). Others consider the 1970s to be the turning point in this process: see J. Germann, Unwitting Architect. German Primacy and the Origins of Neoliberalism (Stanford, CA: Stanford University Press, 2021). 16 K. Kostis, O π λoν ´ τ oς τ ης Eλλαδας ´ : H ελληνικ η´ oικ oν oμ´ια απ o´ τ oυς Bαλκανικ oν´ ς π oλšμoυς μšχ ρι σ ημερα ´ (Athens: Patakis, 2019), 488–489. 17 G. Voulgaris, H Eλλαδα ´ απ o´ τ η Mετ απ oλ´ιτ ευσ η σ τ ην Π αγ κ oσ μιoπ oι´ησ η (Athens: Polis, 2008); and E. Karamouzi, Greece, the EEC and the Cold War, 1974–1979: The Second Enlargement (Basingstoke: Palgrave, 2014).

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underemployed work force. Early on, the creation of a new institutional framework was already understood to be an essential goal. While negotiations proceeded with respect to the pace of tariff reduction, the level of European financial assistance, and quotas and exemptions for agricultural products, polemics over the future of the Greek economy accompanied the debate over participation in the Common Market and threw into stark relief the long-term implications of the European option. The expected influx of foreign capital; the prospects for the survival of Greek export industries in the competitive environment of the Common Market; the impact on Greece’s balance of trade; the setting up of a new development model powered by tourism, shipping, and the few competitive industries that would succeed—all these issues were pivotal to the debate, and their political significance was unmistakable.18 The developmental implications of the “choice for Europe” were not universally welcomed by economists and the business world. Politicians, government officials, and members of the business community who were involved in shaping Greece’s policy toward Europe in practice tended to oscillate between two rather antithetical—though not always clearly distinguished—points of view. The first of these saw participation in the processes of Western European integration as primarily a political choice, motivated by desire for a closer connection with the West; this would necessarily determine the framework within which Greek industry had to operate, and as many concessions as possible would have to be secured so that it could survive in the new competitive environment. The second point of view was based on the recognition that the Greek economy needed a growth spurt in order to tackle the social question plaguing the country and ensure political stability; this meant the liquidation of non-competitive capital as a necessary sacrifice on the altar of industrialization. The coveted growth spurt would not, of course, result automatically from exposure to international competition. In those days, a mystical faith in free markets was not yet fashionable. The new opportunities for growth lay in what were presumed to be Greece’s competitive advantages—low labor costs, availability of certain raw materials, and easy access to shipping 18 For example, see I. Pezmazoglou, H Σ ν ´ νδεσ ις τ ης Eλλαδ ´ oς μετ α´ τ ης Eυρωπ α¨ικ ης ´ Oικ oν oμικ ης ´ Koιν o´ τ ητ oς (Athens: Bank of Greece, 1962); and S. G. Triantis, Koιν η´ Aγ oρ α´ και Oικ oν oμικ η´ Aν απ ´ τ υξ ις : H Eλλας ´ και η EOK (Athens: KEPE, 1967 [1965]).

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lanes—and required an influx of Western European capital to Greece’s still-underdeveloped manufacturing. It soon became clear that the chief source of this capital would be West Germany. German capital, however, did not take the form of direct investment. Nor can it be identified at first glance under the most popular rubric in the relevant statistics: investments enjoying the special privileges of LD 2687/1953 on the protection of foreign capital—a category nominally dominated by American, French, and Swiss (!) investments.19 The so-called American investments often came from Greek shipowners and Greek-American businessmen.20 The French investments consisted mainly in the establishment of Aluminium of Greece, a venture in which, as we shall see, the Germans declined to participate, considering it unprofitable.21 The Swiss investments related in part to their financing of German companies, as the latter often drew their capital from Switzerland (and from Canada as well).22 For the most part, German capital took the form of export credits, government loans, and technical assistance; these extended to a wide range of Greek industries. German direct investment was smaller and was concentrated in lighter, export-oriented industries.23 Thus, although it was critical to Greek industrialization, the significance of German capital went largely unnoticed, since it was often not even covered by the provisions of LD 2687/53. It is telling that, although by 1958, the postwar West German credits that had made their way to Greek industry already totaled around $60 million, with an additional $26 million awaiting

19 P.

V. Roumeliotis, Π oλυεθ νικ šς επ ιχ ειρ ησ ´ εις και υπ oκ oσ τ oλoγ ησ ´ εις σ τ ην Eλλαδα ´ (Athens: Papazisis, 1978).

υπ ερκ oσ τ oλoγ ησ ´ εις -

20 G. Harlaftis, Greek Shipowners and Greece, 1945–1975: From Separate Development to Mutual Interdependence (London and Atlantic Highlands, NJ: Athlone Press, 1993), 196–197. 21 See Chapter 10. 22 Embassy of the FRG to Auswärtiges Amt, Besuch MP Karamanlis in Bonn: (1)

Griechische Wirtschaftslage, (2) Deutsch-griechische Wirtschaftsbeziehungen, 11/1/1978, Politisches Archiv des Auswärtigen Amtes, Berlin (PA AA), B200, 121687. But this phenomenon was not limited to German firms; a large share of the Swiss investments came from Greek shipowning capital based in Switzerland, with the Stavros Niarchos business group representing the most prominent case: see Harlaftis, Greek Shipowners and Greece, 1945–1975, 80 and 198–202. 23 Oncken to Auswärtiges Amt, Kurzfassung zum Bericht Nr. 578/75 vom 28. Mai 1975: Investitionen des Auslands in Griechenland, 28/5/1975 (and the attached report), Bundesarchiv Koblenz (BAK), B102/293108.

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9

final approval,24 West German direct investments in the relevant LD 2687/53 statistics through 1961 amounted to only $1.77 million.25 Accordingly, postwar Greek state loans from West Germany amounted to DM286,808,951.40 (some $71.5 million) by December 31, 1961—not a negligible amount compared to the $117,625,043.90 in state loans from the United States, or to the first postwar state loans from France, which amounted to a meager F 18 million (some $3.6 million) as of December 31, 1964.26 Greek economic historians agree that the Marshall aid’s benefits to Greek industry were limited.27 At the same time, however, general Greek historiography seems to ascribe an almost mystical power to the American presence on the Greek postwar political and economic scene—a presence and a power which, it is imagined, were rather suddenly replaced by those of Europe after the 1974 return to democratic rule.28 Total American military and economic aid to Greece (which went beyond the terms of the Marshall Plan) was, in fact, dizzying in its scale. The Bank of Greece estimates that the total amount of American aid from 1947 to 1956 was around $888 million, while American sources put this figure higher, at almost $1.5 billion.29 Out of these enormous sums, about $54 million had flowed into Greek manufacturing and mining in the nine years 24 Zusammenfassung der dokumentierten und z.Zt. in Bearbeitung befindlichen Großprojekte, die in den Rahmen des Kreditabkommens zwischen der BRD und dem Königreich Griechenland fallen können. Abkommensprotokoll vom 11./21. November 1953. Bearbeitungsstand 6. September 1958, BAK, B102/57218. 25 Aufstellung über die genehmigten langfristigen deutschen Investitions-Vorhaben,

die ausgeführt sind oder in Ausführung begriffen sind, seit der Anwendung des Gesetzesdekrets 2687/53 bis 31.12.1961, BAK, B102/135785. 26 ⎡ενικ´o Λoγιστηριo ´ τoυ Kρατoυς, ´ Aναλυσις ´ Kεϕαλα´ιoυ Δημoσ´ιoυ Xρšoυς [1960–

1965], Nikolaos I. Makarezos Archive (ANIM), Institute for Mediterranean Studies— Foundation of Research and Technology, (IMS-FORTH), F475/A. The small French contribution also had to do with the Greco-French standoff over the fate of prewar French loans to Greece. (A similar controversy over prewar British loans to Greece prevented borrowing from that country as well.) 27 Th. D. Sfikas, ed., To Σχ šδιo Mαρσ ´ αλ: Aνασ υγ κρ o´ τ ησ η και δια´ιρεσ η τ ης

Eυρ ωπ ´ ης (Athens: Patakis, 2011).

28 For a recent example, see A. Liakos, O ελληνικ o´ ς 20oς αιωνας ´ (Athens: Polis, 2019), 467–468. 29 A. Giannitsis, “Διεθνε´ις κεϕαλαιακšς ρošς,” in Oικ oν oμικ η´ ισ τ oρ´ια τ oυ ελληνικ oν ´ κρ ατ ´ oυς, ed. Th. Kalafatis and E. Prontzas, vol. 2, Oικ oν oμικ šς λειτ oυργ ι´ες και επ ιδ o´ σ εις (Athens: Piraeus Bank Group Cultural Foundation, 2011), 525–597.

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from 1948 to 1956.30 The significance of this amount becomes clear when one considers that total Marshall aid to a country like Norway, which also suffered heavy material losses during the war,31 was on the order of $250 million.32 There, however, the aid was more narrowly targeted: $24 million, for example, was directed to Norway’s exportoriented aluminum industry and used for the construction of a single factory.33 In the Greek case, the biggest loan to an industrial enterprise under the Marshall Plan—given to the Hellenic American General Lignite Products Company for the exploitation of Ptolemaida’s lignite deposits to meet Greece’s domestic energy needs—was just under $14 million.34 Of this sum, just under $8 million was disbursed before the loan was canceled due to the project’s lack of progress.35 After 1951 and the ending of Marshall aid, American reports on the outlook for the Greek economy underscored the need to secure additional resources for completing unfinished investment projects and undertaking new ones. The reports suggested that these resources should be sought in Western Europe.36 Nevertheless, we should not imagine this proposed reorientation in terms of shifting spheres of influence. For one thing, the 30 American Aid Loans Granted to the Greek Economy between 1948–1956, National Archives and Records Administration at College Park, MD (NARA), RG469, Series: Subject Files, 1949–57, UD1221, Box 12: Finance: American Aid Loans, 1957. 31 H. O. Frøland, M. Ingulstad, and J. Scherner, eds., Industrial Collaboration in Nazi-Occupied Europe: Norway in Context (Basingstoke: Palgrave, 2016). 32 C. Tarnoff, The Marshall Plan: Design, Accomplishments, and Significance (Washington, DC: Congressional Research Service, 2018), 9 (table 2). 33 M. Ingulstad, “Cold War and Hot Metal: American Strategic Materials Policy, the Marshall Plan and the Loan to the Sunndal Smelter,” Journal for the History of Aluminium, special issue, Comparative Perspectives on the Norwegian and Canadian Aluminium Industries (2007): 125–144. 34 Σ υμβ´oλαιoν Δανε´ιoυ δoλλαρ´ιων 13.836.000 μεταξν ´ Tραπšζης Aθηνων ´ και Eλληνoαμερικανικης ´ Eταιρ´ιας ⎡ενικων ´ ⊓ρo¨ιo´ ντων Λιγν´ιτoυ A.E. [30/6/1951], Economic Development Financing Organization Archive (EDFO Archive), Piraeus Bank Group Cultural Foundation Historical Archives, Athens (PIOP HA), A2Σ 2ϒ7/73017, subf. 1 (K28). 35 ⎡αλανης ´ (EDFO) to Ministry of Coordination, Δανειoν ´ δι’ šργoν ⊓τoλεμα ΐδoς, 9/6/1955; and Σ νμβασις ´ περ´ι λνσεως ´ της απ´o 24-4-1951 περ´ι αξιoπoιησεως ´ των λιγνιτων ´ ⊓τoλεμα ΐδoς της συνoμoλoγηθε´ισης δια´ τoυ N´oμoυ 1717/1951 [18/6/1955], EDFO Archive-PIOP HA, A2Σ 2ϒ7/73017, subf. 1 (K28). 36 G. Stathakis, To Δ´oγ μα Tρ oν ´ μαν και τ o Σχ šδιo Mαρσ ´ αλ: H ισ τ oρ´ια τ ης αμερικανικ ης ´ β oηθ ´ ειας σ τ ην Eλλαδα ´ (Athens: Vivliorama, 2004), 403–408.

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11

American economic and political presence in Greek affairs continued well beyond the conclusion of the Marshall Plan.37 For another thing, West German involvement in Greece preceded the expiration of Marshall aid and the 1953 agreement between Greece and Germany. For example, the Hellenic American General Lignite Products Company was, despite its name, a firm representing West German interests and having its (actual) headquarters in Switzerland.38 The major shareholder, a Greek, had taken refuge there during the Nazi occupation of Greece, in order to avoid retaliation by the Greek resistance for his pro-German stance.39 He remained in Switzerland until, after the war, he was finally acquitted after being tried on charges of economic collaboration.40 ∗ ∗ ∗ The American and West German roles in the Greek economy were therefore complementary—the relationship between the two was sometimes adversarial, but the one presupposed the other rather than excluding it. This was not peculiar to Greece. The aim of the European Recovery Program (to give the Marshall Plan its official name) was to ameliorate the balance of payments by means of the assistance received by the participating States, so that difficulties in making foreign payments—which had grown particularly acute in 1947—would not lead to a contraction of international trade. The basic idea of the Plan, apart from establishing payment mechanisms to facilitate direct trade between Western 37 See S. Rizas, H ελληνικ η´ π oλιτ ικ η´ μετ α´ τ oν εμϕ ν´ λιo π o´ λεμo: Koιν oβ oυλευτ ισ μ´oς και δικτ ατ oρ´ια (Athens: Kasantiotis, 2008); I. Stefanidis, Aσ ν´ μμετ ρ oι ετ α´ιρ oι: Oι Hνωμšνες Π oλιτ ε´ιες και η Eλλαδα ´ σ τ oν Ψ υχ ρ o´ Π o´ λεμo, 1953–1961 (Athens: Patakis, 2016 [2002]); and E. Hatzivassiliou, Στ α σ ν´ ν oρα τ ων κ o´ σ μων: H Eλλαδα ´ και o Ψ υχ ρ o´ ς Π o´ λεμoς , 1952–1967 (Athens: Patakis, 2008). 38 Hellenic American General Lignite Products Co., Report on ECA Loan Application for 13,836,000, 15/6/1951, OXOA Archive-PIOP HA, A2Σ 2ϒ7/73017, subf. 4 (K28). 39 E. Vlachou, Π εν ηντ ´ α και κ ατ ´ ι... δημoσ ιoγ ραϕικ α´ χ ρ o´ νια, vol. 1: O κ o´ σ μoς τ ης oδ oν´ Σωκρ ατ ´ oυς (1935–1951), (Athens: Zidros, 1991), 146–147; and Brief Report: Konstantinos Gertsos and the Business (Financial and Commercial) House of the Gertsos Brothers. Their activity during the past twenty-five years (1935–1960), 29/1/1961, CIA, Nazi War Crimes Disclosure Act (FOIA)/ESDN (CREST): 519b7f95993294098d512b42 [accessible at https://www.cia.gov/readingroom/ accessed on 7/1/2021]. 40 D. Kousouris, Δ´ικες τ ων δ oσ ιλ´oγ ων, 1944–1949: Δικαιoσ ν ´ νη, σ υν šχ εια τ oυ κρ ατ ´ oυς και εθ νικ η´ μν ημη ´ (Athens: Polis, 2014), 417–419; Eleftheria, 20/10/1944; and Rizospastis, 23/11/1945.

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European countries and the United States, was to restore the prewar division of labor within Europe. Ideas of dismantling Germany’s industrial base (ideas which the Americans had been flirting with for some time, and which the British and, more particularly, the French, had continued to advocate) were therefore abandoned. Instead, West Germany would assume the role of providing the capital goods on which the industrial development of the other countries would be based. Those other countries’ exports would, in turn, be absorbed by the German market.41 The pan-European—or at least, Western European—horizon of the Marshall Plan also dictated what the Americans imposed as an inviolable condition: administration of the Plan’s aid was to be collective, managed within the intergovernmental European institutions that would be set up for that purpose. The very timely establishment of the Organisation for European Economic Co-operation, which was called upon to carry out this mission, was an important step. Nevertheless, the ambitious American goals of building a system of supranational cooperation to guarantee trade liberalization, and of creating a common framework for implementing economic policy in Europe, were not achieved. The new organization— charged with administering the Marshall Plan’s financial resources but deprived of even minimal political independence from national governments—embodied the conflicting interests that separated not only the United States from the countries of Western Europe but also the various European member-states from one another. American hopes of rapid progress toward Western European integration were disappointed.42 Meanwhile, the Communist victory in China (1949) and the Korean War (1950–1953) diverted American attention away from Europe. It had now become clear that the Cold War would be waged on a global scale and that the Western European allies, who had begun to regain their strength, had to start assuming their share of the burden. Under the circumstances, American aid would steadily diminish.43 West Germany, which was already enjoying the first fruits of its economic miracle, and in 41 Milward, Reconstruction of Western Europe, 1–5 and 53–55; Berger and Ritschl,

“Germany and the Political Economy of the Marshall Plan, 1947–52,” 229–232. 42 W. Kaiser, Using Europe, Abusing the Europeans: Britain and European Integration, 1945–63 (New York: St. Martin’s Press, 1996), 18–27; and Milward, Reconstruction of Western Europe, 56–89 and 168–211. 43 G. Lundestad, “Empire” by Integration: The United States and European Integration, 1945–1997 (Oxford: Oxford University Press, 1998), 8–21; and M. Pelt, Tying

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fact was benefiting from the growing demand for capital goods created by the Korean War,44 had every reason to take up the gauntlet. Armed with the trade surpluses created by its privileged position in the European division of labor and its flourishing economy, the Federal Republic began to establish the preconditions for its return to the international stage and for German corporations’ entry into new markets. Providing credit for foreign investment and exports soon became the chief means of pursuing this policy.45 At the same time, European countries that were quick to take advantage of the West German credits saw in them an opportunity to enhance their own positions by achieving the development goals that had been set aside as a result of the Marshall Plan priorities. The inability of the Organisation for European Economic Cooperation (OEEC) to become a vehicle for supranational integration in Western Europe in the early 1950s did not mean abandoning the project of European integration. Other similar efforts, however, were not any more successful. The most typical example of these early failures was a plan for the creation of a European Defense Community; the plan, abandoned in 1954, brought to light the differences that existed among the prospective members, their close cooperation within NATO notwithstanding.46 Even more successful examples of this approach, such as the European Coal and Steel Community (ECSC), established in 1951, were the outcome of intense national rivalries that defined the composition and structure of the resulting organizations. In the case of the ECSC, its conception, as formulated in the “Schuman Declaration,” marked the “continental turn” in French policy: the aim was to take advantage of West German coal and steel production and to gain entry into Germany’s traditional export markets. France’s policy shift indicated its willingness

Greece to the West: US-West German-Greek Relations, 1949–1974 (Copenhagen: Museum Tusculanum Press, 2006), 147–152. 44 B. Eichengreen, The European Economy Since 1945: Coordinated Capitalism and Beyond (Princeton, NJ: Princeton University Press, 2007), 81. 45 A. Grünbacher, “Profits and Cold War—Politically Motivated Export Finance in West Germany during the 1950s: Two Case Studies,” German Politics 10.3 (2001), 141–158; and A. Grünbacher, Reconstruction and Cold War in Germany: The Kreditanstalt für Wiederaufbau (1948–1961) (Burlington, VT: Ashgate, 2004). 46 A. S. Milward, The United Kingdom and the European Community, vol. 1, The Rise and Fall of a National Strategy, 1945–1963 (London: Routledge, 2012), 78–125.

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to assume the risk of equal cooperation with West Germany in a supranational context and its desire to exploit British reluctance to engage actively in continental affairs.47 The French strategy was justified by the evolution of the ECSC into the European Economic Community. At the same time, however, it prefigured the division of Western Europe into two distinct organizations. During the two years 1957–1958, negotiations were conducted—with the blessings of the United States—for the creation of a free trade area embracing all the OEEC countries. These negotiations had been the result of the British reaction to the apparent consummation of the project to create the European Economic Community, which now included France, West Germany, Italy, Belgium, the Netherlands, and Luxembourg. The Treaty of Rome, the EEC’s founding document, was signed in March 1957, just as the negotiations within the framework of the OEEC were getting underway. In 1960, after the failure of these negotiations, the European Free Trade Association (EFTA) was established, at the urging of the British, in Stockholm.48 After the establishment of the EFTA, the existence of two competing associations necessarily posed the question of the EEC’s relationship to the smaller economies of the European periphery.49 Moreover, this division within Western Europe did not eliminate the Cold War priorities that dictated a deepening of relations among NATO’s European memberstates,50 especially as Soviet efforts to extend their influence through economic subsidies and military assistance in vital regions such as the

47 J. Young, Britain, France and the Unity of Europe, 1945–1951 (Leicester: Leicester University Press, 1984); and C. Wurm, “Two Paths to Europe: Britain and France from a Comparative Perspective,” in Western Europe and Germany: The Beginnings of European Integration 1945–1960, ed. C. Wurm (Oxford: Berg Publishers, 1995), 175–200. 48 The founding members of EFTA were Britain, Austria, Ireland, Denmark, Norway, Sweden, and Portugal; a little later, Finland also entered the organization: see W. Kaiser, “Challenge to the Community: The Creation, Crisis and Consolidation of the European Free Trade Association, 1958–72,” Journal of European Integration History 3.1 (1997): 7–33. 49 N. P. Ludlow, “A Welcome Change: The European Commission and the Challenge of Enlargement, 1958–1973,” Journal of European Integration History 11.2 (2005): 31– 46. 50 H. Parr, “Anglo-French Relations, Détente and Britain’s Second Application for Membership of the EEC, 1964 to 1967,” in European Integration and the Cold War. Ostpolitik-Westpolitik, 1965–1973, ed. N. P. Ludlow (London: Routledge, 2007), 81–104.

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Middle East were ratcheting up the political pressure on the Western bloc. Against this backdrop, America’s persistent pursuit, after the outbreak of the Korean War, of a more equitable sharing of the costs associated with the Cold War, took on a new sense of urgency. In particular, the United States was pushing its Western European allies to integrate Britain into the EEC and to oppose Soviet inroads in the developing countries of the European periphery.51 As the 1950s ended and the 1960s began, there were not many actors capable of playing a leading role in implementing this twofold strategy. France and Britain were part of the problem: their positions with respect to the liberation movements in Algeria and Cyprus (respectively), and their attempt at joint military intervention during the Suez crisis, seemed emblematic of ongoing colonialism in the Mediterranean. Furthermore, they had contributed decisively to the failure of the OEEC by prioritizing their own national interests. West Germany, on the other hand, was garnering international legitimacy through its inclusion in NATO, its participation in the EEC, and its favorable attitude toward Britain’s proposals for a broad customs union within the OEEC framework. Germany also displayed a growing interest in recovering its traditional export markets. Its rapid economic reconstruction permitted it, as we have seen, to assume a greater share of the Western bloc’s economic commitments—and to lay claim to the political influence that went along with them.52 Under these circumstances, the West German government, taking advantage of economic and political ties it had forged with Greece since the early 1950s, soon discovered that its interests and those of the various Greek governments of the era were often aligned. For the Greeks, the year 1958 brought with it a strong sense of urgency, seeing as it did an intensification of the Cyprus issue and the promulgation of the Macmillan plan, which forced Greece to make choices that were not in line with American aims; the beginning of the Berlin crisis, which tested West Germany’s

51 G. Lundestad, “Empire” by Integration, 8–21; and M. Pelt, Tying Greece to the West, 147–152. 52 G. Schmidt, “‘Tying’ (West) Germany into the West—But to What? NATO? WEU? The European Community?,” in Western Europe and Germany: The Beginnings of European Integration, 1945–1960, ed. C. Wurm (Oxford: Berg Publishers, 1995), 137–174.

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relationship with the United States and contributed to even closer relations between Germany and France; the ongoing Soviet reaction to the American plan to deploy nuclear warheads in Europe; the governmental crisis in Athens and the emergence of the left-wing EDA as the leading opposition party; and the expansion of trade with Eastern bloc countries—despite all its attendant political implications—as a way to forestall recessionary trends in the Greek economy and relieve pressure on the country’s balance of trade. All of these developments contributed both to heightened efforts on the part of the Greek government to find a special ally in the Western bloc, and to Bonn’s recognition that Germany was the only partner capable of assuming that role.53 The 1960s, however, ushered in a whole new range of challenges that were to transform the terms of the political game in Western Europe and, therefore, the limits of what would be considered acceptable governmental action by national electorates. The 1950s had seen the consolidation of democratic institutions without a corresponding democratization at the societal level, but democratic critique of the democratic regimes was now becoming part of the agenda in many Western European countries.54 This development was to add a new constraint on GrecoGerman relations. If successive CDU-led governments had previously found it only natural to cooperate—in the name of the Free World and anti-communism—with post-Civil War Greek governments which systematically violated the human rights of those considered national outcasts,55 the 1960s were characterized by divergent responses to the social and political challenges of the era. While the FRG followed the wider Western European pattern of increasing social mobilization, followed by a major political shift that saw the emergence of the SPD as part of the governing coalition, Greece experienced the opposite trend. In view of mass protests and the election of the liberal Centre Union, a coup coalition under 53 K. Botsiou, Griechenlands Weg nach Europa: Von der Truman-Doktrin bis zur Assoziierung mit der Europäischen Wirtschaftsgemeinschaft, 1947–1961 (Frankfurt a. M.: Peter Lang, 1999), 397–415; J. E. Miller, The United States and the Making of Modern Greece: History and Power, 1950–1974 (Chapel Hill: The North Carolina Press, 2009), 66–79; and Pelt, Tying Greece to the West, 158–179. 54 M. Conway, Western Europe’s Democratic Age, 1945–1968 (Princeton, NJ: Princeton University Press, 2020). 55 N. Alivizatos, Oι π oλιτ ικ oι´ θ εσ μoι´ σ ε κρ´ισ η (1922–1974): Oψεις ´ τ ης ελληνικ ης ´ εμπ ειρ´ιας (Athens: Themelio, 1995); and N. Panourgia, Dangerous Citizens: The Greek Left and the Terror of the State (New York: Fordham University Press, 2009).

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the Crown tried to reverse the democratic opening-up of Greek politics, and ultimately paved the way for the descent into authoritarian rule.56 It is often said that the colonels’ coup in 1967 seemed already to be an anachronism at the time it occurred. In reality, however, what proved to be anachronistic was the belief of most Western European governments—which struggled to find ways to pursue a business-as-usual approach—that Realpolitik could be a sufficient argument for the Western European public. This turned out not to be the case, especially after 1968. Realpolitik also did not jibe well with the new rules of the electoral game in West Germany, where the ascendant SPD found itself trapped between the necessities of governance and its ideological agenda. ∗ ∗ ∗ The dynamics of Greco-German economic and business relations were such that they quickly transcended their prewar horizons—a development that ran contrary to America’s initial vision for postwar Europe. The participation of German companies in electrification projects served as an element of continuity from the prewar to the postwar period.57 But if, in the era between the World Wars, the German role in the Greek economy had remained quite limited,58 it would now expand dramatically. While traditional commercial contacts continued,59 Germany now became ever more involved—and more directly involved—in the industrial development projects that were transforming the Greek economy and even challenging the priorities set forth in the Marshall Plan. The best example (but by no means the only one) involved the construction of an oil refinery that initially met with American opposition and

56 See Chapter 11. 57 Ch. Hadziiosif, H γ ηραια ´ σ εληνη: ´ H βιoμηχ αν´ια σ τ ην ελληνικ η´ oικ oν oμ´ια,

1830–1940 (Athens: Themelio, 1993), 191–194. 58 M. Dimitriadou-Loumaki, “H γερμανικη ´ oικoνoμικη´ και πoλιτικη´ διε´ισδυση στην Eλλαδα ´ τη δεκαετ´ια 1920–1930” (PhD dissertation, Panteion University, Athens, 2010); and M. Pelt, Tobacco, Arms and Politics: Greece and Germany from World Crisis to World War, 1929–1941 (Copenhagen: Museum Tusculanum Press, 1998). For a more general account of the Greek economy in the interwar period, see M. Mazower, Greece and the Inter-war Economic Crisis (Oxford: Oxford University Press, 1991). 59 On the German economic presence in the wider region before 1945, see S. G. Gross, Export Empire: German Soft Power in Southeastern Europe, 1890–1945 (Cambridge: Cambridge University Press, 2015).

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directly impacted the major oil companies that until then had monopolized distribution of expensive refined petroleum products in Greece. Projects like this were not intended merely to meet domestic needs. They helped to elevate the Greek economy’s position in international markets and facilitated the restructuring of Greek exports: in place of tobacco, raisins, cotton, and bauxite, Greece was now selling processed food and beverages, textile goods, aluminum, cement, chemicals, and petroleum products. Greek exports were directed primarily to the Common Market, reinforcing the European orientation of the Greek economy. Where Greece’s bilateral trade with West Germany was concerned, however, the restructuring of Greek exports was not particularly evident. From Greece, Germany mostly continued to receive consumer goods—textiles, furs, and food.60 There is an obvious and probably well-known asymmetry between (expensive) German exports of machines and equipment and the lighter Greek exports. But by considering the role of shipping and certain closely related sectors such as shipbuilding—the importance of which is frequently overlooked—I will show that the division of labor between Europe’s core and its periphery has not always been as clear-cut as we tend to imagine. The dependence of West German shipyards on orders from Greek shipowners during the first critical years of the German development miracle (Wirtschaftswunder) is perhaps the best example of such a temporary but crucial reversal of roles between core and periphery. This reversal does not overturn our ideas about the relations of dependence that exist between the two countries, but it certainly serves to complicate them. The past, to be sure, continued to cast its heavy shadow over the hearts of those who had suffered from the German occupation. But when Germany and Greece met at the negotiating table, each side sought to exploit the past, regarding it as an ace up their sleeve. The 1950 negotiations on the first Greco-German trade agreement were expressly predicated on an end to the prosecutions of Germans who were accused of committing war crimes during the occupation of Greece.61 Thereafter, this issue would form part of the informal agenda at every important

60 Deutsch-griechischer Warenverkehr, 13/6/1975, BAK, B102/168247. 61 K. Králová, Στ η σ κια ´ τ ης Kατ oχ ης ´ : Oι ελλην oγ ερμανικ šς σ χ šσ εις τ ην π ερ´ιoδ o

1940–2010 (Athens: Alexandria, 2013 [2012]), 195–200.

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way station along the road to closer bilateral relations, with a sort of consummation being reached when Prime Minister Konstantinos Karamanlis (1955–1963) visited Bonn in 1958 in the aftermath of Greece’s arrest of Max Merten, formerly military administrator for Thessaloniki during the occupation.62 What the Greek side sought in these discussions was not any moral satisfaction, but the greatest possible economic advantage. Meanwhile, the legal frameworks established for war reparations by the Paris Peace Treaties, and for German debt by the London Agreement, together with technical difficulties in providing quantitative documentation of Greece’s claims, enabled the German side to postpone indefinitely any substantial settlement of its financial obligations resulting from the occupation. All the same, the Greek governments did try to exploit relevant initiatives by other countries, such as France and the Netherlands, in order to put pressure on West Germany. The 1960 Bonn agreement, which provided for the payment of compensation to the victims of Nazism in Greece, was also accompanied by a German commitment to increase importation of goods that Greece was especially eager to sell.63 ∗ ∗ ∗ During the three decades that I examine in this book, the nature of the relationship between Greece and Germany did not remain unchanged. On the contrary, Greco-German relations shifted in response to the rearranging of social alliances and readjustments of political priorities in each of the two states, as well as in response to the always fluid international situation. As a result, the two protagonists of our story, Greece and West Germany, cannot be treated as undifferentiated entities with uniform goals. The ceaseless competition among collective and individual interests within each country was reflected not only in their bilateral relations with one another but also at the multilateral level in the context of international organizations. As a result, new dynamics were constantly

62 Ibid., 215–250; and D.-G. Konstantinakou, “Oι δνσκoλες ´ πτυχšς των ελληνoγερμανικων ´ σχšσεων: Aναλνoντας ´ τα α´ιτια των επ´ιμoνων ελληνικων ´ διεκδικησεων ´ μετα´ τo τšλoς τoυ B’ ⊓αγκoσμ´ιoυ ⊓oλšμoυ,” in O “μακρ ν´ ς ” ελλην oγ ερμανικ o´ ς εικ oσ τ o´ ς αιωνας ´ : Oι μα ν´ ρες σ κιšς σ τ ην ισ τ oρ´ια τ ων διμερ ων ´ σ χ šσ εων, ed. S. N. Dordanas and N. Papanastasiou (Thessaloniki: Epikentro, 2018), 293–312. 63 Králová, Στ η σ κια ´ τ ης Kατ oχ ης, ´ 307–327.

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being generated, and each new dynamic yielded new outcomes, with new configurations of winners and losers. Our examination of the continuities and discontinuities of the GrecoGerman relationship is divided into five main parts. Part I (Chapters 2 through 4) focuses on Greece’s transition from American aid to West German sources of funds, a transition signaled by the November 1953 agreement between the German Minister of Economic Affairs, Ludwig Erhard, and the Greek Minister of Coordination, Spyros Markezinis, envisioning an expansion of Greece’s industrial base through the assistance of German corporations. In considering this period, I call attention to the role played by particular individuals from the world of business. Greek shipowners, including Aristotle Onassis and Stavros Niarchos, were often notable cosmopolitans who at some point in their careers happened to have interests in West Germany. Other figures had more carefully cultivated connections to the European continent’s industrial hub: individuals such as Ioannis Voulpiotis, the Greek representative of Siemens and Telefunken, and Prodromos Bodossakis Athanassiades, the most powerful Greek industrialist of the period, represented the continuities between the interwar and postwar periods—continuities that ran through the period of the Nazi occupation in ways that were sometimes plain to see, sometimes much harder to discern. These individuals played a key part in shaping the postwar landscape, and they were actively involved in the restoration of Greco-German relations. Their problematic pasts were not an impediment; on the contrary, they provided an advantage. Only when their individual aspirations exceeded the elastic limits imposed on them by the Greek governments, and by German companies that sought to make use of them, did their positions in the postwar world become the subject of controversy. In the mid-1950s, on the other hand, it was the Greek shipowners who, having failed to establish themselves in the West German shipbuilding industry in the early years of the Wirtschaftswunder, redirected their attention to Greece and began to assume a leading role in its economy. This proved decisive for Greece’s economic development and was, therefore, a sine qua non for Greece’s subsequent engagement with Europe. Part II (Chapters 5 through 7) details the political shockwaves created by the rather unpopular methods through which Greco-German relations were reestablished. What became known as the Siemens scandal is perhaps the most famous of these, but it was only one of the episodes that decided the fate of the individuals behind the initial Greco-German

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rapprochement. Bodossakis’s machinations against Karamanlis, and the latter’s attempts to rein in the former’s influence, were another, equally crucial, aspect of the reshuffling of the political scene that occurred after Karamanlis’s rise to power. The single most important issue that prompted controversy was the amassing of economic and political power by certain individuals as a result of how the West German credits specified in the Greco-German agreement of 1953 had been allocated. A symbolic policy of mistrust toward the Germans, adopted in other European countries,64 was not a bad idea during the early postwar years, but in Athens, the German representatives had been received with excessive enthusiasm. Part III (Chapters 8 through 10) and IV (Chapters 11 through 14) analyze the rationale behind Greece’s relationship with West Germany and that relationship’s evolution under the new conditions created by Greece’s association with the EEC. These chapters also discuss the reaction of the European Commission to the imposition of the colonels’ dictatorship. The political side effects of the early Greco-German rapprochement, together with the serious imbalances produced by the fundamental asymmetry of their economic partnership, would ultimately lead the two sides to try to embed their relationship in the multilateral European framework. This effort, inaugurated by the 1957 visit to Bonn of the Greek Minister of Trade and Industry, Panagis Papaligouras, culminated in the Adenauer-Karamanlis agreements in November of the following year. The capstone of this new strategy was the 1961 Association Agreement between Greece and the EEC, which provided for a multitude of advantageous (albeit temporary) arrangements whose aim was to prepare the Greek economy to be opened up to competition from the Community. Thanks to West Germany’s support, this aim was largely achieved. Trade between Greece and West Germany had already expanded enormously as a result of bilateral agreements on trade and economic cooperation and the Association Agreement further solidified the commercial contacts between the two nations. The commercial dimension of the Agreement naturally had implications for private interests on each side. Greece was the first nation for which the Federation of German Industry (BDI) published a single-country study, the result of a visit to

64 H. O. Frøland, “Distrust, Dependency, and Détente: Norway, the Two Germanys and ‘the German Question’, 1945–1973,” Contemporary European History 15.4 (2006): 495–517.

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Athens by a special commission of the Federation in October 1962.65 Private interests, hoping either to increase their share of the trade between the two countries or to make investments that could enhance their profit margins, were sensitive to the nuances of the Greco-German economic relationship and attempted to influence the key individuals and institutions who were making the relevant political and economic decisions. Business networks, taking advantage of the sometimes inconsistent priorities within West Germany that defined the country’s ambivalent attitude toward the colonels’ dictatorship, helped maintain channels of communication between Greece and Germany even when institutional avenues were unavailable. Important leaders of West German industry such as Fritz Berg, the president of the BDI, were thus able to work for the thawing of Greece’s association with the EEC after the European Commission froze some of the terms of the Agreement. Despite aggressive armaments sales by the French and the involvement of America and Britain in grandiose but largely abortive investment plans, Greek industrialization still depended on West German technology and technical know-how. But the same mechanisms that had helped to enhance the Greek economy’s competitiveness in international markets would now begin to operate restrictively. Expiration of the principal transitional benefits provided by association with the EEC coincided, in 1973–1974, with the onset of the oil crisis, exposing the weaknesses of the Greek development model. Part V (Chapters 15 through 18) looks at the period from the fall of the junta to Greece’s accession to the EEC and considers the role played by West Germany as Greece’s chief ally in the membership application process. Prior to the dictatorship, Karamanlis had committed himself to the “choice for Europe,” and his return to the premiership clearly presaged a thawing of relations with the Community. Nevertheless, the events of the short period from the 1974 restoration of democracy to the signing of the Accession Treaty in 1979 had neither the inevitability, nor the basis in conscious intentions, that have generally been attributed to them after the fact. Despite slogans about the importance of accession for the nascent republic’s survival, democratic stability was in reality not the goal but the precondition of Greece’s accession to the EEC. At the same 65 Bundesverband der Deutschen Industrie, Industrielle Zusammenarbeit mit Griechenland, Bundesverband der Deutschen Industrie Archiv, Berlin (BDIA), SP 622.

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time, the Community was quite skeptical of any applicant for membership that found itself in open conflict with another nation—in this case with Turkey over Cyprus. The nine members of the EEC issued declarations in which they welcomed Greece’s return to democratic legitimacy, but another factor in the accession of Greece—the first such accession among the newly established democracies of the European South—was the Greek economy’s integration into the Common Market in previous decades. The severity with which the oil crisis had hit the Greek economy, in combination with the country’s heightened need for loans as a result of its arms race with Turkey, worried both the European Commission and the governments of the member-states. These difficulties, however, did not detract from what had already been accomplished. Furthermore, in contrast to France and Italy, West Germany had no particular reason to be anxious. Greek agriculture, which had faced the most serious difficulties as a result of the freezing of the Association Agreement during the dictatorship, would now supply the German market with cheap, high-quality products without harming established agricultural interests. The German side was thinking about other issues, including the fiscal costs that would be occasioned by the presence of Greek workers in West Germany. Regardless of such issues, Bonn soon made up its mind, and downplayed the serious concerns—expressed in studies the German government had itself commissioned—about what would happen when Greek industry was exposed, unprotected, to future competition from the EEC. The German presidency of the European Council in the second half of 1978 would guarantee the settlement of disputes over agricultural products and the smooth completion of the negotiations for Greece’s accession. The last chapter of this part highlights the significance of developments in the year 1981. Stabilization of the Greek democracy, together with the gradual normalization of relations between Greece and Turkey, had helped to bring Greece into the EEC. The domestic political situation would also change radically: the rise of PASOK marked a major shift away from the version of politics that had prevailed in the first years of the Metapolitefsi. But the party’s radical proclamations proved difficult to put into practice. Despite the political volatility and rapid transformations experienced by Greek society in the postwar decades, Greece’s approach to Europe and its special relationship with West Germany were strong elements of continuity—elements which PASOK was neither able nor willing to question.

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The Epilogue (Chapter 19) offers an overview of the main developments from Greece’s entry into the European Community in 1981 through the recent crisis in the eurozone, and ponders the prospects of Greece abandoning its European strategy and adopting an alternative economic program in the 1980s and mid-2010s.

PART I

From US Aid to West German Credits, 1953

CHAPTER 2

Expectations and Frustrations

The visit was something of a trial to everyone concerned and there were moments when it looked dangerously as though there might be a “scandale.” The first contretemps arose directly [after] the Minister and his party arrived in New York. The State Department, who had issued customs clearance for Mr. Markezinis and a staff of six, were suddenly told that no less than twenty vociferous Greeks were clammering for full diplomatic privileges at the frontier and refusing to open their bags... . Suspecting that the visit was going to be none too easy anyway, the Department decided to authorise the customs authorities to let the whole party through, and a scene was avoided. —British Embassy in Washington, DC, on the visit to the USA of the Greek minister of Coordination, Spyros Markezinis, 15 May 19531 The real fireworks came on Saturday… . The next step, and one which filled us with dread, was…to take the new wording and break the news to Markezinis. We went through quite a session of histrionics. —The Deputy Director of the Office of Greek, Turkish, and Iranian Affairs to the American Ambassador in Greece, 12 May 19532

1 Salt (British Embassy, Washington, DC) to Foreign Office, 15/5/1953, The National Archives, Kew, Richmond (TNA), FO 371/107505. 2 Foreign Relations of the United States (FRUS) 1952–1954, VIII (doc. 441), 827–829.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_2

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Spring 1953 is widely understood to be a defining moment in Greece’s postwar economic history. The devaluation of the drachma against the dollar and the repeal of quantitative restrictions on importation of foreign goods by the government of Alexandros Papagos (1952–1955) marked the beginning of a new era for Greece’s battered economy. Bringing an end to the stabilization phase of economic policy that had followed the occupation and civil war, these measures signaled the liberalization of Greece’s foreign trade and laid the groundwork for the rapid growth that would follow. But the transition to a period of growth was not as easy as it seems in hindsight—quite the opposite, in fact. At a time when the longest-lived of Greek governments measured their tenures in months and budget deficits depended on the level of foreign aid, the economic goals envisioned by the reforms still appeared precarious. Just a few weeks after the measures were announced, the Minister of Coordination, Spyros Markezinis, visited the United States in an effort to secure financing for Greece. The visit was a disaster3 : US economic aid would decline steadily after the end of the Marshall Plan, and Greece’s requests for development assistance simply did not mesh with America’s focus on rebuilding its allies’ military strength in the wake of the Korean War (1950–1953). And yet, from the moment of its arrival in New York, the Greek delegation displayed a remarkable brashness that comported badly with the nature and purpose of its visit. In addition to conveying a request for economic assistance, the Greek minister also brought the American president a letter from Papagos. The letter was couched in the form of an entreaty, but in substance it granted the United States the unconditional right to establish military bases in Greece.4 The bilateral agreement adumbrated by this letter came to symbolize Greece’s postwar dependence on the United States.

3 Peurifoy (American ambassador to Athens) to Department of State, Markezinis Visit to Washington, 10/4/1953; Peurifoy to Secretary of State, 16/4/1953; Briefing Books prepared for Fitzgerald etc. in connection with Markezinis visit, 5/5/1953; Stassen (Director of MSA), Minister Markezinis’ Investment Proposals, 8/5/1953; Smith (Department of State) to American Embassy in Athens, 11/5/1953; Barrows (Mutual Security Agency Athens) to MSA Washington, DC, 19/6/1953, National Archives and Records Administration, College Park, MD (NARA), RG469, Series: Decimal Files 1948– 1954, Europe, Greece Division, UD360, Box 6: Greece II.361 Markezinis Visit/May 1953. 4 I. Stefanidis, Aσ ν ´ μμετ ρ oι ετ α´ιρ oι: Oι Hνωμšνες Π oλιτ ε´ιες και η Eλλαδα ´ σ τ oν Ψ υχ ρ o´ Π o´ λεμo, 1953–1961 (Athens: Patakis, 2016 [2002]), 202 and 235–259.

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So, how did the Greek delegation come by its astonishing assertiveness? Certainly Markezinis’s own inflated ego played a role: in the face of American officials’ obvious unwillingness to bow to the demands with which he concluded his lengthy harangues, his refusal to accept the facts became ever more pronounced. But his escalating histrionics, recorded during those days by American and British sources,5 testify to something more substantial than the simple frustration of an arrogant man. In his demands for American dollars—a currency with a fixed exchange rate in relation to the Greek drachma—Markezinis sometimes offered rewards (the right to establish bases) and sometimes resorted to extortion, threatening a possible Greek catastrophe in the event of American refusal.6 He also argued that the requested assistance would, by permitting the development of Greece, contribute to the security and prosperity of the West as a whole. The self-importance of the Greek position had its origins in the Truman Doctrine, although that was now a thing of the past. The intensity of feeling that accompanied it, however, was grounded in the conviction that Greece had made great sacrifices, waging a series of battles against superior powers, first the Axis and then communism, without ever receiving due recognition for its contributions to those struggles. This conviction—provoked by the way the Americans had managed the economic assistance offered to Greece through the Marshall Plan—had become a commonplace of Greek politics and had stored up a great deal of bitterness about the limits the American mission had imposed on Greece’s reconstruction. Markezinis’s explosive temper seems to have been an expression of these unspoken but widespread feelings.7 A divergence between the Greek and American perspectives already existed at the time of the earliest postwar programs for the reconstruction of the Greek economy, which amounted to long lists of requests 5 Salt (British Embassy, Washington, DC) to Foreign Office, 15/5/1953, TNA, FO 371/107505; FRUS 1952–1954, VIII (doc. 441), 827–829. 6 Markezinis thus reverted to a pattern that the Greek Rally had criticized as dishonest in the run-up to the election, when it condemned previous Greek governments’ attempts to extort concessions from the Americans with warnings of a supposed disaster: see Stefanidis, Aσ ν´ μμετ ρ oι ετ α´ιρ oι, 254–259. 7 Before Markezinis’s departure for the United States, these feelings had already been noted by Charles W. Yost, minister-counselor to the American embassy in Athens: see Yost to Department of State, Conversation with Mr. Markezinis, 4/2/1953, NARA, RG469, Series: Decimal Files 1948–1954, Europe, Greece Division, UD360, Box 6: Greece II.361 Markezinis Visit/May 1953.

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for American financing.8 In 1947, a changing of the guard was occurring in Greece, with the United States replacing Britain as the guarantor of Greece’s membership in the Western bloc. The establishment of the Greek Reconstruction Agency the year before, and the publication of the country’s Reconstruction Program in 1947, provided an indication of the consensus that prevailed among Greek leaders regarding both the need to elevate Greece’s position in the international order and the means by which this elevation was to be achieved. The Program constitutes the first official record of Greek aspirations to restore Greek industry to its prewar level and expand it into new sectors. There was to be the greatest possible exploitation of existing mines and of the country’s underutilized industrial potential; this was to be accompanied by the establishment of new industries, with a focus on basic metallurgy, chemicals, oil refining, and shipbuilding.9 The goals outlined in the Program represented the official Greek point of view regarding desired developments in the industrial sector, and they would be reiterated in similar future attempts to obtain the greatest possible benefits from American aid.10 They were, however, at odds with the fundamental objectives of the Marshall Plan. The dependence of Greek development plans on foreign funding led to the cancellation or indefinite postponement of their most ambitious elements, which were not in line with the visions of the funding agencies. This difference in outlooks had not been slow to manifest itself: the publication of the Porter Report11 in 1947 had already made apparent the prioritization of stability over growth that would remain

8 Ch. Hadziiosif, “H πoλιτικη ´ oικoνoμ´ια της ανασυγκρ´oτησης και τoυ εμϕυλ´ιoυ,” in Iσ τ oρ´ια τ ης Eλλαδας ´ τ oυ 20oυ αιωνα. ´ Aνασ υγ κρ o´ τ ησ η-Eμϕ ν´ λιoς -Π αλιν o´ ρθ ωσ η, 1945–52), vol. 4.1, ed. Ch. Hadziiosif (Athens: Vivliorama, 2009), 9–61. 9 Agency for Reconstruction, Π ρ o´ γ ραμμα ανασ υγ κρ oτ ησ ´ εως τ ης χ ωρας ´ : Σχ šδιoν Aνασ υγ κρ oτ ησ ´ εως τ ων τ εχ νικ ων ´ β ασ ´ εων τ ης ελληνικ ης ´ oικ oν oμ´ιας (Athens, 1947), 166–187. 10 G. Stathakis, To Δ´oγ μα Tρ oν ´ μαν και τ o Σχ šδιo Mαρσ ´ αλ: H ισ τ oρ´ια τ ης αμερικανικ ης ´ β oηθ ´ ειας σ τ ην Eλλαδα ´ (Athens: Vivliorama, 2004), 265– 293; and Supreme Council for Reconstruction, Π ρ oσ ωριν o´ ν Mακρ oπ ρ o´ θ εσ μoν Π ρ o´ γ ραμμα Oικ oν oμικ ης ´ Aν oρθ ωσ ´ εως τ ης Eλλαδ ´ oς : Υ π oβληθ šν υπ o´ τ ης Eλληνικ ης ´ Kυβερν ησ ´ εως εις τ oν OEOΣ τ oν Nošμβριoν τ oυ 1948 (Athens: Ministry of Coordination, 1949), 2 and 47–60. 11 See P. A. Porter, Zητ ε´ιτ αι: Eνα ´ θ α ν´ μα σ τ ην Eλλαδα; ´ Hμερ oλ´oγ ιo εν o´ ς π ρ oεδρικ oν´ απ εσ τ αλμšν oυ, 20 Iαν oυαρ´ιoυ–27 Φεβρ oυαρ´ιoυ 1947 (Athens: Metamesonykties Ekdoseis, 2006), 180–215.

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a constant of American policy throughout this early period. Moreover, American leaders never ceased to point out that assistance was not going to continue forever, and they called attention to the need to mobilize internal resources for the development of the Greek economy. In April 1948, the head of the American aid mission, Dwight P. Griswold, had been quick to explain, at an official meeting with the leadership of the Federation of Greek Industrialists, that the European Recovery Program was not some sort of American gift to the rest of the world. On the contrary: Griswold noted that the funds were intended for “for democratic and like-minded peoples as a way to help them rebuild and stabilize their economies.” But, he concluded, this aid could not become a permanent burden on American taxpayers.12 The earliest official Greek studies of the opportunities for industrialization as an element of reconstruction had given little attention, in terms of detailed analysis, to the problem of the limited availability of domestic resources.13 American aid was trending downward and the hopes that Greek leaders had placed in the Marshall Plan had been disappointed. As a new decade began, it was necessary to imagine new conditions under which Greek industrialization could take place. The situation was already clear by early 1952, when Kyriakos Varvaressos submitted his Report on the Greek Economic Problem, warning of the impending cessation of American assistance and outlining the structural constraints on the Greek economy. Varvaressos, an advisor to the World Bank, declared that efforts to industrialize the Greek economy represented an improper diversion of resources, although he did not unequivocally reject any such efforts along these lines.14 His opinion was in keeping with both American policy and the fundamental priorities of the Organization for European Economic Co-operation (OEEC), which had previously led to revision of 12 Quoted in Federation of Greek Industrialists (SEV), H ελληνικ η´ βιoμηχ αν´ια και τ o Π ρ o´ γ ραμμα Eυρωπ α¨ικ ης ´ Aν oρθ ωσ ´ εως (Athens: SEV, 1948), 7. The version given here is a translation into English of the quotation as reported in Greek. 13 Such industrialization was the basis of the Left’s vision for Greek development, a vision summarized in Dimitris Batsis’s 1947 study Heavy Industry in Greece (republished by Kedros, 2004). For attempts to assess the Greek economy’s potential to provide financing, see Hadziiosif, “H πoλιτικη´ oικoνoμ´ια,” 33–37. 14 K. Varvaressos, Eκθ ´ εσ ις επ ι´ τ oυ oικ oν oμικ oν´ π ρ oβληματ ´ oς τ ης Eλλαδ ´ oς, edited by A. Lykogiannis, with introduction by K. Kostis (Athens: Savalas, 2002); and A. Kakridis, Kυριακ ´ oς Bαρβαρ šσ oς : H βιoγ ραϕ´ια ως oικ oν oμικ η´ ισ τ oρ´ια (Athens: Bank of Greece, 2017).

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the Economic Reconstruction Program’s original focus on promoting the industrialization of Greece in order to meet domestic demand.15 In any case, a real difficulty existed. More extensive exploitation of the country’s mineral wealth; the upgrading of existing metallurgical enterprises and the establishment of new ones; the leveraging, through the construction of shipyards and refineries, of Greece’s geographical position and prominence in international shipping—all these things required infusions of capital, which Greek industrialists were not in a position to secure. This constraint meant that the Greeks were often held captive not only to the investment priorities of foreign companies operating in Greek areas of interest, but also to the willingness (or unwillingness) of governments in those companies’ parent countries to grant the necessary permits for the export of foreign exchange. The oil industry offers a good example of the overall situation. Construction of a refinery was one of the main goals of the earliest Greek plans for reconstruction. Not surprisingly, the relevant US agencies resisted Greek ambitions,16 just as they had resisted similar demands from other European countries: they refused to use Marshall Plan funds to finance the expansion of Western Europe’s refinery capacity,17 and the decisive step toward establishment of a refinery in Greece occurred after the end of the Marshall aid. In the early fall of 1953, after the foreign oil companies that controlled the Greek market—BP, Petrofina, Shell, Socony Mobil—had refused to assist in such an effort, the Papagos government nevertheless proceeded with an invitation to tender. Initially, only two smaller companies, one Greek (ELBYN) and the other a consortium of Greek-American businessmen (Skouras-Pappas), responded by offering bids for the construction and operation of a small refinery to meet the needs of the Greek domestic market. The foreign companies, facing the threat of exclusion from the Greek market, would belatedly and somewhat reluctantly submit their own proposals.18 A lengthy series of 15 Supreme Council for Reconstruction, Aναθ εωρημšν oν Π ρ o´ γ ραμμα Oικ oν oμικ ης ´ Aν oρθ ωσ ´ εως τ ης Eλλαδ ´ oς , 1949–1950 (Athens: Ministry of Coordination, 1949), 24. 16 L. Nikolaidis, “To ελληνικ´oν πρ´oγραμμα ανασυγκρoτησεως ´ και η πρoβoλη´ τoυ εις τo εξωτερικ´oν,” Spoudai 4.4 (March–April 1954), 257–269 (particularly 266–267). 17 D. S. Painter, “The Marshall Plan and Oil,” Cold War History 9.2 (2009): 159–175. 18 Joint Memorandum by Shell Petroleum Co., Ltd. and Anglo-Iranian Oil Co. Ltd. on

Proposed Greek Refinery, 5/4/1954, TNA, FO371/112904; Nickerson (Socony-Vacuum Oil Company) to Tannhauser (Foreign Operations Administration/Petroleum Branch),

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negotiations ensued, but the refinery was finally built in 1957 and began operations the following year.19 From the beginning, the oil companies considered the establishment of a Greek refinery unprofitable. Since they themselves supplied the Greek market with the (more expensive) end-stage petroleum products, they had no reason to assist in the production of such products in Greece. Complicating the whole situation was the fact that foreign companies, besides demanding favorable terms, had to obtain the permission of their countries’ monetary authorities in order to export the sums required by their investments. The relevant British authorities, however, sought to prevent the involvement of BP and Shell, characterizing the proposed investment as uneconomical and risky. Right up until the point when, in mid-1957, management of the refinery was assigned to a consortium of private firms, the British embassy in Athens continued to describe the Greek government as unrealistic in its thinking, believing it unlikely that foreign oil companies would ever accept what they (the embassy) regarded as unfavorable terms.20 Greece’s perseverance would finally pay off in 1958, when the first Greek refinery went into operation in Aspropyrgos and its management, under state ownership, was taken over by a consortium of companies in which the shipowner Stavros Niarchos held a majority interest and in which the American oil company Mobil was a participant.21 Two conditions had had to be met before the Greek efforts (which lasted from 1953 until 1957) could be successful. First, alternative sources of funding had to be found, so that American objections could be circumvented.22 In 12/7/1954; and the attached Memorandum: Greek Petroleum Refinery, 30/6/1954, NARA, RG469, Series: Subject Files 1948–1957, P256, Box 1: Commodities-FuelPetroleum-Refinery 1952–1953–1954. 19 British Embassy in Athens/Commercial Department to Foreign Office, 19/7/1957, TNA, FO371/130054; and Kordt (Embassy of the FRG in Athens) to Auswärtiges Amt, Errichtung einer Erdölraffinerie, 6/11/1957, Bundesarchiv Koblenz (BAK), B102/57218. 20 Foreign Office to British Embassy in Athens, 11/3/1954, TNA, FO371/112904;

and British Embassy in Athens/Commercial Department to Foreign Office, 30/5/1957, TNA, FO371/130054. 21 Schmoller (Embassy of the FRG in Athens) to Auswärtiges Amt, Errichtung einer Erdölraffinerie, 20/11/1958, BAK, B102/57218. 22 For the continuing American ambivalence and conflicting views among the various agencies at this early stage, see Parker (MSA Rome) to MSA Athens, Draft policy paper

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May 1955, having secured West German credits for the necessary equipment, the Papagos government succeeded in separating the construction project from the eventual operation of the refinery. It assigned construction of the refinery facilities to a West German consortium and thus presented the multinational oil companies with a fait accompli.23 Second, during the final stage of negotiations over the management of the stateowned refinery, Greek shipowners moved into the game. In general, the shipowners had begun showing an inclination to invest their capital in Greece, and their interest in the refinery would not only make the bidding more competitive but would tip the balance between the Greek state and the foreign corporations. In considering how these two conditions were met, we can begin to construct a road map that leads us beyond this specific case to a more comprehensive understanding of Greek postwar industrialization. In the fall of 1953, after his unsuccessful tours of the United States and Britain,24 Markezinis visited France, Germany, and Italy in succession in hopes of attracting investment to Greece. A Greco-French agreement demonstrated French interest in the Greek electrification program and, more specifically, in the construction of hydroelectric power stations on the Megdovas and Acheloos Rivers25 ; for these projects, the French re Greek refinery, 20/4/1953; Dwyer (Foreign Operations Administration/Petroleum Branch Chief) to Barrows, 21/9/1953; and Barrows to Mann (Chargé d’Affaires, American Embassy in Athens), Proposed Oil Refinery, 28/9/1953, NARA, RG469, Series: Subject Files 1948–1957, P256, Box 1: Commodities–Fuel–Petroleum–Refinery 1952–1953–1954. 23 Kordt (embassy of the FRG in Athens) to Auswärtiges Amt, Bau einer Erdölraffinerie, 14/5/1955, BAK, B102/57218. 24 The visit to Britain took place in July 1953, and produced negligible results. Winston Churchill’s recent health problems dealt the final blow to Markezinis’s hopes of shaking hands with the elderly prime minister in full view of the press. For the relevant background, see Vosper to Soames, 1/7/1953; and Churchill to Markezinis, 8/7/1953, TNA, PREM11/452. 25 For (favorable) journalistic coverage of Markezinis’s visit to Paris, see To Vima, 13– 16/10/1953 and 20/10/1953. The trip to France had in fact been organized on the fly through the French embassy in West Germany, when an adviser to the French political office there learned of the preparations for a Greek visit to Bonn. Moreover, the Greek ambassador in Paris characterized France’s desperate fiscal situation, political instability, and economic problems in ways that did not permit much optimism about the country’s potential as a source of financial resources for Greece: see Σ τεϕανoυ ´ (ambassador in Bonn) to Foreign Ministry, 9/7/1953; Pαϕαηλ ´ (ambassador in Paris) to Foreign Ministry, ⎡αλλ´ια: Δημoσιoνoμικη´ καταστασις ´ κατ´oπιν της ψηϕ´ισεως πρoUπoλoγισμo ¨ ν´ χρησεως ´

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agreed to disburse, over the course of seven years, 5.5 billion French francs (about $15.5 million).26 In Rome, the Italians expressed interest as well, especially in the power station on the Acheloos. It was understood that, subject to conditions, Italian investment might theoretically reach $40 million.27 As of mid-1955, however, Greece had yet to see a single lira28 ; in October of that year, the new Karamanlis government put the Acheloos project on ice.29 In Paris and Rome, the Greek Minister of Coordination had not achieved much beyond some declarations of intent and the establishment of the relevant committees, but his visit to West Germany was to bear fruit immediately. In November 1953, Greece and West Germany signed a bilateral agreement under which the Federal government undertook to provide $50 million in credits to West German companies for investment in Greek industry. And with that, a path was opened up to the resources Greece needed to realize those development goals (including the construction of a refinery) that the Americans had always seen as low-priority. Meanwhile, the Greek government, by means of LD 2687/1953 (to which it ascribed constitutional force), strengthened

1953, 25/2/1953; Pαϕαηλ ´ to Foreign Ministry, Tα oικoνoμικα´ της ⎡αλλ´ιας εις κρ´ισιμoν σημε´ιoν, 28/3/1953; and Pαϕαηλ ´ to Foreign Ministry, Mερικα´ συμπερασματα ´ απ´o την κυβερνητικην ´ κρ´ισιν της ⎡αλλ´ιας, 29/5/1953, Diplomatic and Historical Archives, Ministry of Foreign Affairs, Athens (DHA-MFA), Central Service: 1953, F34, subf. 8. On the postwar French economy, see F. M. B. Lynch, France and the International Economy: From Vichy to the Treaty of Rome (London: Routledge, 1997). 26 Λιατης ´ (director of the Foreign Ministry) to Ministry of Coordination (Office of the Secretary-General), Kε´ιμενα Σ υμϕωνιων ´ ⊓αρισ´ιων 13/15.10.1953 δια´ γαλλικας ´ ´ πιστωσεις ´ and the attached documents; and X. ανθ´oπoυλoς-⊓αλαμας, ´ Eκθεσις περ´ι τoυ εις ⎡αλλ´ιαν ταξειδ´ιoυ τoυ ϒπoυργoν´ τoυ Σ υντoνισμoν´ κ. Σ . Mαρκεζ´ινη και των επιτευχθšντων απoτελεσματων ´ (⊓αρ´ισιoι 8–15 Oκτωβρ´ιoυ 1953), 26/10/1953, DHAMFA, Central Service: 1954, F27, subf. 5. 27 Λιατης ´ to Ministry of Coordination (Office of the Secretary-General), Kε´ιμενα Σ υμϕωνιων ´ Pωμης ´ 3.12.1953 δ’ ιταλικας ´ πιστωσεις, ´ 23/12/1954, and the attached ´ documents; and X. ανθ´oπoυλoς-⊓αλαμας, ´ Eκθεσις περ´ι τoυ εις Iταλ´ιαν ταξειδ´ιoυ τoυ ϒπoυργoν´ τoυ Σ υντoνισμoν´ κ. Σ . Mαρκεζ´ινη και των επιτευχθšντων απoτελεσματων, ´ 18/12/1953, DHA-MFA, Central Service: 1954, F30, subf. 2. 28 Naftemporiki, 16/8/1955 (excerpt from relevant article), DHA-MFA, Central Service: 1954, F30, subf. 2. 29 Kαραμανλης ´ to embassy in Rome, 21/10/1955, DHA-MFA, Central Service: 1955, F23, subf. 10.

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protections for foreign investments in Greece and extended those protections to shipowners’ investments. It thus facilitated inflows of foreign capital and, along with the stabilization of the political situation after 1955, it offered Greek shipowners the guarantees they wanted if they were to invest some part of their profits in Greece’s fledgling industries.

CHAPTER 3

Shipowners and Industrialization: Onassis in Hamburg

This is a celebration of the house of Onassis... . This is a great day for Hamburg, the shipbuilding city. —Theodor Schecker, director of Howaldtswerke A.G. shipyards, Hamburg, at the launching of the tanker Tina Onassis , 25 July 19531

Greek shipowners’ interest in Greek industry was the result of a twofold failure: on the one hand, the failure of Aristotle Onassis’s plans to secure a share in the transportation of Saudi crude oil; on the other hand, the failure, not only of Onassis himself but also of Stavros Niarchos, to gain a foothold in the West German shipbuilding industry. The turning of Onassis’s and Niarchos’s attention toward Greece marked the beginning of a long period of decisive involvement by shipowning capital in the process of Greek industrialization. Investments by Greek shipowners opened the way to an improvement of Greece’s position in the international economy and constituted an essential precondition for the country’s later participation in the transnational European projects that were then still in their formative stages.

1 Groß-Tanker “Tina Onassis ,” a documentary short film by Karl Martell, produced by Norddeutscher Kulturfilm Karl Martell (Hamburg), Film- und Fernsehmuseum Hamburg e.V. I am grateful to Konstantinos Kosmas and Joachim Paschen for their help in locating and securing a copy.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_3

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In the aftermath of the Second World War, Germans found few occasions for national pride. One of those rare moments—probably the most famous—came in the summer of 1954, when West Germany won the World Cup and thousands of German citizens took to the streets of their cities to celebrate.2 And yet, almost a year earlier, one German city had already managed to celebrate, with similar warmth and greater formality, another great event: the launching of the world’s largest oil tanker, the Tina Onassis , constructed at the Howaldtswerke shipyards for the Greek shipowner Aristotle Onassis.3 It was a joyous occasion for the roughly fifty thousand citizens of Hamburg who had turned out to witness it,4 and they had every reason to rejoice. Hamburg, Germany’s largest port, had always been known as a shipbuilding city.5 In the early postwar years, the large part of the city’s population that had traditionally been employed in this industry found themselves in a very difficult position, with the formerly state-owned German shipbuilding industry now stifled by Allied controls.6 Even after restrictions were lifted in late 1949, German shipyards remained in a desperate state.7 The 1953 construction of the Tina Onassis , which incorporated an array of technical innovations and boasted a capacity of over 46,000 tons, inaugurated the era of gigantism in global shipping and was an important milestone for the revival of shipbuilding 2 A Heinrich, “The 1954 Soccer World Cup and the Federal Republic of Germany’s Self-Discovery,” American Behavioral Scientist 46.11 (2003): 1491–1505; and W. Pyta, “German Football: A Cultural History,” in German Football: History, Culture, Society, ed. A. Tomlinson and C. Young (London: Routledge, 2006), 1–22. 3 I am thankful to Gelina Harlaftis for drawing my attention to Onassis’s German

adventures. For a more detailed account, see G. Harlaftis and Ch. Tsakas, “The Role of Greek Shipowners in the Revival of Northern European Shipyards in the 1950s,” in Shipping and Globalization in the Post-War Era, ed. N. P. Petersson, S. Tenold, and N. White (Basingstoke: Palgrave, 2019), 185–212. 4 Bundesarchiv, Online Filmothek: Welt im Bild 57/1953 28.07.1953 (accessible through: https://www.filmothek.bundesarchiv.de/video/583120?q=Onassis, last retrieved on 26 January 2020). Other estimates, like that in the aforementioned documentary film, consider the number of attendees to have been even higher. 5 M. Miller, Europe and the Maritime World: A Twentieth-Century History (Cambridge:

Cambridge University Press, 2012). 6 C. Boie, Schiffbau in Deutschland, 1945–52: Die verbotene Industrie (Bad Segerberg: Detlefsen, 1993). 7 H. B. Wend, Recovery and Restoration: U.S. Foreign Policy and the Politics of Reconstruction of West Germany’s Shipbuilding Industry, 1945–1955 (Westport, CT: Greenwood Publishing, 2001).

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activity in Hamburg. In fact, the launch of the “world’s largest tanker” made news far beyond the Hamburg city limits: it was covered in German newsreels and in the columns of the international press, even becoming the subject of a filmed docudrama.8 One can hardly fail to notice the part played by Greek shipowners in the reconstruction of the West German shipbuilding industry. The launching of the Tina Onassis was part of a massive program for the construction of a tanker fleet that Onassis had initiated in Hamburg, Bremen, and Kiel as early as 1951.9 Before that, Onassis had already launched a program to convert a tanker and twelve corvettes into whalers in Hamburg, Kiel, and Rendsburg. Those whalers were delivered during 1950.10 By 1954, West German ship construction reached 963,114 tons—18% of global shipbuilding output, the second highest national output in the world (after Britain). Moreover, the West German shipbuilding industry ranked second to none in terms of export intensity, with foreign contracts representing 54% of its total production. In that same year, Onassis’s orders accounted for more than half the capacity (56.46%) of all tankers built in West Germany—eleven tankers with a combined capacity of 250,685 tons, out of 440,000 total tons of tanker capacity produced—and more than a quarter (26%) of total West German ship construction.11 Meanwhile, important orders for tankers had also been placed by other Greek shipowners, Stavros Niarchos among them.12 8 Bundesarchiv, Online Filmothek: Welt im Bild 57/1953 28.07.1953 (accessible through: https://www.filmothek.bundesarchiv.de/video/583120?q=Onassis, last retrieved on 26 January 2020); Groß- Tanker “Tina Onassis ,” documentary short film by Karl Martell, produced by Norddeutscher Kulturfilm Karl Martell (Hamburg), Film- und Fernsehmuseum Hamburg e.V. 9 G. Harlaftis, Creating Global Shipping: Aristotle Onassis, the Vagliano Brothers, and

the Business of Shipping c. 1820–1970 (Cambridge: Cambridge University Press, 2019), 188–191. 10 Harlaftis, Creating Global Shipping, 188–191; and L. Scholl, «H ϕαλαινoθηρ´ια στις ν´oτιες θαλασσες ´ και την Aνταρκτικη», ´ in Iσ τ oρ´ια επ ιχ ειρ ησ ´ εων Ων ασ ´ η, ed. G. Harlaftis (Herakleion: Crete University Press, 2022). 11 Schiff und Hafen 2 (2/1955), 5 (5/1955), and 9 (9/1955). My calculations include only ships over 4000 dwt. 12 Schiff und Hafen 11 (11/1952) and Handelsblatt 41 (7/4/1954). For certain attributes typical of maritime business networks between shipowners and builders, such as mutual trust and preference at equal prices, that seem to apply in this case, see G. Boyce, “Network Knowledge and Network Routines: Negotiating Activities between Shipowners and Shipbuilders,” Business History 45.2 (2003): 52–76.

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Greek shipowners’ specific motivations for their early turn to West German shipyards are still not fully known, nor do we have evidence to prove that the decisions made by Onassis and Niarchos had any direct connection to official Greek policy. All the same, the effects of their decisions allow us to detect certain correspondences. Quite early on, the Greek government had attempted to use Greek-owned shipping as a bargaining chip in its pursuit of various goals. In the early postwar years, the most urgent problem for Greece’s ruined economy was how to dispose of surplus tobacco production.13 The absorption of Greek tobacco by the German market was thus a central issue in the negotiations for a bilateral trade agreement that took place in Bonn in October 1950. But the German government’s commitments in this regard provoked a reaction from the German cigarette industry (which was also based in Hamburg). German cigarette manufacturers were hoping for importation of American Virginia tobacco, which was more to the taste of the young smokers who were arriving in Germany as part of the US military presence there. In a desperate attempt to forestall an agreement with the Greek government that would be contrary to their interests, the German cigarette companies tried to induce German shipbuilders to join them in putting pressure on the German government. The Greeks heard reports that the cigarette manufacturers had suggested import credits for orders of American tobacco should be offered in exchange for future American orders from German shipyards. In November 1950, the Greek consulate in Hamburg, having been apprised of this, recommended the immediate placement of Greek orders with those same shipyards with the aim of splitting the emerging alliance between two German industrial sectors.14 At last, in June 1952—after lengthy negotiations and the personal intervention of Chancellor Konrad Adenauer with Minister of Finance Fritz Schäffer, who opposed the measure—a reduction of the duty on imported tobacco was finalized. The reduction did not apply to

13 M. Pelt, Tying Greece to the West: US-West German-Greek Relations, 1949–1974 (Copenhagen: Museum Tusculanum Press), 97–127. 14 Kαμπαλoνρης ´ (consulate in Hamburg) to military mission in Berlin, 2/11/1953. Many thanks to Ioannis Vasilopoulos for drawing my attention to this document: see I. Vasilopoulos, “Greece’s Economic Development and Early European Integration: Business Strategies and State Policies, 1945–1962” (PhD diss., University of Glasgow, 2019), 92.

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American tobacco,15 and this decision gave Greece’s struggling tobacco exports to West Germany a modest lease on life.16 Onassis and Niarchos were not the only Greek shipowners who began to make use of West German shipyards, and they maintained a degree of independence from the Greek state that reflected the global scope of their business interests.17 The Onassis Group’s transfer of its headquarters from New York to Monaco, and the relocation to Europe of its most important operations, was Onassis’s reaction to his investigation by American authorities for violating the American embargo on China during the Korean War.18 Related to this reorientation of Onassis’s activities was the launching, in 1954, of another giant tanker from the Hamburg shipyards: it was named Al Malik Saud Al Awal , in honor of the king of Saudi Arabia, and it was part of an effort by Onassis to obtain an interest in the transportation of Saudi oil.19 In this endeavor, he found key allies in Adenauer’s inner circle, whose members wanted to disrupt Anglo-American control of world oil shipments.20 Thanks to their influence, Onassis obtained a face-to-face meeting with Adenauer in 1954, at which the two men discussed Onassis’s possible acquisition of Hamburg’s Howaldtswerke shipyards.21 But despite significant support for Onassis among Adenauer’s confidants, including prominent

15 Kαμπαλoνρης ´ to military mission in Berlin, ⊓ερ´ι τoυ καπνικoν´ ζητηματoς, ´

22/1/1952; Kαμπαλoνρης ´ to Foreign Ministry, Δηλωσεις ´ ϒπoυργoν´ Schäffer περ´ι τoυ υπoβιβασμoν´ τoυ ϕ´oρoυ σιγαρšτων, 1/4/1952; and Nικoλαρα ΐζης (chargé d’affaires at the Greek embassy in Bonn) to Foreign Ministry, 28/6/1952, DHA-MFA, Central Service: 1952, F111, subf. 8. 16 Pelt, Tying Greece to the West, 121–127. 17 On the postwar international shipping regime within which they acted, see A.

Cafruny, Ruling the Waves: The Political Economy of International Shipping (Berkeley: University of California Press, 1987). 18 G. Harlaftis, “The Onassis Global Shipping Business, 1920s–1950s,” Business History Review 88 (2014), 241– 271. 19 Harlaftis, Creating Global Shipping, 198–203. 20 CIA to State, Efforts of Onassis to purchase German ship works, 5/8/1954, CIA,

Nazi War Crimes Disclosure Act(FOIA)/ESDN(CREST): 519a2b7b993294098d50ffcd (accessible through: https://www.cia.gov/library/readingroom/; last retrieved on 12 November 2020). 21 Hamburger Anzeiger, 4/5/1954, Bundesarchiv Koblenz (BAK), B108/5149.

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bankers such as Hermann Abs22 (who would later become chairman of the Managing Board of Deutsche Bank), his plans met with insurmountable obstacles. The vigorous opposition of Schäffer,23 the same finance minister who had also resisted granting tax advantages to Greek tobacco, may have been the least of Onassis’s problems. Elsewhere, the Americans had succeeded in thwarting the Greek shipowner’s deal with Saudi Arabia, his tankers faced a boycott from the big oil companies, and his fleet of whalers found itself impounded in Peru—much to the delight of his Norwegian and British competitors.24 1954 was not the first occasion on which the possible acquisition of West German shipyards was discussed. Already in late 1951, Onassis and Niarchos had jointly tried to secure, in partnership with German concerns, an interest in the shipyards where they had placed orders for their tankers.25 The two shipowners very soon abandoned their joint venture after Niarchos cooperated with the American authorities in the FBI’s pursuit of Onassis.26 Thereafter, despite Niarchos’s role in the management of the Howaldtswerke shipyard in Kiel,27 and despite Onassis’s persistent interest in the Howaldtswerke shipyard in Hamburg, neither contender was able to gain control of a West German shipyard. This failure was to prove of great importance. Parallel with these developments in the world of the Greek shipping magnates, other processes were underway within Greece itself, and their results too would soon be felt. Once stability had been achieved through the monetary reform of 1953, growth became the chief objective of Greek economic policy. In pursuit of this goal, successive governments sought 22 On Abs, see H. James, The Nazi Dictatorship and the Deutsche Bank (Cambridge: Cambridge University Press, 2004); and N. Frei, ed., Karrieren im Zwielicht: Hitlers Eliten nach 1945 (Frankfurt: Campus, 2001). 23 CIA to State, Efforts of Onassis to purchase German ship works, 5/8/1954, CIA, Nazi War Crimes Disclosure Act(FOIA)/ESDN(CREST): 519a2b7b993294098d50ffcd (accessible through: https://www.cia.gov/library/readingroom/; last retrieved on 12 November 2020). 24 L. Scholl, «H ϕαλαινoθηρ´ια στις ν´oτιες θαλασσες ´ και την Aνταρκτικη», ´ in Iσ τ oρ´ια επ ιχ ειρ ησ ´ εων Ων ασ ´ η, ed. G. Harlaftis (Herakleion: Crete University Press, 2022). 25 Scholz to Kattenstroth, Howaldtswerke AG, 4/12/1951; and the attached Bundesministerium der Finanzen (BMF), Veräusserung der Aktien der Howaldtswerke AG, Hamburg, 29/11/1951, BAK, B102/15552. 26 Harlaftis, “Global Shipping Business.” 27 Scholz to Graf, Kieler Hütte AG, 23/1/1953, BAK, B102/75949.

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to attract foreign investment in order to industrialize the country and remedy the ills arising from the preponderance of the agricultural sector. Already in 1956, the Greek government was able to sign two agreements for investment projects on an unprecedented scale. The first of these enabled Onassis’s creation of Olympic Airways; the second was for Niarchos’s establishment of the Skaramagas shipyards (following the rejection of a similar proposal by Onassis).28 Not long afterward, Niarchos, in partnership with the US-based Mobil Oil Company, took over procurement and management operations at the government’s oil refinery. He went on to play a key role in the founding of Aluminium of Greece by the French aluminum conglomerate Pechiney and the American firm Reynolds.29 During this early period, Onassis did not try to win the refinery contract, since his tankers were being boycotted by the oil companies in retaliation for his attempt to break Aramco’s monopoly on the shipment of Saudi oil.30 In fact, one of the firms that sought the refinery contract, a joint venture by the Greek-American businessmen Spyros Skouras and Tom Pappas, was in negotiations with Onassis for the acquisition of his tanker fleet. It is not clear whether the US government was somehow behind this, but the State Department was aware of the negotiations.31 Neither the growing interest of Greek shipowners in the opportunities offered by the Greek economy, nor the connection between this interest and Greece’s European ambitions, should lead us to overstate the patriotism felt by the magnates of shipping capital. Even as he was negotiating for the establishment of shipyards in Greece, Niarchos was contemplating the possibility of constructing ship repair facilities in Malta32 —a plan entirely at odds with his proposed Greek shipyards, and one which 28 Oikonomikos Tachydromos (OT ), 19/4/1956, 17/5/1956, 12/7/1956, 2/8/1956, and 13/9/1956. 29 On Niarchos’s presence in Greek manufacturing during the early postwar period, see G. Harlaftis, Greek Shipowners and Greece, 1945–1975: From Separate Development to Mutual Interdependence (Atlantic Highlands, NJ: Athlone Press, 1993), 80 and 198–202; Viomichaniki Epitheorisis 445, 11/1971; and OT , 23/9/1971. 30 Harlaftis, “Onassis Global Shipping Business.” 31 Department of State, Memorandum of Conversation: Purchase of Onassis Tanker

Fleet, 23/5/1955, National Archives and Records Administration, College Park, MD (NARA), RG59, Series: Subject Files Relating to Greece and Cyprus 1950–57, A11294, Box 26: 1955 X Shipping. 32 Laycock (British Governor of Malta) to Mintoff (Prime Minister of Malta), 16/5/1956; Mintoff to Laycock, 22/5/1956; Notes on meeting held with Mr. C. Caldis

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certainly does not testify to any special concern for his country’s readiness to participate in Europe.33 Moreover, no less a figure than Konstantinos Karamanlis had condemned Niarchos’s inflexible negotiating position as unpatriotic.34 Regardless, however, of any theoretical debate about the “Greekness” of their businesses, the role that Greek shipowners played as links connecting national economies, international markets, and global geopolitics, presents a challenge to our conventional ideas about the conduct of diplomacy. And, as we shall see, these figures continued to play a complex and sometimes ambiguous role in the decades ahead.

regarding reconstruction of dry docks in Malta, 30/5/1956; and McGee (Colonial Office) to Smith,15/10/1956, The National Archives, Kew, Richmond (TNA), FCO141/10905. 33 This latter viewpoint was urged by the Vice-chairman of the Hellenic Shipyards, Stefanos Syriotis: see OT, 14/9/1961. 34 T. Lamprias, Kαραμανλης ´ o ϕ´ιλoς (Athens: Potamos, 1998), 356–367.

CHAPTER 4

Collaborators and Benefactors: The Connections

If, at that time, someone had prioritized his own “business interests” and had not arranged for those two letters from the occupation authority and Telefunken—letters which made it abundantly clear that Telefunken applied pressure in order to obtain the radio broadcasting and telegraph contracts—to disappear from the Ministry of Transportation’s files, then Mr. S. would not be enjoying a comfortable life in Spain today and Telefunken would not enjoy the reputation and respect that its name now commands in Greece. But in return this “someone”—none other than myself—spent eighteen months in prison and was made to undergo two long trials on criminal charges and seven trials for tax violations. I was acquitted in all of these trials, but only at the greatest sacrifice of freedom, health, and money. —Ioannis Voulpiotis, former representative of Telefunken in Greece, 17 October 19561 Personally, I will never in my life ask Mr. Bodossakis or one of his people for anything ever again. Because of him I lost my whole fortune, which at that time was considerable, even though I maintained and increased the value of his holdings while serving as his official trustee. [Those holdings

1 Voulpiotis to Heymann (Telefunken), 17/10/1956, Deutsches Technikmuseum, Historisches Archiv, Berlin (hereafter DTM/HA), FA AEG-Telefunken, I.2.060ÜGS2057, Nr. 2144.

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include] the factories from which Bodossakis now profits by selling his merchandise to the Federal Republic and NATO. —Walter Deter, former member of the Wehrmacht Economics Staff in Greece, 28 October 19602

The restoration of the prewar division of labor in Europe also meant the reemergence of a wider field of action for the large companies that had dominated German heavy industry before 1945. In all the countries that had endured German occupation, and in West Germany as well, the postwar rehabilitation of groups of businessmen who had either been identified with the Nazi regime or had profited during the war depended on two considerations: first, the extent to which these groups could obscure the traces of their relationships with the people and systems that Hitler’s regime had imposed; and, second, the extent to which they could make the case that postwar economic recovery would require their own contribution to the productive activities that were once again getting underway.3 Even when the second consideration could be met by uniting a country’s business community around a success story, thus burnishing the public image of its leading organizations and their representatives, the first consideration would become more problematic than ever. This was because the creation of a postwar success story often depended on economic realities whose continuities with collaborationism during the German occupation were impossible to miss. The Greco-German agreement of 1953 gave Greece access to West German resources, but that did not mean that the projected investments in Greece were automatically carried out. The whole logic of the agreement was based on the interest that private companies in West Germany were expected to show in Greek industrial development. Major corporations such as Krupp, Siemens, and Telefunken had been involved in the negotiations, shaping the scope, goals, and priorities of the agreement. But their decision to participate was not the result of any pressure 2 Deter to Rheinmetall Berlin AG, 28/10/1960, Zentralarchiv der Rheinmetall AG, Düsseldorf, Germany, B333, Nr. 1. I am grateful to Dr. Christian Leitzbach for his help in locating the relevant material and for providing me with digital copies. 3 V. Berghahn, Unternehmer und Politik in der Bundesrepublik (Frankfurt: Suhrkamp, 1985); A. Grünbacher, West German Industrialists and the Making of the Economic Miracle: A History of Mentality and Recovery (London: Bloomsbury Academic, 2017); and J. Wiesen, West German Industry and the Challenge of the Nazi Past, 1945–1955 (Chapel Hill: University of North Carolina Press, 2001).

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from West German officials. On the contrary, the real initiative seems to have been taken by certain key figures in Greece—individuals of longstanding importance in the Greek economy who maintained close ties to these German companies. Likewise, West German corporations’ willingness to participate in investments eligible for funding under the terms of the agreement depended on their finding Greek partners—or, at least, trustworthy proxies—who could assume part of the risk and successfully navigate the labyrinth of Greek bureaucracy. It was no accident that a decisive role in this process was played by two individuals who had been among the most important links between the Greek and German economies as far back as the interwar period. One of these was Ioannis Voulpiotis, who would represent Siemens and Telefunken in Greece after the war. The other was Bodossakis Athanassiades, who, in the wake of the occupation, was still the most powerful industrialist in Greece and was active in the armaments and chemicals industries and in mining.4 Through their prominence in technologically advanced sectors, Voulpiotis and Bodossakis were able to resurface after the war as promoters of a strategic plan for the industrialization and modernization of the Greek economy via a Greco-German rapprochement. As a result of their connections in Germany, the two men not only played a crucial role in achieving such a rapprochement, but also became the principal Greek beneficiaries of West German credits. Voulpiotis’s and Bodossakis’s postwar careers have often been seen as evidence that those who had collaborated with the German occupation forces in Greece—and particularly those who collaborated economically— were able to escape punishment.5 Such a perspective usually goes no further than an attempt to clarify the (sometimes hazy) boundaries between active collaboration and the pragmatic survival strategies adopted by economic actors in the occupied countries.6 But the persistence of vital links between the Greek and German economies in the postwar landscape

4 In 1950, Bodossakis’s companies represented 22 percent of total Greek industrial production: see.G. Stathakis, To Δ´oγ μα Tρ oν´ μαν και τ o Σχ šδιo Mαρσ ´ αλ: H ισ τ oρ´ια τ ης αμερικανικ ης ´ β oηθ ´ ειας σ τ ην Eλλαδα ´ (Athens: Vivliorama, 2004), 312. 5 D. Kousouris, Δ´ικες τ ων δ oσ ιλ´oγ ων, 1944–1949. Δικαιoσ ν ´ νη, σ υν šχ εια τ oυ κρ ατ ´ oυς και εθ νικ η´ μν ημη ´ (Athens: Polis, 2014). 6 For a recent comparative study of industrial collaboration in Europe, see H. O. Frøland, M. Ingulstad, and J. Scherner, eds., Industrial Collaboration in Nazi-Occupied Europe: Norway in Context (Basingstoke: Palgrave, 2016).

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was not inevitable, nor did it imply simple linear continuities with the interwar past, so what is especially interesting about figures like Voulpiotis and Bodossakis is how the postwar reconfiguration of alliances, goals, and priorities allowed preexisting connections to acquire new relevance in a new context. Voulpiotis’s case is typical in this respect. In early 1938, he had secured for Telefunken the rights to create and operate a Greek radio network, and in the middle of the following year, he became the company’s official representative in Greece. In the end, however, the government of Ioannis Metaxas (1936–1941) postponed the fulfillment of its contract with Telefunken7 —a fact which Telefunken executives in the early 1940s attributed to a successful operation by British agents who were influencing the dictator’s ministers. Telefunken also learned that Metaxas had decided to set up a state-run radio network of his own. Despite these difficulties, the company continued to place its trust in Voulpiotis, judging that he was the only one who could assist Telefunken in advancing its goals in Greece.8 By the time the Greco-Italian War began in the fall of 1940, however, relations between Telefunken and Voulpiotis had soured: the company was looking into allegations, made by Voulpiotis’s Greek associates and accepted rather uncritically by senior Telefunken executives, that Voulpiotis had abused the company’s trust and committed fraud in his dealings with them.9 Voulpiotis would solidify his position as Telefunken’s undisputed representative in Greece only after the German invasion and the occupation of the country by the Wehrmacht. The Reich Foreign Ministry regarded control of radio as one of its most important means of exercising political influence, but this control would turn out to be a much more complicated business than one might suppose in a country that had just surrendered unconditionally to an overwhelmingly powerful enemy. This 7 Buss (Telefunken), Aktennotiz über eine Besprechung am 25. April 1939, 26/4/1939, DTM/HA, FA AEG- Telefunken I.2.060C-00653. On the German effort to build a communication empire from the beginning of the twentieth century, see H. J. S. Tworek, News from Germany: The Competition to Control World Communications, 1900–1945 (Cambridge, MA: Harvard University Press, 2019). 8 Fernholz (Telefunken) to Lansberg (Telefunken), 21/3/1940, DTM/HA, FA AEGTelefunken I.2.060C-00653. 9 Rottgardt to Boehringer (German diplomatic mission to Athens), Persönliche Verhältnisse des Ing. Jannis Voulpiotis, 18/7/1941, DTM/HA, FA AEG-Telefunken I.2.060C-00653.

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was because Greece, although conquered only after the intervention of the Wehrmacht, had originally been designated as part of the Italian sphere of influence.10 The German forces, who had been the first to enter Athens, urgently needed to seize control of particular enterprises that held strategic importance either politically or economically; the Italian forces, humiliated on the Albanian front, would arrive soon thereafter. The main problem faced by the newly arrived Germans was that the procedures for transferring these enterprises to new management had to be implemented not only quickly but also in accordance with the letter of the law, to prevent them from being challenged in retrospect when the Italians, breathless with haste, joined them in the Greek capital. Radio broadcasting, moreover, in order to present the appearance of objectivity—so as to enhance the effectiveness of propaganda—had to be entrusted to a German private company, albeit under the supervision of a special officer of the German Foreign Ministry who would be charged with shaping the political content of the broadcasts.11 It was under these extraordinary circumstances that Voulpiotis’s star really began to rise. By persuading the head of the Wehrmacht’s Economics Staff in Greece, Colonel Wendt, to exercise his influence with Georgios Tsolakoglou, the first prime minister under the occupation (1941–1942),12 Voulpiotis managed to resurrect the ill-fated contract between Telefunken and the Metaxas regime. As Telefunken executives noted with satisfaction, the sums disbursed by Voulpiotis as “beneficial expenditures” amounted to only RM 3,000—as against the RM 17,500

10 M. Mazower Inside Hitler’s Greece: The Experience of the Occupation (New Haven: Yale University Press, 1993). 11 Mair (Abt. Kult/Rundfunk des Auswärtigen Amtes), Aufzeichnung: Deutsche Einflussnahme auf den Rundfunksender Athen, 3/6/1941; Fernholz, Aktennotiz über eine Besprechung im Auswärtigen Amt, Abt. Kult/Rundfunk, 4/6/1941, DTM/HA, FA AEG-Telefunken I.2.060C-00646; and Auswärtiges Amt to Telefunken, Rundfunksender und Kurzwellensender Athen, 7/7/1941, DTM/HA, FA AEG-Telefunken I.2.060C-00657. 12 Voulpiotis to Böhringer (German diplomatic mission to Athens), Rundfunkkonzession in Griechenland, 3/5/1941; Wendt (Wehrmacht) to Tσoλακoγλoυ, ´ 24/5/1941, DTM/HA, FA AEG-Telefunken I.2.060C-00657; Fernholz, Aktennotiz über ein Telefongespräch mit Herrn Voulpiotis, Athen, am 7.6.1941, 9/6/1941; Fernholz to Deutsche Gesandtschaft Athen, 9/6/1941; and Fernholz to Schlotterer (Reichswirtschaftsministerium), Rundfunksender-Konzession Griechenland, 11/6/1941, DTM/HA, FA AEGTelefunken I.2.060C-00646.

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that had been paid, for similar purposes, under Metaxas.13 Voulpiotis was equally successful in the case of telegraph and telephone communications. Once again thanks to Wendt, he arranged for the transfer to Telefunken of the assets belonging to the British company Cable & Wireless. The transfer was carried out in just twelve hours—a speed that cost Telefunken 12.5 million drachmas in “beneficial expenditures.”14 Voulpiotis’s remarkable success in settling these two matters to the advantage of German interests secured him the position of general manager of Greek radio broadcasting during the occupation.15 A detailed report produced by Telefunken, canvassing opinions of Voulpiotis’s character among the most important figures in the German occupation forces, concluded that Voulpiotis enjoyed the confidence of the Reich plenipotentiary for Greece, Günther Altenburg, his military attaché Karl von Clemm-Hohenberg, and his economic and cultural attachés as well. These officials regarded Voulpiotis as one of the most committed Germanophiles in Greece, and they considered him indispensable not only to Telefunken but to Germany itself. On the other hand, the report also called attention to problematic frictions that seemed to have developed between Voulpiotis and agents of the German occupation authority who had been assigned to oversee Greek radio. The report attributed these problems to an attempt by one of these agents, von Niebelschütz—whom Telefunken regarded as a source of future difficulties for their company—to assume control of radio broadcasting. The report also noted that officials of the Nazi party’s local organization in Greece had been spreading rumors about Voulpiotis’s Anglophilia, but the document’s author believed these rumors to be wholly unsubstantiated.16 Voulpiotis’s residence in Athens throughout the war directly implicated him in the machinery of the Nazi occupation. The case of Bodossakis

13 Voulpiotis to Fernholz, Aktennotiz: Rundfunk-Konzession 30/7/1941, DTM/HA, FA AEG- Telefunken I.2.060C-00646.

in

Griechenland,

14 Fernholz, Aktennotiz: Cable and Wireless-Verkehrssenderkonzession, 24/7/1941;

Voulpiotis to Fernholz, “Aktennotiz: Rundfunk-Konzession 30/7/1941, DTM/HA, FA AEG-Telefunken I.2.060C-00647.

in

Griechenland,”

15 Fernholz to Board of Directors AERE, 21/7/1941, DTM/HA, FA AEG-Telefunken I.2.060C-00646. 16 Fernholz, Verhältnis Gesandtschaft/Voulpiotis (undated), DTM/HA, FA AEGTelefunken I.2.060C-00646.

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was more complicated.17 Having managed to prevent English saboteurs from destroying the facilities of PYRKAL—his munitions company—as the Wehrmacht was advancing toward Athens, Bodossakis then abandoned Greece. In the years that followed, he was active in the Middle East, in South Africa, and later in America before making his way to Cairo and accompanying the Greek government back to Athens in the wake of the German withdrawal. His career during the war years was a stormy one. Early on, Bodossakis was targeted by officials of the American government who wanted to assure themselves of where his true sympathies lay. Some, such as Director of Naval Intelligence J. B. Waller, believed that Bodossakis’s support for the Allies was a mere facade.18 Others, including Colonel Ulius L. Amoss, a Greek-American charged with building a network of Greek agents for American intelligence,19 were somewhat more sanguine. In October 1943, Amoss opined that Bodossakis was an unalloyed opportunist who would ultimately align with the Americans because that would be the best way for him to safeguard both his own interests and those of his country.20 (That view was shared by the British, who noted Bodossakis’s instinctive talent for choosing the winning side).21 Nevertheless, Amoss regarded the “sinister Greek magnate” expendable, and even considered having Bodossakis assassinated as soon as he completed a special mission exploiting his

17 For an overview, see Ch. Hadziiosif, H γ ηραια ´ σ εληνη: ´ H βιoμηχ αν´ια σ τ ην ελληνικ η´ oικ oν oμ´ια, 1830–1940 (Athens: Themelio, 1993), 158–161. On Bodossakis’s links with German industry in the interwar years, see M. Pelt, Tobacco, Arms and Politics: Greece and Germany from World Crisis to World War, 1929–1941 (Copenhagen: Museum Tusculanum Press, 1998). 18 M. Pelt, “Germany and the Greek Armaments Industry: Policy Goals and Business

Opportunities,” Working for the New Order: European Business under German Domination, 1939–1945, ed. J. Lund (Copenhagen: Copenhagen Business School Press, 2006), 156. 19 On this plan, known as the “Greek Irregular Project” or “Comprehensive Greek Project,” and also on Amoss’s wild imagination, see. R. Clogg, Anglo-Greek Attitudes: Studies in History (Basingstoke: Palgrave, 2000), 108–143. 20 Amoss (Office of Strategic Services) to Donovan (OSS), Bodosakis, 19/10/1943, CIA, OSS Collection (FOIA)/ESDN (CREST): CIA-RDP13X00001R0001004000019 (accessible through: https://www.cia.gov/library/readingroom/; last retrieved on 13 November 2020). 21 V. Manousakis, «Oικoνoμ´ια και πoλιτικη ´ στην Eλλαδα ´ τoυ B’ ⊓αγκoσμ´ιoυ ⊓oλšμoυ (1940–1944)» (PhD diss., Aristotle University of Thessaloniki, 2014), 563.

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connections with high-ranking officials in the Nazi regime.22 That ambitious scheme—in which Bodossakis was to travel to Switzerland to make contact with Admiral Wilhelm Canaris, the disgruntled head of German military intelligence (Abwehr)—was never realized. Eventually, in 1944, Bodossakis ended up in Cairo, even though the British had opposed his return to the Middle East in the belief that he might create dissensions among the members of the Greek government-in-exile.23 In occupied Greece, meanwhile, Bodossakis’s businesses had not been left to fend for themselves. Walter Deter, a former associate and personal friend of Bodossakis who was also a senior executive at Rheinmetall Borsig, was given charge of them in his capacity as member of Wehrmacht’s Economics Staff in Greece. Deter and Bodossakis had met sometime in the mid-1930s, when Deter offered his services as a consultant to PYRKAL. Shortly thereafter, the two men worked together to set up a Greek subsidiary of Rheinmetall Borsig, and not long before the German attack Rheinmetall Borsig had promoted Deter to the job of regional director for southeastern Europe.24 Bodossakis, as one of the major shareholders in the Greek subsidiary he had helped to establish, continued to be a significant presence on its board of directors. The chairman of the board was Theodoros Ypsilantis, Rheinmetall Borsig’s representative in Greece25 and founder of the Union of Greek Fascists. Immediately after the Wehrmacht’s arrival in Athens, Deter seized the majority stake in PYRKAL being held by the National Bank as security for a loan obtained by Bodossakis’s German wife, Ioanna (née Gebauer).26 Even after he had completed his acquisition of the shares, however, and despite his position as a Wehrmacht officer, Deter declared that he was “obliged

22 Amoss to Donovan, German Inner-Intelligence Service, 5/1/1943 CIA, OSS Collection (FOIA)/ESDN (CREST): CIA-RDP13X00001R000100400001-9 (accessible through: https://www.cia.gov/library/readingroom/; last retrieved on 13 November 2020). 23 Manousakis, «Oικoνoμ´ια και πoλιτικη», ´ 561–564. 24 Ibid., 564–566. 25 Société Commerciale Rheinmetall Borsig Hellénique S.A., Protokoll über die neue nochmalige ausserordentliche Generalversammlung der Aktionäre der Handelsgesellschaft Griechische Rheinmetall Borsig Aktiengesellschaft, die am 14. Dezember 1940 stattfand, Zentralarchiv der Rheinmetall AG, Düsseldorf, B333, Nr. 1. 26 G. Pagloulatos, H Eθ νικ η´ Tρ απ ´ εζ α τ ης Eλλαδ ´ oς , 1940–2000 (Athens: Historical Archive of the National Bank of Greece, 2006),65–66.

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to safeguard the interests of the shares’ previous owner, Mr. Bodossakis Athanassiades.”27 Early in 1942, following discussions at the Defense Economy and Armaments Office in Berlin regarding the difficulties faced by PYRKAL, it was decided to liquidate some of the company’s equipment, repay the debt to the National Bank, and give the shares back to Bodossakis. During these discussions, Deter sought to be recognized as the guardian (Pfleger) of Bodossakis’s assets, but he was prevented by opposition from Altenburg, who was afraid that such a development would provoke a negative reaction from the Italians.28 Deter had already tried to demand an exorbitant price for PYRKAL’s equipment from the German firm Delhag, and the very idea of a restoration of Bodossakis’s property rights is surprising, given that Bodossakis had fled Greece in the face of the Wehrmacht’s advance. Or perhaps, it should not be so surprising: as soon as Deter had acquired Bodossakis’s shares in PYRKAL, he immediately began discussing PYRKAL’s fate with executives at Montanindustrie, and we learn from these executives’ correspondence that Deter had offered them a different version of Bodossakis’s departure from Greece. One letter mentions that the previous owner of the PYRKAL shares “was the Greek Athanassiades Bodossakis, who is said to have been forced [gezwungen worden sei] by the British to flee to Egypt together with his wife. Bodossakis is said to have prevented the British from blowing up his businesses.”29 This version exonerated Bodossakis of the charge of Anglophilia and guarded him against the danger of having his assets frozen by the occupation authorities. The fate of some of those assets—the shares in PYRKAL—is still uncertain. Montanindustrie executives recorded the information that Deter, together with the head of the Wehrmacht Economics Staff in Greece, Colonel Wendt, had transferred the shares to Hellmuth Röhnert, the

27 Deter

to Zeidelhack (Montanindustrie), Aktienmajorität der Poudreries & Cartoucheries Helléniques, Athen, 20/6/1941, Bundesarchiv Berlin-Lichterfelde (BABL), R121/5658. 28 Manousakis, «Oικoνoμ´ια και πoλιτικη», ´ 596–600; and Hadziiosif, H γ ηραια´ σ εληνη,160. ´ 29 Adenauer to Zeidelhack, Bodossakis-Betriebe: Besprechung über die Verhältnisse im Bodossakis-Konzern am 12.6.1941, 14/6/1941, BABL, R121/5658.

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general manager of Rheinmetall Borsig.30 But lists of assets acquired by the company during the war years do not include the PYRKAL shares.31 In all probability, the shares remained in the hands of Deter himself, who made sure to strengthen his personal authority over PYRKAL through the appointment of former executives to management positions. At the same time, he was careful to safeguard the interests of Bodossakis, who continued to be regarded as the company’s rightful owner.32 During the later stages of the occupation, Bodossakis was actually able to issue direct instructions to Deter, and in 1944 Bodossakis’s wife’s sister, Maria Gebauer, began officially participating in the running of the company.33 It should therefore come as no surprise that—according to one version— when Deter was discovered and arrested in the spring of 1946, he was still living at Bodossakis’s house in Psychiko. Deter himself, moreover, never abandoned his claims that he had been working in behalf of Bodossakis’s interests, and he expressed bitterness over Bodossakis’s failure to acknowledge this debt openly. In both his first postwar statement to American officials34 and in a 1960 letter to Rheinmetall (for whom he continued to work),35 he repeated what he had written to Montanindustrie executives in 1941: he had represented the interests of PYRKAL’s rightful owner as a legitimate trustee (ordentlicher Treuhänder).36 Bodossakis’s and Voulpiotis’s activities during the war years made it unlikely that things could simply go back to normal for them once the occupation had ended. Bodossakis had to renounce any relationship with Deter, and he sued the National Bank, seeking the return of his lost PYRKAL shares. This was something the National Bank was not inclined to concede without a fight, since they believed that Deter had acted in

30 Adenauer to Zeidelhack, Bodossakis-Betriebe: Besprechung über die Verhältnisse im Bodossakis-Konzern am 12.6.1941, 14/6/1941, BABL, R121/5658. 31 For this information from the historical archive of Rheinmetall, I am thankful to Dr. Christian Leitzbach. 32 Hadziiosif, H γ ηραια ´ σ εληνη, ´ 160. 33 Manousakis, «Oικoνoμ´ια και πoλιτικη», ´ 559–560 (esp. n.955) and 569. 34 Ibid., 556–557 (esp. n.947). 35 Deter to Rheinmetall Berlin AG, 28/10/1960, Zentralarchiv der Rheinmetall AG, Düsseldorf, B333, Nr. 1. 36 Deter to Zeidelhack, Aktienmajorität der Poudreries & Cartoucheries Helléniques, Athen, 20/6/1941, Bundesarchiv Berlin-Lichterfelde (BABL), R121/5658.

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consultation with Bodossakis.37 Voulpiotis, on the other hand, was forced to prove his innocence before the Collaborators Court.38 Although the American military intelligence services considered it certain that Voulpiotis had had a close connection to the Abwehr, they pointed out that there was no evidence that would lead to his conviction.39 Needless to say, whether or not such evidence existed often depended on a defendant’s connections and influence—their ability to make evidence disappear, or to manufacture new evidence that showed them in a better light.40 Judicial aspects aside, attempts to conceal connections to the occupation were subject to certain critical constraints. First of all, they would create tensions between Greek and German business partners, since revealing or taking responsibility for things done during the occupation could threaten the very existence of businesses which sought to play a role in postwar reconstruction. Furthermore, they might impact the interests of political and economic rivals, insofar as these latter had suffered losses during the occupation or themselves had aspirations for their place in the postwar economy. These complications, which up to now have been studied very little, would largely determine the fate of the investment projects enabled by Greco-German economic cooperation, since, as we shall see, they eventually caused cracks to form at the very center of Greek political life.

37 On this episode, and the final settlement between Bodossakis and the NationalBank of Greece in the matter of PYRKAL, see Manousakis, «Oικoνoμ´ια και πoλιτικη», ´ 597 (esp. n.1030); and Pagoulatos, H Eθ νικ η´ Tρ απ ´ εζ α, 65–66 (esp. n.150). 38 Kousouris, Δ´ικες τ ων δ oσ ιλ´oγ ων, 432–434. 39 General Staff Intelligence/Headquarters Land Forces Greece, Combined Monthly

Intelligence Review No. 11, 7/1946, CIA, Nazi War Crimes Disclosure Act (FOIA)/ESDN (CREST): 5197c267993294098d50e790 (accessible through: https:// www.cia.gov/library/readingroom/; last retrieved on 13 November 2020). 40 For Voulpiotis’s later admission of his own role in erasing such evidence against some of Telefunken’s representatives, see Voulpiotis to Heymann (Telefunken), 17/10/1956, Deutsches Technikmuseum, DTM/HA, FA AEG-Telefunken, I.2.060Ü-GS2057, Nr. 2144.

PART II

Turmoil, 1953–1958

CHAPTER 5

Amity and Secrecy: The 1953 Agreement

Politically, the Federal Republic of Germany has made a noticeable leap forward with the visit of the gentlemen from Friedrich Krupp A.G., who for their part conducted themselves in Greece with extraordinary discretion and exemplary tact. That such a shrewd businessman as Bodossakis has committed himself to working closely with a world-famous German company—one which, moreover, was still stigmatized by the allies as being partly responsible for the war—has caused the Greek public to sit up and take notice. —Karl Hermann Knoke, advisor to the German embassy in Athens, 28 May 19531 The minister of coordination wishes to send Mr. Voulpiotis, Telefunken’s local representative, to Germany in preparation for his visit and to hold preliminary consultations with German businesses. Mr. Voulpiotis has instructed me to let you know that he should in no way be regarded as Markezinis‘s agent. He has agreed to perform this service only because

1 Kutscher (Auswärtiges Amt) to Reinhardt (Bundesministerium für Wirtschaft), Besuch von Repräsentanten der Firma Friedrich Krupp A.G., Essen, in Griechenland, 13/6/1953; and the attached Knoke (embassy of the FRG in Athens) to Auswärtiges Amt, Besuch..., 28/5/1953, Bundesarchiv Koblenz (BAK), B102/57976.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_5

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wishes to do his part in achieving the closest possible economic cooperation between Germany and Greece, something in which he has long been interested. —Knoke to Dr. Reinhardt (Bundeswirtschaftsministerium/Ministerialdirigent), 25 July 19532

At the dinner hosted by the Federal Chancellery to honor its Greek guests and mark the signing of the Bonn agreements, a general atmosphere of euphoria prevailed. A photographer’s lens has immortalized a jubilant Erhard as he leans—all protocol set aside—over the chair of an uncharacteristically sunny Adenauer. Both men are enjoying the traditional cigar. The camera, on this occasion, did not lie. Nor did Markezinis conceal his own delight.3 How could he, when the agreements that had just been reached exceeded all expectations? Until the very eve of the agreement, all the preliminary documents drafted by the German negotiators had emphasized that the Federal Republic could not possibly allocate more than 100 million marks to its participation in the Greek development program.4 But now the agreement called for 200 million marks, 100 million of which could be made available immediately.5 The list of investments of common interest included all the principal Greek proposals: projects at Ptolemais for lignite mining and electrical power 2 Knoke to Reinhardt, 25/7/1953, BAK, B102/57976. 3 Representative snapshots from the event can be seen in the ERT television series

MAPTΥ PIEΣ (“Remembrances”), in particular the episode “Mαρτυρ´ιες τoυ Σ πνρoυ ´ Mαρκεζ´ινη” (“Remembrances of Spyros Markezinis”; accessible through: https://archive. ert.gr/70161/; last retrieved on 14 November 2020). This euphoric atmosphere was in sharp contrast with the symbolic policy of distrust toward the Germans, adopted in other European countries—not to mention the carefully devised “choreography of distance” that had prevailed in the Luxembourg conference which resulted in the signing of the Reparations Agreement between Israel and the FRG a few months before. See D. Diner, Rituelle Distanz: Israels deutsche Frage (Munich: Deutsche Verlags-Anstalt, 2015); and H. O. Frøland, “Distrust, Dependency, and Détente: Norway, the Two Germanys and ‘the German Question’, 1945–1973,” Contemporary European History 15.4 (2006), 495– 517. I am grateful to one anonymous reviewer for generously bringing this point to my attention. 4 BMWi/VB5b, Vermerk: Deutsch-griechische 29/10/1953, BAK, B102/5797.

wirtschaftliche

Zusammenarbeit,

5 Der Bundesminister für Wirtschaft, Runderlass Aussenwirtschaft Nr. 97/53 vom 13. November 1953: Griechenland; Abkommen über eine wirtschaftliche Zusammenarbeit zwischen der Bundesrepublik Deutschland und dem Königreich Griechenland (and the attached documents), BAK, B102/57976.

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generation; a nearby factory to produce nitrogen fertilizers; expansion of the Larymna nickel mines; establishment of an alumina plant; construction of an oil refinery and shipbuilding facilities. Also among the listed investments was an expansion of the Greek telecommunications network6 : this might not be considered a productive investment in the narrowest sense, but an argument could be made that it would assist in the modernization of Greece’s infrastructure. Though the Protocol accompanying the agreement did not dig into the details, this particular planned investment explains, in part, the unexpected doubling of German commitments during the negotiations’ final stage. In early July of 1953, Markezinis had received a much-hoped-for invitation from Erhard, the German minister of economy. Erhard had asked Markezinis to pay a visit to West Germany, specifying, as the subject for discussion, the deepening of economic relations between the two nations. Erhard expressed his personal interest in the talks and suggested that the Greek minister come to Germany just after the upcoming German elections—scheduled for September—had taken place: that way, Erhard himself would have time to participate.7 In fact, the timing of such a visit had been a subject of discussion within the German government long before Erhard’s letter had been written. Back in March, Markezinis had spoken with Dr. Hermann Reinhardt, a high-ranking official in Erhard’s ministry: the two men had discussed possibilities for expanding GrecoGerman economic cooperation beyond simple trade agreements.8 In advance of Markezinis’s trip to the United States, the German embassy in Athens had leaked Bonn’s interest in the Greek development program. This leak was intended to strengthen the Greeks’ negotiating position in America, but the Germans judged that a Greek visit to Bonn would be

6 Der Bundesminister für Wirtschaft, Runderlass Aussenwirtschaft Nr. 97/53 vom 13. November 1953: Griechenland; Abkommen über eine wirtschaftliche Zusammenarbeit zwischen der Bundesrepublik Deutschland und dem Königreich Griechenland (and the attached documents), BAK, B102/57976. 7 Erhard to Markezinis, 2/7/1953; and Markezinis to Erhard, 11/7/1953, BAK, B102/57976. 8 Knoke to Reihardt, Unterredung Ministerialdirigent Dr. ReinhardtKoordinationsminister über die Intensivierung der deutsch-griechischen Wirtschaftsbeziehungen, insbesondere Beteiligung an Vorhaben des griechischen Aufbaues, 28/3/1953; and the attached Knoke, Aufzeichnung, 28/3/1953, BAK, B102/57976.

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appropriate at a later date, after the outcome of the Greek visit to the United States had become known.9 According to a document produced by the German embassy in Athens shortly after Markezinis’s return from America, powerful political and economic circles in the Greek capital believed that the government could not abandon the prospect of working closely with Germany if it wanted its development program to succeed. Those same circles thought it desirable to achieve coordination between the American and West German contributions to the reconstruction of Greece. German industry could participate in this process, the document pointed out, by providing resources for particular investment projects in the form of plant and equipment.10 Although their names were not mentioned, the “circles” referred to in the document surely included both Bodossakis and Voulpiotis. While Markezinis was still in America, another visit, back in Greece, had attracted a good deal of attention. In this case, the visitor was not a member of a foreign government: he was none other than Berthold von Bohlen und Halbach, scion of the Krupp family, heading a delegation from the famous German company that had come to Greece on 14 May in response to an invitation from Bodossakis.11 The latter, who now found himself in control of Europe’s most important nickel reserves outside the Eastern Bloc, had already been a recipient of aid under the Marshall Plan and was now seeking strategic alliances that would allow him to respond to the new conditions.12 His contacts with 9 Auswärtiges Amt to BMWi, Besuch des Koordinationsministers Markezinis in den USA und Kanada und beabsichtiger Besuch in der Bundesrepublik Deutschland, 7/5/1953; and the attached Knoke, Bericht, 24/4/1953, BAK, B102/57976. 10 Auswärtiges Amt to BMWi, Reise des Koordinationsministers Markesinis in die Vereinigten Staaten, 6/6/1953 and the attached Knoke, Reise..., 22/5/1953, BAK, B102/57976. 11 Kutscher (Auswärtiges Amt) to Reinhardt (Bundesministerium für Wirtschaft), Besuch von Repräsentanten der Firma Friedrich Krupp A.G., Essen, in Griechenland, 13/6/1953; and the attached Knoke to Auswärtiges Amt, Besuch..., 28/5/1953, BAK, B102/57976. 12 Draper (Special Representative in Europe/Paris) to Mutual Security Agency/Washington, Krupp-Renn Process for Larymna Nickel, Greece, 25/11/1952, National Archives and Records Administration, College Park, MD (NARA), RG469, Series: Decimal Files 1948–1954, UD360, Box 37: 7.22 Non Ferrous Metals 1952, 1953; and Longman (United States Operations Mission/Greece-Industry Division), Memorandum: Bodossakis Interests, 21/11/1956, NARA, RG469, Series: Subject Files 1948–1957, P256, Box 1: (I)-G-2 Economic conditions. Bodossakis interests.

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Krupp were not concerned only with nickel mining. Alfried Krupp, head of the Krupp dynasty, had been convicted at Nuremberg before being amnestied in 1951. The company was now excluded from involvement in the German steel industry and was therefore looking abroad for new investment opportunities.13 Krupp had shown interest in the expansion of Greece’s energy infrastructure—in particular, the use of lignite deposits at Ptolemais for electrical generation. This was a project which Bodossakis was vying to undertake. Ptolemais had long been the keystone of Greece’s development programs.14 Without this investment, none of the energy-intensive industries under discussion could move forward. The first company to undertake the project, although it had received the largest loan granted in Greece under the US aid program, had confined itself to ordering machinery from West Germany without taking any further action.15 In a March 1953 discussion between Markezinis and Reinhardt on extending Greco-German economic cooperation beyond the realm of trade, the Germans expressed an interest in the investment. The visit of Krupp executives to Greece in May put this interest on a new footing and offered hope that the inertia surrounding the project could at last be overcome. One month later, in a discussion with Bodossakis at the West German embassy in Athens, Knoke set forth the German government’s position on the investment: if Bodossakis was to take over the project in partnership with Krupp, he would need to secure the participation of the German companies that had previously been involved. The discussion also extended to other elements of the Greek development program, such as 13 H. James, Krupp: A History of the Legendary German Firm (Princeton, NJ: Princeton University Press, 2012), 226–247. 14 Watts (Lignite section/ECID) to Sowles (Deputy Director/ECID), Lignite Development, 2/9/1949, NARA, RG469, Series: Records Relating to Strategic Materials, 1948–53, UD1228, Box 2: Commodities-Mining-Lignite (1949/50/51)–1952. 15 Calvert (MSA/G), Conversations in connection with Ptolemais Lignite Development, 26/6/1952, NARA, RG469, Series: Records Relating to Strategic Materials, 1948–53, UD1228, Box 2: Commodities-Mining-Lignite (1949/50/51)–1952; Eλληνoαμερικανικη´ Eταιρ´ια ⎡ενικων ´ ⊓ρo¨ιo´ ντων Λιγν´ιτoυ to Ministry of Coordination, ⊓ρoωθησιν ´ εκτελšσεως šργoυ ⊓τoλεμα ΐ δoς, 12/12/1952; and Hollander (auditor) to Trett (Central Lending Commission), Eλληνo-Aμερικανικη´ Eταιρε´ια ⎡ενικης ´ Eκμεταλλενσεως ´ Λιγν´ιτoυ, 10/10/1953, Economic Development Financing Organization (EDFO) Archive, Piraeus Bank Group Cultural Foundation Historical Archives, Athens (PIOP HA), A2Σ 2ϒ7/73017, subf. 3 (K28). For more information on the orders of machinery, see subf. 8 (K29).

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the construction of a hydroelectric dam on the Acheloos and the establishment of facilities for alumina and aluminum production, but Bodossakis considered these projects unrealistic.16 Markezinis’s acceptance of Erhard’s invitation would increase the significance of the business networks of which Bodossakis and Voulpiotis were part, and which were now solidifying their connections with the highest levels of West German economic and foreign policymaking. In late August, two months before Markezinis’s visit to Bonn, Bodossakis and von Bohlen had visited the Federal Ministry of Economy. Bodossakis made it clear that he was on a semiofficial mission to conduct negotiations on behalf of the Greeks regarding the Ptolemais project. As it turned out, Reinhardt raised wider issues with Bodossakis, reminding him of the importance that the German government attached to the return of German assets that had been confiscated by Greece after the war. Reinhardt also made it clear that it was the Greeks’ responsibility to seek out companies that would be interested in using German credits to participate in the Greek development program.17 This was an important point. The logic of the system of export credits, although it did not exclude the possibility of open invitations to tender, in practice favored the noncompetitive granting of contracts to well-placed West German companies or Greco-German joint ventures.18 The way the system operated was perhaps clearest in the case of the contracts sought by Siemens and Telefunken. Voulpiotis represented both of these firms. Acting as Markezinis’s emissary, he held a series of meetings in Bonn at the same time that Bodossakis was having his own discussions there. Just as Bodossakis was acting to some extent as a representative of the Greek government even as he negotiated a private business deal, Voulpiotis’s conversations too dealt not only with the contracts in which he had an immediate interest but also with preparations for the Greek minister of coordination’s upcoming visit. But in contrast to the publicity that surrounded Krupp’s prospective

16 Knoke, Aufzeichnung: Ptolemais, 5/6/1953, BAK, B102/57976. 17 BMWi to Auswärtiges Amt, Vermerk, 24/8/1953; and Bodossakis to Reinhardt,

5/9/1953, BAK, B102/57976. 18 Allardt (Auswärtiges Amt) to BMWi, Griechische Ausschreibungen, 3/1/1953; and the attached Knoke to Auswärtiges Amt, Griechenland—3-jähriges Entwicklungsprogramm, 17/9/1953, BAK, B102/57976.

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involvement in the Greek economy, the negotiations for the Siemens and Telefunken contracts took place in the strictest secrecy.19 When the Greek delegation arrived in Germany, its schedule—covering ten whole days—seemed to represent a departure from normal diplomatic protocol.20 Instead of meeting immediately with the most senior among his hosts in the West German capital, Markezinis began his visit in Hamburg, where he met with representatives of the German tobacco industry and visited the Deutsche Werft shipyard. Among his other stops before arriving in Bonn were (West) Berlin and Munich, where the Greek delegation held meetings with representatives of Telefunken and Siemens, respectively.21 The talks with Telefunken concerned a contract for overhauling the Greek radio broadcast system, while those with Siemens dealt with the expansion and modernization of the Greek telephone network. The radio contract was a relatively simple matter. Internal documents from Telefunken noted that it was a very attractive opportunity, since a small investment of $1.2 million (4.8 million marks) would yield an annual profit of $200,000 for the company, as well as significant political benefits for Germany.22 In the case of the telephone contract, on the other hand, Siemens’s share of the investment, financed through the system of export credits, would reach $14 million (55.6 million marks).23 Markezinis asked for this amount to be added to the German government’s initial forecasts of the quantity of export credits that it would be able to provide—this, he claimed, would enable him to face the criticism that he would receive back in Greece for his noncompetitive

19 Knoke to Reinhardt, 17/10/1953, BAK, B102/57976. 20 In fact, Voulpiotis claimed later that the visit’s unconventional itinerary was his

own idea and that Siemens and Telefunken had covered the Greek delegation’s expenses in West Germany prior to its official visit in Bonn. See ⊓ρακτικα´ της Eξεταστικης ´ των ⊓ραγματων ´ Eπιτρoπης ´ επ´ι των γερμανικων ´ πιστωσεων: ´ Σ υνεδρ´ιασις 11η της 29ης Mαρτ´ιoυ 1955, Konstantinos Papakonstantinou Archive (KPA), Konstantinos G. Karamanlis Foundation, Athens (KKF), F12. 21 Besuch des Königlichen Griechischen Koordinationsministers Markezinis in Deutschland: Programm, 31/10/1953, BAK, B102/57976. 22 Telefunken, Notiz: Erwerb einer Rundfunkkonzession in Griechenland durch die Firma Telefunken, 5/11/1953, BAK, B102/57976. 23 Siemens & Halske AG / Direktion, Anlässlich des Besuches Sr. Exzellenz, des Herrn Koordinationsministers Markezinis und Sr. Exzellenz, des Herrn Handelsministers Kapsalis... Rahmenvereinbarung getroffen:..., 6/11/1953, Siemens Historisches Institut, Berlin (SHI), Siemens Archiv, 4. Lr 302–33.

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granting of the contract to Siemens. Siemens had no objection, provided that the German government authorized the commitment of the necessary funds. In accepting Markezinis’s request, however, the company was careful to stress that it also wished to participate in Greece’s electrification program.24 In the congenial atmosphere that had developed, all these feverish consultations bore fruit. Among the official documents that accompanied the agreement were confidential letters that had been exchanged between Markezinis and Erhard. In these letters, the Greeks committed to awarding the aforementioned contracts to Telefunken and Siemens on a noncompetitive basis.25 The stage had thus been set for the success of Voulpiotis’s efforts, but the man himself remained behind the scenes. He was present in the corridors of office buildings and at the dinners hosted by the Siemens people in Munich,26 but he was not at the negotiating table.27 This secrecy did not bode well for what was to come. For the time being, however, the Greco-German rapprochement seemed like a game that everyone would win: The Greek government could claim that its unpopular stabilization policy had paid off, securing much-needed capital that would permit the Greek economy to transition smoothly into the post-Marshall era. Greek industry would at last be able to transcend the restrictive framework imposed by the priorities of the American Mission in Athens. The West German government had reopened the Greek market to German companies and had also

24 Knoke to Witzleben (Siemens & Halske AG / Generaldirektor), 26/10/1953; Lehmann and Goeschel (Siemens- Schuckertwerke AG) to Kapsalis (alternate minister of Coordination), 10/11/1953; and Lamberts (Siemens & Halske AG-Siemens & Schuckertwerke AG / Zentralverwaltung Ausland), Besprechungsprotokoll: Besuch der Minister Markezinis und Capsalis in München am 7.11.1953, 30/11/1953, SHI, Siemens Archiv, 18013/18014. 25 Der Bundesminister für Wirtschaft, Runderlass Aussenwirtschaft Nr. 97/53 vom 13. November 1953: Griechenland; Abkommen über eine wirtschaftliche Zusammenarbeit zwischen der Bundesrepublik Deutschland und dem Königreich Griechenland (and the accompanying documents), BAK, B102/57976. 26 Tisch Ordnung (undated), SHI, Siemens Archiv, Berlin, 4. Lr 302–33. 27 Siemens & Halske AG-Siemens & Schuckertwerke AG / Zentralverwaltung Ausland

to Ernst von Siemens, Griechischer Ministerbesuch, 4/11/1953; and the attached Programm für den griechischen Minister-Besuch in der Zeit vom 7. bis 8.11.1953, SHI, Siemens Archiv, Berlin, 4. Lr 302–33.

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ensured—as a result of one of the agreement’s provisions—the restoration of confiscated German assets. West German industry was winning lucrative contacts in an emerging market. And, last but not least, the intermediaries who had worked to secure this agreement would be rewarded as a result of the roles they played in the sectors that were being opened to new investment: lignite, nitrogen fertilizers, and nickel in the case of Bodossakis; telephone and radio communications in the case of Voulpiotis.

CHAPTER 6

Siemens: From the Rally to the ERE

I would not wish to conceal the fact that Mr. Voulpiotis has the reputation among the Greek public of a cold-blooded man who is not burdened by sentiment and who would step over dead bodies if necessary. —Knoke (German embassy in Athens) to Bundeswirtschaftsministerium, 25 July 19531 Furthermore, everything you write and the thoughts behind your words are for us an ongoing proof of your firm allegiance to the House of Siemens. I can once again assure you that our feelings of friendship toward you are as plain as they could possibly be and that we will never forget your loyalty and your devoted service. —Tacke to Voulpiotis, 13 January 19542 The Rally has attained power primarily through its appeal to the common people, but during its two years in office two fundamental weaknesses have alienated it from the masses who were once its supporters. First, the background and temperament of the individuals who have directed its economic policy—as well as the party’s specific political actions—have 1 Knoke (embassy of the FRG in Athens) to Reinhardt (Bundeswirtschaftsministerium), 25/7/1953, Bundesarchiv Koblenz (BAK), B102/57976. 2 Tacke (Siemens) to Voulpiotis (Telepol), 13/1/1954, Siemens Historisches Institut, Berlin (SHI), Siemens Archiv, 18013/18014.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_6

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positioned it unmistakably on the Right. Second, the way this economic policy has been implemented has created the impression that it is serving not just powerful interests but often disreputable ones. —Karamanlis to Papagos, 1 December 19543

The Greek Rally’s overwhelming victory in the 1952 elections did nothing to dispel the passions that had long ruled the Greek political scene. Despite the guiding presence of Papagos (whose health was rapidly deteriorating), the party was still an aggregate of personalities and interest groups, all with their own ambitions and a common propensity for intrigue. But the news that made the rounds in the capital in the days before August 15, 1955 (the Feast of the Assumption of the Virgin), was something special even by Greek standards. It was not every day that the front pages carried high-profile allegations that a deputy minister had demanded money in exchange for rescuing a contract from bureaucratic limbo.4 To make matters worse, this charge came from a representative of Siemens, one of the world’s largest and most prestigious multinational firms. Few could have imagined the far-reaching consequences to which Voulpiotis’s desperate maneuver would lead. Having already put Markezinis out of contention in the struggle to succeed Papagos, the fallout from the Siemens contract would now deal a crippling blow to the leadership ambitions of Foreign Minister (and Deputy Prime Minister) Stefanos Stefanopoulos. At the same time, it would permit the emergence of a powerful new leader within the battered Rally Party—the dynamic Minister of Public Works, Konstantinos Karamanlis. The festive atmosphere with which Markezinis was greeted upon his return from Germany very quickly began to fade. The secrecy surrounding the negotiations with Siemens had gone well beyond what pragmatism demanded, imposing constraints on Markezinis and Voulpiotis, and altogether excluding the prime minister and the senior members of his government. In fact, the latter had not even been informed of the existence of the confidential letters that the Greek minister of coordination and the German minister of economics had exchanged.

3 K. Svolopulos, ed., Kωνσ τ αντ ι´ν oς Kαραμανλης ´ : Aρχ ε´ιo, γ εγ oν o´ τ α και κε´ιμενα, 12 vols. (Athens: Konstantinos G. Karamanlis Foundation and Ekdotiki Athinon, 1992– 1997), vol. 1, 213–214 (and n.148). 4 See, for example, Eleftheria, 14/8/1955.

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What exactly were the sticking points in the agreement? In March 1953, in response to an invitation to tender from the newly established Hellenic Telecommunications Organisation (OTE), Siemens had submitted to the Greek government a proposal for the provision of telephone equipment and installation of the associated lines. The prices quoted by the German company at that time, in its effort to underbid its competitors, were much lower than those prevailing on the international market. In November of the same year, during Markezinis’s visit to the company’s Munich headquarters, it was agreed that Siemens would be granted the telephone contract, but no final determination as to prices was made. The discussions had chiefly concerned the terms of the loan which Siemens would arrange, on behalf of the Greeks, with a German credit institution. West German market prices for telecommunications equipment were used as a basis for calculating the amount of the loan, and the Greek government would be able to ask for a discount if those prices exceeded the prices available on the British or Swiss markets. It was this provision that created the difficulty. These benchmark prices were much higher than the prices quoted by Siemens in March, but also much lower than the prices that the company wanted to be paid in exchange for its participation in the system of West German export credits for Greece.5 The need to obtain the Greek government’s commitment to such a one-sided agreement perhaps made concealment of its terms seem like an attractive solution to two amoral individuals like Markezinis and Voulpiotis (both of whom had—each for his own particular reasons—staked their futures on West German export credits). The Germans, on the other hand, saw things somewhat differently. Siemens regarded the payment of higher prices as something like the Greek government’s moral obligation—tangible compensation for what Siemens executives described as “a

5 Lamberts (Siemens), Besprechungsprotokoll: Besuch der Minister Markezinis und Capsalis in München am 7.11.1953, 30/11/1953; Kerschbaum and Tacke (Siemens & Halske) to Capsalis, 9/11/1953; and the attached Siemens & Halske AG / Direktion, Anlässlich des Besuches Sr. Exzellenz, des Herrn Koordinationsministers Markezinis und Sr. Exzellenz, des Herrn Handelsministers Kapsalis... folgende Vorschläge... formuliert:..., 9/11/1953; Mayer (Siemens Hellenic Electrotechnical Comp.) to Siemens & Halske, Direktionsschreiben v.9.11.53 an die Herren Koordinationsminister Markezinis und Handelsminister Kapsalis, 4/12/1953; Lerchenfeld (Embassy of the FRG in Athens/Director of the Economics Department) to Tacke (Siemens/Stellvertretendes Vorstandsmitglied), 5/12/1953; Schubert (Siemens) to Mattei (Siemens), Griechenland, 7/12/1953, Siemens Historisches Institut, Berlin (SHI), Siemens Archiv, 18013/18014.

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service unique in the history of our Company”6 (i.e., their participation in the export credit program). In fact, company executives took issue with the generosity displayed by Gerd Tacke, the Siemens manager in charge of Greece,7 and private lending institutions in West Germany expressed more general reservations concerning the size of the loan and the terms under which it was to be repaid.8 Reinhardt, as undersecretary (Ministerialdirigent ) of the West German Ministry of Economy, took a more neutral position. Recognizing that the proceedings had been unseemly, he went along with the plan to hide the substance and binding nature of the agreement from the Greek prime minister, and he even scolded Voulpiotis when, in October 1954—as we shall see—the latter finally told Papagos about the letters’ existence.9 Uncertainty as to the prices for the supply and installation of the required telecommunications equipment would not be resolved easily. Technically, the responsibility for determining an acceptable cost fell to a committee of Greek officials, while the final decision was subject to the agreement of OTE management and the approval of the Ministry of Transportation, the prime minister, and the Ministerial Council. The complications involved would very soon produce friction even among those who had been the moving spirits behind the agreement. In December 1953, the committee responsible for evaluating Siemens’s price proposals issued a discouraging report which emphasized the high cost of procuring the equipment.10 In January, at a meeting of the Ministerial Council to discuss the contract, Markezinis failed to obtain approval of his proposals for the next stages of the negotiations—which, unbeknownst 6 Tacke (Siemens) to [Voulpiotis], undated (handwritten letter and typed copy of Tacke’s response to a letter from Voulpiotis dated 27/8/1954), SHI, Siemens Archiv, 18013/18014. 7 Ibid. 8 Pferdmenges (Bundesverband des privaten Bankgewerbes) to BMWi, 27/11/1953,

BAK, B102/57218. For the Greek reaction to these sometimes contradictory reports, see ανθ´oπoυλoς-⊓αλαμας ´ (GMFA) to ϒπoυργε´ιo Συντoνισμoν, ´ 17/12/1953; Στεϕανoυ ´ (Greek Ambassador in Bonn) to Foreign Ministry, 16/12/1953; and the attached newspaper articles, DHA-MFA, Central Service: 1953, F35, 2; and Στεϕανoυ ´ to Foreign Ministry, 27/1/1954, Central Service: 1955, F23, subf. 5. 9 Voulpiotis to Reinhardt, 3/11/1954, BAK, B102/57218. 10 N´ικoλης, ⊓εσμαζ´oγλoυ, Σαμαρας, ´ [ ⎡νωματευσις] ´ επ´ι των πρoτασεων ´ της

Siemens, 12/1953, Konstantinos Papakonstantinou Archive (KPA), Konstantinos G. Karamanlis Foundation, Athens (KKF), F15, subf. 2.

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to the other ministers, had been agreed to in advance with Voulpiotis. After this meeting, Voulpiotis let Munich know that Markezinis’s position was hanging by a thread, since he could not afford to give any ground on the question of prices.11 At the beginning of March 1954, with the impasse still unbroken, Voulpiotis arrived at what he thought was the most promising means of resolving the situation: if Markezinis’s position vis-à-vis his rivals on the Ministerial Council was really as weak as it appeared, then, in order to force Papagos to accept his recommendations on the Siemens contract, the minister of coordination should threaten to resign.12 In early April, Minister of Coordination Spyros Markezinis, widely regarded as Papagos’s likely successor, submitted his resignation. This resignation came as a complete surprise to the general public. In the days that followed, both pro-government newspapers and the opposition press offered every possible explanation—some credible, others incredible—for this sudden turn of events.13 Unmentioned among all these explanations were the frictions produced by the complexities of the Siemens contract. And why should anyone mention them? No one understood, even when Markezinis actually resigned, that the government was sitting on a bomb: in exchange for a loan from the West German financial markets, it was on the verge of agreeing to a contract that was prejudicial to the public interest. Recognition of this fact would be delayed a little longer by the appointment of Thanos Kapsalis as the new minister of coordination. Kapsalis was Markezinis’s closest associate: he had been present on the trip to West Germany and was perhaps the only other person who was privy to the secret commitments that had been made. Nevertheless, the spur-of-the-moment14 execution of a plan—the threat of Markezinis’s resignation—that Voulpiotis had devised as a final means of pressure 11 Tazedakis (OTE legal advisor) to Siemens & Halske AG-Siemens & Schuckertwerke AG/Zentralverwaltung für Ausland, 12/1/1954; and Voulpiotis to Halske/Vorstand, 13/1/1954, SHI, Siemens Archiv, 18013/18014. 12 Mayer (Siemens Hellenic Electrotechnical Comp.) to Schwarz (Siemens & Halske), 1/3/1954, SHI, Siemens Archiv, 18013/18014. 13 D. I. Karageorgos, «H διαδρoμη ´ τoυ Eλληνικoν´ Συναγερμoν´ απ´o την ι´δρυση´ τoυ ως την αδρανoπo´ιηση´ τoυ, 1951–1956» (PhD diss., University of Athens, 2015), 265–278. 14 It is not clear why Markezinis opted to resign at this particular moment. Nevertheless, Voulpiotis–whose credibility is, of course, limited–had informed Munich well before Markezinis’s resignation that he (Voulpiotis) had finally reached a deal on the

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only about a month before had already lit the fuse on a new, much more serious government crisis. In the spring of 1954, few would have wagered that the rift between Papagos and Markezinis was irreparable. Papagos kept Markezinis’s close associates in control of the ministries that oversaw the economy15 precisely in order to send the message that he would continue the policies undertaken by his former minister of coordination. But time was running out. The Siemens contract was going nowhere. In the summer, when Papagos reciprocated Adenauer’s visit to Greece by traveling to Bonn, Erhard raised the issue with Kapsalis. Instead of answering, Kapsalis suggested that the matter should be taken up with the prime minister.16 By autumn, the Greek government was inclined to deal with the situation through an international invitation to tender.17 In October, with Erhard’s visit to Athens on the horizon, the German ambassador approached Stefanopoulos, emphasizing the German government’s belief that to solicit bids would be to violate Greece’s commitment to Siemens. Concurrently, Voulpiotis spoke to Papagos, apprising him of the details of the case—including Kapsalis’s participation in the collusion.18 The crisis caused by the revelation of the commitments made by the Greek government without the knowledge of its prime minister would soon assume unprecedented proportions. Yet the resulting collision between the Rally’s two factions also contained elements of the theater of the absurd. In a spectacular role reversal, Papagos, who had been unaware of Markezinis and Erhard’s correspondence and who wished to obtain proof

contract during Adenauer’s visit to Greece in mid-March 1954. Voulpiotis was supposedly going to inform Siemens about the details of this deal when he visited Germany, but Markezinis’s sudden resignation caused him to postpone his visit. See Voulpiotis to Verlohr (Siemens & Halske), 13/3/1954; Verlohr to Voulpiotis, 15/3/1954; and Mattei to Voulpiotis, 19/3/1954, SHI, Siemens Archiv, 18013/18014. 15 Apart from Kapsalis, who replaced Markezinis as minister of coordination, Konstantinos Papagiannis also remained in the government as minister of finance. 16 Allardt (Auswärtiges Amt), Vermerk: Deutsch-Griechische Wirtschaftsbesprechungen am 1.7.1954, von 11:30 bis 13 Uhr, 2/7/1954, BAK, B102/57978. 17 Lamberts, Gedächtnisnotiz: Griechenland. Long Term-Geschäft S&H, 14/9/1954, SHI, Siemens Archiv, 18013/18014. 18 Voulpiotis to Papagos [German translation of the original letter], 8/11/1954; Voulpiotis to Kordt, 12/11/1954; and Voulpiotis to Engels (Telefunken), 29/11/1954, Deutsches Technikmuseum, Historisches Archiv, Berlin (DTM/HA), FA AEG-Telefunken, I.2.060Ü-GS2057, Nr. 2144.

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of Markezinis’s machinations, asked the German ambassador to confirm that commitments had been made in the letters. Meanwhile Markezinis, seeking to refute the accusations against him, denied the binding nature of the letters he had exchanged with Erhard. Markezinis blamed the whole affair on Voulpiotis and, in order to demonstrate the flimsiness of the Siemens representative’s claims, he now made a point of bringing up Voulpiotis’s personal history under the occupation.19 Events moved so quickly that even the Germans found themselves confused. On November 15, just as Erhard was crossing from Yugoslavia into Greece, the job of minister of coordination—and thus the responsibility for conducting economic negotiations on behalf of the Greek government—was assumed by Panayis Papaligouras. Changing trains for Athens at the railway station in Thessaloniki, Erhard found the journalists waiting for him and stated, in answer to their questions, that Markezinis’s letters bound the Greek government morally but not legally. Shortly afterward, when he finally arrived at Athens’ Larissa Station and was informed that the German ambassador had spoken of a legal commitment by the Greek government, Erhard began the process of revising his initial statement.20 Ultimately, in the official exchange of letters with Papaligouras that concluded his visit to Greece, Erhard arrived at a means of resolving the issue: he confirmed that the letters he had exchanged with Markezinis concerning the assignment of the telephone contract to Siemens were indeed binding, but then stated that he was releasing the Greek government from its commitments. At the same time, however, the Greek government was once again committing itself to negotiate with Siemens, with the difference that the negotiations would now be conducted on the basis of internationally competitive prices.21 The contradictory messages from the German side were not just reflexive responses to the Greek government’s sudden reversal. To some 19 Mayer to Siemens & Halske and Siemens Schuckertwerke, Politische Entwicklung, 17/11/1954, SHI, Siemens Archiv, 18013/18014; and Karageorgos, «H διαδρoμη´ τoυ Eλληνικoν´ Συναγερμoν». ´ 20 Engels, Aktennotiz: Griechenland. Unterredung am 20.12.54 mit Dr. Lühr, am 22.12.54 mit Oberregierungsrat Schellpeeper, Prof. Dr. Müller-Armack, Ministerialdirektor Reinhar[d]t, 27/12/1954, DTM/HA, FA AEG-Telefunken, I.2.060Ü-GS2057, Nr. 2144. 21 Der Bundesminister für Wirtschaft, Runderlass Aussenwirtschaft Nr. 107/54 vom 1. Dezember 1954: Griechenland; Verhandlungsprotokoll vom 19. November 1954 (and the attached documents), BAK, B102/57978.

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extent they were the product of more farsighted calculations, but they also reflected compromises among the different views prevailing within the Ministry of Economy. One of Erhard’s advisers, Alfred Müller-Armack,22 had been the person behind the decision to abjure the binding nature of the Erhard-Markezinis letters. Reinhardt, on the other hand, seemed to distance himself from this approach.23 Ultimately, Erhard’s decision to offer the Greek minister some room to maneuver prioritized the larger issues at stake in Greco-German relations above the particular ambitions of a single company. At the same time, it ensured that Siemens would not be shut out of the Greek market. In Athens, the political ferment was reaching its peak. In December, Papagos went forward with a sweeping reshuffle of his government that reflected the new balance of power within the Rally. Stefanopoulos and Kanelopoulos, the foreign and defense ministers, respectively, were both promoted to the status of deputy prime minister while maintaining their portfolios. Papaligouras retained his position at the sensitive Ministry of Coordination. Konstantinos Karamanlis expanded his authority: he already oversaw the Ministry of Public Works, and he now took charge of the Ministry of Transportation as well.24 This last development was to prove decisive. Unexpectedly, Voulpiotis would emerge stronger from the November crisis. In the summer of 1954, executives at the German companies he represented were wondering whether he still had access to government

22 Müller-Armack was head of the political section of Federal Ministry of Economy under Erhard, and they both adopted neoliberal economic ideas. Müller-Armack would, a little later, manage to act as a bridge between the conflicting views of Chancellor Adenauer and Erhard regarding Germany’s European policy. See A. Müller- Armack, Auf dem Weg nach Europa (Stuttgart: Poeschel, 1971); R. Ptak, Vom Ordoliberalismus zur sozialen Marktwirtschaft: Stationen des Neoliberalismus in Deutschland (Opladen: Leske und Budrich, 2004), 85–86; and Q. Slobodian, Globalists: The End of Empire and the Birth of Neoliberalism (Cambridge, MA: Harvard University Press, 2018), 189–191. 23 Voulpiotis to Engels (Telefunken), 29/11/1954; and Engels, Aktennotiz: Griechenland. Unterredung am. 20.12.54 mit Dr. Lühr, am 22.12.54 mit Oberregierungsrat Schellpeeper, Prof. Dr. Müller-Armack, Ministerialdirektor Reinhar[d]t, 27/12/1954, DTM/HA, FA AEGTelefunken, I.2.060Ü-GS2057, Nr. 2144. 24 For a detailed account of developments within the Rally, see Karageorgos, «H διαδρoμη´ τoυ Eλληνικoν´ Συναγερμoν»; ´ and E. Hatzivassiliou, H αν ´ oδ o ς τ o υ Kωνσ τ αντ ι´ν oυ Kαραμανλη´ σ τ ην εξ oυσ ι´α, 1954–1956 (Athens: Patakis, 2000).

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officials.25 As it turned out, however, his disclosure of the ErhardMarkezinis letters was seen—through the distorting lens of the Rally’s internal politics—as entirely the result of Markezinis’s scheming. The responsibility of Siemens and its Greek representative faded into the background. Furthermore, having helped Stefanopoulos to eliminate his chief rival within the party, Voulpiotis could once again count on an important friend in the government.26 In addition, executives at Telefunken believed that the appointment to the Ministerial Council of Georgios Rallis—son of Ioannis Rallis, who had been prime minister during the occupation— had strengthened the government’s pro-German tendency despite the removal of Markezinis. Voulpiotis claimed that his own relationship with Georgios was like that of a father with his son.27 It was against this backdrop that a designated inter-ministerial committee approved a draft of the telephone contract in mid-June 1955.28 The OTE board of directors gave its consent on 27 June. That very same day, Panayis Papaligouras, minister of coordination, sent a letter to Deputy Minister of Transportation Konstantinos Papakonstantinou, encouraging him to sign the contract. Papakonstantinou, acting on instructions from Karamanlis, delayed signing the contract until he could complete an audit of the relevant financial data. To this end, he had dispatched a ministry official to Egypt to compare the terms under which a similar contract had been granted to Siemens there. Papakonstantinou also believed that a proposal submitted to OTE by the Swedish company Ericsson (in the context of the March 1953 tender) had been more advantageous than that of Siemens.29 Faced with the likely ratification of the Siemens contract and with Papaligouras’s pressure on Papakonstantinou, Karamanlis submitted his 25 Engels and Heyne, Notiz: Griechenland, 7/7/1954, DTM/HA, FA AEGTelefunken, I.2.060Ü-GS2887, Nr. 2974. 26 Voulpiotis to Engels, 22/2/1955; and Ahlbrecht (AEG) to Heyne (Telefunken), 12/5/1955, DTM/HA, FA AEG- Telefunken I.2.060Ü-GS2887, Nr. 2974. 27 Engels, Aktennotiz: Anruf Vulpiotis am 29.6. aus München. Konzession Griechenland, 29/6/1954, DTM/HA, FA AEG-Telefunken, I.2.060Ü-GS2887, Nr. 2974. 28 Συνεδρ´ιασις υπ’ αριθ. 403: Aπ´oσπασμα εκ των πρακτικων ´ τoυ Διoικητικoν´ Συμβoυλ´ιoυ τoυ Oργανισμoν´ Tηλεπικoινωνιων ´ Eλλαδoς, ´ 27/6/1955, KPA-KKF, F15, subf. 1; and a later review of the case by Siemens, Notiz: Voulpiotis. Personen- und Zeittafel, 10/2/1969, SHI, Siemens Archiv, 18013/18014. 29 Mayer to Siemens & Halske / Direktion, Tele[f]ongeschäft, 27/8/1955, SHI, Siemens Archiv, 18013/18014; Muscheidt (Siemens & Halske / Aussenstelle) to Erhard,

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resignation to the prime minister on 2 July.30 Papagos refused to accept the resignation—a development that sent the contract back into limbo. Nevertheless, the situation had already created a split among the supporters of First Deputy Prime Minister Panagiotis Kanellopoulos, who was one of the contenders for leadership of the Rally. Generally reckoned among these supporters were both Karamanlis and Papaligouras.31 So when Voulpiotis spoke to Stefanopoulos at the beginning of August concerning a bribe that—he alleged— Papakonstantinou was demanding from Siemens, the stars seemed to be on his side. Stefanopoulos, pleased by Markezinis’s departure, perhaps calculated that he could now eliminate yet another rival within the party32 —in this case, the up-and-coming minister of public works and transportation, Karamanlis. Even if he could not attack Karamanlis directly, he could strike at him through Papakonstantinou, and he did not hesitate to urge Voulpiotis to approach Papagos directly.33 This time, however, the outcome would be different. Karamanlis had now accumulated much more power within the party than Markezinis had ever possessed,34 and he would prove to be a tough opponent. On August 4, 1955, Voulpiotis sent Papagos two letters in which he claimed that Papakonstantinou, acting through a third party, had asked Siemens for a personal donation of $100,000. But although Papakonstantinou submitted his resignation, the prime minister did not accept

Griechenland-Telefongeschäft, 19/9/1955; and the attached Mattei to Schwarz, Preisvergleich: Angebot Griechenland zu Ägypten ERT&T Angebot v. 11.6.1955; Preisvergleich: Märzangebot S&H: Ericsson, BAK, B102/57218. 30 Kαραμανλης ´ to ⊓απαγo, ´ 2/7/1955, KPA-KKF, F15, subf. 8. 31 Hatzivassiliou, H αν ´ oδ oς τ oυ Kωνσ τ αντ ι´ν oυ Kαραμανλη, ´ 113–116. 32 This was also the view of the West German ambassador, who regarded Kanellopoulos and Papaligouras as friendly to West German companies, in contrast to Papakonstantinou. See Kordt to Auswärtiges Amt, Siemens Telefongeschäft Griechenland: Strafprozess gegen den Beauftragten obiger Firma, Herrn Voulpiotis, 13/10/1955, BAK, B102/57218. 33 Betz (Embassy of the FRG to Athens) to Auswärtiges Amt, Siemens Telefongeschäft, 19/8/1955; Kordt to Auswärtiges Amt, Siemens Telefongeschäft Griechenland: Strafprozess gegen den Beauftragten obiger Firma, Herrn Voulpiotis, 13/10/1955, BAK, B102/57218. 34 American estimates from August 1955 spoke of forty to fifty Rally MPs who might be willing to support Karamanlis in the battle to become Papagos’s successor: Hatzivassiliou, H αν ´ oδ oς τ oυ Kωνσ τ αντ ι´ν oυ Kαραμανλη, ´ 166–168.

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it.35 Instead, he approved a proposal by Karamanlis to suspend negotiations with Siemens, and he declared his government’s intention to issue an invitation to tender bids for the telephone contract. Concurrently, Papakonstantinou filed a defamation suit against Voulpiotis. Karamanlis’s dynamic reaction and active support for his colleague offered a strong contrast to the behind-the-scenes dealings and obfuscation of reality that had put Markezinis and his subordinates in such a vulnerable position. And his approach paid off. Within a few days, the tide had turned against Karamanlis’s opponents, leading to the expansion of his own influence within a party that increasingly found itself in disarray.36 That fall, when Voulpiotis and Papakonstantinou had their days in court, the political atmosphere was completely different from the one that had prevailed during the summer, when legal charges had been filed against both parties. On the day after the judgment against Voulpiotis was handed down, Papagos, the ailing field marshal, passed away and the dynamic minister who had stood by his colleague stepped into the premiership. In defiance of the party’s line of succession—but with the approval of the Americans, who looked forward to a readjustment of the Greek stance on the Cyprus question—it was Karamanlis, ultimately, who was proclaimed prime minister by the palace.37 The king and queen, hoping for a return to stability, thus gave their blessing to a politician of the new generation. Karamanlis’s political profile—that of a dynamic leader—had been established by the Siemens case at this politically sensitive moment in time, and the consequences of this fact would be felt very soon. For the present, this political development was disadvantageous to Siemens and to its legal representative—or, more precisely, its former representative. On 2 September—exactly one month after Voulpiotis had addressed his accusatory letters to Papagos, and at a time when the slings and arrows of the Greek press were aimed directly at the German company—Siemens and Voulpiotis announced that their relationship was

35 Voulpiotis to Papagos, 4/8/1955 (German translation of the original letter); Voulpiotis to Papagos, 4/8/1955 (German translation of the letter as published later in the newspaper Akropolis, 18/8/1955), BAK, B102/57218. 36 Hatzivassiliou, H αν ´ oδ oς τ oυ Kωνσ τ αντ ι´ν oυ Kαραμανλη, ´ 158–160. 37 S. Rizas, H ελληνικ η´ π oλιτ ικ η´ μετ α ´ τ oν εμϕ ν´ λιo π o´ λεμo: Koιν oβ oυλευτ ισ μ´oς

και δικτ ατ oρ´ια (Athens: Kastaniotis, 2008), 152–161.

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at an end.38 For obvious reasons, this separation had to be amicable39 ; the letters in which the two parties announced the termination of their partnership were written in the style of a press release. But the company’s panic was revealed by its executives’ private protestations to state officials that they had hardly known Voulpiotis, and that they had believed him to be an official representative of the Greek government.40 These claims were as surreal as those made by Markezinis after the revelation of the letters he had exchanged with Erhard. Years afterward, Voulpiotis would remind Siemens of how close their ties had once been: seeking to obtain the greatest possible remuneration for the services he had provided, he embarked upon a lawsuit against the company that would drag on into the 1970s.41 At the time when their relationship had ended, however, Siemens had agreed to pay Voulpiotis half a million marks. In exchange for what? What else: his silence concerning the negotiating tactics they had employed—together—in pursuit of the telephone contract.42

38 Handelsblatt, 7/9/1955 (exchange of letters between Siemens and Voulpiotis). 39 Ruhe (BMWi), Vermerk, 27/8/1955, BAK, B102/57218. 40 Verlohr (Siemens & Halske / Zentralverwaltung für Ausland) to Mayer, 6/9/1955;

Verlohr to Tazedakis and Mayer, Allgemeines, 14/10/1955; and the attached Tacke, Aktenvermerk: Griechenland-Situation/Gespräch mit Herrn Mattei in Gegenwart des Herrn Verlohr am 14.10, 14/10/1955, SHI, Siemens Archiv, 18013/18014. 41 Tazedakis to Siemens, Angelegenheit Voulpiotis, 10/9/1968, SHI, Siemens Archiv, 18013/18014. 42 Siemens & Halske / Zentralverwaltung für Ausland, Notiz: Herrn Voulpiotis, 11/11/1955; Siemens & Halske / Zentralverwaltung für Ausland, Aktennotiz, 14/11/1955; Voulpiotis to Schwarz, 10/12/1955; Voulpiotis to Siemens & Halske / Vorstand, 28/11/1957; and Siemens, Notiz: Voulpiotis. Personen- und Zeittafel, 10/2/1969, SHI, Siemens Archiv, 18013/18014.

CHAPTER 7

Reshuffle: Karamanlis’s First Transition

Mr. Bodossakis is particularly troubled by recent developments and by the lukewarm attitude of the German government, which leaves its loyal friends in an exposed position. Among these friends were and are not only Mr. Markezinis but also the present minister of coordination, Mr. Papaligouras, who has helped, is helping, and will continue to help us in the future both in fulfilling our plans for Ptolemais and in doing so in close cooperation with German industry under your company’s leadership. —Kambouroglou (PYRKAL) to Dr. Mehner (Krupp), 7 September 19551 At least three leading government members covet the prime minister’s job. Minister of Commerce and Industry Papaligouras, probably the ablest as well as the most ambitious, has been actively courting American sponsorship …. Last fall, the Bodossakis-Lambrakis-Markezinis group induced the defection of an ERE deputy from Karamanlis’ hometown … and the

1 Kambouroglou (PYRKAL) to Dr. Mehner (Krupp), 7/9/1955, BA Koblenz (BAK), B102/57218.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_7

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group can probably cause several new defections from the ERE whenever it chooses. —CIA, Political Prospects in Greece, Current Intelligence Weekly Summary, 29 May 19572 Mr. Papaligouras … [has] for some time, been seeking a pretext to leave the government …. He was, indeed, encouraged in his decision … also by Mr. Bodossakis Athanasiades, the important Greek industrialist who is something of an eminence grise in the Greek political scene, who warned him that the moment had come, in his own interest, to sever his conne[ct]ion with the Karamanlis regime. It is also known that Air Vice-Marshall Potamianos, formerly the King’s Private Secretary and still his most trusted confidant and adviser (who is an employee of Mr. Bodossakis) was spreading the impression among government deputies that not only had Mr. Karamanlis lost the confidence of the Americans, but also of King Paul: he is known to have told Mr. Papaligouras this. —Allen (British Ambassador in Athens), 7/3/19583

The tremors produced by the Siemens scandal did not arrest the dynamics of Greco-German economic cooperation.4 Already in 1955 the credit limits in the 1953 agreement were being revised upward.5 But the business landscape created by the unequal economic—and, inevitably, political—advantages that such cooperation brought to particular interest groups could not be sustained. The transition from American aid to West German credits via the privileging of long-standing links between the 2 CIA, Political Prospects in Greece, Current Intelligence Weekly Summary, 29/5/1957, CIA, General CIA Records, (FOIA)/ESDN (CREST): CIA-RDP7900927A001300010001-7 (accessible through: https://www.cia.gov/library/readin groom/; last retrieved on 16 November 2020). 3 Allen (British ambassador in Athens) to Lloyd (foreign secretary), [Assessment of Greek Political Crisis], 7/3/1958, The National Archives, Kew, Richmond (TNA), FO 371/136220. 4 The awarding of the telephone contract to Siemens in January 1957—after a process of competitive bidding— brought an end to the one episode that might have endangered the process. See Kordt to Auswärtiges Amt, Griechische Ausschreibung für 50.000 Telephonanschlüsse, 7/1/1957, BAK, B102/57218. 5 ⊓ρωτ´oκoλλoν διαπραγματενσεων ´ διεξαχθεισων ´ μεταξν´ Eλληνικης ´ Aντιπρoσωπε´ιας υπ´o την πρoεδρ´ιαν τoυ ϒπoυργoν´ Συντoνισμoν´ κ. ⊓απαληγoνρα ´ και ⎡ερμανικης ´ υπ´o την πρoεδρ´ιαν τoυ ϒπoυργoν´ Eθνικης ´ Oικoνoμ´ιας της Oμoσπoνδιακης ´ Kυβερνησεως ´ ´ καθηγητoν´ Λ. Eρχαρντ απ´o της 19ης–21ης Σεπτεμβρ´ιoυ 1955, Konstantinos Karamanlis Archive–Konstantinos G. Karamanlis Foundation, Athens (AKK-KKF), F2A.

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Greek and German economies was Markezinis’s legacy, but Markezinis was no longer in government, and Siemens’s irksome behavior had led to the defenestration of Voulpiotis as soon as the political environment changed. It was someone else who proved to be the biggest beneficiary of the closer relationship between Greece and Germany: the Bodossakis group, a participant in investments that had absorbed about 270 million marks out of a total 345 million marks in West German credits,6 had managed to remain unaffected by the Rally Party’s crisis.7 But Konstantinos Karamanlis had built his leadership profile by facing off against the “powerful and often disreputable” interests promoted by Markezinis, and Karamanlis’s appointment as prime minister meant that new confrontations were inevitable. Very soon, another political crisis would erupt, leading to the collapse of the government in early 1958. The outcome of this new controversy would determine both the political future of Karamanlis and the very nature of the power bloc that the emerging model of Greek development was calling into existence. The challenges posed by Greek industrialization were not limited to attracting and allocating foreign capital: setting the terms according to which the Greek financial contribution to the relevant industrial ventures would be used proved equally challenging. Given the state’s close supervision of the financial sector, such decisions were made politically and thus were the object of transactions and disputes between members of the business community and political and administrative officials. The state’s involvement in industrial policymaking was not an exogenous variable that could regulate competing business interests without being influenced by them. On the contrary: from the very beginning, the amount of credit 6 Zusammenfassung der dokumentierten und z.Zt. in Bearbeitung befindlichen Großprojekte, die in den Rahmen des Kreditabkommens zwischen der BRD und dem Königreich Griechenland fallen können. Abkommensprotokoll vom 11./21. November 1953. Bearbeitungsstand 6. September 1958, BAK, B102/57218. 7 In 1957, the Bodossakis group owned not only the Larymna nickel mines, the Ptolemais lignite mines, and the Ptolemais nitrogen fertilizers plant, but also a part interest (with Stavros Niarchos) in the operation of the Aspropyrgos oil refinery. Moreover, Bodossakis still owned PYRKAL, and his other holdings included an assortment of mines, wineries and distilleries, chemical and textile plants, and ship repair facilities. See Longman (US Overseas Mission/Greece/Industry Division), Bodossakis Interests, 24/7/1956, NARA, RG469, Series: Subject Files, 1949–1957, UD1221, Box 12: Industry: Companies; Bodossakis Interests & General Cement, 1957; and Longman, Bodossakis Interests, 21/11/1956, NARA, RG469, Series: Subject Files, 1948–1957, P256, Box 1: (I)-G-2 Economic Conditions. Bodossakis Interests.

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that should become available to industry, and the proper fields of action of the various financial institutions involved, was the focus of controversies that brought conflicting priorities and aspirations to light. Nothing encapsulated the political dimension of these conflicts better than the Bodossakis Group’s indebtedness to the National Bank. When the bank’s governor, Vassilios Kyriakopoulos, tendered his resignation in early April of 1957, the newspapers ascribed this event, rather vaguely, to pressures on the governor regarding the bank’s lending policy8 : the reason for Kyriakopoulos’s resignation, it was said, was the government’s proposal to allocate 10% of bank deposits to industrial loans—a proposal warmly supported by Minister of Coordination Dimitrios Helmis and Minister of Trade and Industry Panayis Papaligouras.9 A journalist at the newspaper Eleftheria,10 however, was far less oblique when he explained the matter to the political affairs adviser at the American embassy: the affair had involved Deputy Prime Minister Andreas Apostolides’s pressuring of Kyriakopoulos to relax his enforcement of the bank’s policies insofar as they concerned Bodossakis and Dimitrios Lambrakis, the publisher of To Vima.11 According to the same source, Apostolides owed his position to Lambrakis, and a CIA bulletin took note of the widely held belief that the deputy prime minister enjoyed the support of palace circles and worked in the service of powerful private interests—interests which the bulletin, however, did not identify.12 After a face-to-face meeting with the prime minister, Kyriakopoulos withdrew his resignation. This was taken as evidence that Karamanlis

8 The liberal newspaper Eleftheria (9/4/1957) mentioned a letter in which the governor of the National Bank accused cabinet members of a concerted attempt to secure favorable treatment for particular companies. 9 Eleftheria, 9–10/4/1957. 10 The journalist involved was Efthymios Papageorgiou, son of the newspaper editor

Anargyros Papageorgiou. The younger Papageorgiou was a standard source for the Americans regarding what was happening behind the scenes in Greek politics. 11 Elting (counselor for political affairs/US Embassy in Athens) to Department of State, The Kyriakopoulos Case, 10/4/1957, NARA, RG59, Series: Subject Files Relating to Greece and Cyprus, 1955–1958, A11315, Box 6: Greece. Athens-General, 1957. 12 CIA, Political Prospects in Greece, Current Intelligence Weekly Summary, 29/5/1957, CIA, General CIA Records, (FOIA)/ESDN (CREST): CIA-RDP7900927A001300010001-7 (accessible through: https://www.cia.gov/library/readin groom/; last retrieved on 16 November 2020).

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had managed to bring the members of his government into line,13 but this interpretation was not confirmed by subsequent developments. In May—the very next month after Kyriakopoulos’s abortive resignation—the National Bank approved a new loan of 60 million drachmas to Bodossakis’s Hellenic Chemical Products and Fertilizers Corporation; AEEXPL). This new loan brought the total credit that the National Bank had extended to AEEXPL to 180 million drachmas, a sum which, thanks to a special exemption authorized by the Currency Committee, exceeded the legally allowable limit of 20% of the bank’s share capital. In October, the bank proceeded to further increase its total grants and guarantees to the company to 220 million drachmas—an amount that represented 37% of the bank’s funds.14 The bank’s assumption of ever greater risk in its extension of credit to the overindebted AEEXPL caused tensions that finally came to a head in the spring of 1958. On 13 March, the bank’s management yielded to pressure from the government on Bodossakis’s behalf and agreed, under protest, to negotiate a new loan to the company.15 But the government that was pressuring the National Bank was not the same government that had been in power only a short time before. At the very beginning of March, the defection of fifteen ERE members of parliament, occasioned by a change in the election law, forced Karamanlis to resign. New elections, scheduled for May, would be held by a provisional government, in which Karolos Arliotis—an old acquaintance of Bodossakis from the board of directors of Rheinmetall-Borsig’s Greek subsidiary16 —took over

13 Elting (counselor for political affairs/US embassy in Athens) to Department of State, The Kyriakopoulos Case, 10/4/1957, NARA, RG59, Series: Subject Files Relating to Greece and Cyprus, 1955–1958, A11315, Box 6: Greece. Athens-General, 1957; and Eleftheria, 10/4/1957. 14 G. Pagoulatos, H Eθ νικ η´ Tρ απ ´ εζ α τ ης Eλλαδ ´ oς , 1940–2000 (Athens: Historical

Archive of the National Bank of Greece, 2006), 271. 15 Pagoulatos, H Eθ νικ η´ Tρ απ ´ εζ α, 271–272. 16 Société Commerciale Rheinmetall Borsig Hellénique S.A., Protokoll über die neue

nochmalige ausserordentliche Generalversammlung der Aktionäre der Handelsgesellschaft Griechische Rheinmetall Borsig Aktiengesellschaft, die am 14. Dezember 1940 stattfand, Zentralarchiv der Rheinmetall AG, Düsseldorf, B333, Nr. 1.

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as minister of coordination.17 Soon thereafter, Kyriakopoulos resigned permanently from his position as governor of the National Bank.18 It was not by chance that the government crisis coincided with the beginning of negotiations for new loans to Bodossakis’s companies. Although Apostolides had already resigned as deputy prime minister in the summer of 1957, Bodossakis continued to maintain strong connections to members of the Ministerial Council who sought to expand their autonomy vis-à-vis the prime minister. Within the ERE, the most serious source of concern for Karamanlis was Papaligouras,19 whom Bodossakis believed had handled the Siemens case well, thus preventing a more serious blow to economic cooperation between Greece and Germany.20 Papaligouras had already had significant experience in government when he succeeded Markezinis at the all-important Ministry of Coordination under the Papagos government. After Karamanlis took over as prime minister, however, Papaligouras had been demoted to the post of minister of trade and industry. In early 1958, a consensus emerged that the planned election law would have significant implications for the future stability of Karamanlis’s government. At the same time, however, Karamanlis seemed satisfied that he had managed to limit Papaligouras’s influence within his party.21 But events soon proved him wrong: after a draft of the new law was released, Papaligouras was able, in collusion with Georgios Rallis and Apostolides, to bring about the departure of fifteen ERE MPs.22 The government did 17 Constantinos Georgakopoulos Government (provisional): 5.3.1958 – 17.5.1958, The Secretariat General for Legal and Parliamentary Affairs (accessible through: https://gsl egal.gov.gr/?p=1212; last retrieved on 16 November 2020). 18 Pagoulatos, H Eθ νικ η´ Tρ απ ´ εζ α, 272. 19 CIA, Political Prospects in Greece,

Current Intelligence Weekly Summary, 29/5/1957, CIA, General CIA Records, (FOIA)/ESDN (CREST): CIA-RDP7900927A001300010001-7 (accessible through: https://www.cia.gov/library/readin groom/; last retrieved on 16 November 2020). 20 Kambouroglou (PYRKAL) to Dr. Mehner (Krupp), 7/9/1955, BAK,B102/57218. 21 Mulcahy (First Secretary/US Embassy in Athens) to Department of State, Memo-

randum of conversation: Averoff’s rising ambitions and eclipse of Pap[a]ligouras, 16/1/1958, NARA, RG84, Series: Classified General Records, 1943–1963, UD2650A, Box 64: 350 Greece (January–June) 1958. 22 Riddleberger (US ambassador to Greece) to Secretary of State, 2/3/1958, NARA, RG84, Series: Classified General Records, 1943–1963, UD2650A, Box 64: 350 Greece (January–June) 1958.

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not lose its parliamentary majority, but the extent of the backlash would ultimately force the prime minister to call for new elections. Despite a general dissatisfaction with Karamanlis’s leadership style23 and despite the political fallout from the Cyprus question,24 those who had orchestrated the mass defection did not all do so for the same reasons. In the case of Rallis, resignation represented a final attempt to convince Karamanlis not to proceed with enactment of the proposed election law.25 For Apostolides, it was the logical conclusion of his struggle with Karamanlis over control of economic policy.26 For Papaligouras, who had been careful to inform the Americans27 and to secure Bodossakis’s support before trying to bring down the government,28 the subversion of Karamanlis was in aid of his own leadership ambitions. Papaligouras’s ambitions were not realized. Despite the circumstances under which Karamanlis was forced to resign, he succeeded in winning reelection—even expanding his majority in Parliament—and he rid himself of his opponents within the party. When he returned to government in May of 1958, he had everything he needed to reshape Greece’s economic landscape through stricter control over industrial credit and more active state involvement in industrialization generally. To restrain the seeming omnipotence of the country’s most powerful conglomerate, the new government adopted a twofold strategy. On the one hand, Karamanlis tried to strike at Bodossakis directly, carrying out

23 Riddleberger to Secretary of State, 27/5/1958, NARA, RG84, Series: Classified General Records, 1943–1963, UD2650A, Box 64: 350 Greece Classified and unclassified. (April–June) 1958. 24 S. Rizas, H ελληνικ η´ π oλιτ ικ η´ μετ α ´ τ oν εμϕ ν´ λιo π o´ λεμo: Koιν oβ oυλευτ ισ μ´oς και δικτ ατ oρ´ια (Athens: Kastaniotis, 2008), 192–206. 25 Horner (Counselor for Political Affairs/US Embassy to Greece) to Department of State, Views of George Rallis on Current Greek Political Scene, 24/6/1958; and the attached Memorandum of conversation (Rallis and Stearns/Second Secretary of US Embassy in Athens): Aspects of Greek Political Scene, 20/6/1958, NARA, RG84, Series: Classified General Records, 1943–1963, UD2650A, Box 64: 350 Greece, Classified and unclassified. (April– June) 1958. 26 Eleftheria, 18/7/1957. 27 Riddleberger to Secretary of State, 28/2/1958, NARA, RG84, Series: Classified

General Records, 1943–1963, UD2650A, Box 64: 350 Greece (January–June) 1958. 28 Allen (British Ambassador in Athens) to Lloyd (Foreign Secretary), [Assessment of Greek Political Crisis], 7/3/1958, The National Archives, Kew, Richmond (TNA), FO 371/136220.

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forced nationalizations—as in the case of LIPTOL (Bodossakis’s Ptolemais lignite facilities), which was nationalized under a plan to create a PPC monopoly in electricity29 —and increasing the National Bank’s shares in— and thus control over—heavily indebted companies such as AEEXPL.30 On the other hand, Karamanlis also worked to strengthen rival enterprises, allowing the entry of competitors into sectors, such as fertilizers, where Bodossakis had a special interest.31 By June, Bodossakis already seemed to be exasperated by Karamanlis’s actions, and he was making it known that he was ready to abandon the Aspropyrgos refinery and even to shut down his other businesses in Greece.32 But these declarations—Bodossakis’s attempt to put pressure on the government by threatening to deal a serious blow to the Greek economy—were not so easy to put into practice. In the years of the Marshall Plan and the Markezinis-Erhard agreement, the withdrawal of Bodossakis’s investments would have seemed the precursor to inevitable disaster, but now there were other eligible investors. By 1958, Greek shipowners had already shown an interest in Greek industry and were ready to take advantage of any failure of will among the established industrialists. Given this, it was not surprising that Bodossakis’s only voluntary withdrawal from any of his operations was the sale of his share in the refinery to the Niarchos Group.33 Like Bodossakis, Niarchos had made use of West German credits—in Niarchos’s case, for the establishment of 29 For PPC’s strategy of aggressively taking over private electric companies during this period, see N. S. Pantelakis, O εξ ηλεκτ ρισ μ´oς τ ης Eλλαδας ´ : Aπ o´ τ ην ιδιωτ ικ η´ π ρωτ oβ oυλ´ια σ τ o κρατ ικ o´ μoν oπ ωλι ´ o (1889– 1956) (Athens: MIET, 1991), 424– 436; and S. N. Tsotsoros, Eν šργ εια και αν απ ´ τ υξ η σ τ η μετ απ oλεμικ η´ π ερ´ιoδ o: H Δημ´oσ ια Eπ ιχ ε´ιρησ η Hλεκτ ρισ μoν´ , 1950–1992 (Athens: Neohellenic Research Center [KNE/EIE], 1995), 90. 30 K. Ch. Hatziotis, Π ρ o´ δρ oμoς Mπ oδ oσ ακης ´ Aθ ανασ ιαδης ´ , 1891–1979 (Athens: Bodossakis Foundation, 2005). 31 Ch. Tsakas, «Oι Eλληνες ´ βιoμηχανoι ´ μπρoστα´ στην ευρωπα¨ικη´ πρ´oκληση: Kρατικη´ στρατηγικη´ και ιδιωτικα´ συμϕšρoντα απ´o τη σννδεση ´ με την EOK στην απoκατασταση ´ της Δημoκρατ´ιας» (PhD diss., University of Crete, 2015), 90–91. 32 Memorandum of conversation (Demetracopoulos/Makedonia and Athinaiki journalist; and Mulcahy): Miscellaneous political information from Greek journalist, 12/6/1958, NARA, RG84, Series: Classified General Records, 1943–1963, UD2650A, Box 64: 350 Greece Classified and unclassified. (April–June) 1958. 33 Schmoller (Botschaft der BRD Athen) to Auswärtiges Amt, Errichtung einer Erdölraffinerie, 20/11/1958, BAK, B102/57218.

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Hellenic Shipyards.34 At around the same time, Onassis made his appearance on the Greek business scene with Olympic Airways, and Stratis Andreades, president of the Union of Greek Shipowners and head of the Emporiki Bank Group, expressed an interest in becoming active in industry as well. New investment initiatives undertaken at the beginning of the 1960s would bring other actors to prominence: among these were the French multinational aluminum company Pechiney and the GreekAmerican businessman Tom Pappas, who was partnered with ESSO, the American oil company. In any case, the reshaping of the business landscape was not left to the private sector alone. On the contrary, it was the active role played by the state that brought this process to its consummation. In April 1957, when the extent of Bodossakis’s indebtedness had become the object of controversy, Kyriakopoulos had proposed that the National Bank assume control of the Economic Development Financing Organization (EDFO),35 which was in charge of administering American aid. This takeover did not occur, however. In fact, after Karamanlis’s reelection in 1958, the new government, realizing the insufficiency of the country’s existing lending institutions, set up yet another entity that would undertake to promote the planning of new industrial investments. The Industrial Development Corporation (IDC) was established in the autumn of 1959. Its administration was entrusted to Alexandros Tsatsos, who was general manager of the cement company AGET and who had recently resigned from the position of vice-president of the Federation of Greek Industrialists (SEV) as a result of disagreements with other leading executives at the Federation.36 The new organization’s seven-member governing board would include not only those in whom the government had absolute confidence—such as textile manufacturer Symeon Siniosoglou, former SEV president and close relative of

34 Zusammenfassung der dokumentierten und z.Zt. in Bearbeitung befindlichen Großprojekte, die in den Rahmen des Kreditabkommens zwischen der BRD und dem Königreich Griechenland fallen können. Abkommensprotokoll vom 11./21. November 1953. Bearbeitungsstand 6. September 1958, BAK, B102/57218. 35 Kυριακ´oπoυλoς to Kαραμανλη, ´ 25/4/1957; and the attached Kυριακ´oπoυλoς, ϒπ´oμνημα περ´ι της εκ μšρoυς της Eθνικης ´ Tραπšζης Eλλαδoς ´ και Aθηνων ´ ασκησεως ´ της βιoμηχανικης ´ π´ιστεως, 25/4/1957, AKK-KKF, F3A. 36 Aλ. Tσατσoς ´ to ⎡. Tσατσo, ´ 25/8/1959 and 14/9/1959, Alexandros and Giorgos Tsatsos Private Collection, Athens, correspondence with parents.

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Foreign Minister Evangelos Averoff—but also other leading figures from the business world. Andreades, in his capacity as president of Emporiki Bank, was only one example of this latter category. Not long after the IDC was established, Stefanos Syriotis joined its governing board. Syriotis had just left the position of general director in the prime minister’s political office to become an executive in the uppermost echelons of the Niarchos Group.37 The dramatic rise of Andreades and Niarchos, both of whom, in addition to their investment ventures, were able to influence the formulation of Greek industrial policy, revealed the existence of a counterweight to the once-mighty Bodossakis Group. Moreover, Niarchos and Andreades were inclined to work together—a fact illustrated by a “gentlemen’s agreement” according to which Andreades would delay the start of operations at his Elefsis Shipyards until 1968, so that Niarchos’s Hellenic Shipyards could operate without competition during the fragile early stages of the company’s growth.38 By the early 1960s, Andreades’s activities extended from the banking sector, where he challenged the National Bank’s monopoly, to industry, where he was now in direct competition with Bodossakis as a result of his investment in phosphate fertilizers. The Emporiki Group also had a presence in the insurance sector and oversaw the Athens-Piraeus Electric Railway. Somewhat later, it took over management of the Hilton Hotel and established Elefsis Shipyards. This wide range of activities was all in addition to Andreades’s thriving shipping operations and his growing influence within the Union of Greek Shipowners.39 Niarchos too had established a presence in Greek industry’s most important infant sectors—oil refining, shipbuilding, and aluminum—and had thus created a gigantic industrial conglomerate, organically complementing his role in international oil transport.40 Very

37 OBA, Διoικητικ´oν Συμβoνλιoν, ´ Athens: 1961, Industrial Development Corporation (IDC) Archive, S1ϒ3, F5, subf. 2, Piraeus Bank Group Cultural Foundation Historical Archives, Athens (PIOP HA). 38 OT, 11/4/1963. 39 A. Drougoutis, «Eπιχειρησεις ´ και πoλιτικη: ´ η κρατικoπo´ιηση τoυ oμ´ιλoυ της

Eμπoρικης ´ Tραπεζας» ´ (MA thesis, University of Crete, 2018).

40 G. Harlaftis, Greek Shipowners and Greece, 1945–1975: From Separate Development to Mutual Interdependence (Atlantic Highlands, NJ: Athlone Press), 80, 198–202; Bιoμηχ ανικ η´ Eπ ιθ ε ωρησ ´ ις, 445, 11/1971; and OT , 23/9/1971.

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soon, the Niarchos Group would begin to be represented at the highest levels within SEV.41 From the very first meeting between Karamanlis and Tsatsos, the work of the IDC focused on the situation created by the Greek economy’s exposure to international competition. The organization was concerned with two key issues: first, the question of whether it should prioritize the establishment of industries based exclusively on their competitiveness; second, the maintenance of a balance between foreign investment and domestic capital.42 The earliest discussions within the organization generated a range of views on these subjects, and these differences of opinion would eventually erupt into serious frictions leading to Tsatsos’s resignation.43 In the meantime, however, the newly established organization was able—in the face of these disagreements and other difficulties—to play a more or less important role in a number of investments. These included Halyvourgiki’s installation of an up-to-date blast furnace; the establishment of Aluminium of Greece by Pechiney and Reynolds (with the participation of Niarchos); and the founding of Phosphate Fertilizers Industry by Andreades, whose proposal to the IDC was given approval over a competing proposal from Bodossakis and the National Bank. The effort to reconcile governmental priorities with competing private interests, foreign and domestic, led to tensions which eventually forced the governor of the Bank of Greece, Xenophon Zolotas, to try to clarify both the IDC’s specific responsibilities and its wider operational framework.44 As a state-sponsored entity whose key positions were occupied by leading representatives of Greece’s private sector, the organization seemed to lose its way after it had played its role in creating Aluminium of Greece. Ultimately, Zolotas acknowledged that the IDC had failed to achieve its

41 SEV Information Bulletin (Deltion Pliroforion), 92, 30/4/1966. 42 Eπ´ισκεψις Aλεξανδρoυ ´ ⎡. Tσατσoυ ´ παρα´ τω κυρ´ιω ⊓ρošδρω της Kυβερνησεως ´

την 31ην Oκτωβρ´ιoυ 1959, AKK-KKF, F10A.

43 Tσατσoς ´ to Kαραμανλη, ´ 28/3/1960; Tσατσoς ´ to Kαραμανλη, ´ 3/7/1961; and Tσατσoς ´ to Mαρτη, ´ 7/7/1961, IDC Archive, S2ϒ1, F2, PIOP HA; and author’s oral history interview with Giorgos Tsatsos, official of AGET and SEV (1970–1983), Athens, 4/4/2012. 44 X. Zolotas, Oικ oν oμικ η´ αν απ ´ τ υξ ις και ιδιωτ ικ η´ επ ιχ ε´ιρησ ις : M´ια π ρ o´ τ ασ ις (Athens: Bank of Greece, 1962).

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goals,45 and the organization merged with EDFO to create the Hellenic Industrial Development Bank (ETVA). Until that time, however, the IDC continued to attract controversy regarding the proper role of the state in the Greek economy. Debates on this issue became still more acute as the establishment of trading blocs and customs unions in Western Europe presented new challenges to Greek industry.

45 X. Zolotas, Noμισ ματ ικ η´ ισ oρρ oπ ι´α και oικ oν oμικ η´ αν απ ´ τ υξ ις : H ελληνικ η´ oικ oν oμ´ια κατ α´ τ ην τ ελευτ α´ιαν δεκαπ εντ αετ ι´αν; Π ρ oβληματ ´ α και π ρ ooπ τ ικα´ι (Athens: Bank of Greece, 1964), 249–253.

PART III

Bonn and Brussels, 1958–1963

CHAPTER 8

Loans and Integration: From Bonn to Brussels

The creation of a European economic development organization means the establishment of a collective European process for finding resources and consistent financial assistance for Greece and the other developing European countries, for orienting them toward, and ultimately integrating them into, a unified European economy . . . . The cooperation and support of Germany (which has contributed approximately $125–150 million to the funds that the Organization has disbursed) is critical. . . . . The economically advanced European countries, and Germany in particular, are likely to diverge from one another in order to pursue bilateral approaches and relationships (which presuppose smaller contributions in the absence of the creation and establishment of “institutions,” and require some form of recompense for every instance of financial support The preceding remarks are especially timely in view of the economic discussions between Greece and Germany that are now taking place at the highest level. —Ioannis Pesmazoglou, head of the Greek delegation during the OEEC negotiations for the creation of a Free Trade Area, August 19581

1 ⊓εσμαζ´oγλoυ to Kαραμανλη, ´ Oυσιωδεις ´ εξελ´ιξεις εις τας διαπραγματενσεις ´ δια´ την EZEΣ. Bασικα´ι παρατηρησεις ´ και συμπερασματα, ´ [8/1958], Konstantinos G. Karamanlis Foundation, Athens, Konstantinos Karamanlis Archive, (AKK-KKF), F6A.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_8

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The Federal Republic granted Greece a loan of 200 million deutschmarks in 1958 without attaching any conditions.... The Greek government quickly became accustomed to Germany’s generosity. —Seelos, West German Ambassador in Athens, 18 November 19602

The political side effects of the Greco-German rapprochement were soon to coincide with larger-scale processes that would alter the parameters of relations between the two countries. The initial phases in the formation of the various Western European projects offered Greek leaders the opportunity to call for the expansion and the perpetuation of foreign economic aid, while at the same time moderating the exclusive dependence on West Germany that had so bedeviled the political situation in Greece. At this early stage, the Greeks were trying to weigh all the possible alternatives that were now opening up to them, in hopes of gaining the best possible negotiating position vis-à-vis their future partners. The opinions held by the most powerful of these prospective partners would play a critical role in Greek decision-making. This was particularly true in the case of Germany, to which the Greek government looked for economic assistance and investment capital. The West German government, for its part, expressly conditioned its assistance upon Greece’s participation in the multilateral projects that were then taking shape.3 Bilateral contacts between Germany and Greece very soon came to reflect the two sides’ aims. Serious upheavals in Greek domestic politics were not the only problem caused by Greco-German cooperation. The widening of Greece’s trade deficit was less conspicuous but equally dangerous. In the years since the 1953 agreement, the total value of the goods exchanged between the two countries had more than doubled. But this rapid increase was not evenly distributed. Quite the contrary, Greece’s bilateral trade deficit with West Germany had skyrocketed from just under 19 million marks in 1953 to more than 162 million marks in 1957.4 It was apparent that 2 Seelos (German ambassador in Athens) to Auswärtiges Amt, Die politische Bedeutung der Entwicklungshilfe für Griechenland, 18/11/1960, BA Koblenz (BAK), B102/74715. 3 Blücher (vice-chancellor) to Erhard (minister for the economy), Mein Gespräch mit dem griechischen Handels- und Industrie-Minister in Athen, Herrn Papaligouras, 30/4/1957; and Erhard to Blücher, 20/5/1957, BAK, B102/58097. 4 Haas (Auswärtiges Amt), Aufzeichnung: Die deutsch-griechischen Wirtschaftsverhandlungen, 5/12/1958; and the attached Der Außenhandel Griechenlands, BAK, B102/58097.

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the cost of industrial imports from West Germany could not be offset by the low value-added agricultural products that made up the bulk of Greek exports. German loans provided a temporary solution to the balance of payments problem, but it would be some time before the investments in Greek industry financed by these loans would finally pay off. The Greek government estimated that the deficit would widen still further in proportion to the growth of the economy, as increasing industrialization led to heightened demand for expensive machinery from abroad.5 How to alleviate the political and economic asymmetry of the GrecoGerman relationship was a uniquely challenging problem. In the context of bilateral relations, the economic side of the problem could not be dealt with effectively without maximizing the political side effects. As the 1950s ended, the controversy surrounding the arrest of the war criminal Max Merten provided a particularly dramatic example of the sort of political payoff the West Germans could demand in exchange for their economic assistance to Greece. Merten, formerly military administrator for Thessaloniki during the German occupation of Greece, was held in Greek custody and was eventually tried for his role in—among other things— the spoliation and deportation of the city’s Jews. Even as his trial was still ongoing, however, a law was passed bringing an end to Greece’s pursuit of German war criminals, and shortly after Merten’s conviction, he was turned over to Germany and given compensation for his detention in Greece.6 In late 1960, Merten’s calumnies against Prime Minister Karamanlis, whom he accused of being a wartime collaborator, occasioned the last major scandal to rattle the Greco-German relationship in the early postwar period. But the whole affair was reminiscent of an era that had largely passed. The suspicions that prevailed among Karamanlis’s close associates as they sought out the instigators behind Merten’s slander campaign were illustrative of the profound changes that had taken place in Greek politics: the prime minister’s old opponents from the 1950s were

5 ⊓ρακτικ´oν συνoμιλιων ´ εν τω Oμoσπ´oνδω ϒπoυργε´ιω Oικoνoμ. Συνεργασ´ιας, Kυριακη´ 7 Ioυλ´ιoυ 1957, ωρα ´ 9:30–12:30, AKK-KKF, F3A. 6 K. Králová, Das Vermächtnis der Besatzung. Deutsch-griechische Beziehungen seit 1940 (Vienna: Böhlau, 2016).

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soon set aside as suspects, and attention passed instead to the EDA and the Centre Union, now the main opposition parties.7 The first exploratory contacts between Greek leaders and the Six (the countries that would soon establish the EEC) had taken place at the end of 1956. At that time, the Greeks were interested in working out a formula for Greece’s participation in the Common Market that was then taking shape; this was initially a backup plan, in case negotiations for a wider trade area among the members of the Organization for European Economic Cooperation (OEEC) proved unsuccessful.8 But after the EEC was formally established by the Treaty of Rome on March 25, 1957, Greek interest became more definite. Already in May the Greek ambassador in Brussels was briefing Foreign Minister Evangelos Averoff about his informal contacts with representatives of the Community, which involved discussions of the pros and cons of Greece’s participation in the newly formed organization.9 Until the end of 1957, the Greek government officially saw the alternate scenarios under which Western European integration might take place as equivalent with respect to its own aims, and treated them as complementary rather than competing. This outlook was embodied in Karamanlis’s speech at the NATO Summit Meeting of Heads of State and Government in December. There, the Greek prime minister argued that economic assistance ought to be provided for the purpose of increasing the Alliance’s military strength. Karamanlis imagined this assistance as coming not only from the North Atlantic alliance itself but from other Western European groupings as well, and he expressed no preference regarding the best approach to integration.10

7 Bšρρoς (head of the prime minister’s military office), ⊓ιθανα´ι εκδoχα´ι, 10/10/1960;

ϒπ´oθεσις Mαξ Mšρτεν, undated; and Mακρης ´ to Kαραμανλη, ´ 20/11/1966, AKK-KKF, F31A. 8 Xρηστ´ιδης, Σημειωσεις ´ επ´ι της πρo¨ιστoρ´ιας της συγκρoτησεως ´ της Koινης ´ Aγoρας ´ των Eξ και επ´ι των šκτoτε εξελ´ιξεων, 30/12/1960, AKK-KKF,F13A. 9 Zamarias to Averof, 9/5/1957, in F. Tomai-Konstantopoulou (ed.), H σ υμμετ oχ η´ τ ης Eλλαδας ´ σ τ ην π oρε´ια π ρ oς τ ην ευρωπ α¨ικ η´ oλoκληρωσ ´ η: H κρ´ισ ιμη εικ oσ αετ ι´α, 1948–1968 (Athens: Ministry of Foreign Affairs, 2003), vol. 1, 250–254.

10 K. Svolopoulos, ed., Kωνσ τ αντ ι´ν oς Kαραμανλης ´ : Aρχ ε´ιo, γ εγ oν o´ τ α και κε´ιμενα, 12 vols. (Athens: Konstantinos G. Karamanlis Foundation and Ekdotiki Athinon, 1992–1997), vol. 2, 477–480. For the relevant position paper, see ⊓εσμαζ´oγλoυ to Kαραμανλη, ´ 10/12/1957; and the attached appendix Economic Considerations, undated, AKK-KKF, F4A.

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Through their participation in the processes of European integration, the Greeks sought to achieve two primary economic aims. One aim was to avail themselves of much-needed capital, chiefly through institutions such as a European economic development authority or the European Investment Bank (EIB). From the former, the Greek government hoped to secure resources for infrastructure projects, maintaining the benefits of the financial assistance previously provided by the United States, while at the same time trying, through the transition to a multilateral context, to mitigate the dependence that such bilateral relations entailed. From the EIB, the Greeks expected ancillary financing on favorable terms that would encourage foreign and domestic private investment in developing countries.11 The second aim that the Greeks hoped to achieve was the creation of favorable economic conditions for the export of the country’s agricultural products—less stringent expectations for the pace at which Greek tariffs on agricultural products were to be dismantled, and exemptions from the quantitative restrictions imposed on more developed economies.12 At the beginning of 1958, the Greek OEEC delegation unsuccessfully approached the American delegation with a request for the United States to subsidize the projected trade zone so that objections to the Greeks’ economic claims could be resolved.13 As preliminary discussions went forward, it was direct contacts with the Germans that were most significant for the Greeks. In July 1957, Panayis Papaligouras had visited Bonn, where he held talks with senior officials in the German government. The talks were meant to assess the progress that had been made in Greco-German relations thus far and to find ways for the two sides to extend the scope of their economic cooperation. During the Greek minister’s three-hour meeting with German Vice-Chancellor 11 For the role these two proposed institutions played in the Greeks’ calculations, see the relevant note by Pesmazoglou to Karamanlis, in Svolopoulos, Kαραμανλης, ´ vol. 2, 468–471. 12 ⊓ρακτικ´oν συνoμιλιων ´ εν τω Oμoσπ´oνδω ϒπoυργε´ιω Oικoνoμ. Συνεργασ´ιας, Kυριακη´ 7 Ioυλ´ιoυ 1957, ωρα ´ 9:30–12:30, AKK-KKF, F3A; and ϒπ´oμνημα της Eλληνικης ´ Kυβερνησεως ´ επ´ι των κατευθννσεων ´ αναπτνξεως ´ της Eλληνo-⎡ερμανικης ´ oικoνoμικης ´ συνεργασ´ιας, 14/8/1958, AKK-KKF, F6A. 13 Burgess (US Mission to NATO and European Regional Organizations) to US Embassy in Athens, Greek request for United States assistance in Free Trade Area negotiations, 18/1/1958, National Archives and Records Administration at College Park, MD (NARA), RG84, Series: Classified General Records, 1943–1963, UD2650A, Box 56: OEEC 1956–1957.

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Franz Blücher and Minister of Economy Ludwig Erhard, the conversation was devoted entirely to the prospects that had opened up for Greece as a result of the establishment of the EEC and the OEEC discussions for a free trade zone. Papaligouras emphasized the Greeks’ intention to participate in these projects, and he asked Blücher and Erhard directly if they thought it was best for Greece to seek full participation in the Common Market, regardless of the processes going on within the OEEC.14 The German officials’ answer was that Greece should indeed participate in the Common Market: by doing so, Greece would be able to sell its agricultural products more easily and could take advantage of new opportunities to obtain credit. At the same time, however, Papaligouras’s interlocutors did not discourage Greece from participating in the wider free trade area being pursued by the OEEC.15 Their ambivalent attitude was probably related to contemporary disagreements within the German government over Germany’s own preferred path to economic integration. On the one hand, the chancellor and the Foreign Ministry favored a privileged relationship with France within the EEC. On the other hand, Erhard and the ministries responsible for economic affairs, whose priority was the health of German economy’s export sectors, liked the idea of participating in the still larger market envisioned by the OEEC.16 In any case, both Erhard and a representative from the German Foreign Ministry—also present at the meeting—were quick to explain that Greece would only be able to take part in either of the nascent projects via a specialized status (Assoziierung ) devised for developing countries.17 Such an explanation was unnecessary. Papaligouras had delineated precisely this model of association when he spoke about the economic assistance Greece would need during the transition period required for the restructuring of its economy. The same position, moreover, had 14 ⊓ρακτικ´oν συνoμιλιων ´ εν τω Oμoσπ´oνδω ϒπoυργε´ιω Oικoνoμ. Συνεργασ´ιας, Kυριακη´ 7 Ioυλ´ιoυ 1957, ωρα ´ 9:30–12:30, AKK-KKF, F3A. 15 ⊓ρακτικ´oν συνoμιλιων ´ εν τω Oμoσπ´oνδω ϒπoυργε´ιω Oικoνoμ. Συνεργασ´ιας, Kυριακη´ 7 Ioυλ´ιoυ 1957, ωρα ´ 9:30–12:30, AKK-KKF, F3A. 16 T. Rhenisch, Europäische Integration und industrielles Interesse: Die deutsche Industrie und die Gründung der Europäischen Wirtschaftsgemeinschaft (Stuttgart: Franz Steiner, 1999); and M. Schulte, “Industry, Politics and Trade Discrimination in West Germany’s European Policy, 1957–1963.” (PhD diss., London School of Economics and Political Science, 1996). 17 ⊓ρακτικ´oν συνoμιλιων ´ εν τω Oμoσπ´oνδω ϒπoυργε´ιω Oικoνoμ. Συνεργασ´ιας, Kυριακη´ 7 Ioυλ´ιoυ 1957, ωρα ´ 9:30–12:30, AKK-KKF, F3A.

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recently been reached by a committee of industrialists chaired by Christoforos Katsambas, co-owner of the Peiraïki-Patraïki textile firm, Greece’s biggest exporter of manufactured goods. The committee, established on the initiative of the Greek government, concluded that Greece’s full participation in the OEEC’s projected free trade zone would be disastrous for the country’s domestic industries.18 Going forward, therefore, Greco-German talks would be concerned with the form that the required assistance should take, given Greece’s desire to participate in the processes of Western European unification. Papaligouras’s talks in Bonn culminated in a confidential protocol articulating two important commitments. Firstly, the protocol reaffirmed both sides’ interest in particular investment projects and outlined the means by which West German participation in those projects’ financing was to be secured. Secondly, it confirmed the Federal Republic’s favorable view of Greece’s participation in the newly established European Economic Community, and declared that it was Germany’s intention to support this goal.19 Despite these affirmations, resolute progress would be made only after pivotal international and domestic developments in 1958 that obliged the Greek government and its Western allies to seek more immediate solutions to looming instability, both within Greece and internationally. These included the destabilization of the Middle East, in combination with a new intensification of the Cyprus question in the context of the Macmillan plan, which drove Greece to make decisions that did not comport with American aims; the onset of the Berlin crisis, which tested West Germany’s relationship with the United States and contributed to a closer relationship between Germany and France; the ongoing Soviet reactions to American plans to station nuclear warheads in Europe; the results of the May elections, in which the EDA emerged as the official opposition party and the Centre’s political program ceased to be a viable alternative for middle class voters; and the political implications of expanded trade with Eastern Bloc countries (which offered a solution to Greece’s surging trade deficit). All these trends and events contributed to the Greek government’s keen interest in developing a unique, privileged 18 Alexandros Tsatsos, the former president of SEV who would later serve as chairman of the Industrial Development Corporation (IDC), disagreed vehemently with some of the committee’s conclusions, but he remained a voice in the wilderness. See Oikonomikos Tachydromos (OT ), 16 and 23/5/1957. 19 Eμπιστευτικ´oν ⊓ρωτ´oκoλλoν Συνoμιλιων, ´ 9/7/1957, AKK-KKF, F3A.

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relationship with an ally in the Western Bloc. They also contributed to Bonn’s realization that Germany was the only ally that could assume this role.20 In light of the aforementioned developments, the German Foreign Ministry, at the urging of its ambassador in Athens, set aside its reservations—occasioned by the ongoing crisis in Greece’s relations with Turkey as a result of the Cyprus question—regarding a visit to Bonn by Karamanlis.21 The agreement signed by Adenauer and Karamanlis during the visit crystallized the interdependence between bilateral Greco-German relations and the broader European perspective.22 For Greek infrastructure projects and industrial investments, the agreement provided for a state-issued German loan of 200 million marks, long-term German credits of 100 million marks, and German technical assistance of 15 million marks.23 Both the preamble to the agreement and the accompanying protocol contained an explicit provision stating that the amount of the loan would be taken into account in determining Germany’s contribution to any future support that might be provided to Greece within the context of the OEEC. This provision, suggested by Erhard, offered a way of circumventing the difficulties that had cropped up in the OEEC negotiations.24 It satisfied, to some extent, the Greeks’ request for immediate

20 For the crucial role that the international and domestic political and economic developments of 1958 played in shaping the strategies of Greece’s principal allies, see K. Botsiou, Griechenlands Weg nach Europa: Von der Truman-Doktrin bis zur Assoziierung mit der Europäischen Wirtschaftsgemeinschaft, 1947–1961 (Frankfurt: Peter Lang, 1999), 397–415; J. E. Miller, The United States and the Making of Modern Greece: History and Power, 1950–1974 (Chapel Hill: University of North Carolina Press, 2009), 66–79; and M. Pelt, Tying Greece to the West: US-West German-Greek Relations 1949–1974 (Copenhagen: Museum Tusculanum Press, 2006), 158–159. 21 Pelt, Tying Greece to the West, 160–163. 22 For the official text of the agreement, see Svolopoulos, Kαραμανλης, ´ vol. 3, 297–

300. 23 Technical assistance was to be provided in five annual installments of three million marks each. This provision was not included in the official text of the agreement, where only the first installment of three million marks was mentioned. See the subsequent document from the Bundesministerium für die Wirtschaft, Besuch des griechischen Vizeministerpräsidenten Kanellopoulos am 11.1.1960 um 11 Uhr bei Herrn Minister, 8/1/1960, BAK, B102/58098. 24 Both France (which did not want to see the foundation of institutions of a supranational character) and Britain (which kept urging that payment of Greece’s prewar debt be made a precondition for further financial assistance) reacted strongly against the Greek

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financial assistance, and it also offered implicit political support to the Greek government. West German support, however, had very clear limits, and these were defined by the political exigencies of the Franco-German relationship and by broader calculations regarding the process of European integration. Erhard, speaking to Karamanlis, thus counseled moderation so as not to further complicate the already difficult impasse which had been reached in the OEEC negotiations. This impasse was due largely to France’s resistance to any appeals whose fulfillment presupposed the creation of supranational institutions. The West German reaction to the second set of economic aims advanced by the Greek side—favorable treatment for Greek products in the emerging trade area—was much more positive. But of course, this positivity did not mean that they would fully accept all of Greece’s hoped-for terms.25 After all, Erhard himself espoused a liberal vision of economic development, and thought protectionism should play a limited role in the development models of the countries that would participate in the new organizations.26 Greece’s commercial goals—and their political implications—played a critical role in defining the Western European strategy that Karamanlis’s governments pursued. But Greece’s economic challenges resulted, domestically, in intense social pressures whose resolution could not be delayed until lengthy negotiations with prospective trading partners in Western Europe had been completed. By 1958, Greece was facing a serious balance of payments crisis, and one way to address it immediately was via expanded trade with the Eastern Bloc. Between 1958 and 1960, the “Eastern trade” grew so rapidly as a share of total Greek exports that the countries of the Eastern Bloc, taken collectively, had become Greece’s primary export market.27 That this trend should coincide with the EDA’s proposals. For these reactions, see the memorandum that had been drafted in October (in advance of Karamanlis’s visit to Bonn) in Svolopoulos, Kαραμανλης, ´ vol. 3, 279–280. 25 Ibid., 276–279. 26 A. S. Milward, The European Rescue of the Nation-State (London: Routledge, 2000

[1992]), 196–201; and M. Wegmann, Früher Neoliberalismus und europäische Integration: Interdependenz der nationalen, supranationalen und internationalen Ordnung von Wirtschaft und Gesellschaft (1932–1965) (Baden-Baden: Nomos, 2002), 326. On Erhard’s economic philosophy, see A. J. Nicholls, Freedom with Responsibility: The Social Market Economy in Germany, 1918–1963 (New York: Oxford University Press, 1994). 27 S. Walden, Eλλαδα ´ και ανατ oλικ šς χ ωρες ´ , 1950–1967: Oικ oν oμικ šς σ χ šσ εις και π oλιτ ικ η´ (Athens: Odysseas-Institute for Mediterranean Studies, 1991), vol. 2, 86–138.

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emergence as Greece’s official opposition was not conducive to complacency. The argument that Greece had to be kept from slipping into the Communist orbit had already been employed by Greek leaders before the trade crisis and the May 1958 elections28 ; it now appeared more cogent and became an important consideration for Greece’s Western allies.29 At the end of 1958, the collapse of the talks concerning the creation of a broad trade area within the OEEC put the question of Greece’s association with the EEC on a new footing.30 Greek leaders had to consider how far they could retreat from their original demands, accepting a less protectionist framework than they had originally hoped for, without harming the Greek economy’s opportunities for development. That question proved very difficult to answer. The matter was complicated not only by the competing national interests of the EEC member-states, but also by American and British interference on issues such as the level of the Community tariff on imported tobacco and Greece’s prewar debt.31 The intricacy of the problems that representatives of the various nations

28 In his meetings in Bonn in July of 1957, Papaligouras put the argument to his (rather condescending) interlocutors with characteristic bluntness, describing the political consequences that would follow from a rejection of Greek demands and the consequent exclusion of Greece from both the OEEC countries’ proposed trade area and from the EEC: “I am not engaging in blackmail [...] but my successor will engage in an eastward reorientation”; see ⊓ρακτικ´oν συνoμιλιων ´ εν τω Oμoσπ´oνδω ϒπoυργε´ιω Oικoνoμ. Συνεργασ´ιας, Kυριακη´ 7 Ioυλ´ιoυ 1957, ωρα ´ 9:30–12:30, AKK-KKF, F3A. 29 C. Botsiou, Griechenlands Weg nach Europa: Von der Truman-Doktrin bis zur Assoziierung mit der Europäischen Wirtschaftsgemeinschaft, 1947–1961 (Frankfurt: Peter Lang, 1999), 412–415; Miller, United States and the Making of Modern Greece, 69–79; and Pelt, Tying Greece tot he West, 174–179. 30 [⊓εσμαζ´oγλoυ], ⊓ρooπτικα´ι μετα ´ την šναρξιν λειτoυργ´ιας της Eυρωπα¨ικης ´ Koινης ´ Aγoρας, ´ 4/2/1959; and ⊓εσμαζ´oγλoυ to Kαραμανλη, ´ Σημε´ιωμα επ´ι της αναγκης ´ πρoβoλης ´ των ελληνικων ´ απ´oψεων μετα´ της Eυρωπα¨ικης ´ Oικoνoμικης ´ Koιν´oτητoς κατα´ τας επαϕας ´ τoυ κ. ϒπoυργoν´ των Eξωτερικων ´ [...], 9/4/1959, AKKKKF, F8A. 31 American interference—despite the United States’ otherwise supportive position on Greek association with the EEC— ad to do with Greek requests regarding the level of the Community’s external tariff on imported tobacco, which threatened the competitiveness of Virginia tobacco in Western European markets. See, for example, Svolopoulos, Kαραμανλης, ´ vol. 4, 465–467. On the British interference by way of Dutch insistence on the settlement of pre-war Greek debts as a precondition for Greece’s access to loans from the European Investment Bank, see, for example, Svolopoulos, Kαραμανλης, ´ vol. 4, 498–500, 509, 524.

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were called upon to resolve was reflected in the length of the negotiations: these turned out to be protracted, despite the stated intention of all participants to complete them quickly. The Greek representatives’ approach to the negotiations evolved according to the circumstances: at one moment they appeared obliging; at another, intractable. In the end, they were fairly successful in achieving their principal aims with respect to the status of Greek agricultural products and the pace of tariff reductions for Greek industry. The Association Agreement that was signed in July 1961 provided that Community tariffs on nearly all Greek industrial goods would be repealed by 1969. Meanwhile, Greek tariffs on Community exports would be phased out over the course of either 22 years (if the products in question were also being produced in Greece) or 12 years (for whatever was not being produced in Greece at the time of the Agreement). The Agreement provided for the promotion of Greek agricultural exports to the Common Market through the easing of quantitative restrictions and tariff protections, but it also called for Greece’s gradual adoption of the EEC’s common external tariff. Moreover, Greece and the EEC would have to harmonize their agricultural policies within the framework of the Common Agricultural Policy (CAP) which was to be developed by the Six.32 Finally, the Association Agreement provided for $125 million in loans, on favorable terms, from the European Investment Bank, thus enabling Greece to obtain some of the capital it needed for the development of its economy.33 The sum that the Greek negotiators were able to obtain from the European Investment Bank in the form of loans was appreciably below what had been hoped for. The decrease from $250 to 300 million—the original Greek negotiating position—to $125 million had seemed to produce a split within the Greek side during the last stretch of the negotiations. The distance between the original Greek targets and the final amount was, in fact, less than it appeared: in the end, the Germans did not insist upon the provision of the 1958 Adenauer-Karamanlis agreement according to which German loans to Greece would offset future German aid contributions under multilateral arrangements.34 Nevertheless, there

32 On CAP, see A.-C. L. Knudsen, Farmers on Welfare: The Making of Europe’s Common Agricultural Policy (Ithaca, NY: Cornell University Press, 2009). 33 Svolopoulos, Kαραμανλης, ´ vol. 4, 545–559. 34 See a report by Christides in Svolopoulos, Kαραμανλης, ´ vol. 4, 369–372.

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was a more fundamental problem. The head of the Greek delegation, Ioannis Pesmazoglou, insisted that, for the sake of the Greek economy, the loans guaranteed in the Agreement had to at least approximate the sums asked for in the original Greek negotiating position. The attitude of Foreign Minister Evangelos Averoff was more conciliatory.35 Their divergent views on this issue reflected broader disagreements over the extent to which the Greek negotiators could afford to compromise36 —disagreements that should not be ascribed too hastily to the differing priorities of an economist and a politician.

35 ⊓εσμαζ´oγλoυ to Kαραμανλη ´ and Aβšρωϕ, Kνρια ´ επ´ιδικα σημε´ια εν σχšσει πρoς την σννδεσιν ´ Eλλαδoς´ Koινης ´ Aγoρας ´ [...], 10/7/1960, AKK-KKF, F13A; and a note by Averof in Svolopoulos, Kαραμανλης ´ , vol. 4, 342– 344. 36 ⊓εσμαζ´oγλoυ to Kαραμανλη, ´ Eισηγησις ´ επ´ι της ελληνικης ´ στασεως ´ šναντι των τελευτα´ιων εξελ´ιξεων [...], 10/5/1961, ⊓εσμαζ´oγλoυ to Kαραμανλη, ´ Συμπληρωματικη´ εισηγησις ´ επ´ι της ελληνικης ´ στασεως ´ šναντι των τελευτα´ιων εξελ´ιξεων [...], 11/5/1961; and Aβšρωϕ to Kαραμανλη´ (telephone message), 11/5/1961, AKK-KKF, F15A.

CHAPTER 9

Bulwark or Colony?

I hear repeatedly from the authorized representatives of the nations of the European Community that the issue of Greece’s association is above all a political issue. I am afraid, however, that there is not sufficient recognition of what this political issue is all about. In Greece, one and a half million people are poor due to a shortage of arable land and the prevailing lack of opportunities for employment. Today these unfortunate people are no longer willing to listen to arguments: their patience has been exhausted. Although in totalitarian countries the intellectual revolt of the disadvantaged is kept in check by police methods, this is not possible in countries with liberal institutions, such as Greece. Greek Governments since the liberation have made a sustained effort to promote the development of their country, heeding advice from foreign representatives and not seeking, as others do, to blackmail those who assist them into helping them carry out absurdly ambitious plans . . . . But Greece’s long-term problems . . . are not being solved through demonstrations of prudence and responsible governance. For this reason, the Greek Government sought association with the Common Market, and its application was accepted because of our shared desire that through the creation of an adequate infrastructure and the strengthening of its exports, Greece may find a place in the European

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_9

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economic arrangement and, lying as it does on the far edge of Europe, may become a stable political bulwark for its common defense. —Filonas Filon, Greek ambassador in Paris, January 19611 The option of association, even if it had been urged on us, should—in my opinion—have been rejected. Association is something talked about in the case of the member-states’ colonies. Why should we voluntarily rank ourselves with the Dutch Antilles? There are degrees of economic development, and for us to represent ourselves as falling into in the lowest of them is neither correct nor, I suspect, advantageous. Among nations, it is not the case that the poorest is entitled to the most. —Panayiotis Verikios, Greek ambassador to the Low Countries, January 19612

When the Association Agreement was signed in Athens in July 1961, the mainstream political parties greeted it rather favorably. Elements of the Centre offered only mild criticism of particular provisions, while Spyros Markezinis’s Progressive Party had come out in favor of full membership in the EEC.3 Many economists, on the other hand, had always taken a much more guarded position. Their caution was not something unique to Greece: in every European country that contemplated membership in a customs union, at these formative stages, the community of economists had been wary of the idea. But this is not because these customs unions have been irrational in economic terms, nor is it because economic aspirations were supposedly being sacrificed on the altar of geopolitics. In fact, the opposite is true: it has been economic theory’s inability to grasp the economic dynamics of regional integration that has dictated the reluctance of many economists.4

1 Quoted in K. Svolopoulos, ed., Kωνσ τ αντ ι´ν oς Kαραμανλης ´ : Aρχ ε´ιo, γ εγ oν o´ τ α και κε´ιμενα, 12 vols. (Athens: Konstantinos G. Karamanlis Foundation and Ekdotiki Athinon, 1992–1997), vol. 4, 478–481. 2 Bερνκιoς ´ to Aβšρωϕ, 5/1/1961, AKK-KKF, F77A. 3 For the reception of the Agreement by the Greek press and the debate in the Greek

parliament during the ratification process, see Svolopoulos, Kαραμανλης, ´ vol. 5, 114– 115 and 292–295. For the political parties’ positions from the beginning of the process, see M. Minotou, H ευρωπ α¨ικ η´ επ ιλoγ η´ τ ης κυβ šρνησ ης Kαραμανλη, ´ 1957–1959 (PhD diss., National and Kapodistrian University of Athens, 2002). 4 A. S. Milward, The European Rescue of the Nation-State (London: Routledge, 2000 [1992]), 121–134.

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The limits of economic theory were understood by the head of the Greek delegation at the negotiations for the Association Agreement.5 Ioannis Pesmazoglou, himself a professor of economics and an enthusiastic supporter of Greek participation in the process of European integration, was fully aware of the political ramifications of the decision to associate with Europe: the deepening of relations with the EEC would strengthen bourgeois political forces and consequently stabilize Greece’s connections to the Western Bloc.6 Yet this outcome was not preordained. Because of the huge difference between Greece’s level of economic development and that of the other nations of the Community, Pesmazoglou frequently warned of the danger of turning Greece into a colony of the Six. In order to avoid the economic subordination of Greece to its prospective partners, specific conditions would have to be met. These conditions, according to Pesmazoglou, involved acceptance of Greek demands regarding the promotion of Greece’s exports and the provision of economic support for Greek development.7 Pesmazoglou’s position was not mere rhetoric nor was it just part of a tough negotiating strategy on the part of the Greek negotiators. Underpinning this position, which appears throughout the Greek negotiators’ internal documents, was an acceptance of the dangers posed by an economically underdeveloped country’s participation in a customs union or trading zone that had hitherto consisted of much more developed national economies. The first official documents drafted by the Greek government during the initial stage of the OEEC negotiations had already pointed out the problems that such an asymmetry could create.8 While

5 V. Pesmazoglou, «Eλλαδα ´ και Eυρωπα¨ικη´ Oλoκληρωση, ´ 1957–1967: Oικoνoμικη´

σκšψη, πoλιτικη´ πραγματικ´oτητα και o I. ⊓εσμαζ´oγλoυ», in Iωαννης ´ Σ. Π εσ μαζ o´ γ λoυ: Π ανεπ ισ τ ημιακ o´ ς , ευρωπ α¨ισ τ ης ´ , διαπ ραγ ματ ευτ ης, ´ ed. G. Donatos, N. I. Theoharakis, G. Stasinopoulos, et al. (Athens: Metamesonykties Ekdoseis,2010), 91–105. 6 ⊓εσμαζ´oγλoυ, Σχšδιoν υπoμνηματoς ´ δια´ κ. Erhard, 12/1959, Konstantinos G. Karamanlis Foundation, Athens, Konstantinos Karamanlis Archive (AKK-KKF), F8A. 7 ⊓εσμαζ´oγλoυ, Σημε´ιωμα δια ´ τoν ϒπoυργ´oν των Eξωτερικων ´ κ. E. AβšρωϕToσ´ιτσαν, 2/1/1961, AKK-KKF, F77A. 8 Ministries of Coordination and Foreign Affairs, Greece, the European Economic Community and a Free Trade Area (Athens, 1959); and ϒπ´oμνημα της Eλληνικης ´ Kυβερνησεως ´ επ´ι της Eυρωπα¨ικης ´ Zωνης ´ Eλευθšρων Συναλλαγων, ´ χ.η., AKK-KKF, F4, subf. 1.

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those documents noted the economic benefits of an integrated market— increased productivity, support for investment and consumption—and their political importance in the Cold War context, they also emphasized the misery that would result if no steps were taken to protect the weaker economies of the European periphery. All the same, the Greek negotiators warned that the exclusion of the peripheral countries would compel them to seek other partners, in contravention of their long-established Western orientations. Thus, the Greeks were critical of those who used the difficulties that peripheral economies would face as an argument against the poorest countries’ participation in the processes of integration. Their own rationale for demonstrating the impact of peripheral countries’ participation in an integrated market was that they wished to ensure that the necessary corrective measures would be taken.9 The first official Greek documents took the position that specialization in the international division of labor does not imply mutual benefit in the case of partners with different levels of development, and that the gap between industrial and agricultural economies will widen if both become part of an integrated market. Such integration would contribute to further declines in the competitiveness of poorer countries, since it would deprive them of the opportunity to apply protectionist safeguards—the most fundamental tool of development policy that they possess—and would thus subject them to incalculable economic, social, and political costs.10 Behind this attempt to relativize the benefits of free trade, one can discern the influence of the British economist John R. Hicks on the outlook of Pesmazoglou, who was one of the principal framers of the Greek policy positions.11 In keeping with this analysis, it was further argued

9 Ministries of Coordination and Foreign Affairs, Greece, the European Economic Community and a Free Trade Area, 15–18. 10 Ibid., 18–21. 11 For this observation, see Pesmazoglou, «Eλλαδα ´ και Eυρωπα¨ικη´ Oλoκληρωση», ´

91–94, where Hicks’s Essays in World Economics (Oxford: Clarendon, 1959) is identified as one of Pesmazoglou’s intellectual points of reference. Hicks’s influences on the documents produced by the Greek delegation in 1957 can be traced mainly to the essay “Free Trade and Modern Economics,” included in the aforementioned collection but previously delivered as a lecture at the Manchester Statistical Society in March 1951. Hicks was also cited by critics of Greece’s European strategy, including the Greek Planning Society circle led by Angelos Angelopoulos. The Society later published a translation of one of Hicks’s books (Eθ νικ η´ oικ oν oμικ η´ αν απ ´ τ υξ ις εις διεθ ν η´ π λα´ισ ια [Athens: Papazisis, 1963]).

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that, even if steps should be taken to promote the economic development of peripheral economies, increased investment in those economies would have higher trade deficits as a collateral effect. Thus, the idea that protectionism was necessary if greater equity in international development was to be achieved would be a core element in the Greek negotiators’ proposals and demands regarding the development policy to be pursued by the emerging European institutions.12 Identifying the risks engendered by the creation of a formally integrated but in fact heterogeneous market, and then offering political proposals for dealing with those risks, constituted only one aspect of the Greek approach. The other aspect—equally interesting—involved describing the development model that would result in the event that the necessary steps were taken to permit the peripheral economies to make good use of their competitive advantages. A core element of this model was the migration of the surplus labor force from the periphery to the industrially developed countries. The Greek leaders saw this process as not only inevitable but also desirable, and they proposed that it should be deliberately encouraged. To alleviate its social repercussions, this process would have to be accompanied by active support for industrial investments in the developing countries, so that the hemorrhaging of population could gradually be arrested as soon as conditions made this possible. The investments would need to target the consumer and intermediate goods industries, and also, depending on the availability of raw materials, the whole range of metallurgical activities. Meanwhile, the policy of protectionism would be centrally directed by the new European authorities and would not be based exclusively on national resources, thus removing the distortions of “overtaxation” and “overprotectionism.” In the new environment, therefore, the industrialization of the European periphery would be accompanied by competitive pressures that would, over the long run, produce a complete transformation of their economic landscapes.13 The 1961 Association Agreement partially fulfilled the conditions set forth by the Greek representatives during the advanced stages of their negotiations with the EEC: the Agreement included generous time frames

12 Ministries of Coordination and Foreign Affairs, Greece, the European Economic Community and a Free Trade Area, 23–24. 13 Ibid., 24–31.

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for the elimination of Greek tariffs on industrial products, provisions to support Greek agricultural exports, and loans from the European Investment Bank. At the same time, however, it weakened Greece’s bargaining position by denying the country full membership status and by providing for the eventual harmonization of Greece’s agricultural policy with that of the EEC once the latter had formulated its Common Agricultural Policy. The full implications of this last aspect of the Agreement would not be widely understood until later, when the Community’s filibustering of the ongoing talks on agricultural products effectively negated many of the Agreement’s benefits.14 Despite the political drawbacks of Greece’s associate status,15 very few ventured to prefer full membership on economic grounds. Those who did take such a position argued that direct exposure to international competition would provide Greek industries with a salutary shock, forcing them to adapt in order to survive.16 This point of view, though controversial, was not entirely marginal: in fact, the argument’s essential features were accepted even by supporters of the Association Agreement.17 But they were aware that the shock they were recommending might not always be a sustainable one, even given the privileged treatment offered by the Agreement’s transitional provisions. A 1957 study produced by a panel of experts from the Athens Chamber of Commerce and Industry (ACCI) had predicted that, if Greece were to join the free trade zone that the OEEC countries were trying to set up, half of the country’s industrial enterprises would face the specter of extinction.18 Supporters of association therefore considered a transitional period essential if Greek industry 14 On these talks, see E. Hatzivassiliou, Eλληνικ η´ ευρωπ α¨ικ η´ π oλιτ ικ η, ´ 1965–1966: Eπ αναδρασ τ ηριoπ oι´ησ η σ τ o κ oιν oτ ικ o´ π λα´ισ ιo (Athens: Konstantinos K. Mitsotakis Foundation, 2003). 15 Career diplomats—including Panayiotis Verykios, Greece’s ambassador to the Low Countries—sometimes expressed their dissatisfaction with the choice of associate status instead of accession to the EEC as a full member; they pointed out that associate status had not been meant for equal, independent, and sovereign states. See Bερνκιoς ´ to Aβšρωϕ, 5/1/1961, AKK-KKF, F77A. 16 For this debate within Greek industry circles, see Oikonomikos Tachydromos (OT ), 16 and 23/5/1957. 17 A. Kakridis, “Greek Economists and the Quest for Development (1944–1967)” (PhD diss., Panteion University, 2009), 252–256. 18 Athens Chamber of Commerce (EVEA), H θ šσ ις τ ης Eλλαδ ´ oς šναντ ι τ ης E.Z.E.Σ. (Athens, 1957).

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was to emerge from the shelter of protectionist policies and face competition from the other nations of the Community. The most ambitious version of this position predicted that, by taking advantage of the possibilities offered by the large European market, Greece could move to an export-led growth model sustained by certain internationally competitive industries.19 Not all of the relevant studies preceded the government’s decision to seek closer relations with the EEC. In an era rife with attempts at institutional reform, there was no established mechanism for the timely production of theoretical and scientific analysis as a basis for political decisions. In fact, it was frequently the pressure created by such decisions that caused the necessary work to be done belatedly, or even after the fact. Thus, it was during the negotiations for association with the EEC, in 1959–1960, that Greece’s Centre of Economic Research was established. This organization, later overhauled and restructured as the Centre of Planning and Economic Research (KEPE), published its first studies in the wake of the signing of the Association Agreement.20 These studies, part of an ambitious publishing program, addressed, inter alia, the question of the long-term consequences of Greece’s association with the EEC, including the prospects for Greek industry in light of its gradual exposure to competition from the Community. Although the circle of economists at KEPE embraced the decision to participate in the Common Market,21 the only study published by the Centre that was exclusively devoted to the subject took an entirely pessimistic view. Professor Stefanos Triantis’s book, titled Common Market and Economic Development: The EEC and Greece, was published in 1965—four years after the signing of the Association Agreement. Triantis estimated that Greek manufacturing, in order to produce competitive industrial hubs, would need to enjoy high levels of protection over a much longer time span than the transition period provided for in the Agreement. Moreover, he challenged the argument that association with 19 D. I. Halikias, Oικ oν oμικ η´ αν απ ´ τ υξ ις τ ης Eλλαδ ´ oς και ισ oζ ν´ γ ιoν π ληρωμων ´

(Athens: Bank of Greece, 1963), 79–119. 20 G. Kostelenos and D. Kazis, 50 Xρ o´ νια Kšντ ρ o Π ρ oγ ραμματ ισ μoν ´ και Oικ oν oμικ ων ´ Eρευν ων ´ (Athens: KEPE, 2011), 11–40. 21 For the views of KEPE’s research staff during the early years of its existence, see the author’s oral history interview with Adamantios Pepelassis, deputy scientific director of the Centre of Economic Research in 1962–1963, Athens, 22/1/2014.

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the EEC and access to an expanded market would ensure opportunities for Greece’s exports, concluding instead that the concentration of Greek manufacturing in a handful of specialized industries would make it more vulnerable to international fluctuations. From this point of view, exposing Greek industry to international competition in hopes of forcing it to restructure and modernize itself might in fact cause its destruction if the pressure exerted by foreign competitors should prove insupportable.22 Triantis, whose findings harmonized well with the catastrophizing outlook espoused by the Left,23 was not exceptional in his pessimism. From the conservative economist Leonidas Dertilis, who succeeded Papaligouras at the Ministry of Trade after the 1958 elections, and Vassilios Damalas, former secretary-general of the Ministry of Coordination under the Centre Union; to Professor Georgios Koutsoumaris, economic advisor to the Federation of Greek Industrialists (SEV), and the devotees of economic planning under Angelos Angelopoulos, the various critics of association voiced a wide range of concerns: the impact that the lifting of quantitative limits on imports would have on the balance of trade; the need for a policy of state intervention in the Greek economy; and the suffocating competition that Greek domestic industry would face under the new arrangements.24 The solutions that were proposed in response to these various concerns differed according to the particular aims of those who articulated them. In this respect, the work of Georgios Koutsoumaris, who produced a specialized study for the KEPE that was published in 1963 under the title The Morphology of Greek Industry, is of particular interest. Koutsoumaris detailed what he saw as the most critical priorities for Greek industrial policy given Greece’s association with the Community, emphasizing, 22 S. G. Triantis, Koιν η´ Aγ oρ α ´ και Oικ oν oμικ η´ Aν απ ´ τ υξ ις : H Eλλας ´ και η EOK (Athens: KEPE, 1967 [1965]). 23 N. Kitsikis, ed., H θ ν ´ ελλα τ ης Koιν ης ´ Aγ oρ ας ´ (Bucharest: Political and Literary Publications, 1962). 24 A. Angelopoulos, “Διατ´ι δεν συμϕšρει πρoς τo παρ´oν η σννδεσις ´ με την Koινην ´ Aγoραν”, ´ Nea Oikonomia 155.11 (1959): 722–725; and the Greek Planning Society, Π ρ oγ ραμματ ισ μ´oς και oικ oν oμικ η´ αν απ ´ τ υξ ις : Tρεις δημ´oσ ιαι σ υζ ητ ησ ´ εις (Athens, 1966), 39–65; V. Damalas, H Eλλας ´ και η Koιν η´ Aγ oρ α: ´ To μšλλoν τ ης ελληνικ ης ´ oικ oν oμ´ιας εις τ α π λα´ισ ια τ ης Eυρωπ α¨ικ ης ´ Oικ oν oμικ ης ´ Koιν o´ τ ητ oς (Athens: Papazisis, 1962); Δερτιλης ´ to Kαραμανλη, ´ 31/7/1958, AKK-KKF, F6A; and G. Coutsoumaris, The Morphology of Greek Industry (Athens: Center of Economic Research, 1963).

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among other things, the maintenance of low labor costs, government subsidies to cover part of the cost of technological improvements, and the provision of additional resources to thriving industries.25 The need to socialize the costs of Greek industrial firms’ modernization was a point of consensus among the SEV leadership. On the other hand, there had been no such consensus among these industrialists as to whether Greece ought to participate in the process of creating an integrated market. In May 1957, the “industry committee” had been established in response to a government request, with Katsambas as president and a membership that included various industry executives and administrative officials. The committee took the position that Greece’s immediate accession to the OEEC countries’ proposed trade area would mean the devastation of Greece’s domestic industries; they hoped for privileged treatment of Greek industry in the context of a loose association. At the same time, Alexandros Tsatsos, a former SEV president and CEO of the cement company AGET, was writing opinion pieces in favor of full and unconditional membership.26 Tensions within the SEV over this issue became so serious that the Federation’s president, Nikolaos Dritsas, issued a circular in which he stressed that debating the pros and cons of Greece’s participation in the process of European integration was harmful, insofar as the question was political and concerned the survival of the Western Bloc. On this basis, the circular emphasized that the real challenge facing Greek industry was its need to Europeanize regardless of whether or not Greece took part in the emerging European projects. The gravest risks, the circular concluded, lay in attempting to sustain a situation in which production costs were high and genuine competition nonexistent.27 Although the SEV president’s circular adduced the political nature of Greece’s upcoming decision in order to soothe tempers within the Federation, mention of the need to Europeanize also called attention to the 25 Coutsoumaris, Morphology of Greek Industry. For a more detailed account of the ´ studies presented in this chapter, see. Ch. Tsakas, “Oι Eλληνες βιoμηχανoι ´ μπρoστα´ στην ευρωπα¨ικη´ πρ´oκληση: Kρατικη´ στρατηγικη´ και ιδιωτικα´ συμϕšρoντα απ´o τη σννδεση ´ με την EOK στην απoκατασταση ´ της Δημoκρατ´ιας” (PhD diss., University of Crete, 2015), 51–67. 26 For Tsatsos’s views and the conclusions of the industry committee, see Oikonomikos Tachydromos (OT ), 16 and 23/5/1957. 27 SEV Circular, T´ιθεται θšμα μειωσεως ´ τoυ κ´oστoυς η´ εξευρωπα¨ισμoν´ της παραγωγης, ´ undated [1957], Gennadius Library, Athens, Konstantionos A. Vovolinis Papers, F300.

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developmental aspect of the choice for Europe. But public statements regarding the Greek economy’s prospects in the new internationalized context did not necessarily complement the political activities and corporate strategies of Greek industry’s leading figures. Whatever official positions the SEV might take, the leading lights of the business world—entrepreneurs such as Katsambas, Tsatsos, Bodossakis, and even Andreades—based their attitudes on their own perceptions of opportunities for investment or trade. In some cases, such as that of Tsatsos, these individuals’ viewpoints happened to coincide with an ideological belief in the possibilities that would be opened up by the liberalization of international trade. In other cases, including that of Bodossakis, they reflected the places they had already established for themselves within the international division of labor. In most cases, their viewpoints were closely connected with the benefits they derived from American aid and German credits, and with the consequent strengthening of their own positions in the sectors where they operated. In any case, the characteristic reaction of Greece’s most powerful industrial firms to their impending exposure to international competition took the form of efforts to exert pressure on the Greek government, in hopes of obtaining favorable terms for their bilateral negotiations and arrangements with future business partners. The possibilities of Greco-German business partnerships had been of great interest to both sides from very early on. From the time of Papaligouras’s initial contacts in Bonn, there had been talk of Siemens expanding its operations in partnership with Greek electrical appliance manufacturers such as Drakos’s IZOLA.28 Later, with Karamanlis’s visit to the West German capital on the horizon, Katsambas briefed the Greek prime minister on the favorable prospects for the establishment, in partnership with the West German textile industry, of Greek textile factories which, taking advantage of Greece’s cotton crop and ample workforce, could produce goods for export.29 Similar opportunities might exist 28 ⊓ρακτικ´oν συνoμιλιων ´ εν τω Oμoσπ´oνδω ϒπoυργε´ιω Oικoνoμ. Συνεργασ´ιας, Kυριακη´ 7 Ioυλ´ιoυ 1957, ωρα ´ 9:30–12:30, AKK-KKF, F3A; and šματα υπoυργε´ιoυ Συντoνισμoν´ πρoς συζητησιν ´ εις B´oννη, 6/11/1958, AKK-KKF, F7A. 29 Kατσαμπας, ´ Σημε´ιωμα επ´ι τoυ ταξιδε´ιoυ των γερμανων ´ βιoμηχανων ´ βαμβακoς ´

εις Eλλαδα, ´ 6/10/1958; and Στoιχε´ια βαμβακoς, ´ 6/11/1958, AKK-KKF, F7A. Business opportunities, however, would not prevent Katsambas from asking—shortly thereafter—for protectionist measures such as higher tariffs and quantitative restrictions on textile imports. See Kατσαμπας ´ to Kαραμανλη, ´ 14/5/1959, and Kατσαμπας, ´ H ελληνικη´ βιoμηχαν´ια βαμβακoς, ´ 10/5/1959, AKK-KKF, F9A.

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for the tobacco industry, since the success of its exports would depend more heavily on the preferences (or available options) of international consumers. Preferential treatment for Greek tobacco was the number one priority of the Greek delegation during the negotiations on agricultural products, and the important concessions won by Greece vindicated the optimism of Evangelos Papastratos regarding his business’s future within the EEC.30 Despite such optimism, and despite professions of good intentions from both sides, the process of getting the hoped-for business partnerships to materialize proved to be a complicated one. On the one hand, the fate of these ventures would depend on broader and more time-consuming negotiations concerning the legal framework that would regulate not only the establishment of West German companies in Greece but also the emigration of Greek workers to West Germany. In January 1960, the secret protocol that crowned the visit to Bonn by Greek Deputy Prime Minister Panagiotis Kanellopoulos deferred, once again, any conclusive agreement on these issues.31 Even when an agreement was finally reached shortly thereafter, the provisions regarding the establishment of companies were ratified by the Greek parliament only after a delay of seventeen months.32 Other difficulties that plagued efforts to forge viable Greco-German business partnerships had to do with the very priorities set forth in the 1958 agreement. As American sources noted at the time, funds from the German loan would either be channeled to infrastructure projects or would be used to indirectly support Greek purchasing power by neutralizing the pressures on the exchange rate that would result from continually increasing imports of consumer goods. The private sector, while not entirely denied the benefit of these inflows, was

30 E. Papastratos, H δ oυλεια ´ κι o κ o´ π oς τ ης : απ o´ τ η ζ ωη´ μoυ (Athens: n.p., 1964),

239. 31 Von Brentano, Erhard, Kanellopoulos, Vertrauliches Ergebnisprotokoll, 15/1/1960, BA Koblenz (BAK), B102/58098. 32 Naftika Chronika, 627/386 (15/7/1961); and D. K. Apostolopoulos, Die griechisch-deutschen Nachkriegsbeziehungen: Historische Hypothek und moralischer Kredit (Frankfurt: Peter Lang, 2004), 196–200 and 236–238.

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supposed to obtain financial resources chiefly from the 100 million marks provided for this purpose—not from the 200 million loan.33 A special place—somewhere between state infrastructure projects and private investment ventures—was occupied by the Greek request for the promotion of West German orders from PYRKAL, Bodossakis’s munitions company.34 Internal documents produced by the German Ministry of Economy on the eve of Karamanlis’s visit to Bonn in 1958 identified PYRKAL as one of two major economic issues that the Greek prime minister would raise with the German chancellor.35 Bodossakis’s open conflict with the Greek government throughout 1958 did not prevent him from asking that government to advocate for his interests in the course of the Greco-German talks, nor did it prevent the prime minister from presenting Bodossakis’s case at the highest levels during his visit to the West German capital. Although Karamanlis’s vague allusions to a future nationalization of PYRKAL never solidified into policy, the National Bank had increased its control over the company, whose importance to the Greek economy transcended domestic business-government disputes.36 But moderation on both sides was not sufficient to avert a serious crisis at PYRKAL, which continued to post losses until 1961, despite huge reductions in its workforce.37 Unlike industrial investments, which were always a central element in official talks between Greece and West Germany, the opportunities presented by shipping were not on the negotiating table during

33 Riddleberger to Secretary of State, 23/11/1958, National Archives and Records

Administration at College Park, MD (NARA), RG84, Series: Classified General Records, 1943–1963, UD2650A, Box 66: 510.1 Classified 1956–1957–1958. 34 Jacques (US embassy in Athens), Memo of Converstion (Arliotis/Jacques): Greco-

German Financial Negotiations, 19/11/1958; and Riddleberger to Secretary of State, 23/11/1958, National Archives and Records Administration at College Park, MD (NARA), RG84, Series: Classified General Records, 1943–1963, UD2650A, Box 66: 510.1 Classified 1956–1957–1958. 35 Bundesministerium für die Wirtschaft, (Entwurf) Besuch des griechischen Ministerpräsidenten Karamanlis (10. Bis 13.11.1958), 6/11/1958, BAK B102/58097. 36 Mπoδoσακης ´ to Kαραμανλη, ´ 20/9/1958; and the attached note ⎡ερμανικα´ι παραγγελ´ιαι πυρoμαχικων ´ εις Eλλαδα, ´ 19/9/1958; ⎡ερμανικα´ι απoψεις επ´ι θšματoς στρατιωτικων ´ παραγγελιων ´ εις Kαλυκoπoιε´ιoν, 18/9/1958, AKK-KKF, F6A; and Svolopoulos, Kαραμανλης ´ , vol. 3, 276–279. 37 G. Pagoulatos, H Eθ νικ η´ Tρ απ ´ εζ α τ ης Eλλαδ ´ oς , 1940–2000 (Athens: Historical Archive of the National Bank of Greece, 2006), 272–273.

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Karamanlis’s visit. Although the second part of the Greco-German establishment agreement (signed in March 1960) did address the regulation of maritime issues, exploration of particular investment opportunities was left to whatever parties might be interested. In March 1961, even before the agreement had been ratified by the Greek parliament, Andreades addressed to Rheinhardt a letter in which two possibilities were explored: first, the possibility of subsidies from the West German government that would encourage Greek shipowners to place orders with German shipyards; second, Germany’s possible interest in strengthening ship repair and shipbuilding activities in Greece through the provision of appropriate credits.38 Reinhardt, apparently unenthusiastic, waited until September to forward the letter to the German Shipowners’ Association (Verband Deutscher Reeder) and the Association of German Shipyards (Verband Deutscher Schiffswerften). He also shared the letter with the Federal Association of Private Banks (Bundesverband des privaten Bankgewerbes),39 but all three organizations were slow to express their views. In the end, two discouraging letters from Reinhardt, one in October 1960 and another in January 1961, apprised Andreades of West Germany’s rather notional interest in Greek shipping and its reluctance to provide additional financing to the Greek shipbuilding industry.40 This lack of engagement on the part of the Germans would prove costly for the West German shipbuilding industry, which had missed what was perhaps the last chance to address its ongoing loss of Greek contracts,41 and thus to arrest—albeit temporarily—the emergence of

38 Gerbaulet (Bundeswirtschaftsministerium) to Verband Deutscher Reeder and Verband Deutscher Schiffswerften, Stellungnahme zum Schreiben der Handelsbank von Griechenland vom 31.3.1961 an MinDir Dr. Reinhardt, 25/9/1961; and the attached Andreadis to Reinhardt (German translation of the original French document), BAK,B102/293078. 39 Gerbaulet (BMW) to Verband Deutscher Reeder and Verband Deutscher Schiffswerften, Stellungnahme zum Schreiben der Handelsbank von Griechenland vom 31.3.1961 an MinDir Dr. Reinhardt, 25/9/1961, BAK, B102/293078. 40 Andreadis to Reinhardt, 6/11/1961; and Reinhardt to Andreadis, 4/1/1962, BAK, B102/293078. 41 Already in the late 1950s, more new Greek orders were being placed in Japanese shipyards than in those of any other country—a trend that snowballed after 1961. For Greek orders by country and shipyard, see. G. M. Foustanos, Bασ ιλε´ις τ ων ωκεαν ων. ´ Nαυπ ηγ ησ ´ εις τ ων Eλληνων, ´ 1948–1974, 4 vols. (Athens: Argo, 2000– 2004).

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Japan as the center of global shipbuilding.42 In their rather predictable responses to Andreades’s letter, the German shipowners opposed governmental support for their Greek competitors,43 the Association of German Shipyards was in favor of subsidizing Greek orders but against German investment in the Greek shipbuilding industry,44 and the private banking industry appeared—as so often in the past—wary of any further outflows of German capital.45 The response of the Union of Private Shipping Banks (Arbeitsgemeinschaft privater Schiffsbanken)—a presumably interested organization which Andreades’s letter reached via the Federal Association of Private Banks—did send a positive response to the West German Ministry of Economy, but only after a long delay.46 In contrast to such failures in the private sector, the use of West German assistance for important state enterprises, and especially for PPC’s power generation projects, would yield more tangible results. Greece’s investment program had prioritized the expansion of the nation’s electrical generation capacity, as a precondition for reducing the power costs of energy-intensive industries. At the beginning of 1961, three major projects were underway: two new brown coal-fired power plants were being built at Ptolemais, another was being installed at Megalopolis, and a hydroelectric dam was being constructed at Kastraki on the Acheloos River. The total cost of these projects amounted to 509 million marks, of which 357 million marks came from foreign sources. German capital’s share amounted to 65.3% (233 million marks), while the proportions of American and French capital were 23.5% (84 million marks) and 11.2%

42 S. Tenold, “The Declining Role of Western Europe in Shipping and Shipbuilding, 1900–2000” in Shipping and Globalization in the Post-War Era, ed. N. P. Petersson, S. Tenold, and N. White (Basingstoke: Palgrave, 2019), 9–36. 43 Verband Deutscher Reeder to Bundeswirtschaftsministerium, Stellungnahme zum Schreiben der Handelsbank von Griechenland vom 31.3.1961, 10/10/1961, BAK,B102/293078. 44 Verband Deutscher Schiffswerften to Bundesminister für Wirtschaft, Stellungnahme zum Schreiben der Handelsbank von Griechenland vom 31.3.1961 an MinDir Dr. Reinhardt, 28/11/1961, BAK, B102/293078. 45 Bundesverband des privaten Bankgewerbes to Bundesministerium für Wirtschaft, Stellungnahme zum Schreiben der Handelsbank von Griechenland vom 31.3.1961 an Herrn Ministerialdirektor Dr. Reinhardt, 14/11/1961, BAK, B102/293078. 46 Arbeitsgemeinschaft privater Schiffsbanken to Bundesverband des privaten Bankgewerbes, Schreiben der Handelsbank von Griechenland vom 31.3.1961 an Herrn Ministerialdirektor Dr. Reinhardt, BMW, 5/12/1961, BAK, B102/293078.

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(40 million marks), respectively. Siemens, meanwhile, was making a technical study of a possible fourth project: the construction of a second hydroelectric dam at Kremasta, also on the Acheloos.47 The study was funded through the technical assistance provisions of the 1958 agreement, and other studies received funding from the same source. The progress of the “German studies” of various investment projects was a standing item on the agenda of the joint meetings, chaired by the prime minister, between the Industrial Development Corporation (IDC) and the relevant ministries.48 The prospect of completing the hydroelectric projects on the Acheloos was of particular interest, since it had been associated, since the era of Greece’s first postwar development plans, with the possibility of providing low-cost electricity for an alumina production plant49 —or, more optimistically, for an aluminum smelter.

47 Gerbaulet, Griechische Projekte, 19/1/1961; and the attached cost calculations BAK, B102/74715. 48 For example, see Σ νσκεψις ´ 30ης Mαρτ´ιoυ 1960, AKK-KKF, F12A. 49 Alumina is the intermediate stage of aluminum production that results from the

processing of bauxite.

CHAPTER 10

Bauxite and Aluminum: A Turn Toward France?

Karamanlis: I would also like to learn your views about French investments in Greece. Debré: We wish to see them happen, and we are pleased with the beginning that has been made with the Pechiney agreement. But we need to recognize two critical facts: (1) the French economy has only been in recovery since 1958, and confidence in its rehabilitation is not yet such as to allow us to intervene in, or to seek to direct, capital flows; (2) our investments in Algeria are our top priority. —Exchange between the Greek prime minister and his French counterpart during Konstantinos Karamanlis’s visit to Paris, 11 July 19601 The Vereinigten Aluminium-Werke (VAW) are of the opinion that the projected price for electricity cannot be met without some form of subsidy. It is principally for this reason that the company chose not to participate,

1 Quoted in Κ. Svolopoulos, ed., Κωνσταντίνος Καραμανλής: Αρχείο, γεγονότα και κείμενα, 12 vols. (Αthens: Konstantinos G. Karamanlis Foundation and Ekdotiki Athinon, 1992– 1997), vol. 4, 352.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_10

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even though Pechiney had set aside 50% of its interest— 25% of the capital stock—for VAW. —Seelos (Ambassador of the Federal Republic of Germany in Athens), 22 July 19602 I ask you to consider whether it is advisable or perhaps even necessary for me to raise the matter with the French minister for industry and commerce, Professor Jeanneney. Naturally it is unacceptable that the importation of Greek bauxite, something which has been going on for years, may now be adversely affected because French industry is setting up its own aluminum operation in Greece, having obtained a commitment to energy prices which are presumably far below normal. Westrick (Federal Ministry of the Economy/State of Secretary), 17/3/19623

The establishment of Aluminium of Greece4 (AoG) was a landmark event. It was the biggest and most notable foreign investment in an era that saw Greece transform itself from an underdeveloped agricultural economy to an industrialized nation. AoG, which began operations in 1966, was closely identified with a French multinational aluminum company that was one of its original investors.5 For this reason, it has often been treated as evidence of France’s importance to the Greek economy, or even of 2 Seelos (Ambassador of the Federal Republic of Germany to Athens) to Auswärtiges Amt, Aufbau einer Aluminium-Ιndustrie in Griechenland, 22/7/1960, Bundesarchiv Koblenz (BAK), B102/293056. 3 Westrick to Abteilung V (BMWi), 17/3/1962, BAK, B102/293056. 4 There exist two monographs on the Aluminium of Greece (AoG). The older one,

based on a wide range of French and European sources, and including full access to the archives of AoG and Pechiney, remains the most comprehensive account: I. Grinberg and P. Mioche, Aluminium de Grèce: L’usine aux trois rivages (Grenoble: Presses Universitaires de Grenoble, 1996). The more recent publication, Κ. Κostis, Κράτος και επιχειρήσεις στην Ελλάδα: Η ιστορία του Αλουμινίου της Ελλάδος (Αthens: Polis, 2013)—an expansion of the author’s previous book Ο μύθος του ξένου: Ή, η Pechiney στην Ελλάδα (Αthens: Αlexandria, 1999)—is based on a much more limited range of sources (mostly Greek, but with a selective use of the AoG archives as well). Whereas Kostis’s monograph neglects the European context, Grinberg and Mioche’s work conceptualizes the establishment of AoG as part of Greece’s West European strategy. Neither book, however, examines systematically the prospects for the development of the aluminum industry in Greece in the context of the postwar division of labor in Western Europe prior to the establishment of AoG. 5 In fact, the project was realized by a consortium consisting of Reynolds, an American multinational aluminum producer, the Niarchos Group, and the Industrial Development Corporation (IDC), a Greek state agency, under the leadership of Pechiney.

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the existence of a Greco-French special relationship. Pechiney’s investment, however, was not the outcome of initiatives taken by the French government. On the contrary, it was part of broader developments in the international aluminum industry resulting, on the one hand, from the new landscape created by the division of Western Europe into the Common Market and the European Free Trade Association (EFTA) and, on the other hand, from competition for control of available bauxite deposits.6 Meanwhile, West Germany’s resistance to the idea of creating an aluminum industry in Greece underscored the continuities that existed between the Marshall Plan and the European project. Even if European integration was opening up new opportunities for the development of peripheral economies as a result of their privileged relationship with West Germany, this relationship was to be built upon the legacy of the Marshall Plan—which, in this case, had made Greece into a key supplier of bauxite to the West German aluminum industry. Divergent interests with respect to the projected aluminum investment very quickly turned into a Franco-German dispute within the EEC and, concurrently, ignited a fierce political confrontation within Greece. The development of an aluminum industry was among those proposals in the first Greek postwar reconstruction programs that were rejected by the American mission. The Americans regarded such an investment as uneconomical. Instead, they preferred to reinforce Greece’s traditional role as a supplier of bauxite to Northern Europe’s aluminum industries,7 and they drew up a plan to upgrade the Skalistiris Groups’s Eleusis Bauxites mining operation through a combination of industrial loans and Strategic Materials Program aid. The aim of the plan was to maximize production and facilitate Greek bauxite exports to West Germany. It was 6 For his remarks on the Norwegian case, I am thankful to Hans Otto Frøland, whose comments and ideas have been of critical importance for the contextualization of my research within the overall European framework. My sincere thanks also to Philippe Mioche for his interest and to Olivier Lambert and Elvire Coumont, both of the Institut pour l’histoire de l’aluminium (IHA), for providing me with relevant material. 7 H. O. Frøland, “Une existence ‘confuse’: l’histoire transnationale de la SABAP, 1928– 1956”, in Industrie entre Méditerranée et Europe, XIXe-XXIe siècle, ed. M. Carbonell, X. Daumalin, I. Kharaba, et al. (Aix-en-Provence: Presses Universitaires de Provence, 2019), 195–210; and L. Papastefanaki, “‘Greece Has Been Endowed by Nature with This Precious Material’: The Economic History of Bauxite in the European Periphery, 1920s– 70s,” in Aluminum Ore: The Political Economy of the Global Bauxite Industry, ed. R. S. Gendron, M. Ingulstad, and E. Storli (Vancouver: University of British Columbia Press, 2013), 158–184.

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there that aluminum production would take place, and a portion of the output would be exported to the United States.8 At the same time, the Economic Cooperation Administration (ECA) was promoting the expansion of aluminum production in Norway, on the grounds that the country had the comparative advantage of cheap energy thanks to its rich waterfalls.9 The absence of bauxite deposits in Norway was no impediment: this problem could be solved through the importation of Greek bauxite. In its most ambitious version, this plan envisaged the production of alumina in Greece and its direct export to Norway. In October 1950, at a meeting between Greek and Norwegian representatives in Paris, it was agreed that a Norwegian delegation would be sent to Greece to investigate the possibilities for on-site exploitation of Greek bauxite deposits.10 This version of the plan was definitively shelved, however, after the Norwegian experts concluded it was unrealistic to expect that Greece could develop into an alumina producer in the foreseeable future.11 After these early disappointments, Greek hopes for upgrading their country’s production found expression in the direct approach to the Germans, and aluminum was back on the agenda. The establishment of an alumina production plant was presented by the Greeks as a critical need and was finally included on the list of investments of common interest in the texts of the 1953 agreements. In fact, among all the proposed projects on the list, this was the investment with the third largest amount of projected funding (USD 10.5 million).12 The project continued to be

8 ECA/Greece to ECA, 20/12/1951, National Archives and Records Administration, College Park, MD (NARA), RG469, Series: Decimal Files 1948–1954, UD360, Box 37: Greece/7.221 Aluminum and Bauxite. 9 M. Ingulstad, “Cold War and Hot Metal: American Strategic Materials Policy, the Marshall Plan and the Loan to the Sunndal Smelter,” in “Comparative Perspectives on the Norwegian and Canadian Aluminium Industries,” special issue, Journal for the History of Aluminium 2 (2007): 125–144. 10 Katz (Special Representative in Europe/Paris) to ECA/Washington, Sunndalsora

aluminum plant, 14/10/1950, NARA, RG469, Series: Decimal Files 1948–1954, UD360, Box 37: Greece/7.221 Aluminum and Bauxite. 11 ECA/Norway to ECA, 21/3/1951, NARA, RG469, Series: Decimal Files 1948– 1954, UD360, Box 37: Greece/7.221 Aluminum and Bauxite. 12 BMWi, Vermerk: Deutsch-griechische wirtschaftliche Zusammenarbeit, 29/10/1953, ΒΑK, Β102/57976.

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discussed at all the important stages in the development of the GrecoGerman relationship, down to Karamanlis’s visit to Bonn in November 1958.13 Despite the alleged urgency of the desired investment, however, no substantial joint action was taken. There was a simple reason that the proposal went nowhere: the concerned parties were expressing serious reservations regarding the viability of the proposed investment. As early as 1953, Bodossakis (true to form) had supposed that the aluminum investment would require the harnessing of the Acheloos River—a consideration which, in his view, rendered such an investment highly questionable.14 And indeed, as we have seen, the first Karamanlis government postponed work on the Acheloos project indefinitely in 1955 due to the high cost of the investment. Bodossakis’s views were shared by VAW, the (state-owned) German firm that was most interested in the project. The key discussions between Greek officials and VAW took place in April 1957. At these, the Greek side cited the recent establishment of the EEC and Greece’s desire to participate in it as a primary reason for the development of Greece’s aluminum industry. The Greeks even offered VAW the management of the proposed aluminum company, emphasizing as inducements the presence of bauxite reserves, the availability of cheap labor, and the low energy costs guaranteed by the exploitation—enabled by West German capital—of the lignite deposits at Ptolemaida. The German company, however, offered little hope of a commitment: it cast doubt on the alleged advantages and pointed out that its own preexisting investments and trade commitments in Canada and Norway made it harder for VAW to undertake new projects.15 Similarly, during a resumption

13 Betz (West German embassy in Athens) to Auswartiges Amt, Amtlicher Besuch der griechischen Minister Papaligouras und Eftaxias in Bonn, 5/8/1955, BAK, B102/58096; and Vertrauliches Besprechungsprotokoll, 9/7/1957, BAK, B102/58097. By contrast, during the visit to Germany of the Greek Vice Premier Panagiotis Kanellopoulos in January 1960, when negotiations with Pechiney had started, this item was not on the agenda. See Von Brentano, Erhard, Kanellopoulos, Vertrauliches Ergebnisprotokoll, 15/1/1960, BAK, B102/58098. 14 Knoke (West German embassy in Athens) to Auswärtiges Amt, Aufzeichnung: Ptolemais, 5/6/1953 [Anlage zu Bericht Nr. 656 vom 22.6.1953], ΒΑK, Β102/57976. 15 Väth, Vermerk über die erste Besprechung betr. Aufbau einer griechischen Aluminiumindustrie im Bundeswirtschaftsministerium am 11.4.1957, 23/4/1957; and Väth, Vermerk: Aufbau einer griechischen Aluminiumindustrie. Besuch der Herren Philaretos und Pappas. Besprechung bei VAW am 12.4.1957, 13/4/1957, BAK, B102/293056.

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of talks on the eve of Karamanlis’s visit to Bonn, VAW management explained to frustrated Greek officials that the extensive trading area to be formed within the Organization for European Economic Co-operation (OEEC) would be self-sufficient in aluminum as a result of Norwegian production.16 It was not only the Germans who were hesitant. A little earlier, in 1956, American aluminum firms such as Reynolds and Alcoa, which were busily trying to assess the quantity and quality of available bauxite deposits throughout the world, considered the possibility of establishing an alumina plant in Greece. Just before leaving Greece, the investigating geologist commissioned by Reynolds informed the American mission that Greek bauxite was not suited to American processing methods. He expected, however, that Reynolds was very likely to ignore his misgivings.17 At around the same time, other sources were providing differing accounts of Reynolds’s plans regarding alumina production in Greece,18 and reports that the company had already decided to invest there could not be confirmed. American companies’ interest in Greek aluminum was never entirely withdrawn, and the possibility of American investment remained open until the end of the decade.

16 VAW to BMWi, Griechisches Aluminium- und Tornedeprojekt, 23/9/1958; and the attached Griechenland / Bau von Erzeugungsanlagen für Tornede und Aluminium, 19/9/1958, BAK, B102/293056. The Germans may have come to this view, when Erhard, during his visit in Oslo earlier in 1958, was persuaded by his Norwegian interlocutors that Norway’s upcoming aluminum expansion program would be aimed at the West German market. The collapse of the talks within the OEEC in late 1958 and the subsequent split between the EEC and EFTA led Norway to target the British market instead. See H. O. Frøland, “Distrust, Dependency, and Détente: Norway, the Two Germanys and ‘the German Question’, 1945–1973,” Contemporary European History 15.4 (2006): 495–517; and H. O. Frøland, “A Three-way Game: The Anglo-Norwegian Aluminium ‘Conflict’ in the 1960s and the Role of Alcan,” in From Warfare to Welfare BusinessGovernment Relations in the Aluminium Industry, ed. H. O. Frøland and M. Ingulstad (Trondheim: Akademika Publishing, 2012), 229–260. 17 Longman (USOM/Greece), Memorandum: Reynolds Metals Company (Moses/Chief Geologist), 13/11/1956, NARA, RG469, Series: Subject Files, 1949–57, UD1221, Box 7: Mining: Aliveri Lignite, Bauxite & Hellenic, 1956. 18 Wood (State Department officer for Greece) to Allen (US ambassador in Athens), 4/10/1956, NARA, RG59, Series: Subject Files Relating to Greece and Cyprus, 1950– 1957, A11294, Box 27: American Interests; and Longman, Memorandum: Aluminum Production in Greece, 6/11/1956, NARA, RG469, Series: Subject Files, 1949–57, UD1221, Box 7: Mining: Aliveri Lignite, Bauxite & Hellenic, 1956.

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In the early months of 1960, the inertia surrounding aluminum investment in Greece was finally overcome when, after some preliminary discussions, Pechiney, Reynolds, and the Greek shipowner Stavros Niarchos formally declared their interest in concluding an agreement with the Greek government.19 This interest, however, was not sufficient for a swift conclusion to the negotiations, which instead proved fitful. The initial proposals came from two rival consortia. Participating in one of these consortia were Pechiney, Compadec (a subsidiary of Pechiney focusing on research and international trade), the French firm Ugine, and the German VAW. The second consortium was formed by Reynolds and Niarchos. In mid-May, the two consortia signed partnership agreements.20 Each of these agreements, however, was conditional. On the one hand, Pechiney conditioned the further progress of negotiations on the satisfaction of its demands regarding the price to be paid to the Public Power Corporation for electricity. And indeed, somewhat unusually, the power supply contract for AoG was signed one day before the protocol of the company’s incorporation agreement was finalized on June 26, 1960.21 Reynolds, on the other hand, had lost confidence in Niarchos over the course of the negotiations—the shipowner now seemed to be acting independently22 —and was waiting for all the documents to be finalized before

19 Compadec (Pechiney subsidiary) to Martis (minister of industry), 6/4/1960; and Compadec to Πρωτοπαπαδάκης (minister of coordination), 6/4/1960; Reynolds (Reynolds International, Inc./executive vice- president) to Tsatsos (IDC/president), 6/4/1960; and Τσάτσος to Συριώτη (Hellenic Shipyards/Niarchos Group), 6/5/1960, Industrial Development Corporation (IDC) Archive, Piraeus Bank Group Cultural Foundation Historical Archives, Athens (PIOP HA), S5, F1, subf. 26. 20 Συμφωνία μεταξύ Γαλλικού Ομίλου-Ομίλου Νιάρχου της 10.5.1960; and Συμφωνία διευθύνσεως της ελληνικής εταιρείας Αλουμίνας-Αλουμινίου της 17.5.1960, IDC Archive, PIOP HA, S5, F1, subf. 6. 21 Διεύθυνσις Επενδύσεων, Σύμβασις παροχής ηλεκτρικής ενεργείας μεταξύ αφ’ ενός της ΔΕΗ και αφ’ ετέρου γαλλικής ομάδος αποτελούμενης εκ της Pechiney, εις ην δύναται να προστεθή η Ugine, συνεργαζομένη μετά της Compadec, ελληνικής ομάδος κ. Στ. Νιάρχου και του ΟΒΑ, 25/6/1960; and Πρωτόκολλον συμφωνίας σχετικής με την εγκατάστασιν βιομηχανίας αλουμίνας και αλουμινίου εν Ελλάδι και διά την σύστασιν προς τον σκοπόν αυτόν της Α.Ε. Αλουμίνιον της Ελλάδος εδρευούσης εν Αθήναις, 26/6/1960, IDC Archive, PIOP HA, S5, F1, subf.6. 22 Low (Hellenic Shipyards/Niarchos Group) to Berger (US embassy in Athens), 12/8/1960 [morning]; Low to Berger, 12/8/1960; and Low to Wishart (Reynolds), 19/8/1960, IDC Archive-PIOP HA, S5, F1, subf. 26.

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it would decide whether or not to cosign the agreement.23 In the end, the final agreement between the Greek state and the other contracting parties (Pechiney, Compadec, Niarchos, and the Industrial Development Corporation (IDC) would be signed on 27 August. In September, Reynolds would become a founding partner (after the fact) in AoG.24 But what was it that had motivated these specific companies to go forward with their investment? The fact that the Greek prime minister’s visit to Paris coincided with the final stage of the aluminum investment negotiations should not lead us to draw hasty conclusions. Pechiney’s vigorous assumption of a leading role in the negotiation process was not part of any particular economic strategy to strengthen Greco-French relations. As he prepared for Karamanlis’s arrival in Paris, the Greek ambassador to France, Philonas Philon, was fully aware of the two countries’ limited opportunities to reach meaningful financial and technical agreements.25 Although both sides attached great importance to the public relations opportunities provided by the Greek prime minister’s visit, French Prime Minister Michel Debré and President de Gaulle studiously avoided making any specific commitments—especially those of an economic nature.26 The former even made it clear to his Greek counterpart that the French government did not intend to encourage French foreign investment (except in Algeria)—but it would be happy to see French firms take an interest in such investments independently.27 As it turned out, French companies’ interest in investing in Greece was limited. In the lead-up to Karamanlis’s visit, only three companies—apart from Pechiney and its subsidiary Compadec—had expressed such an interest, all for the purpose of oil exploration.28

23 Επίσκεψις εκπροσώπων του οίκου Reynolds, 22/8/1960, IDC Archive-PIOP HA,

S5, F1, subf. 26. 24 Σύμβασις 27.8.1960 μεταξύ Ελληνικού Δημοσίου αφ’ ενός και Pechiney, Compadec, ΟΒΑ, Στ. Νιάρχου (συμβαλλόμενοι); Pechiney, Compadec, Niarchos, Reynolds, Πράξις, 15/9/1960; and ΦΕΚ162Α’/4.10.1960, IDC Archive-PIOP HA, S5, F1, subf. 26. 25 Svolopoulos, Καραμανλής, vol. 4, 341–342. 26 Svolopoulos, Καραμανλής, vol. 4, 351–358. 27 Ibid., 352. 28 Χρυσανθόπουλος (Foreign Ministry/Economic Affairs Directorate), Σημείωμα: Περί των Γαλλικών οίκων οίτινες ενδιαφέρονται διά την εκτέλεσιν μεγάλων έργων εν Ελλάδι, 15/6/1960, ΑΚΚ-KKF, F12Α.

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In fact, Pechiney’s and Reynolds’s interest in investing in Greece, as well as VAW’s ultimate refusal to participate in the aluminum investment, resulted from (divergent) national strategies for dealing with the new situation created by the collapse, at the end of 1958, of talks aimed at uniting OEEC member-states into a single trading area. In that year, 70% of Western European aluminum imports came from outside Europe, mostly from the United States and Canada. The formation of the EEC, a customs union that would impose common tariffs on imports from other countries, forced American and Canadian aluminum producers to invest in the Community’s aluminum industry so as to avoid the Common Market’s customs duties. In addition, the collapse of OEEC talks and the resulting split between the EEC and the EFTA offered France, the largest Western European aluminum exporter, an open field: the EEC’s tariff barriers disadvantaged not only the giants of North America but also Norway, Europe’s other big aluminum-exporting nation. Norway would follow Britain into the EFTA and, since 22% of all Norwegian aluminum exports in 1958 went to the EEC, imposition of the Community tariff on Norwegian aluminum augured well for French aluminum exports.29 In this context, Greece—which in 1960 found itself in the last stage of negotiations to join the EEC’s customs union as an associate member— assumed strategic importance as a gateway to the Common Market. The new incentive structure was reflected not only in Reynolds’s and Pechiney’s positive responses to Greece’s development aims, but also in the negative attitude of the state-owned VAW. In contrast to France’s outward orientation, West Germany had adopted a strategy of boosting national aluminum production to meet the rapidly growing needs of West German industry. This strategy required intensive investment in West Germany’s own aluminum industry in preference to investment abroad.30 If there was to be interest in foreign investment, the risks would have to be limited. In the case of Greece, uncertainty surrounding energy costs meant that this condition did not apply. Despite French

29 H. O. Frøland, “The Norwegian Aluminium Expansion Program in the Context of European Integration, 1955– 975,” in the Comparative Perspectives on the Norwegian and Canadian Aluminium Industries special issue, Journal for the History of Aluminium 2 (2007): 103–123. 30 M. Knauer, “A Difficult New Beginning: The Race of the German Aluminium Industry to Catch up with the Competition in the 1950s and 1960s,” Journal for the History of Aluminium 51 (2013): 64–77.

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pressure on the Greek government, leading to a scandalously low price for AoG’s electricity, Pechiney’s investment remained controversial. The French, recognizing the financial risk involved, tried until the last minute to secure VAW’s participation by offering the West German company 50% of Pechiney’s share. VAW would thus assume a 25% stake in the consortium as a whole31 —a proposal the German company ultimately rejected. Reynolds’s decision to enter into a joint venture with Pechiney as a minority partner, and Pechiney’s offer to VAW, should not surprise us. Although many countries welcomed the cooperation of North American capital in sharing the costs and risks of investments,32 Western European firms had successfully defended their position in European aluminum production. They obliged their newly-arrived competitors to become minority partners in joint ventures, and North American companies had managed to control only two of the twenty-seven aluminum production facilities in EEC countries. It was precisely through mergers, expansions, and, on occasion, alliances between Western European firms that European aluminum companies’ dominant position in their own markets was maintained.33 The early 1960s saw the start of a period of tremendous growth in the international aluminum industry. By 1974, global consumption of aluminum was eleven times greater than it had been in 1950.34 As part of their efforts to meet this increasing demand, the big aluminum companies entered into a struggle for control of the world’s all-important bauxite reserves. Pechiney was in the forefront of this struggle.35 In Greece, the French very early adopted a strategy of gaining a stranglehold on this raw material. Citing the impossibility of accurately measuring the extent of the

31 Seelos (West German embassy in Athens) to Auswärtiges Amt, Aufbau einer Aluminium-Ιndustrie in Griechenland, 22/7/1960, BAK, B102/293056. 32 P. T. Sandvik, “Joint Ventures in the Norwegian Aluminium Industry and the Hydro-Harvey Affair, 1963– 1973,” in “Comparative Perspectives on the Norwegian and Canadian Aluminium Industries,” special issue, Journal for the History of Aluminium 2 (2007): 145–154. 33 Frøland, “The Norwegian Aluminium Expansion Program,” 104. 34 Knauer, “A Difficult New Beginning,” 73–74. 35 Frøland, “The Norwegian Aluminium Expansion Program,” 104–105.

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available deposits,36 the French succeeded in including in the contract of August 27, 1960, a ceiling on Greek bauxite exports of one million tons per year, with the aim of guaranteeing a reliable supply for AoG. This blanket provision proved insufficient, however. After preoccupying the AoG’s corporate founders throughout 1960–1961,37 the issue of bauxite supplies was temporarily settled by a decree from the Ministry of Trade, according to which Greek mining companies would need to obtain a one-time export license in advance whenever they made deliveries of bauxite in fulfillment of a contract with a foreign company.38 All the same, guaranteed long-term access to the necessary reserves would continue to be a pressing issue even after the first reliable sources of supply were obtained in 1962 through an agreement between AoG and the Barlos Bauxites-Hellas mines.39 The French attempt to control Greek bauxite did not go unanswered. On the one hand, West Germany’s emphasis on domestic manufacture of aluminum increased its need for the associated ore and thus heightened German interest in assuring a steady influx of bauxite from Greece.40 On the other hand, Greek mining companies now felt that their own activities were being jeopardized. This was particularly true of the Skalistiris Group’s Eleusis Bauxite mines, whose exports constituted 74% of all Greek bauxite exports to the EEC in 1960, mainly to meet demand 36 For an overview, see Τσάτσος to Παπαληγούρα, Βιομηχανία Αλουμινίου. Αποθέματα Βωξιτών εν Ελλάδι, 16/7/1962, IDC Archive-PIOP HA, S5, F1, subf. 44. With this note, Tsatsos, the president of the IDC, informed Papaligouras of the disagreements over the size of Greek bauxite deposits, following the latter’s return to government as minister of coordination after the 1961 elections. 37 See relevant material in IDC Archive-PIOP HA, S5, F1, subf. 8. 38 Υπουργείο Εμπορίου, Απόφασις: Περί εξαγωγών μεταλλεύματος βωξίτου, 3/3/1962,

IDC Archive-PIOP HA, S5, F1, subf. 44; and Εθνική Τράπεζα της Ελλάδος to Μεταλλεία Βωξίτου Ελευσίνος, Απόφασις υπ’ αριθ. 12558/3.3.1962 κ. Υπουργού Εμπορίου, 20/3/1962, Skalistiris Archive-PIOP HA, SF2/SE2/FI3.

39 See relevant material in IDC Archive-PIOP HA, subf. 21 and subf. 31. On the pressures Pechiney exercised on Barlos, who was forced to step down as chairman of his company, see Μπάρλος to Καραμανλή, 20/8/1961; and the attached memorandum; and Μπάρλος to Τσάτσο, 6/2/1962; and the attached circular, 9/12/1961, IDC ArchivePIOP HA, subf. 31. 40 It was for this reason that VAW tried to regain and expand its (rather limited) prewar rights on Greek bauxite mines. See Frøland, “Une existence ‘confuse’,” 206–210; and Papastefanaki, “‘Greece Has Been Endowed by Nature with This Precious Material’,” 174–175.

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from West German companies.41 The convergence of interests between economic actors in West Germany and Greek mining companies was not merely theoretical. Immediately after the Ministry of Trade issued its decree, Skalistiris notified the West German embassy in Athens about this new development, attributing the decision to pressure from the French.42 That opinion, which VAW director Wolfgang Simon personally conveyed to the state secretary of the Ministry of Economy Ludger Westrick,43 was only partially correct. The French had not been alone in their attempt to influence the ministry: the IDC had joined them in the effort to browbeat the mining companies, having outlined a specific action plan for this purpose at least as early as July 1961.44 German reaction was immediate. Just a few days earlier, Westrick45 had been told by VAW that the Greek government was making “veiled threats” to bauxite exporters and he was already contemplating a direct approach to French Trade and Industry Minister Jean-Marcel Jeanneney.46 Meanwhile, VAW had already demanded explanations from

41 Μεταλλεία Βωξίται Ελευσίνος to Υπουργείο Εμπορίου, 17/2/1965; and the attached table Εξαγωγαί βωξίτου διά ΕΟΚ; and Μεταλλεία Βωξίται Ελευσίνος προς Υπουργείο Εμπορίου, 16/2/1965, Skalistiris Archive-PIOP HA, SF2/SE2/FI3; and author’s interview with Michael Skalistiris, head of the Skalistiris Group in the 1960s and 1970s, Athens, 19/4/2012. 42 Vereinigte Aluminium Werke to Reinhardt (BMWi), Bauxitimport aus Griechenland, 19/3/1962, BAK, B102/293056. 43 Simon (VAW) to Westrick (BMWi), 19/3/1962, BAK, B102/293056. 44 Διεύθυνσις Τεχνικών Υπηρεσιών ΟΒΑ to Τσάτσο, Σημείωμα διά τον κ. Πρόεδρον

σχετικώς με διεξαχθείσας συζητήσεις εις το Παρίσι αναφορικώς με το θέμα βωξιτών, 14/7/1961, IDC Archive-PIOP HA, S5, F1, subf. 31. 45 Westrick’s interest in the aluminum industry was not merely theoretical. Before

he became Erhard’s close associate as state secretary in the Ministry of the Economy, Westrick had served as director of VAW before and during the Second World War. In 1942, he was appointed head of a massive program to expand light metals production in occupied Norway. See H. O. Frøland, “Facing Disincentives? Norwegian Aluminium Companies Working for the German Aircraft Industry,” in Industrial Collaboration in Nazi-Occupied Europe: Norway in Context, ed. H. O. Frøland, M. Ingulstad, and J. Scherner (Basingstoke: Palgrave, 2016), 331–357; and H. O. Frøland, “Nazi Germany’s Pursuit of Bauxite and Alumina,” in Aluminum Ore: The Political Economy of the Global Bauxite Industry, ed. R. S. Gendron, M. Ingulstad, and E. Storli (Vancouver: University of British Columbia Press, 2013), 79–106. 46 Westrick to Abteilung V (BMWi), 17/3/1962, BAK, B102/293056.

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Pechiney’s director-general Pierre Jouven, who blamed the whole situation on a misunderstanding.47 The issue very soon moved beyond the realm of Franco-German bilateral relations and was raised in the wider context of the EEC. In March 1963, despite Greek assurances to the German government that ensuring necessary bauxite supplies to West Germany was a priority, the Greek government announced its intention to impose, in that year, a ceiling of 350 thousand tons on total bauxite exports to the Common Market.48 This amount represented an arbitrarily-defined share of the overall ceiling of one million tons provided for in the 1960 agreement. However, since Greece’s 1961 Association Agreement with the EEC had come into effect in November 1962, the imposition of this new quantitative restriction on exports was subject to Community approval. Getting the member-states to agree would prove to be a difficult task. From the outset, German officials regarded the quantity provided for in the ceiling as wholly insufficient. Two years earlier, in 1961, West Germany alone had imported 408 thousand tons of Greek bauxite.49 The West German Ministry of Economy saw the French as responsible for the situation that had arisen, and began to explore legal options for removing the ceiling.50 Allowing for the possibility that they would not be able to avoid the imposition of a ceiling entirely, German officials sought to have Greek bauxite exports to Community countries set at 660 thousand tons, of which the lion’s share would go to West Germany.51 The French, on the other hand, accepted the Greek position, on the grounds

47 VAW to Reinhardt (BMWi), Bauxitimport aus Griechenland, 13/3/1962, BAK, B102/293056. 48 Boemcke (deputy permanent representative of West Germany to the EEC) to Calmes (secretary-general of the Council of the European Communities), Beschränkung der griechischen Bauxitausfuhr, 30/3/1963, Historical Archives of the EU, Florence (HAEU), CM2/1964–1543. 49 OECD-Statistik: Ausfuhr Griechenland an Aluminiumerzen und Konzentrat, BAK, B102/293056. According to other calculations, German bauxite imports from Greece in 1961 amounted to 383,000 tons. See Väth (BMWi), Vermerk über die Errichtung eines griechischen Exportkontigents für Bauxit, 22/3/1963, BAK, B102/293056. 50 Hünke (BMWi), Assoziierung Griechenlands mit der EWG: Griechenlands Exportverbot für Bauxit, 1/4/1963, BAK, B102/293056. 51 Väth (BMWi), Vermerk über die Errichtung eines griechischen Exportkontigents für Bauxit, 22/3/1963, BAK, B102/293056.

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that the proposed ceiling was merely a further specification of the original one million ton ceiling provided for in the 1960 AoG agreement that had preceded Greece’s Association Agreement with the EEC.52 The situation quickly reached an impasse: the issue was met with indifference from other member-states, and the result was yet another Franco-German standoff.53 Given all this, West German officials concluded that their best option was to apply direct pressure to Greece with the initial aim of raising the ceiling for the EEC countries; it would then become easier to negotiate the German share for the following year. The Germans argued that the Greeks could not ask for German credits to promote Greek industrialization and then use those credits to the detriment of German interests.54 The threat implied by this argument was unstated but nonetheless clear, and it proved decisive. Papaligouras sent a desperate letter directly to Erhard, justifying the need for the ceiling in terms of Greece’s contractual obligations and granting an increase in the ceiling to 425 thousand tons for 1963.55 In the end, the Germans obtained a still greater increase, to 480 thousand tons.56 The contention over bauxite exports would gradually subside after AoG signed its second supply agreement with Greece’s largest mining company, Parnassos Bauxites, in mid-1963.57 The issue would, however, continue to loom large in the negotiations over the revision of AoG’s operating agreement that were undertaken by the government of Georgios Papandreou in 1964 and concluded by the Stefanopoulos government in early 1966.58 The solution that was finally arrived at was

52 Leyser (BMWi), Vermerk: Assoziierung Griechenlands mit der EWG, 20/3/1963, BAK, B102/293056. 53 Hünke

(BMWi), Assoziierung Griechenlands mit der EWG: Griechenlands Exportverbot für Bauxit, 1/4/1963, BAK, B102/293056. 54 Hünke (BMWi), Assoziierung Griechenlands mit der EWG: Griechenlands Exportverbot für Bauxit, 1/4/1963, BAK, B102/293056. 55 Papaligouras to Erhard, 23/4/1963, BAK, B102/293056. 56 Voigt (Auwärtiges Amt) to Hünke (BMWi), [Telegram], 29/6/1963, BAK,

B102/293056. 57 For material on the supply agreements, see IDC Archive-PIOP HA, subf. 21. 58 Poincaré (AoG) to Παπανδρέου (prime minister), 31/10/1964; and the attached

ΑτΕ, Υπόμνημα προς την Ελληνικήν Κυβέρνησιν επί των διαπραγματεύσεων μετά της Α.Ε. Αλουμίνιον της Ελλάδος σχετικώς προς την εφαρμογήν της από 27 Αυγούστου

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a relative relaxation of export limits until 1970.59 In fact, however, the entire issue was by then only of secondary importance, since the real political controversy in Greece in the two years 1964–1965 centered on the extremely low price AoG paid for its electricity—something that had long attracted public attention. Because the aluminum plant would begin operations in 1966, successive Greek governments’ negotiations for a revision of the operating agreement would take place in an atmosphere of scandal that subjected Greco-French relations to a considerable strain.60 The drama culminated, in 1965, with the establishment by the Parliament of a commission of inquiry to consider referring for indictment Karamanlis and those of his government officials who were involved in the negotiations with Pechiney.61 The commission soon determined that charges were excluded by the statute of limitations and took no further action. This scandal, however, further exacerbated the political climate, which by now had become seriously dysfunctional.

1960 συμβάσεως, 31/10/1964; Σημείωμα Σταύρου Νιάρχου περί Συμβάσεως Αλουμινίου, 27/1/1965; Υπουργείο Βιομηχανίας, Υπόμνημα επί της συμβάσεως Αλουμινίου, 12/1964; Υπουργείο Βιομηχανίας, Υπόμνημα επί της συμβάσεως Αλουμινίου (συμπλήρωμα), 2/1965, Nikolaos I. Makarezos Archive (ΑΝΙΜ), Institute for Mediterranean Studies–Foundation of Research and Technology, (IMS-FORTH), F475/Α. 59 Σύμβασις 11.3.1966 μεταξύ του Ελληνικού Δημοσίου και της Α.Ε. «Αλουμίνιον της Ελλάδος», IDC Archive- PIOP HA, subf. 6. 60 Κ. Κostis, Ο μύθος του ξένου: Ή, η Pechiney στην Ελλάδα (Αthens: Αlexandria, 1999); and L. Flitouris, “Κρίση στη χώρα των θεών: Η πολιτική κρίση της δεκαετίας του 1960 και η γαλλική διπλωματία,” in Πρακτικά του ΣΤ΄ Ευρωπαϊκού Συνεδρίου Νεοελληνικών Σπουδών/Proceedings of the 6th European Congress of Modern Greek Studies, ed. V. Sabatakakis (Αthens: European Society of Modern Greek Studies, 2020), 95–111. 61 For example, see the ERE pamphlet Η αποκάλυψις της συκοφαντίας (Αthens, 1966).

PART IV

Europeanization Under Authoritarian Rule, 1963–1974

CHAPTER 11

Catalyst: The Common Market and the Descent into Dictatorship

Without commenting on all the unspeakable things which have been happening in our country during the last three years, and which are clear indications of a national crisis, I would suggest, in general terms, that a Government of competent and suitable persons should be organized and should be granted extraordinary powers by the Parliament—or by the king, should the Parliament refuse... . —Konstantinos Karamanlis to Konstantinos Tsatsos, 10 May 19661 In a word: … a catalyst. This is what the Common Market should be. A catalyst ... . But we also have a deadline before us. We have before us the time limit specified in the treaty. We have the elimination of tariffs. And this is a bill that will come due ... because unfortunately during the five years that have passed since the treaty was signed, we have not demonstrated a grasp of what it means. And when the bill comes due, we Industrialists will pay it with our lives, because either we will survive or we will perish. There

1 K. Svolopoulos, ed., Kωνσ τ αντ ι´ν oς Kαραμανλης ´ : Aρχ ε´ιo, γ εγ oν o´ τ α και κε´ιμενα, 12 vols. (Athens: Konstantinos G. Karamanlis Foundation and Ekdotiki Athinon, 1992– 1997), vol. 6, 218.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_11

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is no other option. But the country’s economy—the whole of Greece— must be even more affected, although perhaps not in the same way, by the deadline that is about to arrive. —George Drakos, former SEV president, January 19672

Democratic sensibilities did not play a decisive role in the Greek government’s efforts to establish a closer relationship with Europe. The identification of Europe with democracy was a subsequent invention.3 In an era when those who had won the civil war were trying to enforce the marginalization of those who had lost,4 the adoption of the “European idea” was combined harmoniously with disregard for any notion of the rule of law. In fact, the pressure resulting from the forthcoming exposure to international competition—together with the feeling that the future of Greek industry would be determined during the first years after Greece’s association with the EEC, when the pace of tariff reductions was still advantageous for Greece—contributed in a very important way to the creation of a climate conducive to authoritarian political solutions. This tendency was a response to the social unrest that came to a head in the wake of the events of July 1965 (when King Constantine ousted the centrist Liberal Prime Minister Georgios Papandreou who had won a landslide victory). Mass mobilization imparted to the looming political crisis the air of a challenge to the whole socio-economic order that had been established after the civil war. Very soon, leading representatives of the business world became an integral part of the emerging coup coalition5 that favored a seizure of power by the Crown. And after the King 2 TEE (Tεχνικ´o Eπιμελητηριo ´ Eλλαδας), ´ To π ρ o´ βλημα τ ης αντ αγ ωνισ τ ικ o´ τ ητ oς τ ης βιoμηχ αν´ιας μας και αι ελληνικα´ι π ρ ωτ ´ αι ν´ λαι (Athens, 1971), 67–71. 3 For an authoritative account of the Spanish case, see F. Guirao, The European Rescue of the Franco Regime, 1950–1975 (New York: Oxford University Press, 2021). 4 N. Alivizatos, Oι π oλιτ ικ oι´ θ εσ μoι´ σ ε κρ´ισ η (1922–1974): Oψεις ´ τ ης ελληνικ ης ´ εμπ ειρ´ιας (Athens: Themelio, 1995); and N. Panourgia, Dangerous Citizens: The Greek Left and the Terror of the State (New York: Fordham University Press, 2009). 5 On the term “coup coalition”, see G. A. O’Donnell, Modernization and BureaucraticAuthoritarianism (Berkeley: University of California Press, 1979). For an early scholarly discussion of O’Donnell’s approach, see D. Collier, ed., The New Authoritarianism in Latin America (Princeton, NJ: Princeton University Press, 1979). On the Greek case, see N. Bermeo, “Classification and Consolidation: Some Lessons from the Greek Dictatorship,” Political Science Quarterly 110:3 (1995): 435–452; and Ch. Tsakas, “Europeanisation under Authoritarian Rule: Greek Business and the Hoped-For Transition to Electoral Politics, 1967–1974,” Business History 62.4 (2020): 686–709.

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was preempted by the colonels who on their own initiative carried out the coup d’état of April 21, 1967, the business world gave—a posteriori—its acquiescence to the military regime. In this context, joint ventures with foreign business would not be interfered with. During the early years of the dictatorship, however, they would be promoted for the most part through informal channels—sometimes sidestepping, as in the case of West Germany, the official policies of some Western governments. The signing of the Association Agreement with the EEC and the resolution of the uncertainties created by the protracted negotiations6 gave a new impetus to foreign and domestic industrial investments: between 1962 and 1965, private investment in manufacturing and mining more than doubled, while the inflow of investment capital from abroad tripled.7 Notwithstanding these developments, the onset of the severe political crisis in July 1965 and the accompanying upheavals in the labor market would impact both the economy itself and the outlook for foreign and domestic investors. Despite a remarkable GDP growth rate of 10.8% in 1965, dark clouds were visible on the horizon in the second half of that year, as certain imbalances caused by the Centre Union’s expansionary policy started to assume dangerous proportions amid the political instability triggered by the king’s toppling of the government. 1966 saw deterioration in the key economic indicators, with trends moving in an unfavorable direction despite the gradual restoration of government stability following Stefanos Stefanopoulos’s assumption of the premiership. The rate of GDP growth for that year would be limited to 6.5%, while inflation would climb to 4.9%, the highest level in a decade.8 At the same time, private investments in manufacturing and mining fell relative to their post-1962 surge and flows of investment capital from abroad showed a comparable decline.9

6 SEV President Leonidas Kanellopoulos denounced these delays—and the resultant uncertainties—from the dais at the Federation’s annual meeting: see Federation of Greek Industrialists, H ελληνικ η´ βιoμηχ αν´ια κατ α´ τ o 1960 (Athens, 1961), 5. 7 Bank of Greece, Mακρ oχ ρ o´ νιες σ τ ατ ισ τ ικ šς σ ειρ šς τ ης ελληνικ ης ´ oικ oν oμ´ιας

(Athens, 1992). 8 Ministry of National Economy (ϒ⊓E⊝O), H ελληνικ η´ oικ oν oμ´ια 1960–1997: Mακρ oχ ρ o´ νιες μακρ ooικ oν oμικ šς σ τ ατ ισ τ ικ šς σ ειρ šς (Athens, 1998). 9 Bank of Greece, Mακρ oχ ρ o´ νιες σ τ ατ ισ τ ικ šς σ ειρ šς. These disquieting developments did not escape the attention of the US embassy in Athens. See Foreign Relations of the United States (FRUS), 1964–1968, XVI, 437– 40 (doc. 208), 450 (doc. 213 [editorial

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Needless to say, the repercussions of the July 1965 political crisis were not restricted to the worsening of particular economic indicators. The early part of the decade had been marked by a renewed assertiveness on the part of labor, symbolically inaugurated by the great construction workers’ strike that broke out in December of 1960.10 Beyond their effects on the political and social climate, massive demonstrations against the King and the accompanying strikes in the aftermath of the July 1965 crisis had a more tangible aspect. Although industrial actions had only a limited degree of success in achieving their immediate aims,11 indirectly they managed to generate significant wage increases: according to Greek Social Insurance Institute (IKA) data, the overall average wage in a sample of one hundred industrial enterprises increased by 12.1% in 1966 compared to 7.6% in the previous year.12 This trend boosted labor’s share in manufacturing GDP, so that it kept pace with the (extraordinarily high) growth of labor’s real share of total GDP.13 Such wage increases were troubling insofar as they threatened what the postwar development model saw as Greece’s most fundamental competitive advantage: low labor costs. For some in the business world, wage increases meant that the preconditions for further development were disappearing even as Greek industry faced imminent exposure to international competition. Leading SEV officials, including Georgios Drakos, president until 1966, and Christoforos

note]; and 451–54 (doc. 214). On the economic difficulties at this critical juncture, see Oikonomikos Tachydromos (OT ), 16/6 and 7/7/1966. 10 Ch. Ioannou, Mισ θ ωτ η´ απ ασ χ o´ λησ η και σ υνδικαλισ μ´oς σ τ ην Eλλαδα ´ (Athens: Foundation for Mediterranean Studies, 1989), 85–104; and D. Lampropoulou, “Koινωνικα´ δικαιωματα ´ και πoλιτικη´ σνγκρoυση ´ στην αυγη´ της σνντoμης ´ δεκαετ´ιας: H απεργ´ια των oικoδ´oμων τo Δεκšμβριo τoυ 1960” in H “σ ν´ ντ oμη” δεκαετ ι´α τ oυ ’60. Θεσ μικ o´ π λα´ισ ιo, κ oμματ ικ šς σ τ ρατ ηγ ικ šς , κ oινωνικ šς σ υγ κρ oν´ σ εις , π oλιτ ισ μικ šς διεργ ασ ι´ες, ed. A. Rigos, S. I. Seferiadis, E. Hatzivassiliou (Athens: Kastaniotis, 2008), 220–240. 11 Ioannou, Mισ θ ωτ η´ απ ασ χ o´ λησ η και σ υνδικαλισ μ´oς , 101–104. 12 Bank of Greece, Eκθ ´ εσ ις τ oυ διoικητ oν´ τ ης Tραπ šζ ης επ ι´ τ oυ ισ oλoγ ισ μoν´

τ oυ šτ oυς 1966 (Athens, 1967).

13 Th. P. Lianos, Υ π εραξ ι´α, oργ ανικ η´ σ ν ´ νθ εσ η τ oυ κεϕαλα´ιoυ και κ šρδ oς σ τ ην

ελληνικ η´ βιoμηχ αν´ια (Athens: Economic Chamber of Greece–Foundation for Mediterranean Studies, 1992), 69–91 and 130–131; G. Papantoniou, Διαν oμη´ τ oυ εισ oδ ηματ ´ oς και σ υσ σ ωρευσ ´ η τ oυ κεϕαλα´ιoυ: H ελληνικ η´ εκβιoμηχ ανισ ´ η, 1958– 1973 (Athens: Papazisis, 1979), 148; and Ministry of National Economy (ϒ⊓E⊝O), H ελληνικ η´ oικ oν oμ´ια 1960–1997.

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Katsambas, now the Federation’s honorary president, repeatedly emphasized that the country had done little to prepare for the challenges ahead and that, given the Community’s thus far unilateral reduction of tariffs on Greek exports, this was a time not for inertia but for closing the gap with the EEC.14 Similar concerns were addressed in a confidential memorandum from Xenofontas Zolotas, governor of the Bank of Greece, to Prime Minister Stefanopoulos. The memorandum, which was leaked to the press in mid-1966, further heightened uncertainty regarding the condition of the Greek economy and its prospects.15 It is unclear whether the business world’s anxieties had an important influence on the Palace. In the days before the events of 21 April, King Constantine was sounding out America’s attitude toward a possible royal coup.16 The Crown’s vacillations concerning when and under what conditions a state of emergency should be declared were one of the principal reasons why the operational arm of the planned action—the colonels—took matters into their own hands. These vacillations, however, do not mean that a broader coalition that wanted the king to lead a coup did not exist. In addition to the army and those associated with the Palace, this coalition included not only elements of the ERE but also powerful figures in the business community. A number of facts testify to the existence of a pro-coup alliance within politics and the larger society as a result of—among other things—the economic consequences of the ongoing political crisis. Among these facts, we may include: (1) Konstantinos Karamanlis’s acceptance of the necessity of a departure from constitutional procedures (provided the ERE would not be part of the resulting unconstitutional government); (2) reports from American sources that certain political figures with privileged connections to the 14 G. Drakos, H βιoμηχ αν´ια σ τ ην Eλλαδα ´ (Athens: n.p., 1980), 94–95; and TEE (Tεχνικ´o Eπιμελητηριo ´ Eλλαδας), ´ To π ρ o´ βλημα τ ης αντ αγ ωνισ τ ικ o´ τ ητ oς τ ης βιoμηχ αν´ιας μας και αι ελληνικα´ι π ρ ωτ ´ αι ν´ λαι (Athens, 1971), 67–71; Ch. Katsambas, H ελληνικ η´ βιoμηχ αν´ια και τ α π ρ oβληματ ´ α´ τ ης (Athens: n.p., 1966), 8– 20; Oikonomiki Poreia, vol. 120, 5/5/1966; the author’s interview with Ioannis Marinos, editor and publisher of Oikonomikos Tachydromos, 1965–96, Athens, 21/11/2011; Greek Planning Society (Eλληνικη´ Eταιρε´ια ⊓ρoγραμματισμoν), ´ Π ρ oγ ραμματ ισ μ´oς και oικ oν oμικ η´ αν απ ´ τ υξ ις : Tρεις δημ´oσ ιαι σ υζ ητ ησ ´ εις (Athens 1966), 39–65; and ELKEPA (Greek Productivity Centre), To ελληνικ o´ ν εξ αγ ωγ ικ o´ ν π ρ o´ βλημα (μετ α´ τ ην σ ν´ νδεσ ιν με τ ην E.O.K.) (Athens, 1966), 91–100. 15 Oikonomikos Tachydromos (OT ), 16/6 and 7/7/1966. 16 FRUS, 1964–1968, XVI, 570–72 (doc. 269).

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business community—these included Panayiotis Pipinelis17 and Spyros Markezinis—were plotting to bring about an unconstitutional change of government; (3) Bodossakis’s pressuring of the ERE leadership to seize the initiative and take decisive action in the days leading up to the coup; and, most especially, (4) the participation of Christoforos Stratos (co-owner of Piraïki-Patraïki, son-in-law of Katsambas, and close associate of SEV president Dimitrios Marinopoulos) in Constantine’s own extraconstitutional plans.18 The Palace may have maintained channels of communication with members of the business community, but the group of colonels led by Georgios Papadopoulos, Nikolaos Makarezos, and Stylianos Pattakos were not in consultation with important businessmen.19 Their April 21st proclamation, attempting to legitimize the army’s intervention, made no explicit reference to the economic aspects of the crisis.20 On the other 17 Pipinelis’s candidacy in 1961 was sponsored by shipping circles: see Naftika Chronika, 15/10/1961 (633/392). 18 J. E. Miller, The United States and the Making of Modern Greece. History and Power, 1950–1974 (Chapel Hill: University of North Carolina Press, 2009), 128–129; E. Nikolakopoulos, H καχ εκτ ικ η´ δημoκρατ ι´α: K´oμματ α και εκλoγ šς , 1946–1967 (Athens: n.p., 2001), 355–371; A. Papahelas, O βιασ μ´oς τ ης ελληνικ ης ´ δημoκρατ ι´ας : O Aμερικανικ o´ ς π αρ αγ ´ ων, 1947–1967 (Athens: Estia, 1997), 234–236, 252, and 257– 260; Svolopoulos, Kαραμανλης, ´ vol. 6, 212–23, 259, and 264–265. For the accounts of witnesses who testify to the Palace’s moves see also S. V. Markezinis, Σ ν´ γ χ ρ oνη π oλιτ ικ η´ ισ τ oρ´ια τ ης Eλλαδ ´ oς (1936–1975), vol. 3 (Athens: Papyros, 1994), 129– 151; and D. Bitsios, Στ o o´ ριo τ ων καιρ ων ´ (Athens: Livanis, 1997). On Bodossakis’s role, see Kostas Ch. Hatziotis, Π ρ o´ δρ oμoς Mπ oδ oσ ακης ´ Aθ ανασ ιαδης ´ , 1891–1979 (Athens: Bodossakis Foundation, 2005), 381–382. On Stratos’s role, see the author’s interviews with Lukas Patras, special advisor to Prime Ministers Karamanlis and Georgios Papadopoulos, (Athens, 26/4/2012 and 2/5/2012) and Aristides Dimopoulos, secretarygeneral of the Ministry of Coordination, 1969–1971, and deputy minister of finance, 1971–1973 (Athens, 19/5/2011); both men were associates of Stratos at the Society for Greek Studies in the mid-1960s. On Stratos’s relationship to the Palace, see also G. ´ Giannikopoulos, Xρισ τ o´ ϕ oρ oς Στ ρ ατ ´ oς : Eνας ευπ ατ ρ´ιδης τ ης π oλιτ ικ ης ´ (Athens: Estia, 2010). 19 Ch. Tsakas, «Oι Eλληνες ´ βιoμηχανoι ´ μπρoστα´ στην ευρωπα¨ικη´ πρ´oκληση: Kρατικη´ στρατηγικη´ και ιδιωτικα´ συμϕšρoντα απ´o τη σννδεση ´ με την EOK στην απoκατασταση ´ της Δημoκρατ´ιας» (PhD diss., University of Crete, 2015), 113–117 and 254–255. 20 It is telling that, although Makarezos’s voluminous memoirs identify the preservation of the social order as the main objective of the April 21st coup, they do not explicitly mention the economic crisis among the reasons for the colonels’ seizure of power. Makarezos drafted the April 21st proclamation and the military government’s

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hand, the new regime’s policy statements did contain scattered references to the economy, and made it clear that the colonels intended to continue the economic development policies delineated by Greek governments since 1953: they would safeguard monetary stability and implement the principles set forth in the development programs, attract capital from abroad while mobilizing domestic resources, and preserve Greece’s orientation toward Western Europe and its Association Agreement with the EEC.21 Despite initial uncertainty as to the colonels’ actual plans for the economy, the new regime managed to restore the business community’s confidence in government during the first months after the coup. From the beginning, SEV’s leadership held discussions regarding the proper response to the new situation. The different reactions registered at a meeting of the Federation’s top officials on the day after the coup were eventually to develop into distinct strategies that defined how Greek industrialists would conduct themselves in the years that followed. On the one hand, in keeping with the policy enunciated by the Federation’s president, Dimitrios Marinopoulos, SEV officially but discreetly distanced itself from the dictatorship. Individual businessmen, on the other hand, pursued the policy advocated by Bodossakis and established close ties with the leaders of the new regime.22 But the divergence between SEV’s official position and the attitude of its members did not mean that Greek industrialists had to make a show of opposition to the dictatorship. On the contrary, involvement in economic policymaking by SEV executives and others closely associated with the Federation was regarded from the outset as the safest means of influencing the colonels.23

program statements; he was also responsible for economic policy under the dictatorship: see N. Makarezos, Π ως ´ oδηγ ηθ ηκαμε ´ σ τ ην 21η Aπ ριλ´ιoυ 1967 (Athens: Pelagos, 2005), 13–15, where his authorship of those texts is documented, and N. Makarezos, H oικ oν oμ´ια τ ης Eλλαδ ´ oς (21η Aπ ριλ´ιoυ 1967–8η Oκτ ωβρ´ιoυ 1973) (Athens: Pelagos, 2006), 58–82. 21 To Vima, 23/4/1967. 22 For this debate within SEV, see Maria Mavroeidi’s interview with Marinopoulos,

Athens, 1/5/2002, Economia Group, Athens, “Aρχε´ιo ⊓ρoϕoρικων ´ Mαρτυριων” ´ [F Mαριν´oπoυλoς]. On the distinction between SEV’s official stance and those of its individual members, see the author’s interviews with Nikolaos Svoronos, SEV vice- president 1970–78, Athens, 30/3/2012; and Giorgos Tsatsos, member of SEV’s Board of Directors throughout the 1970s, Athens, 4/4/2012. 23 For details, see Tsakas, «Oι Eλληνες ´ βιoμηχανoι», ´ 110–130.

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In contrast to SEV’s pretense of disengagement, the Greek shipowners openly supported the dictatorship. Not only did the Union of Greek Shipowners (EEE) issue friendly statements,24 the actions of the organization’s president, Stratis Andreades, also reflected a positive attitude toward the new regime. In fact, Andreades soon managed to join the circle of Papadopoulos’s close associates.25 A consummate example of the general tendency among the shipowners came on the day after the failed royal counter-coup in December 1967, when Aristotle Onassis offered his own support to the regime by declaring his interest in undertaking an impressive range of investments in Greece.26 By 1972, when the EEE named Papadopoulos its honorary lifetime president, the move simply formalized what was already widely known—namely, that a cordial relationship existed between the shipowners and the colonels.27 The colonels had shared the belief that the looming political crisis posed a danger to Greece’s social order and international alignment, both of which had been established by the victory of bourgeois and nationalist forces—most crucially, the army—in the civil war.28 Moreover, this belief preoccupied the whole military hierarchy from the highest to the lowest ranks of the officer corps and helped to engender the feeling that

24 Naftika Chronika, 1/5/1967 (766/525). 25 For Andreades’s moves, see ⊓ρoσϕωνησις ´ κυρ´ιoυ υπoυργoν´ Eμπoρ´ιoυ υπ´o τoυ

Kαθηγητoν´ κ. Σ τρατη´ Aνδρεαδη, ´ 4/5/1967; Aνδρεαδης ´ to Mακαρšζo, 8/5/1967; [Andreades], The Political, Social and Economic Significance of the Recent Political Change in Greece, 17/6/1967; and Mερικα´ι εκ των κατα´ την διαρκειαν ´ της τελευτα´ιας διετ´ιας ενεργειων ´ τoυ καθηγητoν´ κ. Σ τρατη´ Aνδρεαδη ´ επ´ι εθνικων ´ και oικoνoμικων ´ θεματων, ´ 17/3/1969, Nikolaos I. Makarezos Archive (ANIM), Institute for Mediterranean Studies–Foundation of Research and Technology, Rethymno (IMS-FORTH), F447/A; Foreign Relations of the United States (FRUS), 1969–1976, XXIX, 795–98, (doc. 317); and The Financial Times, 21/6/1967. 26 Ch. Tsakas, “Shipping Tycoons and Authoritarian Rulers: Doing the Oil Business with the Greek Dictatorship, 1967–1974,” Journal of Modern Greek Studies 38.1 (2020):185–208. 27 Few knew, however, that this decision had been influenced by Andreades’s personal interests and by conflicts among rival shipowners: see Tsakas, “Shipping Tycoons and Authoritarian Rulers,” 196. 28 D. Papadimitriou, «‘Kαι εχρειασθη ´ η 21η Aπριλ´ιoυ δια´ να μη απωλεσθη´ η ν´ικη τoυ ⎡ραμμoυ’: ´ H ιδεoλoγ´ια της μετεμϕυλιακης ´ Δεξιας ´ και η καταργηση ´ της Iστoρ´ιας στo λ´oγo της ‘Eπαναστασης’», ´ in H Δικτ ατ oρ´ια, 1967– 1974: Π oλιτ ικ šς π ρακτ ικ šς —Iδε oλoγ ικ o´ ς λ´oγ oς —Aντ ι´σ τ ασ η, ed. G. Athanasatou, A. Rigos, and S. Seferiadis (Athens: Kastaniotis, 1999), 153–165.

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a coup was necessary,29 so that the question became not whether the attempt should be made but when and by whom. This widespread conviction among army officers enabled the ascendancy of the active faction that finally took the initiative in carrying out the coup. The rest of the army offered no opposition, especially once Constantine decided to adopt an accommodating attitude toward the coup’s leaders.30 In fact, the general agreement as to the coup’s necessity allowed the colonels to stampede even the highest ranks of the army, which they had bypassed and which had been looking to the Palace to take the initiative in orchestrating a coup. In the end, the colonels succeeded in bringing some of the generals into their own camp.31 The colonels’ efforts to justify their coup as necessary to preserve the post-civil war status quo reflected the consensus within the army. Insofar as they cited the threat of communism, they made use of rhetoric that was already prevalent at the time: since the early 1960s, as the Center and Left had grown stronger, such rhetoric had undergone a sharp revival on the pre-dictatorship Right.32 In reality, this anticommunist rhetoric was an attempt to describe in a negative way—that is to say, through the representation of a symbolic enemy in terms of the prevailing post-civil war discourse—the challenges confronting the contemporary social order. But by then the real challenges were much more complex: they had been created by the interplay between the political crisis and the intense social unrest, and they produced unprecedented effects. These included youth radicalization, a resurgence of the labor movement, and Andreas Papandreou’s emergence as an important new political leader of the Centre Union’s left wing.33

29 D. Haralampis, «H δικτατoρ´ια ως απoτšλεσμα των αντιϕασεων ´ της μετεμϕυλιακης ´ δoμης ´ τoυ πoλιτικoν´ συστηματoς ´ και oι αρνητικšς της επιπτωσεις», ´ in Athanasatou, Rigos, and Seferiadis, H Δικτ ατ oρ´ια, 75–91. 30 Papahelas, O βιασ μ´oς τ ης ελληνικ ης ´ δημoκρατ ι´ας, 315–361. 31 S. Rizas, H ελληνικ η´ π oλιτ ικ η´ μετ α ´ τ oν εμϕ ν´ λιo π o´ λεμo: Koιν oβ oυλευτ ισ μ´oς

και δικτ ατ oρ´ια (Athens: Kastaniotis, 2008), 429–448.

32 D. Papadimitriou, Aπ o´ τ oν λα o´ τ ων ν oμιμoϕρ o´ νων σ τ o šθ ν oς τ ων εθ νικ oϕρ o´ νων: H σ υντ ηρητ ικ η´ σ κ šψη σ τ ην Eλλαδα, ´ 1922–1967 (Athens: Savalas, 2006), 242–284. 33 K. Varela, «To πoλιτικ´o βαπτισμα, ´ 1963–1967», in O Aνδρ šας Π απ ανδρ šoυ και η επ oχ η´ τ oυ: Bιoγ ραϕικ o´ σ χ εδ´ιασ μα, μελετ ηματ ´ α και μαρτ υρ´ιες, ed. V. Panagiotopoulos (Athens: Ta Nea-Ellinika Grammata, 2006), vol. 1, 145–180.

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In this context, a collateral effect of the Greco-German relationship was beginning to excite the political imaginary of the post-civil war power web in Greece. Subsuming bilateral relations between Greece and West Germany within the European framework had minimized unwelcome reminders of the occupation, but the resultant migratory flows now posed a new problem. The (supposedly temporary) emigration to West Germany—once seen as a painless way to alleviate the political and social effects of underemployment and unemployment—was leading to the creation of ever-larger Greek communities in Germany that were predominantly working-class. That this labor force was becoming familiar with western-style freedoms with respect to elections and trade union participation was a source of alarm to those who were charged with keeping an eye on attitudes among the Greek Gastarbeiter.34 Makarezos, in his final report as military attaché at Greece’s embassy in Bonn in February 1965, described the unionized Greek workers as a sort of Trojan Horse: “A critical National issue has begun to manifest itself on West German territory. In our opinion, failure to give it the proper attention in a timely fashion will, with mathematical certainty, soon create the conditions for the overthrow of our bourgeois social order.”35 This existential angst explains, in part, the military regime’s later hypersensitivity regarding Greek-language radio broadcasts from West Germany—a perennial sticking-point in relations between the two countries throughout the period of the dictatorship.36 A related concern was the importance of migrants’ remittances for Greece’s balance of payments, and it was this consideration that determined the dictatorship’s fierce reaction to the rumor of an impending devaluation of the drachma that

34 On the Greek communities, see N. Papadogiannis, “A (Trans)National Emotional Community? Greek Political Songs and the Politicisation of Greek Migrants in West Germany in the 1960s and early 1970s,” Contemporary European History 23.4 (2014): 589–614. On the surveillance of migrant communities in West Germany, see A. Clarkson, Fragmented Fatherland: Immigration and Cold War Conflict in the Federal Republic of Germany, 1945–1980 (New York and Oxford: Berghahn,2010). 35 Mακαρšζoς (military-naval attaché in Bonn) to ⎡EE⊝A, 24/2/1965; and the ´ attached Mακαρšζoς, Σ υνoπτικη´ Eκθεσις επ´ι τoυ θšματoς των Eλληνων ´ εργατων ´ και σπoυδαστων ´ εν Δυτ. ⎡ερμαν´ια, undated, ANIM, IMS-FORTH, F205/A. 36 N. Papanastasiou, «To Eλληνκ´o ⊓ρ´oγραμμα της Bαυαρικης ´ Pαδιoϕων´ιας και η εξšλιξη των ελληνo- γερμανικων ´ σχšσεων (1967–1974)» in O «μακρ ν´ ς » ελλην oγ ερμανικ o´ ς εικ oσ τ o´ ς αιωνας ´ : Oι μα ν´ ρες σ κιšς σ τ ην ισ τ oρ´ια τ ων διμερ ων ´ σ χ šσ εων, ed. S. N. Dordanas and N. Papanastasiou (Athens: Epikentro, 2018), 387–401.

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was reported in these same broadcasts in February 1971.37 But it was not just the Greek regime that had to accommodate itself to the situation. The colonels were sometimes able to set the rules of the game—as, for example, when they succeeded in squelching reports of the supposedly imminent devaluation: by marshalling powerful figures in the West German business world who were involved in the project to build a power plant at Megalopolis, they managed to impose restraints on the Greeklanguage programs at Deutsche Welle and Bavarian Broadcasting that had been airing the rumors.38 The Greek communities in West Germany were an important factor in Germany’s ostensible commitment to democracy in Greece, but they had only a limited influence on West German policy toward the Greek regime. At the same time, the importance that German diplomacy seemed to place upon certain highly symbolic issues (such as the rescue of Professor George-Alexandros Mangakis,39 one of the dictatorship’s prominent critics) had the paradoxical effect of calling down the Greek regime’s wrath upon West German ambassador Peter Limbourg, who was by no means stubbornly opposed to the colonels’ regime.40 In any case, the critical decisions affecting the development of Greco-German relations during this period would often be made via informal procedures, and it was not just a happy accident that high-ranking officials at the Ministry of Coordination41 —the ministry responsible for the economy 37 Royal Ministry for Foreign Affairs, Note-Verbale, No. GDG4I-I2, 25/2/1971; and Botschaft der Bundesrepublik Deutschland, Note Verbale, No. 96/71, 4/3/1971, ANIM, IMS-FORTH, F359/A. 38 Kλαυδιαν´oς to Mακαρšζo, Eνšργειαι Koινoπραξ´ιας Eργoυ ´ Mεγαλoπ´oλεως δια´ Eλληνικας ´ εκπoμπας ´ ραδιoϕ. Δικτνων ´ Δυτ. ⎡ερμαν´ιας, 12/3/1971, ANIM, IMSFORTH, F359/A. 39 D. K. Apostolopoulos, «Eπαναπρoσšγγιση και συμϕιλ´ιωση: Aπ´o την εξoμαλυνση ´ τoυ κατoχικoν´ παρελθ´oντoς στην κoινη´ δραση ´ για την εδρα´ιωση της δημoκρατ´ιας στην Eλλαδα ´ (1950–1979)», in Dordanas and Papanastasiou, O «μακρ ν´ ς » ελλην oγ ερμανικ o´ ς εικ oσ τ o´ ς αιωνας, ´ 347–366. 40 H. Fleischer, «Oψεις ´ της (δυτικo-)γερμανικης ´ πoλιτιστικης ´ πoλιτικης ´ απšναντι στην Eλλαδα ´ των συνταγματαρχων: ´ O τετραγωνισμ´oς τoυ κνκλoυ», ´ in Π ρακτ ικ α´ σ υνεδρ´ιoυ: H δικτ ατ oρ´ια τ ων σ υντ αγ ματ αρχ ων ´ και η απ oκατ ασ ´ τ ασ η τ ης δημoκρατ ι´ας, ed. P. Sourlas (Athens: Hellenic Parliament Foundation, 2016), 359–377. 41 The German magazine Der Spiegel, 7/7/1969 (28/1969) reported that Ioannis Rodinos-Orlandos (alternate minister of coordination) and Ioannis Nassoufis (secretarygeneral at the same ministry) had been given the nickname “the German guard” (“deutsche Garde”).

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and for the progress of Greece’s association with the EEC—had often studied or worked in Germany. A few months after the coup, the political section of the West German Foreign Ministry produced a detailed memorandum which expressed the view that German policy should not only take account of Greece’s great geopolitical significance as a member of NATO and the importance of democracy for the Western alliance, but should also recognize the limited ability of other NATO nations to influence internal political developments in Greece. On this basis, the memorandum argued that economic pressure was not a suitable means for bringing about the restoration of parliamentary government in Greece and that it would instead be likely to alienate Greece from West Germany and result in the loss of Germany’s standing in Greece. Thus, the memorandum’s ultimate conclusion was that Greco-German economic relations should proceed as before.42 Despite these findings, however, and despite West German companies’ reaffirmation of their interest in going forward with the investment projects—such as the modernization and expansion of the state-owned oil refinery at Aspropyrgos43 —that they had undertaken before the advent of the dictatorship, it was the conclusion of the West German ambassador in Athens, expressed in his 1968 annual report, that relations between the two countries had reached an impasse. The ambassador’s report also stressed that, thanks to the Bundestag’s decision not to permit any new economic assistance to Greece while the state of emergency remained in force, West Germany had lost ground to the United States, Britain, and France—countries whose economic policies toward Greece were especially proactive according to the report.44 French policy in particular was characterized by open diplomatic support for the colonels and the strengthening of bilateral economic relations with Greece. France’s strategy was perhaps most clearly encapsulated by its ongoing arms exports to the colonels’ regime: on the day after the coup, the United States had stopped supplying Greece with heavy military equipment, and the French intended to fill the void left by 42 Abteilung I des Auswärtigen Amts, Die deutsche Haltung gegenüber Griechenland, 24/8/1967, Politisches Archiv des Auswärtigen Amts, Berlin (PA AA), B26, Bestellnr. 415. 43 Petrobau Ingenieur GmbH to Makarezos, Modernisation of the State Oil Refinery at Aspropyrgos, 11/5/1967, PA AA, B AV Neues Amt, Bestellnr. 1616. 44 Schlitter, Politischer Jahresbericht 1968, 8/2/1969, PA AA, B26, Bestellnr. 419.

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the Americans.45 The French attitude was a matter of grave concern to the West German authorities, and their concern became intense anxiety when France became the first country in Western Europe to be visited by a member of the Greek regime’s ruling triumvirate.46 In June 1969, Makarezos, the Greek Minister of Coordination, came to Paris at the invitation of Pierre Messmer, the French minister of defense.47 Messmer was not the only French government minister whom Makarezos would meet: he also spoke with the Minister of Economy Francois-Xavier Ortoli, as well as Minister of Foreign Affairs and former Prime Minister Michel Debré.48 Moreover, the reception held in Makarezos’s honor at the Greek embassy was attended by representatives of major French financial institutions and important members of the French business community49 —a success that had something to do with the active support of the presidents of Pechiney and Alsthom.50 (The latter was a large construction firm that

45 E. G. H. Pedaliu, “‘A Sea of Confusion’: The Mediterranean and Détente, 1969– 1974,” Diplomatic History 33.4 (2009): 735–750; and E. G. H. Pedaliu, “‘A Discordant Note’: NATO and the Greek Junta, 1967–1974,” Diplomacy and Statecraft 22.1 (2011): 101–120. 46 Schlitter to Auswärtiges Amt, Besuch griechischen Koordinationsministers in Frankreich, 7/6/1969; Botschaft der Bundesrepublik Deutschland (Paris) to Auswärtiges Amt, Besuch griechischen Koordinationsministers in Frankreich, 11/6/1969; and Generalkonsulat der Bundesrepublik Deutschland (Thessaloniki) to Auswärtiges Amt, Französisch-griechische Beziehungen, 24/9/1969, PA AA, B26, Bestellnr. 421. 47 Colonel Rolet (Attaché Militaire, Ambassade de France en Grèce) to Ministre de la Coordination, 13/3/1969, ANIM, IMS-FORTH, F438/A. 48 Entretien entre Michel Debré, ministre français des Affaires étrangères et Nikolaos Makarezos, ministre grec de la Coordination [5/6/1969], Historical Archives of the European Union, Florence (HAEU), MAEF-37.225; Eισαγωγη´ εις συνoμιλ´ιαν μετα´ κ. Ortoli, undated; and Eισαγωγη´ εις συνoμιλ´ιας μετα´ κ. Debré, ANIM, IMS- FORTH, F438/A. 49 Personalités ayant accepté d’ assister à la réception de l’ Ambassade Royale de Grèce du 4 Juin 1969 en l’ honneur de S.E. M. N. Makarezos, undated; and Mακαρšζoς, Eπ´ισκεψις εις ⊓αρισ´ιoυς και τα εξ αυτης ´ πρoκνπτoντα ´ βασικα´ συμπερασματα, ´ undated, ANIM, IMS-FORTH, F193/A. 50 Marchandise (Pechiney) to Ministre de la Coordination, 30/5/1969; and ⊓ρ´oγραμμα επισκšψεως εις ⎡αλλ´ιαν ϒπoυργoν´ κ. Mακαρšζoυ. Eπαϕα´ι και εκδηλωσεις, ´ undated, ANIM, IMS-FORTH, F438/A.

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just recently had assumed responsibility for aspects of the energy projects at Polyphytos and Ptolemais).51 The Greek government had every reason to be pleased with the results of the contacts it had made in France: in addition to the political success that the visit itself represented, the Greeks had hopes that their efforts to attract French investment capital would soon bear fruit.52 Faced with the prospect of large-scale French investments in Greece, West Germany’s diplomats were eager to avoid seeing their own country fall too far behind, and 1969 saw Germany’s tentative response to French diplomacy via the exchange of the first informal cabinet-level visits with Greece since the colonels’ seizure of power. In February, Greece’s alternate minister of coordination, Rodinos-Orlandos, paid a private visit to Bavaria. He was accompanied by Ioannis Nassoufis, secretary-general of the same ministry. During their stay, Rodinos-Orlandos not only held talks with representatives of West German business concerns but also met with Franz Josef Strauß, Germany’s minister of finance and the chairman of Bavaria’s ruling party, the Christian Social Union (CSU). The two men had the chance to discuss in detail the possibilities for Greco-Bavarian economic cooperation in the form of direct investments and financial support for infrastructure projects in Greece.53 Despite Strauß’s assurances to the German Foreign Ministry that he had met with Rodinos- Orlandos solely in his capacity as the leader of the CSU (and not as a minister of the German government), the situation was in fact more complicated. Rodinos-Orlandos’s visit had political significance and a practical result, in that the two men agreed to exert pressure on the German government in hopes of encouraging West German investment in Greece. Following up on this agreement, Nassoufis made a second visit to West Germany during which he made contact with five 51 Kαρδαμακης ´ (PPC) to Mακαρšζoς, 20/3/1969; and the attached final draft Protocol; and Iδια´ιτερo ⎡ραϕε´ιo ϒπoυργoν´ (Ministry of Coordination) [handwritten note], 2/4/1969, ANIM, IMS-FORTH, F25/B (subf. «⊓oλνϕυτoν-⊓τoλεμαΐ ς»). ´ 52 Mακαρšζoς, Eπ´ισκεψις εις ⊓αρισ´ιoυς και τα εξ αυτης ´ πρoκνπτoντα ´ βασικα´ συμπερασματα, ´ undated; Mαυρoειδης ´ to Aγγελη, ´ ⊓ληρoϕoρ´ιαι, 12/6/1969; and ⊓απαδημητρ´ιoυ, Eνημερωτικ´oν σημε´ιωμα, undated, ANIM, IMS-FORTH, F193/A. 53 Auswärtiges Amt, Angeblicher Ministerbesuch in Deutschland, 14/2/1969; Schlitter to Auswärtiges Amt, Angeblicher Ministerbesuch in Deutschland, 19/2/1969; Schlitter to Auswärtiges Amt, Deutschlandbesuch von Minister Rodinos-Orlandos, 5/3/1969; Abteilung III des Auswärtigen Amts, Besuch des stellvertretenden griechischen Koordinationsministers Rodinos-Orlandos, PA AA, B26, Bestellnr. 421.

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of the country’s important conglomerates—Rheinstahl, Siemens, Krupp, Klöckner, and Deutsche Babcock—with the aim of establishing a fund for the support of West German investments in Greece. The plan for the fund, which had been drawn up in consultation with Strauß, provided for the creation of a pool of DM 250 million, to which the state-owned Kreditanstalt für Wiederaufbau, on the one hand, and the group of five German conglomerates, on the other, would each contribute 40%. The remaining 20% would be contributed by a state-owned bank in Greece. The Greeks, meanwhile, undertook to compile a list of industrial capital goods that would be imported to Greece to meet the needs of Greek industry, with a special emphasis on goods produced by the companies that were to participate in the West German fund.54 A few months later, Nassoufis’s contacts would result in a visit to Greece by Franz Sackmann, Bavarian deputy minister of economy and transport. Sackmann had been invited by the Hellenic-German Chamber of Commerce and Industry, but there were deeper reasons for his visit. The trading relationship between Bavaria and Greece was a particularly important one, since Greece was Bavaria’s second largest trading partner in southeastern Europe. Just as important however was the recent loss of significant contracts to French competition.55 These factors, together with the ideological peculiarities of the CSU, led to apparently inconsistent choices at the level of foreign relations, and Sackmann’s visit to Athens further underscored the contradictions of German foreign policy. On the one hand, the visit, together with Sackmann’s undisguised political support for the Greek regime, provoked tensions among the West German Foreign Ministry, the Bavarian state government, and the German embassy in Athens. On the other hand, the visit offered an opportunity for major West German corporations with a stake in Greece—companies such as Siemens—to take advantage of new business 54 Klöckner Industrie-Anlagen G.m.b.H. to Makarezos, 30/7/1969; and Nασoνϕης ´ to Mακαρšζo, 12/8/1969, ANIM, IMS-FORTH, F76/B. 55 Months before Sackmann visited Athens, the objections to German Foreign Minister Willy Brandt’s policy toward Greece, and the reasons that led the Bavarian government to establish a relationship with the colonels’ regime had been clarified in a letter from Sackmann to Franz Heubl, West German minister for federal affairs. That a translated copy of this letter has been found in the archive of Nikolaos Makarezos is an indication of even deeper ties between the Bavarian government and the Greek regime and testifies to the two governments’ willingness to coordinate their activities. See Sackmann to Heubl, 18/6/1969, ANIM, IMS-FORTH, F193/A.

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opportunities via a political channel of communication with the dictatorship.56 By the end of 1969, West German diplomats were noting the progress that had been achieved in economic relations between the two countries. At the same time, however, they pointed out the risks posed by ongoing political standoff with the Greek regime at the Council of Europe.57

56 Auswärtiges Amt, Geplanter Besuch des Staatssekretärs im Bayerischen Wirtschaftsministerium Dr. Sackmann in Athen vom 4. bis 7. 10. 1969, 20/8/1969; Limbourg to Auswärtiges Amt, Besuch Staatssekretärs Sackmann, München, in Griechenland, 14/10/1969; Limbourg to Auswärtiges Amt, Besuch von Staatssekretär Sackmann, München, in Griechenland, 21/10/1969; Ansprache von Staatssekretär Franz Sackmann vor der deutsch-griechischen Handelskammer in Athen, 6/10/1969; Sackmann to Duckwitz, 27/10/1969; and Heubl to Duckwitz, 29/10/1969, PA AA, B26, Bestellnr. 421. 57 Auswärtiges Amt, Deutsch-griechsche Wirtschaftsbeziehungen, 5/12/1969, PA AA, B26, Bestellnr. 426; and Limbourg, Politischer Jahresbericht 1969, 9/2/1970, PA AA, B26, Bestellnr. 416.

CHAPTER 12

Isolation and Cooperation

Under the circumstances, Greece would consider its exclusion from the Council of Europe a reason to leave NATO. All the NATO allies agree that this is to be avoided ... . As to Germany’s position on the Association Agreement ... France and the Netherlands likewise do not intend to contemplate changes to their relationship with Greece within the framework of the EEC …. With respect to bilateral economic relations between Germany and Greece, it is best to be guided by the principle that our allies also share: economic pressure is not a suitable means for influencing political conditions within a country in a democratic direction. —German Ministry of Foreign Affairs (Section I), On the German stance toward Greece, 24 August 19671 The French have effectively been the second support of Papadopoulos’ government…. On some aspects of the Community’s policy towards Greece … the French seem prepared to drive the hardest possible commercial bargain, reserving their political gestures for bilateral occasions…. In contrast with the French, the Germans have managed their political

1 Abteilung I des Auswärtigen Amts, Die deutsche Haltung gegenüber Griechenland, 24/8/1967, PA AA, B26, Bestellnr. 415.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_12

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relations with clumsiness…. The Germans feel bound both to deplore totalitarianism and to say they do not mean to give any offence. —Hooper, British Ambassador in Athens, 3 January 19732

Following the imposition of the dictatorship, international organizations became one of the principal arenas in which the political priorities of Greece’s western allies would be put to the test. Constantine’s initial accommodation with the colonels had allowed foreign governments to avoid the pitfalls associated with extending recognition to the new regime, since officially their ambassadors were accredited to the king, and he remained on his throne.3 Soon, however, other challenges—far more substantial—emerged. The policies that the Western democracies adopted hinged on three major considerations: the strategic importance of Greece’s position within NATO; the possibility of using the Council of Europe as a release valve for the pressures created by public opinion; and the importance of Greece’s inclusion in the EEC customs union in the context of the Greek association as a means of bringing about closer economic cooperation between Greece and Western Europe. The fact that Greece’s Western allies had to think in terms of multiple international organizations and a corresponding multiplicity of perspectives did not mean that the policies they adopted lacked coherence. It did mean, however, that their policies were more complex and multilayered than would otherwise have been the case. Not long after the colonels’ coup, in June 1967, NATO SecretaryGeneral Manlio Brosio set forth, with the support of the alliance’s most powerful member-states, a principle that the organization would observe consistently in the years ahead. Owing to the supposedly critical nature of the world situation and the need for solidarity within NATO, the “Greek question” was never to be raised at the ministerial level.4 Geostrategic considerations—the growing Soviet presence in the Mediterranean, the 2 Hooper (British Ambassador Athens), Britain, Greece and the EEC, 3/1/1973, The National Archives, Kew, Richmond (TNA), FCO 9/1734. 3 H. Conispoliatis, “Facing the Colonels: British and American Diplomacy towards the Colonels’ Junta in Greece, 1967–1970” (PhD diss., University of Leicester, 2003), 49–51 and 63–66. 4 K. Maragkou, “Favouritism in NATO’s Southeastern Flank: The Case of the Greek Colonels, 1967–74,” Cold War History 9.3 (2009): 347–366; and E. G. H. Pedaliu, “‘A Discordant Note’: NATO and the Greek Junta, 1967– 1974,” Diplomacy and Statecraft 22.1 (2011): 101–120. On US support for Brosio’s efforts to restrict the subject to

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weakening of important Arab nations’ commitments to the West, and the need to maintain the integrity of NATO’s southeastern flank and provide military cover for Turkey—militated against doing anything that could push the Greek regime in the direction of neutrality, but they were not the only factors shaping NATO policy toward Greece in the years of the dictatorship. The economic consequences of America’s suspension of military aid to Greece and the imposition of limits on arms sales by the country’s main Western European suppliers—with the notable exception of France—were equally important. The resumption of military aid in September 1970, in order to allow Greece to meet its NATO commitments, occurred after persistent diplomatic efforts by Brosio and despite opposition from the Scandinavian countries,5 but it also reflected earlier decisions by the United States, Britain, and West Germany.6 Germany in particular had been paying close attention to French behavior toward Greece, both because of the fraught relationship—at once complementary and competitive—that existed between the West German and French defense industries, and also because of France’s control of German armaments industry within the Western European Union (WEU).7 Indeed, Germany’s interest in France’s activities testifies to the wide range of economic interests that were at stake where military aid and arms sales to Greece were concerned.8 Since the end of 1968, the West German Foreign Ministry had been in favor of resuming German military aid to Greece and continuing to sell the Greeks military equipment. There were cogent reasons for these positions, the most fundamental of which was the dependent position discussions among permanent representatives, see also Foreign Relations of the United States, 1969–1976, XXIX, 704–707 (doc. 276). 5 FRUS, 1969–1976, XLI, 168–175 (doc. 43). 6 Pedaliu, “‘A Discordant Note’,” 110–111; J. E. Miller, The United States and the

Making of Modern Greece: History and Power, 1950–1974 (Chapel Hill: University of North Carolina Press, 2009), 157–175; and Conispoliatis, “Facing the Colonels,” 286– 296. 7 G. Schmidt, “‘Tying’ (West) Germany into the West—but to What? NATO? WEU? The European Community?,” in Western Europe and Germany: The Beginnings of European Integration, 1945–1960, ed. C. Wurm (Oxford: Berg Publishers, 1995), 137–174. 8 Abteilung I des Auswärtigen Amts, Politische Lage in Griechenland: Frage der Weiterführung der deutschen NATO-Verteidigungshilfe sowie der kommerziellen Rüstungslieferungen, 3/11/1968, PA AA, B26, Bestellnr. 412.

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of the West German defense industry. France’s leaders, taking advantage of the restrictions that the WEU treaty imposed on West Germany, had succeeded in winning for French industry Greek orders for highspeed warships that had initially been placed with a shipyard in Bremen. The contract was ultimately given to the French Société d’Armement Maritime et Transports, which in turn placed an order with the German firm Pintsch Bamag for the construction of twelve torpedoes that were to be part of the ships’ armament. In March 1969, Pintsch Bamag applied to the German Ministry of Defense for approval of this secondary contract,9 and the West German authorities had no choice but to accept the loss of the original contract and to give their approval to the construction to the torpedoes instead. They found themselves in a similar position with respect to French subcontracts with Rheinmetall10 and AEG.11 In the case of AEG, the subcontract was for fifty torpedoes to equip four new Greek submarines. A Kiel shipyard had pursued the submarine contract, but France had managed to supplant West Germany in this instance as well.12 On the other hand, this order for torpedoes very likely never would have been placed if not for the resumption of military aid to

9 Pintsch Bamag to Bundesminister für Verteidigung, Angebot über Torpedoausstoßrohre für S-Boote der griechischen Marine, 31/3/1969 and Referat IA4 des Auswärtigen Amts, Gesetz über die Kontrolle von Kriegswaffen vom 20.4.1961: 12 Torpedoausstoßrohre an französische Werft zur Ausrüstung von S-Booten für die griechische Marine, 11/4/1969, PA AA, B26, Bestellnr. 421. 10 Rheinmetall GmbH to Bundesminister für Verteidigung, Jagdpanzerkanone 90 mm, 27/3/1969; and Referat IA4 des Auswärtigen Amts, Gesetz über die Kontrolle von Kriegswaffen vom 20.4.1961: 1 Geschütz Kal. 90 mm (Jagdpanzerkanone) nach Griechenland, 11/4/1969, PA AA, B26, Bestellnr.421. 11 AEG to Bundesministerium für Wirtschaft, Gesetz über die Kontrolle von Kriegswaffen v. 20.4.1961: Beantragung von Genehmigungen, 12/2/1969 and Abteilung III des Auswärtigen Amts, Likeferung von 50 Torpedos SST 4 nach Griechenland, 18/4/1969, PA AA, B26, Bestellnr. 421. 12 Abteilug I des Auswärtigen Amts, Demarche des französischen Gesandten wegen des Baues von U-Booten für Argentinien und Griechenland auf deutschen Werften, 11/6/1969; and Auswärtiges Amt, U-Boote für Griechenland, 15/10/1969, PA AA, B26, Bestellnr. 421. On the interest of Willy Brandt’s SPD government in the original submarines contract, see Referat IIA7, Griechenlands Verhältnis zur NATO: Lieferung von deutschen Rüstungsgütern an Griechenland (u.a. U-Boote), 10/6/1970, PA AA, B26, Bestellnr. 417.

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Greece, since Greece had undertaken the procurement of the submarines in order to comply with its NATO obligations.13 The situation became more complicated at the end of 1969, when conflicts over the nature of the colonels’ regime and the violation of human rights in Greece came to a head at the Council of Europe (CoE).14 At a moment when the United States, Britain, and Germany were all looking for ways to resume military aid to Greece,15 the renewed prominence of the Greek issue on the international scene provoked a diplomatic frenzy in London and Bonn. Caught between the Scandinavian countries’ refusal to drop the issue and the intransigence of the Greek government, both Britain and Germany looked for a solution that would not only satisfy democratic public opinion in Western Europe but would also avert any further repercussions for NATO and the EEC. Britain tried to convince the Greek foreign minister, Panayiotis Pipinelis, that Greece should voluntarily withdraw from the CoE.16 West Germany, for its part, had adopted a recommendation from own Foreign Ministry in the days before the contentious CoE meeting, and advocated a temporary suspension of Greece’s CoE membership until such time as Greek promises of a restoration of parliamentary government had been fulfilled.17

13 Abteilung I des Auswärtigen Amts, Lieferung von 50 Torpedos SST 4 nach Griechenland, 5/5/1969, PA AA, B26, Bestellnr. 421. 14 E. G. H. Pedaliu, “A Clash of Cultures? The UN, the Council of Europe and the Greek Dictators,” in The Greek Junta and the International System: A Case Study of Southern European Dictatorships, 1967–74, ed. A. Klapsis, C. Arvanitopoulos, E. Hatzivassiliou, and E. G. H. Pedaliu (New York: Routledge, 2020), 87–109. 15 For example, see FRUS, 1969–1976, XXIX, 645–55 (doc. 256); Conispoliatis, “Facing the Colonels,” 264–270; A. Nafpliotis, Britain and the Greek Colonels: Accommodating the Junta in the Cold War (London: I. B. Tauris, 2013), 43–55; E. G. H. Pedaliu, “Human Rights and Foreign Policy: Wilson and the Greek Dictators, 1967–1970,” Diplomacy and Statecraft 18.1 (2007): 185–214; and Abteilung III des Auswärtigen Amts, Wiederaufnahme der NATO-Verteidigungshilfe an Griechenland, 14/4/1969, PA AA, B26, Bestellnr. 421. 16 Conispoliatis, “Facing the Colonels,” 264–270; and A. Varsori, “The EEC and Greece from the Military Coup to the Transition to Democracy (1967–1975),” in O Kωνσ τ αντ ι´ν oς Kαραμανλης ´ σ τ oν εικ oσ τ o´ αιωνα, ´ 3 vols., ed. K. Svolopoulos, K. Botsiou, and E. Hatzivassiliou (Athens: Konstantinos G. Karamanlis Foundation, 2008), vol. 1, 317–338. 17 Abteilung I des Auswärtigen Amts, Griechenland und Europarat: Kabinettsitzung am 11/12/1969, PA AA, B26, Bestellnr. 421.

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The two countries’ equivocal positions were dictated by their assessments of the consequences that Greece’s expulsion from the CoE might have for NATO and the EEC—and also by their fears regarding such an action’s ramifications for their own economic relations with Greece. As for the possibility of the crisis spilling over into other Western international organizations, the chief worry—apart from the uncharted territory of the potential legal issues18 —was that the expulsion from the CoE might serve to strengthen hardline elements inside the colonels’ regime, halting any steps toward liberalization and perhaps even jeopardizing Greece’s membership in the Western Bloc. Although some believed that Greek officials such as Makarezos and Pipinelis19 might be emphasizing these risks simply in order to gain leverage in negotiations, British and German diplomats eventually came to share these concerns. As a result, they made it their mission to preserve the unity of the West and to maintain channels of communication through which they could encourage the regime to move in the direction of liberalization.20 At the same time, they were avoiding the economic costs that their countries would experience if Greek threats of retaliation for Western sanctions were carried out. These costs, it was reckoned, might include the annual loss of approximately 25% of the value of British exports and 30% of the value of West German exports.21 Nor was it just a question of trade: Makarezos had declared that new investment proposals would be treated less favorably if they came from firms in countries that had supported the Scandinavian initiatives. This prospect caused anxiety not only for the British (especially since the United Kingdom Atomic Energy Authority was in talks with the

18 Pipinelis to embassies in London, Paris, Bonn […] M.A. NATO, EOK, OHE, 19/12/1968 in F. Tomai, ed., H σ υμμετ oχ η´ τ ης Eλλαδας ´ σ τ ην π oρε´ια π ρ oς τ ην ευρωπ α¨ικ η´ oλoκληρωσ ´ η: Aπ o´ τ o π αγ ´ ωμα τ ης Συμϕων´ιας Σ ν´ νδεσ ης σ τ ην šντ αξ η σ τ ις Eυρωπ α¨ικ šς Koιν o´ τ ητ ες (1968–1981) (Athens: Papazisis, 2006), vol. 2, 164. 19 Limbourg, Antrittsbesuch des Herrn Botschafters bei[m] Koordinationsminister Makarezos am 6. November 1969, 10–12,30 h., 6/11/1969; and Limbourg to Auswärtiges Amt, Griechenland-Europarat: Unterredung mit Außenminister Pipinelis am 14.11.1969, 15/11/1969, PA AA, B26, Bestellnr. 425. 20 Nafpliotis, Britain and the Greek Colonels, 43–55; and Referat IA4 des Auswärtigen Amts, Mögliche Folgen einer Suspendierung Griechenland[s] vom Europarat, 8/12/1969, PA AA, B26, Bestellnr. 426. 21 Conispoliatis, “Facing the Colonels,” 261; Nafpliotis, Britain and the Greek Colonels, 53; and Referat IA4 des Auswärtigen Amts, Mögliche Folgen einer Suspendierung Griechenland[s] vom Europarat, 8/12/1969, PA AA, B26, Bestellnr. 426.

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PPC regarding construction of a £40 million nuclear power plant) but also for the Germans (who risked losing even more contracts to French companies).22 The awkward position in which the British and West German diplomatic services found themselves is documented in a German Foreign Ministry memorandum from late October 1969 regarding the stance which the CoE member-states were eventually going to adopt. In the memorandum, which was drafted in anticipation of a German-British meeting on the subject,23 Britain and West Germany were the only two states identified as “undecided.”24 The Germans, moreover, had doubts about the British assessment that Greece’s departure from the Council of Europe would alleviate similar tensions within NATO and the EEC25 (even though they had information that the Norwegian government was planning to use the CoE’s decision on Greece as a way to alleviate discomfort with the colonels’ regime in other international organizations).26 The German Foreign Ministry’s anxieties seemed justified when, on the day after Greece’s withdrawal from the CoE, Denmark launched an initiative to coordinate the actions of CoE member-states—albeit outside the CoE’s institutional framework—so as to preempt any possible economic reprisals from the dictatorship. As it turned out, however, the West German government had little difficulty in putting a stop to this project.27

22 K. Maragkou, “The Wilson Government’s Responses to ‘The Rape of Greek Democracy’,” Journal of Contemporary History 45.1 (2010): 162–180; and Referat IA4 des Auswärtigen Amts, Mögliche Folgen einer Suspendierung Griechenland[s] vom Europarat, 8/12/1969, PA AA, B26, Bestellnr. 426. 23 Referat IA4 des Auswärtigen Amts, Besprechungen des Assistant Under-Secretary of State D. V. Bendall am 30.10.1969 im AA: Besuch bei Herrn D I und Gespräch über ‘Griechenland und der Europarat’, 29/10/1969, PA AA, B26, Bestellnr. 425. 24 Referat IA4 des Auswärtigen Amts, Abstimmungsmodalitäten im Ministerkomitee des Europarats im Zusammenhang mit der Suspendierung Griechenlands, [29/10/1969], PA AA, B26, Bestellnr. 425. 25 Referat IA4 des Auswärtigen Amts, Mögliche Folgen einer Suspendierung Griechen-

land[s] vom Europarat, 8/12/1969, PA AA, B26, Bestellnr. 426. 26 Deutsche Botschaft Oslo to Auswärtiges Amt, Norwegisches Verhalten zu Griechenland, 14/10/1969, PA AA, B20-200, Bestellnr. 1815. 27 P. M., 18/12/1969; and Referat IIIA2 des Auswärtigen Amts to Deutsche Vertretung bei den Internationalen Organisationen, Griechenland im GATT, 8/1/1970, PA AA, B20-200, Bestellnr. 1815.

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All this notwithstanding, it was clear that both Britain and Germany had underestimated the Greek regime’s tenacity in the face of what it regarded as a direct threat to its very existence—namely, the granting to an international organization of the right to judge the domestic political situation in Greece. At the German-British meeting on the issue in late October, the German side, true to form, had taken the position that Britain’s proposal for Greece’s voluntary withdrawal from the CoE would be understood by the Greek government as accommodating the colonels’ regime. In fact, the Germans had even formulated their proposal for a temporary suspension from the Council as a compromise between the hardline Scandinavian stance and the more accommodating British proposal.28 In the end, however, both the British and the German proposals infuriated the dictatorship, a fact that underscored the impossibility of finding a modus vivendi with the colonels in the international arena. Pipinelis characterized the West German proposal as openly hostile and instructed the Greek ambassador in Washington to complain vociferously to the State Department about the positions taken by America’s closest allies in Western Europe.29 On the other hand, the West German ambassador in Athens based his analysis of the state of Greco-German relations on a belief that the Greek regime had simply misunderstood the intentions behind the German position.30 Throughout the diplomatic crisis at the Council of Europe, the United States maintained a policy of unruffled support for the positions taken by the Greek government. This stance was meant to ensure NATO unity,31 and America’s composure was based on a recognition of how far removed the CoE’s symbolic condemnation was from any real political consequences.32 Only a handful of countries—Denmark being the

28 Referat IA4 des Auswärtigen Amts, Besprechungen des Assistant Under-Secretary of State D. V. Bendall am 30.10.1969 im AA: Besuch bei Herrn D I und Gespräch über ‘Griechenland und der Europarat,’ 29/10/1969; and Referat IA4 des Auswärtigen Amts, Griechenland und Europarat: Ihr heutiges Gespräch mit Assistant Under- Secretary of State Bendall, 30/10/1969, PA AA, B26, Bestellnr. 425. 29 Pipinelis to Washington embassy, 13/12/1969, in Tomai, Aπ o´ τ o π αγ ´ ωμα τ ης Συμϕων´ιας Σ ν´ νδεσ ης σ τ ην šντ αξ η σ τ ις Eυρωπ α¨ικ šς Koιν o´ τ ητ ες, 173; and FRUS, 1969–1976, XXIX, 675–677 (doc. 264). 30 Limbourg, Politischer Jahresbericht 1969, 9/2/1970, PA AA, B26, Bestellnr. 416. 31 FRUS, 1969–1976, XXIX, 731–734 (doc. 289). 32 Ibid., 605–614 (doc. 239).

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best example—seemed to have flirted with the idea of taking more tangible steps.33 Only a few days after Greece walked out of the CoE, Kissinger had no difficulty in persuading President Nixon to approve the unconditional resumption of military aid, in hopes of bringing about an improvement in Greece’s relations with the West.34 With respect to the EEC, the situation was more complex. After several months of indecision, the European Commission had “frozen” Greece’s Association Agreement,35 restricting its applicability to the “current administration” of projected tariff reductions and other technical issues. This arrangement meant that the EEC would adhere to all the agreed-upon provisions that needed no further elaboration via formal consultations, but it would “freeze” those aspects of the Agreement that entailed political coordination with the Greek government.36 In practice, however, the boundaries between political and technical issues proved difficult to define, and this led—as we shall see—to expansive interpretations that permitted even quite significant negotiations with the dictatorship to take place.37 33 K. Kjærsgaard, “Confronting the Greek Military Junta: Scandinavian Joint Action under the European Commission on Human Rights, 1967–70,” in The ‘Long 1970s’ Human Rights, East-West Détente and Transnational Relations, ed. P. Villaume, R. Mariager, and H. Porsdam (London: Routledge, 2016), 33–69; and M. Pelt, «H Δαν´ια και o θανατoς ´ της ελληνικης ´ δημoκρατ´ιας: Eσωτερικšς αντιδρασεις ´ και διεθνης ´ συνεργασ´ια, 1963–1974», in H Δαν´ια, τ o Συμβ oν´ λιo τ ης Eυρ ωπ ´ ης , τ o NATO και τ α ανθ ρ ωπ ´ ινα δικαιωματ ´ α σ τ ην Eλλαδα ´ κατ α´ τ η διαρκεια ´ τ ης χ oν´ ντ ας, ed. K. Winther-Jacobsen and E. Hatzivassiliou (Athens: Danish Institute at Athens and Patakis, 2019), 19–66. 34 FRUS, 1969–1976, XXIX , 678–679 (doc. 265). 35 The European Parliament, for its part, condemned the coup from the outset, and

took the view that the abolition of Greece’s parliament made implementation of the Association Agreement impossible, since the Agreement presupposed the operation of certain supervisory bodies—such as the Greece-EEC Mixed Parliamentary Committee— that required a Greek parliament in order to exist Tranos to υπoυργε´ιo Eξωτερικων, ´ 11/5/1969, in F. Tomai-Kostantopoulou, ed., H σ υμμετ oχ η´ τ ης Eλλαδας ´ σ τ ην π oρε´ια π ρ oς τ ην ευρωπ α¨ικ η´ oλoκληρωσ ´ η: H κρ´ισ ιμη εικ oσ αετ ι´α 1948–1968 (Athens: Ministry of Foreign Affairs, 2003), vol. 1, 439–441. 36 V. Coufoudakis, “The European Economic Community and the ‘Freezing’ of the Greek Association, 1967–1974,” Journal of Common Market Studies 16.2 (1977): 114– 131; and Varsori, “The EEC and Greece,” 320–321. 37 A prime example of such negotiations was the extension of the association between Greece and the EEC to include the three new member-states (Denmark, Britain, and Ireland) that entered the Community after its first expansion in 1973.

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The Community’s ambivalence was not due solely to the legal ramifications of a unilateral breach of the Agreement’s explicit provisions. Though this factor was given serious attention both by the Commission and by some EEC member-states, including West Germany,38 it did not have decisive weight—as would be demonstrated by the irregular procedure that led to the decision not to disburse the sums already agreed upon in the Financial Protocol.39 In fact, the chief reason for the Community’s inability to make straightforward decisions regarding its association with Greece was the reluctance of the member-states to go so far as to openly sever relations with the Greek regime. This reluctance was reflected, for example, in an August 1967 memorandum from the West German Foreign Ministry, recording the intentions of Germany, France, and the Netherlands not to pursue any change in the existing framework of Greece’s relations with the EEC.40 Differences of opinion among representatives of various political parties within the individual memberstates—and the refraction of those opinions through the institutions of the Community—also made it harder to arrive at firm decisions.41 The challenges to formulating a coherent policy were on display most vividly with respect to the Financial Protocol that had been added to the Association Agreement in order to assist the development of the Greek economy. When, in the summer of 1967, the Greek government requested disbursement of $10 million for the construction of a highway along Crete’s northern coast, the European Investment Bank reacted favorably but sought the opinion of the European Commission.

38 Varsori, “The EEC and Greece,” 320–325; and Abteilung I des Auswärtigen Amts,

Assoziationsabkommen EWG-Griechenland: Frage möglicher Vertragsverletzung seitens der Gemainschaft, 6/1/1969, PA AA, B20-200, Bestellnr. 1814. 39 Poνσσoς ´ to Foreign Ministry, 16/10/1967; and Poνσσoς ´ to Foreign Ministry, 24/11/1967, Konstantinos G. Karamanlis Foundation, Athens, Konstantinos Karamanlis Archive, (AKK-KKF), F92/A. 40 Abteilung I des Auswärtigen Amts, Die deutsche Haltung gegenüber Griechenland, 24/8/1967, PA AA, B26, Bestellnr. 415. 41 Varsori, “The EEC and Greece,” 320–327. For a typical summary of the different views regarding Greece’s association, see Auswärtiges Amt, Informatorische Aufzeichnung über die Arbeit des Europäischen Parlaments (Strassbourg, Mai-Sitzungsperiode 1969): Auswirkungen der derzeitigen politischen Lage in Griechenland auf das Funktionieren der Assoziation EWG-Griechenland, 22/5/1969, PA AA, B20-200, Bestellnr. 1814.

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Although the loan fell within the category of “current administration” of the Association Agreement, a majority of the Commission voted— despite France’s support for the Greek request and a split in the votes of the West German commissioners—to suspend the disbursement. This decision set off a lengthy dispute with the Greek government, which accused the Community of a unilateral breach of its contractual obligations on political grounds.42 Weighing its response, the West German Foreign Ministry decided not to subject itself to the political costs of openly supporting the Greek side, despite the ministry’s judgment that the disbursement did not constitute new aid to Greece and thus was not disallowed by the restrictions put in place by the West German parliament.43 As for the leaders of the military regime, they were not ideologically “anti-European.44 ” On the contrary, they had always insisted that Greece was faithfully keeping its commitments to the Community, and that it was the EEC that was violating its agreements. Moreover, they did not fail to highlight the discrepancy between the Community’s stance and the conduct of the individual EEC member-states both bilaterally and within NATO. Naturally, this aggressive denunciation of Greece’s isolation from its partners did not reflect a sincere intention to comply with the political requirements of the EEC. That did not mean, however, that the regime—eager as it was for international and domestic legitimacy— could be indifferent to the fate of its relationship with the Community.

42 Varsori, “The EEC and Greece,” 321–322; Abteilung I des Auswärtigen Amts, Assoziationsabkommen EWG- Griechenland: Frage möglicher Vertragsverletzung seitens der Gemainschaft, 6/1/1969, PA AA, B20-200, Bestellnr. 1814; K´oλλιας to ελληνικšς πρεσβε´ιες στα κρατη-μšλη ´ της EOK, 30/9/1967; and Poνσσoς ´ to Foreign Ministry, 5/10/1967, in Tomai-Konstantopoulou, H κρ´ισ ιμη εικ oσ αετ ι´α 1948–1968, 441–442 and 443–446. 43 Ministre de la Coordination, Aide-Memoire sur le fonctionnement du Protocole No 19 annexé au Traité d´ Athènes, 6/3/1969, Schlitter, Assoziierung Griechenlands mit der EWG, 11/3/1969; and Referat 1A2 des Auswärtigen Amts, Assoziierungsabkommen EWG-Griechenland: Griechische Wünsche bezüglich Finanzprotokoll, 5/1969, PA AA, B20-200, Bestellnr. 1814. 44 On aspects of the colonels’ ideology, see M. I. Meletopoulos, H δικτ ατ oρ´ια τ ων

σ υντ αγ ματ αρχ ων ´ (Athens: Papazisis, 1996), 147–339; and D. Papadimitriou, «‘Kαι εχρειασθη ´ η 21η Aπριλ´ιoυ δια´ να μη απωλεσθη´ η ν´ικη τoυ ⎡ραμμoυ’: ´ H ιδεoλoγ´ια της μετεμϕυλιακης ´ Δεξιας ´ και η καταργηση ´ της Iστoρ´ιας στo λ´oγo της ‘Eπαναστασης’», ´ in H Δικτ ατ oρ´ια, 1967–1974: Π oλιτ ικ šς π ρακτ ικ šς —Iδε oλoγ ικ o´ ς λ´oγ oς —Aντ ι´σ τ ασ η, ed. G. Athanasatou, A. Rigos, and S. Seferiadis (Athens: Kastaniotis, 1999), 153–165.

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This issue had implications that were by no means trivial: in fact, as we shall see, the connection between the dictatorship’s European problem and its larger political problem often served to bring the regime’s internal oppositions and contradictions to the fore. Immediately after Greece’s forced withdrawal from the Council of Europe, the Greek permanent representative in Brussels, Stavros Roussos, emphasized the need to apply pressure to the governments of the member-states in order to prevent further measures from being taken against Greece. Specifically, he proposed that the regime should implement economic measures that would have the effect of disadvantaging imports from the Community.45 A few months later, in April 1970, when the European Commission announced its intention to “reconsider” Greece’s Association Agreement with the EEC, and for a time Roussos’s warnings seemed to have been confirmed.46 This new development sounded the alarm to the Greek diplomatic services and prompted Greece’s turn toward France in an effort to avert a definitive rupture with the EEC.47 The Commission’s initiative heightened French suspicions regarding the independence of the former from the Council of Ministers,48 and the dictatorship’s overtures to France—based on the assumption that France’s own interests would lead it to openly support the regime49 —combined with stronger backing from the United States

45 Roussos to Foreign Ministry, 16/12/1969, in Tomai, Aπ o´ τ o π αγ ´ ωμα τ ης

Συμϕων´ιας Σ ν´ νδεσ ης σ τ ην šντ αξ η σ τ ις Eυρωπ α¨ικ šς Koιν o´ τ ητ ες, 175–178.

46 Poνσσoς ´ to Ministry of Coordination, 17/4/1970, in ibid., 183–184. 47 Markopouliotis to Foreign Ministry, 20/4/1970, in ibid., 184–186; Auswär-

tiges Amt, Verhältnis Griechenland-EWG: Shreiben von Außenminister Pipinelis an EWG-Präsidenten Rey, 21/4/1970; Referat IA2 des Auswärtigen Amts, Athen hofft auf Intervention Frankreichs bei EWG-Schwierigkeiten, 21/4/1970; and Limbourg to Auswärtiges Amt, Assoziation Griechenland-EWG: Revision des Vertrages, 21/4/1970, PA AA, B20-200, Bestellnr. 1816. 48 Poνσσoς ´ to Foreign Ministry, 16/4/1970; and Poνσσoς ´ to Foreign Ministry, 17/4/1970, AKK-KKF, F93/A. 49 On the French policy toward Greece and France’s priorities in the Mediterranean during this period, see FRUS, 1969–1976, XII, 414–32 (doc. 138), FRUS, 1969–1976, XXIX, 669–99 (doc. 273); Pedaliu, “‘A Sea of Confusion’,” 735–750; and L. Plassmann, Comme dans une nuit de Pâques? Les relations franco-grecques, 1944–1981 (Frankfurt: Peter Lang, 2012), 219–284.

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produced the abandoned.50

desired

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50 Direction Generale des Relations Exterieures, Projet d’une Declaration de la Commission, 6/5/1970, HAEU, EM-82; Referat IA2 des Auswärtigen Amts, Assoziationsabkommen EWG-Griechenland: Auswirkungen der derzeitigen politischen Lage in Griechenland auf das Funktionieren der Assoziation, 3/6/1970, PA AA, B20-200, Bestellnr. 1816; and Poνσσoς ´ to Foreign Ministry, 20/6/1970, AKK-KKF, F93/A. As early as March 1970, Tasca had observed to Roussos that “the Greek market was sufficiently important that the governments of the EEC member-states would avoid being drawn into any actions that were contrary to the Athens Agreement.” See Poνσσoς, ´ Συνoμιλ´ια μετα´ τoυ εν Aθηναις ´ ⊓ρšσβεως των Hνωμšνων ⊓oλιτειων, ´ 21/3/1970, ANIM, F192/A.

CHAPTER 13

Blueprint for Rapprochement

UNICE’s Council of Presidents, having met in Athens . . . and being aware of the need to enlarge the EEC, will do what is necessary for the activation of Greece’s Association Agreement and for urging the implementation of the association’s principal objectives. —Press release of the Union of Industries of the European Community, Athens, 24 February 19691 Dependent on the interpretation which the Greek government would give to a step by step normalization process, it might be found desirable, and would seem possible in practice, to start normalizing Community relations with Greece before democracy can be said to have been fully restored (for instance before free elections have been held) through a cautious and gradual approach, keeping in step with a gradual democratization process in Greece. —Director General (DG1) On relations between the EEC and Greece, 16 October 19732

1 UNICE, Communique de Presse, 24/2/1969, Historical Archives of the EU, Florence (HAEU), EM-80. 2 Directeur General (DG1), Note à l’attention de Sir Christopher Soames, VicePrésident de la Commission: Les relations CEE-Grèce, 16/10/1973, HAEU, BAC050/1982_0028.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_13

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The spillover effects of the Greek case at the Council of Europe on the country’s relations with the EEC were not limited to the institutional level.3 Greece’s enforced withdrawal from the CoE also had the effect of mobilizing moderate elements of the dictatorship who feared that their country might soon find itself facing more stringent sanctions from the EEC. At the same time, however, regime hardliners4 had been outraged by the promises of normalization that Greek Foreign Minister Panayiotis Pipinelis had made during the diplomatic battle in Strasbourg5 —and also by similar statements made in a letter from Papadopoulos to President Nixon.6 Though the European Commission very soon abandoned any consideration of harsher measures, the possibility of a rupture in Greece’s relations with Western Europe acted as a catalyst for political developments that would test the internal cohesion of the colonels’ regime. The gradual coalescence of a powerful faction whose political and economic power depended on the Greek economy’s integration into the EEC was to play a decisive role in shaping the policies of controlled liberalization implemented by the military government’s leaders. Meanwhile, the European Commission and major EEC member-states seemed willing to accept the move to a democracy supervised by the army, seeing it as a solution that would permit the untroubled continuation of economic relations with Greece. And it was precisely an authoritarian backlash—and, therefore, the failure of this solution—that paved the way for the collapse of the dictatorship. The economy represented perhaps the most significant point of intersection between the European question and the larger political question.

3 The account offered here goes beyond the assumptions of the existing literature, which tends to overstate the institutional aspect and often constructs an idealized image of the political processes at work. For recent examples of this standard narrative, see E. De Angelis and E. Karamouzi, “Enlargement and the Historical Origins of the Community’s Democratic Identity,” Contemporary European History 25.3 (2016): 439–458; and V. Fernández Soriano, “Facing the Greek Junta: The European Community, the Council of Europe and the Rise of Human-Rights Politics in Europe,” European Review of History 24.3 (2017): 358–376. 4 These Included, at this point, figures such as Ioannis Ladas, Konstantinos Aslanides, and Michael Balopoulos. 5 These promises were summarized by the Greek foreign minister in a memorandum that was known as “the Pipinelis timetable.” For this memorandum, see To Vima, 17/4/1970. 6 FRUS, 1969–1976, XXIX, 700–702 (doc. 274).

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The fast-paced development of the Greek economy and the breakneck growth of its industrial exports (whose principal market at this point was the Common Market) had imposed very definite constraints. From 1968 to 1973, the average annual growth rate of Greece’s GDP was 9%,7 while per capita GDP rose from 57% of the Community average to 70%.8 Meanwhile, industry’s share of total Greek exports climbed from 16% in 1967 to 46% in 1973. Already in 1968—in advance of the timetable envisioned by the Association Agreement—the EEC had completely eliminated tariffs on Greek industrial products, and although Greece’s association was officially frozen, the growth rate of Greek industrial exports to the Community from 1968 to 1973 was three to four times higher than that of total Greek exports to the EEC-6.9 Needless to say, the constraints imposed by this new economic reality also had to do with the emergence of private interests associated with the expanded trade in industrial goods, and these interests would play an important role in avoiding a definitive breach between the European Community and the Greek regime. At the end of February 1970, in an interview with representatives of the press, SEV president Dimitrios Marinopoulos expressed—indirectly but clearly—the Federation’s anxiety regarding the aftereffects of Greece’s forced withdrawal from the Council of Europe.10 The interview was unscheduled and was in fact more like a press conference called in response to an emergency. It took place just a few days after a great disappointment: on 20 February, the Joint Council of Association—originally established to facilitate the application of the Association Agreement— had held its first ambassadorial-level meeting since the coup, and the Ministry of Coordination had encouraged expectations that some resolution of the stalemate between Greece and the Community could be 7 Ministry of National Economy, H ελληνικ η´ oικ oν oμ´ια, 1960–1997: Mακρ oχ ρ o´ νιες μακρ ooικ oν oμικ šς σ τ ατ ισ τ ικ šς σ ειρ šς (Athens, 1998). 8 G. Pagoulatos, Greece’s New Political Economy: State, Finance, and Growth from Postwar to EMU (Basingstoke, UK: Palgrave, 2003), 91. 9 Bank of Greece, Eκθ ´ εσ ις τ oυ Διoικητ oν´ τ ης Tραπ šζ ης επ ι´ τ oυ ισ oλoγ ισ μoν´ τ oυ ´ εσ ις τ oυ Διoικητ oν´ τ ης Tραπ šζ ης šτ oυς 1967 (Athens, 1968); Bank of Greece, Eκθ επ ι´ τ oυ ισ oλoγ ισ μoν´ τ oυ šτ oυς 1973 (Athens, 1974); Ministry of National Economy, Eλληνικ η´ oικ oν oμ´ια; and I. Hassid, Eλληνικ η´ Bιoμηχ αν´ια και EOK: Mελšτ η γ ια τ ις επ ιπ τ ωσ ´ εις τ ις šντ αξ ης (Athens: IOBE, 1980), vol. 1, 72 and 78. 10 “Δημητριoς ´ Mαριν´oπoυλoς, πρ´oεδρoς ΣEB,” quoted in SEV Bulletin, 184, 28/2/1970.

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in the cards. As it turned out, however, the Joint Council of Association determined that no substantial progress had been made toward the Community’s preconditions for ending or modifying the freeze.11 The SEV president’s words would not go unnoticed.12 Already at the first annual SEV congress after the 1967 coup, Marinopoulos had emphasized the extraordinary importance of the government’s assurances that it would seek full implementation of the Association Agreement, preserve Greece’s Western orientation, and work to strengthen private enterprise and attract foreign capital.13 In September 1967, just after the “freezing” of the Greek association, the SEV president, speaking at a meeting of the Union of Industries of the European Community (UNICE), had stressed that fulfillment of the goals of the Association Agreement was a primary objective of the Greek government.14 In 1968, Marinopoulos had sought to convince UNICE to hold its annual meeting in Athens so that SEV’s sister organizations could express their support for Greece’s aims.15 It was only a year later, in 1969, that the presidents of UNICE accepted Marinopoulos’s invitation, although originally they had rejected the idea following the intervention of the President of the European Commission, Jean Rey.16 The 1969 annual meeting, however, was held in Athens under the chairmanship of Fritz Berg, president of the West German federation (though most of the other national federations were represented by their vice-presidents). The official announcement of the meeting declared UNICE’s intention to “do what is necessary for the activation of the Association Agreement between

11 For an account of this episode from the point of view of the secretary-general of the Ministry of Coordination (who also presided over the Greek Committee for European Cooperation at the same ministry), see the particularly informative work by A. G. Dimopoulos, H Koιν η´ Aγ oρ α´ και η Σ ν´ νδεσ ις (1969–1972) (Athens: n.p., 1979), 87–90. 12 For the extensive commentary in the press, see Oikonomikos Tachydromos, 5/3/1970. For the German Foreign Ministry’s account of Marinopoulos’s comments, see Referat IA2 des Auswärtigen Amts, Griechische Industrielle für frühere EWG-Vollmitgliedschaft, 26/2/1970, PA AA, B20-200, Bestellnr. 1816. 13 Viomichaniki Epitheorisis (BE), 393, 7/1967. 14 BE, 396, 10/1967. 15 BE, 400, 2/1968. 16 Auswärtiges Amt, Industriekontakte mit Griechenland, 18/2/1969, PA AA, B26,

Bestellnr. 421.

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Greece and the EEC and the fulfillment of the lofty goals of the association.” The announcement made no mention of the political preconditions for such a development.17 It is unclear to what extent Berg’s presence was connected with the contemporary initiatives by major West German companies or with the contacts between Greek Alternate Minister of Coordination Rodinos-Orlandos and CSU officials in Bavaria.18 A few days before the UNICE annual meeting, the West German Foreign Ministry was planning to make sure that Berg was apprised of the negative impressions that visits to Athens by other prominent figures had produced; they also wished to recommend that Berg communicate to his Greek counterpart the significance that West Germany attached to the restoration of constitutional government in Greece.19 Evidently, these official exhortations came to nothing. In fact, after the UNICE meeting was over, the German ambassador sent his regrets to the Foreign Ministry: he had not even managed to get in touch with Berg to relay the Ministry’s advice.20 Events like these may have been a source of aggravation to European Commission circles and official West German diplomacy in the first years after the coup. In the wake of Greece’s withdrawal from the Council of Europe, however, the business organizations that supported unfreezing the Greek association now seemed to be applying pressure in a new direction. SEV’s forceful promotion of its own position, as expressed by Marinopoulos in February 1970, was perceived by the Ministry of Coordination as a political salvo directed at the dictatorship’s handling of relations with the EEC. Marinopoulos’s press conference inaugurated a period of open crisis in SEV’s relations with the regime, and in the end the Federation’s president was forced to resign.21 In fact, his

17 Schlitter to Auswärtiges Amt, Sitzung der Union der Industrieverbände der EWGStaaten (UNICE), 4/3/1969, PA AA, B20-200, Bestellnr. 1814. 18 See Chapter 11. 19 Referat IA4 to Referat IIIA1 des Auswärtigen Amts, Industriekontakte mit Griechen-

land, 20/2/1969, PA AA, B26, Bestellnr. 421. 20 Schlitter to Auswärtiges Amt, Sitzung der Union der Industrieverbände der EWGStaaten (UNICE), 4/3/1969, PA AA, B20-200, Bestellnr. 1814. 21 Author’s interviews with Aristides Dimopoulos, secretary-general of the Ministry of Coordination (1969–1971) and deputy minister of Finance (1971–1973), Athens, 19/5/2011; and with Nikolaos Svoronos, SEV’s vice-president (1970–1978), Athens,

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resignation occurred soon after the European Commission’s mid-April announcement that it intended to reconsider Greece’s associate status.22 Nevertheless, despite these serious tensions, the passage of time—and the failure of the European Commission’s threats to materialize—repaired the industrialists’ relations with the regime. Throughout the whole period of the dictatorship, the need to unfreeze the Association Agreement was a common element in all political statements emanating from SEV. Of course, SEV was not unaware of the political aspect of the problem. But concern for the state of Greece’s relations with the EEC (and the associated need for political liberalization) never became the basis of a dissenting alliance against the dictatorship: even such important business figures as Bodossakis and Tom Pappas, both of whom maintained close ties with Papadopoulos, were urging the dictatorship’s leaders to pursue some kind of return to normalcy. In fact, what the views expressed by different segments of the business community all tended to share was a desire to find a blueprint for reconfiguring the dictatorship in a viable form that would permit a rapprochement with the EEC without putting at risk the basis of Greek industry’s spectacular development under the military regime.23 Meanwhile, despite a semblance of political inertia, the crisis at the highest levels of the regime following the publication of the Pipinelis timetable would ultimately result in conflicting strategies with respect to Greece’s relations with the EEC. At a meeting of the government in September 1971, competing visions were recorded in the minutes for the first time. Papadopoulos, while acknowledging that the “Europeanization” of the Greek political system was a precondition for a rapprochement with the Community, nevertheless sought to defer the political changes required for such a development until an indefinite point in future. Makarezos, on the other hand, was now urging that the necessary changes should be expedited, and he called attention to the convergence with Western Europe that had already taken place in

30/3/2012; Oikonomikos Tachydromos (OT ), 30/4/1970 and 25/6/1970; and SEV Bulletin, 190 (31/5/1970). 22 To Vima, 17/4/1970. 23 Ch. Tsakas, “Europeanisation under Authoritarian Rule: Greek Business and the

Hoped-for Transition to Electoral Politics, 1967–1974,” Business History 62.4 (2020): 686–709.

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the economic sphere.24 The economy, of course, was Makarezos’s area of responsibility, and he was thus pointing the finger at Papadopoulos— the man with jurisdiction over the regime’s political transformation—as the person primarily responsible for the ongoing problems with the EEC, insofar as the endless postponement of political reforms was incompatible with reactivation of the Association Agreement. In the summer of 1972, Papadopoulos seemed to have arrived at a plan for setting on foot the long-awaited political reforms. In meetings with members of his group of so-called technocrats, Papadopoulos asked them to begin taking steps to establish a political party in the expectation that the relevant provisions of the Constitution of 1968 would soon take effect. Joining Papadopoulos’s officials in the effort were important figures from the business world such as Angelos Kanellopoulos of the Titan cement company.25 But the process of preparing to make the 1968 constitution a reality—which took place amid proclamations that parliamentary government would be restored on a “sound basis” that would involve the establishment of a “new and uncorrupted” political class—was to prove extraordinarily time-consuming as a result of the inherent sclerosis of the regime and Papadopoulos’s determination to exercise absolute control over developments. Meanwhile, the international and domestic situation was imposing a stringent time frame of its own.

24 Limbourg to Auswärtiges Amt, Umbildung und Umorganisation griechischen Kabinetts, 27/8/1971; and Limbourg to Auswärtiges Amt, Umorganisation der griechischen Regierung, 14/9/1971, PA AA, B 26, Bestellnr. 432; author’s interview with Dimopoulos, Athens, 19/5/2011; and with Patras, Athens, 26/4/2012. For the minutes of the government meeting, see Dimopoulos, H Koιν η´ Aγ oρ α´ και η Σ ν´ νδεσ ις, 213–232. 25 G. Carter, «Tα κα ν´ σ ιμα ετ ελε´ιωσ αν...»: Aπ o´ τ ην Π oλιτ ικ oπ oι´ησ η Π απ αδ oπ oν´ λoυ σ τ ην «Mετ απ oλιτ ευσ η» Kαραμανλη; ´ Π ρ oσ ωπ ικ η´ μαρτ υρ´ια (Athens: Pelagos, 2011), 59–96; and the author’s interview with Patras, Athens, 26/4/2012.

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In light of the enlargement of the EEC through the accession of Britain, Ireland, Denmark, and Norway,26 the question of Greece’s relationship with the new member-states inevitably arose.27 Naturally, the Greeks sought the automatic extension of the Association Agreement to the new EEC members on the grounds that this fell under the rubric of “current administration.”28 Both France and West Germany desired this as well. In the case of France, however, support for Greece was subject to the proviso that French agricultural interests should not be adversely affected,29 and this proved to be an important point. Despite France’s open political support for the Greek dictatorship (culminating in the visit to Greece of French Undersecretary of State for Foreign Affairs Jean de Lipowski in early 197230 ), there had been instances in which the two countries found themselves at odds—especially when, owing to pressure from the French Ministry of Agriculture, Greece was treated as a third country rather than as an EEC associate member.31 The most notable example in this regard was the 1970 imposition by the Community of restrictions on imports of wines from non-EEC countries. As part of this policy, a countervailing duty was assessed on Greek wine imports, and the Greeks, regarding this as a violation of the Association Agreement, had been demanding the duty’s removal ever since. This issue soon became entangled with that of the EEC’s imminent 26 In a referendum in late 1972, Norway rejected its government’s proposal to join the EEC. See R. M. Allers, Besondere Beziehungen: Deutschland, Norwegen und Europa in der Ära Brandt (1966–1974) (Bonn: Dietz, 2009); and H. A. Ikonomou, “Europeans— Norwegian Diplomats and the Enlargement of the European Community, 1960–1972” (PhD diss., European University Institute, Florence, April 2016). 27 The question was of great concern to the Greek authorities, and since 1970 they had been trying to investigate both the economic and political implications of the enlargement. See, for example, KE⊓E, Eπιπτωσεις ´ εκ της Συνδšσεως της Bρεταν´ιας μετα´ της EOK επ´ι της Eλληνικης ´ Oικoνoμ´ιας, 15/4/1970, ANIM, F236/A; and Σoρ´oκoς to ανθ´oπoυλo-⊓αλαμα, ´ 5/1/1972, in Tomai, Aπ o´ τ o π αγ ´ ωμα τ ης Συμϕων´ιας Σ ν´ νδεσ ης σ τ ην šντ αξ η σ τ ις Eυρωπ α¨ικ šς Koιν o´ τ ητ ες, 189–193. 28 Dimopoulos, H Koιν η´ Aγ oρ α ´ και η Σ ν´ νδεσ ις , 80–81. 29 Referat IIIE1 des Auswärtigen Amts, Beziehungen EWG-Griechenland, 12/5/1972,

PA AA, B26, Bestellnr. 435. 30 Hooper (British Ambassador Athens), Diplomatic Report (No. 197/72): Visit by the French Under-Secretary for Foreign Affairs, 9/2/1972, The National Archives, Kew, Richmond (TNA), FCO 30/1327; and To Vima, 30/1/1972. 31 Schlitter, Kleiner Handelskrieg Griechenland/Frankreich, 28/1/1969, PA AA, B20200, Bestellnr. 1814.

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enlargement. The Community, yielding to pressure from the French and Italians, sought to extend the terms of the Greek Association Agreement to the new member-states without reinstating provisions of the Agreement’s fourteenth protocol that guaranteed more favorable treatment for Greek wines. To achieve these two aims simultaneously, the Community proposed the signing of an additional protocol between Greece and the four new EEC nations, thus avoiding the activation of the disputed provisions that automatic extension of the Association Agreement would entail. Instead, the proposals of the Community on Greek wine imports would protect French and Italian interests.32 The question of the extension of the Greek association was discussed at a government meeting on August 29, 1972, during which the positions expressed the previous September were reiterated. This time, however, Makarezos openly raised the possibility of appealing to international arbitration, pointing out that the EEC’s unilateral interpretation of the Association Agreement’s “current administration” was proving inimical to the Greek economy, and that accepting the procedures proposed by the EEC would mean that the Greek government would acquiesce to a third country status for Greece. Papadopoulos, for his part, acknowledged the logical basis for an appeal to arbitration, but noted that the issue was essentially not legal but political: in view of the stringent deadlines for signing the additional protocol, the Greek government found itself facing

32 Direction Generale des Relations Exterieures, Note à l’attention de M. Noel, Secrétaire Général (Projet). Diffusion d’ une note provenant d’un pays tiers: Aide-mémoire de la delegation permanente hellénique concernant le regime à appliquer aux vins grecs à l’importation dans la Communauté, 29/5/1972; and the attached Delegation permanente hellénique Aide-mémoire, 19/5/1972; General Direktion/Auswärtige Beziehungen, Vermerk für Herrn Dahrendorf: Beziehungen mit Griechenland [Projet], 23/6/1972; and Katapodis (Permanent Delegation of Greece/Chargé d’Affaires a.i.) to the President of the Council of the Association between EEC and Greece, Mémorandum du Gouvernement hellénique concernant, d’une part, l’adaptation du Protocole no 14 de l’ Accord d’ Athènes aux principes de la politique viti-vinicole commune et, d’autre part, la conclusion d’un Protocole additionnel par suite de l’élargissement de la Communauté, 11/7/1972, HAEU, BAC- 003/1978_0869; and Butler-Madden (UK Delegation to the EC) to Hall (European Integration Department), EEC/Greece: Negotiation of the Additional Protocol, 10/5/1972; and Butler-Madden to Hall, EEC/Greece: Wine, 6/7/1972, TNA, FCO 30/1327. For Greek views on the matter, see Dimopoulos, H Koιν η´ Aγ oρ α´ και η Σ ν´ νδεσ ις , 52–81. For an overview, see The Economist, 17–23 November 1973.

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political blackmail, and it should not take any actions that would lead to a rift with Western Europe.33 The now largely forgotten issue of Greek wine was to prove a turning point in Greece’s international relations and domestic politics. Internationally, the Greco-French dispute gave West Germany a much-desired opportunity to challenge France’s leverage in economic relations with Greece. Within Greece, divergent views among the dictatorship’s leaders regarding the best position to take toward the EEC—and the dependence of these views on different visions of Greece’s political future—soon led to an escalation of the debates that were already going on within the dictatorship over the eventual transformation of the regime. On the European front, West Germany assumed the role of mediator in the dispute over wines between the Greek government and Germany’s own partners within the EEC. As early as the beginning of 1971, West Germany was inclined to abandon restrictions on bilateral economic relations with Greece. This tendency was driven both by a general recognition that Germany’s economic position in Greece had dramatically deteriorated vis-à-vis those of its competitors34 and also by the resulting pressures from the German industries most directly impacted by this deterioration. Meanwhile, even as it began to pursue a new approach to bilateral relations, Germany was also adopting a friendlier attitude toward Greece at the level of the Community.35 Germany’s rethinking of its position on Greece led to a series of contacts, brokered by Roussos, between the German permanent representative to the EEC, Hans-Georg Sachs, and Greek officials. The object of these meetings was a reactivation of the Additional Financial Protocol.36 Toward the end of 1971, the relevant section of the West German Foreign Ministry made the determination that neither bilateral nor Community sanctions had had any success in promoting the restoration of Greek democracy; they thus concluded that

33 Kυβερνητικ´oν ⊓oλιτικ´oν Συμβoνλιoν. ´ ⊓ρακτικ´oν υπ. Aριθμ. 19, 1/9/1972, ANIM, IMS-FORTH, F236/A. 34 Limbourg to Auswärtiges Amt, Die Wirtschaftsentwicklung Griechenlands in den

ersten Monaten 1970, 19/5/1970, PA AA, B20-200, Bestellnr. 1816. 35 Referat IIIA5 des Auswärtigen Amts, Deutsch-griechische Wirtschaftsbeziehungen, 15/1/1971; and Referat IIIE/IA2 des Auswärtigen Amts, Haltung der Bundesregierung gegenüber Griechenland, 18/1/1971, PA AA, B20- 200, Bestellnr. 1819. 36 Sachs, Verhältnis der EWG zu Griechenland, 12/3/1971; and Sachs, Verhältnis der EWG zu Griechenland, 13/4/1971, PA AA, B20-200, Bestellnr. 1819.

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punitive tactics were ill-judged and encouraged those at the ministry who oversaw European affairs to adopt a position in support of Greek requests for financing.37 Throughout 1972, German support for Greece, though efficacious only with regard to a few minor trade issues,38 was important in contributing to a thaw in Greco-German relations. In the autumn of that year, this improvement in the political climate resulted in a visit to Greece by German Deputy Foreign Minister Paul Frank, who discussed with Greek officials the full range of issues that concerned the two countries.39 On the domestic front, Makarezos, having just won Greece a Financial Times “economics Oscar” for the second year in a row in January 1973,40 made a public statement that illustrated the increasing importance of the European question in Greek politics. During a luncheon given in his honor by the Foreign Press Association of Greece, the deputy prime minister acknowledged that the “freezing” of the Association Agreement had been entirely due to political reasons, and he let it be known that the government was at work on a plan to remove the political impediments to good relations with the Community.41 Makarezos’s remarks set off a public debate in Greece over the country’s relationship with the EEC, and this debate soon centered on the issue’s political aspects.42 Prominent opponents of the regime and those well versed in the subject, such as Pesmazoglou, emphasized the political preconditions for removing existing impediments.43 Leading financial publications, such 37 Referat IA4 to Referat IIIE1 des Auswärtigen Amts, Assoziation Griechenland-EWG: Finanzprotokoll Nr. 19, 27/10/1971, PA AA, B26, Bestellnr. 437. 38 Referat IIIE1 des Auswärtigen Amts to Frank, Assoziation EWG-Griechenland: Gespräch mit dem griechischen Minister Fthenakis am 20.7.1972 in Brüssel, 17/7/1972; and Referat IIIE1 to Referat IA4 des Auswärtigen Amts, Reise StS Frank nach Griecheland (25.-30.9.1972): Griechenland-EWG, 4/9/1972, PA AA, B20-200, Bestellnr. 1917. 39 Limbourg to Auswärtiges Amt, Besuch Staatssekretär Frank: Gesprächspartner und themen, 12/9/1972, Referat IA4 des Auswärtigen Amts, Kabinettsitzung am 10. Oktober 1972: Unterrichtung über die Reise von StS Frank nach Griechenland und in die Türkei, 9/10/1972, PA AA, B26, Bestellnr. 436. 40 See The Financial Times, 10/1/1972 and 15/1/1973. 41 To Vima, 19/1/1973. 42 See also S. Verney and P. Tsakaloyannis, “Linkage Politics: The Role of the European Community in Greek Politics in 1973,” Byzantine and Modern Greek Studies 10.1 (1986): 179–194. 43 To Vima, 20/1/1973.

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as the Oikonomikos Tachydromos (OT ),44 also focused their coverage on the political questions involved. The OT , moreover, ran an interview in which three members of the European Commission were asked about the regime’s expectations of a change in EEC policy toward Greece after François-Xavier Ortoli—who, in his role as a minister of the French government, had once welcomed Makarezos to Paris—took over as president of the Commission. The commissioners flatly rejected the idea that any such change in policy would occur.45 Amid all this controversy, Makarezos publicly posed a question to the Greek business community’s organizations and representatives—including Marinopoulos himself46 —regarding the Greek economy’s readiness to face immediate full membership in the EEC. SEV, taking Makarezos’s question as an opportunity to bring this issue back to the forefront, made a series of public statements intended, on the one hand, to declare its support for membership in the EEC and, on the other hand, to restore its relationship with the deputy prime minister. Criticizing the approach taken by the Karamanlis government in the negotiations for association—principally on the grounds that the Federation’s positions had not been given due consideration at that time—SEV simultaneously praised Makarezos’s recent statements. Moreover, it sought to explain that it had called out recent errors not in order to oppose the government, but only so that forthcoming challenges could be addressed in a timely fashion.47 Makarezos was not publicly reviving the question of Greece’s relationship to the EEC simply because he was interested in the issue from a technical point of view. On the contrary: the deputy prime minister was well aware of the political implications of his choice. Makarezos’s actions bespeak a definite strategy, centering on relations with the EEC but extending to the full range of political challenges that confronted the dictatorship. By foregrounding the issue of the Greek economy’s readiness for immediate and full integration into the Common Market, Makarezos was exploiting the concerns of manufacturers in order to 44 OT, 8/2/1973. 45 The three commissioners interviewed were Ralf Dahrendorf, George Thomson and

Patrick J. Hillery. See OT , 22/2/1973. Soon afterward, Ortoli himself would disappoint Greek hopes in a speech to the European Parliament. See To Vima, 15/3/1973 and 23/5/1973. 46 Mαριν´oπoυλoς to Mακαρšζo, 6/2/1973, ANIM, F160γ/A. 47 SEV Bulletin, 256, 28/2/1973 and 257, 15/3/1973.

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refocus the conversation on the political question. He thus sought to shift the responsibility for solving it onto the regime’s political leader, Papadopoulos, who at that time was preoccupied with creating a “Party of the Revolution” and preparing for a long transition to some sort of parliamentary democracy under his own control. In the early months of 1973, increasing expectations for political change went hand-in-hand with the regime’s apparent inability to offer a road map for escaping from stagnation. Intensifying the eagerness for change was manifestations of social discontent the likes of which had not been seen for several years. Meat shortages and rising prices for consumer goods caused universal frustration. Periodic student protests, culminating in February with the occupation of the law school at the University of Athens, tended to take on a political character. There were unprecedented levels of workplace unrest, as seen in PPC employees’ resistance to new company rules, and threats of walkouts by employees of private companies over the issue of working hours. In residential and rural areas, the establishment of new industries provoked opposition from local authorities and affected citizen groups. All these phenomena created the impression of social and political turmoil, leaving the regime even less room for maneuver than it already had.48 The regime’s lack of a clear political trajectory and the growing problems that it faced were interpreted by the foreign embassies in Athens as betokening a retreat from liberalization. The foreign diplomats perceived that Papadopoulos’s position was weakening and ascribed the inertia to the regime’s “hardliners” and to the man who was now their indisputable leader, Dimitrios Ioannides.49 In the months that followed, political developments gathered force and became an avalanche. On 23 April, after the newspaper Vradyni published remarks by Karamanlis that were critical of the regime, the government ordered all copies of the paper to be

48 See relevant coverage in To Vima during the first half of 1973. These developments did not pass under the foreign embassies’ radar. See FRUS, 1969–1976, XXX, 2–5 (doc. 2); and Oncken to Auswärtiges Amt, Lage in Griechenland, 30/5/1973, PA AA, B AV Neues Amt, Bestellnr. 14598. On the student movement, see also K. Kornetis, Children of the Dictatorship: Student Resistance, Cultural Politics and the “Long 1960s” in Greece (Oxford: Berghahn Books, 2013). 49 FRUS, 1969–1976, XXX, 2–5 (doc. 2); and Oncken to Auswärtiges Amt, Lage in Griechenland, 30/5/1973, PA AA, B AV Neues Amt, Bestellnr. 14598.

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confiscated.50 A month later, the regime announced that it had broken up a royalist mutiny among naval officers, and bluntly suggested that King Constantine himself might somehow have been involved. On the first of June, the regime proclaimed a presidential republic, dethroning Constantine and calling a referendum to ratify the constitutional change. Finally, in October, Papadopoulos, as president of the republic, appointed Spyros Markezinis as prime minister for the purpose of conducting elections. SEV could not remain aloof from these developments. In July, a few days before the referendum, the Federation announced its support for the government’s political initiatives via an editorial in its Bulletin.51 Moreover, SEV drew a direct connection between the liberalization efforts and the hoped-for rapprochement with the EEC. Once again, SEV proposed that an annual meeting of UNICE presidents should be held in Athens, characteristically observing that: SEV’s proposal aims to bring together in Athens the industry leaders of the nine nations of the Common Market countries who, through UNICE, have a significant influence on the overall policy of the EEC. It is offered at a time when relations between Greece and the European Economic Community are undergoing a change—accentuated by recent political developments—which will have a favorable impact on prospects for the further implementation of the Association Agreement.52

SEV’s optimism seemed to match the prevailing mood on the international scene. The West German ambassador in Athens, Dirk Oncken, recommended that the German Foreign Ministry extend its support to Markezinis both bilaterally and at the level of the Community, conditioning the level of its support on the successful conduct of the upcoming elections.53 Similar recommendations were made to the French and

50 Svolopoulos, Kαραμανλης, ´ vol. 7, 169–173; and Vradini, 24/4/1973. 51 SEV Bulletin, 265, 15/7/1973. 52 SEV Bulletin, 269, 15/9/1973. 53 Oncken to Auswärtiges Amt, Libelarisierungstendenzen in der griechischen Innen-

politik: Motivierung, 22/9/1973; Oncken to Auswärtiges Amt, Libelarisierungstendenzen in der griechischen Innenpolitik: Vorschläge für den Fall der Ernennung von Markezinis zum Ministerpräsidenten, 24/9/1973, PA AA, B AV Neues Amt, Bestellnr. 14584.

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British governments by their own ambassadors,54 but Oncken in particular perceived a range of opportunities for Greco-German cooperation, especially on economic issues. Oncken also felt that these opportunities were greater than ever thanks to Greco-French differences over the treatment of Greek agricultural products. Germany’s former working relationship with Markezinis at the time of the Papagos government was also an advantage.55 The United States too was ready to welcome the Markezinis government, and the liberalization measures that accompanied the proclamation of Papadopoulos as president of the republic, as “hopeful steps toward the normalization of political life.56 ” Henry Tasca, America’s ambassador to Greece, and the influential Greek-American entrepreneur Tom Pappas both suggested that Nixon make a visit to Greece, and although this proposal failed to find any supporters in the State Department’s Bureau

54 Goodison (FCO/Southern European Department), British policy toward Greece, 13/11/1973; and Goodison to Hooper (British Ambassador in Athens), British policy toward Greece, 16/11/1973, TNA, FCO 9/1733; Hooper to Goodison, 15/11/1973, TNA, FCO 9/1712; Memorandum of Conversation, (Denson, British Embassy Athens/Councelor and Brandin, American Embassy Athens/Minister-Councelor), Greek Internal Situation and the Cyprus Problem, 2/11/1973, National Archives and Records Administration, College Park, MD (NARA), RG59, Series: Records Relating to Greece 1963–1974, A15641, Box 23: POL 15–1/9 Markezinis Cabinet; and A. Varsori, “The EEC and Greece from the Military Coup to the Transition to Democracy (1967–1975),” in O Kωνσ τ αντ ι´ν oς Kαραμανλης ´ σ τ oν εικ oσ τ o´ αιωνα, ´ 3 vols., ed. K. Svolopoulos, K. Botsiou, and E. Hatzivassiliou (Athens: Konstantinos G. Karamanlis Foundation, 2008), vol. 1, 317–338. 55 Oncken to Auswärtiges Amt, Neuer griechischer Ministerpräsident Markezinis: zur

Person, 5/10/1973, PA AA, B AV Neues Amt, Bestellnr. 14587; and Oncken to Auswärtiges Amt, Gespräch mit Ministerpräsident[en] Markezinis am 31.10.1973, 2/11/1973, PA AA, B AV Neues Amt, Bestellnr. 14584. 56 Sisco (Near Eastern and South Asian Affairs-NEA) to Secretary of State, The Markezinis Government. A Preliminary Assessment, 11/10/1973, NARA, RG59, Series: Records Relating to Greece 1963–1974, A15641, Box 23: POL 15–1/9 Markezinis Cabinet; and Secretary of State to US Mission to the United Nations, Possible US statement on new GOG, 6/10/1973, National Archives and Records Administration at College Park, MD (NARA), State Department Central Foreign Policy Files (DSCF), Record Group 59 (accessible through http://aad.archives.gov/aad/; last retrieved on 7 April 2015).

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of Near Eastern Affairs, the bureau’s director, Joseph Sisco, seemed optimistic about the possibility of Markezinis’s being formally invited to visit the United States.57 It was another development, however, that was perhaps the most interesting. As the British ambassador to Athens had pointed out, the question of Greece’s relationship with the EEC was one of the main problems that the “Markezinis experiment” was meant to resolve.58 European Commission circles, which thus far had maintained a tough stance toward Greece, now seemed inclined to offer support to the liberalization project. Although Commissioner for External Relations Sir Christopher Soames was careful, in his official contacts with Vyronas Theodoropoulos, Greece’s permanent representative to the EEC, to downplay expectations for a quick rapprochement,59 Soames’s cautious attitude was in fact a product of calculation. Only a short time before, Edmund Wellenstein, the director-general for external relations, had recommended the adoption of a public statement that would emphasize the Commission’s desire to see recent political developments translate into a restoration of human rights and democracy in Greece. At the same time, he had proposed starting the process of normalizing the Community’s relations with Greece even before the full restoration of democracy. But a precondition for the success of any such strategy was a low-profile approach on the part of the Greek regime. Otherwise, Wellenstein concluded, public opinion would most likely misinterpret the Community’s position.60 A favorable international mood was a necessary but not sufficient condition for such aspirations to crystallize into concrete policies.

57 Tasca

(American Ambassador to Athens) to Secretary of State, Possible Nixon/Papadopoulos meeting, 1/10/1973; and the attached Briefing Paper: US-Greek Relations by Ambassador Tasca, undated; Sisco (NEA) to Secretary of State, Greece: Ambassador Tasca’s Proposal for Meeting Between President Nixon and President Papadopoulos, 15/10/1973; and Davies (NEA) to Tasca, 3/11/1973, NARA, RG59, Series: Records Relating to Greece 1963–1974, A15641, Box 23: POL 7 Visits; and Miller, Making of Modern Greece, 170–173. 58 Hooper to Goodison, Greece and the EEC, 25/10/1973, TNA, FCO30/1783. 59 Hay, Call of the Greek Ambassador on Sir C. Soames, 19/10/1973, 22/10/1973,

HAEU, BAC.050.1982_0028. 60 Directeur General (DG1), Note à l’attention de Sir Christopher Soames, VicePrésident de la Commission: Les relations CEE-Grèce, 16/10/1973, HAEU, BAC050/1982_0028.

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Markezinis had become prime minister at a time when inflationary pressures, which had begun to make themselves felt since the beginning of 1973, were assuming uncontrollable proportions as a result of the oil crisis to which the latest Arab-Israeli clash had given rise. Inflation had already been creating headaches for the regime before Markezinis took office, but the Yom Kippur War61 and the use of oil as a diplomatic weapon by the Arab nations62 had exacerbated the problem, driving Greek inflation to levels not seen for at least two decades.63 These negative economic developments, in combination with the eruption of hitherto repressed social forces as the regime’s rigorous authoritarianism was gradually relaxed, lit the fuse on a political powder keg. An explosion seemed imminent in mid-November, when renewed student unrest in the wake of demonstrations at Georgios Papandreou’s memorial service64 escalated into the occupation of Athens Polytechnic. The regime’s initial indecision in the face of the student revolt65 soon gave way to a flexing of military muscle, the reappearance of tanks on the streets of Athens, the suppression of the students, the re-imposition of martial law, and placement under house arrest of key pre-dictatorial political figures. This backlash exposed the failure of the regime’s efforts to move toward a tutelage democracy, and it created an opportunity for those forces within the army who from the beginning had been against any steps toward liberalization. On 25 November, just a week after the suppression of the student revolt, a new coup, led by the head of the military police, Dimitrios Ioannides, overthrew Papadopoulos, proclaimed a return to the “original principles” of the 21st of April “Revolution,” and brought to a standstill any prospects for rapprochement with the European Community. 61 C. Daigle, The Limits of Détente: The United States, The Soviet Union, and the Arab–Israeli Conflict, 1969–1973 (New Haven and London: Yale University Press, 2012). 62 E. Bini, G. Garavini, and F. Romero, eds., Oil Shock: The 1973 Crisis and Its Economic Legacy (London: I. B. Tauris, 2016); G. Garavini, After Empires: European Integration, Decolonization, and the Challenge from the Global South, 1957–1986, trans. Richard R. Nybakken (Oxford: Oxford University Press, 2012); and G. Garavini, The Rise and Fall of OPEC in the Twentieth Century (Oxford: Oxford University Press, 2019). 63 For the monthly inflation rates, which skyrocketed to 20% in October only to jump to 30% in November 1973, see data from the Greek Statistical Service (ESYE; last accessed via www.statistics.gr on 7 April 2015). 64 Eleftheros Kosmos, 6/11/1973; and To Vima, 6–7/11/1973. 65 See Markezinis, Aναμν ησ ´ εις , 385–441.

CHAPTER 14

Growth and Crisis

Economically, Greece does not survive without Western Europe. It is there that we have secured funds for major investments in recent years, and armaments that we could not have obtained anywhere else. It is also where we sell most of our agricultural produce and receive a substantial part of our technical know-how. Western Europe, moreover, has every interest in not losing Greece and its expanding market. Greece spends truly tremendous sums for investments, and the economy is thus proving to be a key factor in the Western European countries’ relations with Greece. —Ministry of Foreign Affairs (18th Directorate), Greece in the International Arena, November 19731

In the years of rapid growth that passed between the signing of the Association Agreement in 1961 and the outbreak of the oil crisis in 1973, Greek industry displayed unprecedented dynamism. During those years, it reoriented itself toward the Common Market, creating the preconditions for Greece’s eventual integration into the European Community as a full member. The imposition of the dictatorship did not signal the abandonment of this trajectory—on the contrary, it confirmed it. Critical transformations occurred. The increasing repatriation of Greek 1 Ministry of Foreign Affairs (18th Directorate of Research and Planning), H Eλλας ´ εις τ´oν διεθνη´ χωρoν ´ (study), 11/1973, 28–31, Institute for Mediterranean Studies– Foundation of Research and Technology, Rethymno (IMS- FORTH), Archive of the Prime Minister, Minister of Finance, and Minister of the Interior (AAIA), F95/B.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_14

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shipowners worked to the disadvantage of the multinational corporations who were often in partnership with them. West Germany’s role in the Greek economy—which had made itself conspicuous during the 1950s through highly visible bilateral agreements and partnerships with private businesses—had now been Europeanized and redirected toward state-owned enterprises. The relative strengthening of French influence during the dictatorship—possible thanks to France’s open support for the colonels—may have somewhat diminished Germany’s predominance, but it did not alter the two countries’ relative importance in the Greek economy. The challenges facing that economy, however, were now much more far-reaching, and the collapse of the dictatorship completely transformed the macroeconomic, political, and ideological contours of the postwar landscape in which Greek industrialization had thus far taken place. The period during which Greece had begun developing a close relationship with the EEC was a time of rapid economic change. The Western European economy was growing at a very fast pace, achieving tremendous gains—especially in the area of industrial exports—and narrowing the huge gap that had separated it from the United States in the immediate aftermath of the war. During the same era, the Greek economy was also in the middle of a major development push, with per capita GDP increasing at an average annual rate of 6.2% from 1950 to 1973.2 Industry quickly emerged as the engine of economic performance, with manufacturing GDP growing at an average annual rate of 10.2% during the 1960s—a much higher rate than that of other developing countries.3 The trend continued to accelerate during the first part of the following decade, and in 1973 the growth rate of Greek manufacturing GDP reached a record high of 23.2%.4 Industry had also played a critical role in reorienting Greece’s export trade toward the EEC. From 1962 to 1974, bilateral trade between Greece and the EEC grew prodigiously: the value of imports to Greece from the six founding members of the Common

2 B. Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond (Princeton, NJ: Princeton University Press, 2007), 16–18 and 25. 3 M. Karamesini, Bιoμηχ ανικ η´ π oλιτ ικ η, ´ ευρωπ α¨ικ η´ εν oπ oι´ησ η και μισ θ ωτ η´ εργ ασ ι´α (Athens: Ellinika Grammata, 2002), 112. 4 Ministry of National Economy (ϒ⊓E⊝O), H ελληνικ η´ oικ oν oμ´ια 1960–1997: Mακρ oχ ρ o´ νιες μακρ ooικ oν oμικ šς σ τ ατ ισ τ ικ šς σ ειρ šς (Athens, 1998).

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Market increased sixfold, while the value of Greek exports to those countries increased tenfold. In 1962, 36.1% of Greek exports went to the EEC; in 1975, the proportion had grown to 44.2% (50% with the inclusion of the three new member-states), and the corresponding percentage for Greek industrial exports had risen from 15.6% to 43.7% (46%).5 The strongest performances were posted by companies in those sectors which, according to KEPE estimates in the early 1960s, possessed the necessary comparative advantages to allow them to emerge as poles of industrial development. Between 1969 and 1973, the most important contributions to the growth of Greek industry were made by basic metallurgy and metal goods, non-metallic minerals, foodstuffs, and, secondarily, textiles and chemicals.6 It was primarily in these same sectors that the biggest exporters were to be found. Meanwhile, over the period 1968– 1973, the inflow of venture capital into Greece more than doubled relative to the six years from 1961 to 1966 ($627.2 million as compared to $292 million).7 Notably, during that same period, the share of Greek industrial exports generated by multinational corporations exercising control over major industries declined from 55.6% to 29.8%.8 On the other hand, over the period 1967–1974, ship-owning capital provided about 50% of the value of total investments in industry under the terms of LD 2687/53, with the funds going mainly to refineries and shipyards.9 As a result, shipping capital controlled about a quarter (24%) of the 100 largest industrial enterprises by 1973, and it had gained almost complete control over the petroleum and transportation (essentially shipbuilding) sectors (85% and 74%, respectively).10 5 For these data, see Bank of Greece, Eκθ ´ εσ ις τ oυ Διoικητ oν´ τ ης Tραπ šζ ης επ ι´ τ oυ ´ εσ ις τ oυ Διoικητ oν´ ισ oλoγ ισ μoν´ τ oυ šτ oυς 1967 (Athens, 1968); Bank of Greece, Eκθ τ ης Tραπ šζ ης επ ι´ τ oυ ισ oλoγ ισ μoν´ τ oυ šτ oυς 1973 (Athens, 1974); and I. Hassid, Eλληνικ η´ Bιoμηχ αν´ια και EOK: Mελšτ η γ ια τ ις επ ιπ τ ωσ ´ εις τ ις šντ αξ ης (Athens: IOBE, 1980), vol. 1, 72 and 78. 6 A. Giannitsis, H ελληνικ η´ βιoμηχ αν´ια: Aν απ ´ τ υξ η και κρ´ισ η (Athens: Gutenberg, 1985), 73. 7 Bank of Greece, Mακρ oχ ρ o´ νιες σ τ ατ ισ τ ικ šς σ ειρ šς τ ης ελληνικ ης ´ oικ oν oμ´ιας (Athens, 1992). 8 Giannitsis, H ελληνικ η´ βιoμηχ αν´ια, 323 and 328. 9 See G. Harlaftis, Greek Shipowners and Greece, 1945–1975: From Separate Development

to Mutual Interdependence (London and Atlantic Highlands, NJ: Athlone Press, 1993), 84 and 197 (Table 5.3 and Annex IX). 10 Harlaftis, Greek Shipowners and Greece, 79–89.

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The decade of rapid industrialization between 1963 and 1973 saw the convergence of two decisive factors that defined the Greek economy’s impressive development, but also confirmed its structural limits. One of these was the—essentially unilateral—elimination of tariffs on the part of the EEC; that process had been completed in 1968 and tariffs had not been re-imposed despite the “freezing” of Greece’s associate status. The other factor was the introduction of incentives on an unprecedented scale, exempting industrial companies from taxes on reinvested profits. Together, these two factors postponed Greek industry’s exposure to international competition and—along with informal types of protection, such as the disregarding of official limits on business loans in order to promote investment in selected sectors—contributed to increasing distortions of Greece’s industrial development. The distortions, however, did not represent a departure from the development model that the Greek economy’s incorporation into the Common Market had introduced. They were, on the contrary, among that model’s essential features. Since the signing of the Association Agreement, Greece’s economy had performed impressively under conditions of long-term monetary stability and rising employment. In the second half of 1973, however, the onset of the oil crisis and the overheating of the Greek economy combined to reveal the structural weaknesses of postwar Greece’s pursuit of economic development via integration with the Common Market. 1974 was easily the worst year for the Greek economy since the monetary stabilization of 1953, with GDP contracting by 6.4% while inflation soared to 26.9%. Rapid industrialization had multiplied the Greek economy’s need for liquid fuel imports and, despite restrictions on fuel consumption, the value of fuel and lubricants imports in 1974 skyrocketed to $863.5 million (as compared to $49.8 million in 1962).11 At the same time, industrialization required ever-increasing imports of machinery whose cost could not be offset by the export of lower-value-added Greek consumer and intermediate goods. Thus, in the two years 1973–1974, Greek expenditures on imports were equal to 21% of GDP (up from 13.3% in 1961), while the total value of Greek exports for 1973 and 1974 amounted, respectively, to 6.4% and 8.2% of GDP (compared to 5.5% in

11 Bank of Greece, Eκθ ´ εσ ις τ oυ Διoικητ oν´ γ ια τ o 1974; and Bank of Greece, Mακρ oχ ρ o´ νιες σ τ ατ ισ τ ικ šς σ ειρ šς τ ης ελληνικ ης ´ oικ oν oμ´ιας .

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1961). As a result, Greece’s trade deficit widened from 7.8% of GDP in 1961 to 14.7% in 1973 and 13.3% in 1974.12 A less visible but equally significant side effect of the Greek economy’s ongoing integration into the Common Market was a progressive erosion of the Greek government’s ability to provide the generous incentives on which industrial enterprises relied. According to estimates from the Greek Ministry of Finance, the gradual lowering of tariffs on imports from the EEC and third countries under the terms of the Association Agreement had cost Greece 3 billion drachmas in lost revenue over the period 1962–1969. In 1969 alone, the loss was more than 900 million drachmas.13 These numbers, and the expected further decrease in revenue as tariff reductions accelerated in the years ahead, faced the Greek government with the challenge of finding ways to offset the losses. Meanwhile, the Directorate General for Taxation at the Greek Ministry of Finance determined that revenue loss due to the system of investment incentives amounted to 2.75 billion drachmas in the single year 1970, and that in the same year various exemptions had deprived the state of a further 1.85 billion drachmas.14 Incentives and exemptions for industry had largely been responsible for these numbers. In addition to the cost of direct incentives, exemptions claimed by industry had resulted in about one billion drachmas in lost revenue for 1969,15 and the Oikonomikos Tachydromos estimated that new export incentives implemented in 1970 would cost the treasury an additional billion drachmas.16 All of this was entirely predictable. Already in 1965, a KEPE study had identified the fiscal effects of tariff reductions as one of the dangers of association with the EEC,17 and the budgetary cost of tax exemptions had led the Ministry of Finance to oppose the introduction of

12 Ministry of National Economy (ϒ⊓E⊝O), Eλληνικ η´ oικ oν oμ´ια. 13 ϒπoυργε´ιoν Oικoνoμικων, ´ Σημε´ιωμα επ´ι της πρooπτικης ´ εξελ´ιξεως των κρατικων ´

εσ´oδων κατα´ τo τρšχoν šτoς 1971, 8/2/1971, AAIA, F210/A.

14 ⎡ενικη ´ Διενθυνσις ´ Φoρoλoγ´ιας, 15/3/1971, AAIA, F210/A. 15 ⎡ενικη ´ Διενθυνσις ´ Φoρoλoγ´ιας, ⊓αρατηρησεις ´ επ´ι των υϕισταμšνων απαλλαγων, ´

9/3/1971 and the attached Διενθυνσις ´ Συμβατικη, ´ Συγκεντρωτικη´ Kαταστασις ´ […] κατα´ τo šτoς 1969, 3/1971, AAIA, F210/A.

16 OT , 24/9/1970. 17 S. G. Triantis, Koιν η´ Aγ oρ α ´ και Oικ oν oμικ η´ Aν απ ´ τ υξ ις : H Eλλας ´ και η EOK

(Athens: KEPE, 1967 [1965]), 91–121.

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industrial incentives as early as 1967.18 In 1968, moreover, Greek industry’s ballooning energy consumption had already forced the colonels to announce the expansion of the country’s refinery capacity.19 Most importantly, the need to maintain a balance-of-payments equilibrium in the face of international competition was recognized from the very beginning as a critical issue by those who had pioneered Greece’s Western European strategy. The problem had soon attracted the attention of wider circles in government, business, and academia,20 and it was precisely an awareness of Greece’s subordinate position in the international division of labor that had compelled Ioannis Pesmazoglou, head of the Greek delegation during the negotiations for the Free Trade Area and the Association Agreement, to insist—beginning in the late 1950s—that Greece had to receive adequate financial assistance from the European institutions that were then being constructed.21 Export performance was only one factor shaping Greek companies’ attitude toward prospective integration into the Common Market. There were other equally important considerations. One of these was the opportunity for partnerships with foreign companies who wanted to take advantage of Greece’s special status under the favorable terms of the Association Agreement in order to increase their exports to other countries of the Common Market.22 Another was reduced costs for their orders

18 Zακ´oπoυλoς, Aπωλεια ´ εσ´oδων εκ τελων ´ χαρτoσημoυ ´ εκ της εϕαρμoγης ´ τoυ αν. ν´oμoυ 148/1967 “περ´ι μšτρων πρoς εν´ισχυσιν της κεϕαλαιαγoρας,” ´ 11/1967, IMSFORTH, AAIA, F209/A; ⎡ενικη´ Διενθυνσις ´ Φoρoλoγ´ιας τoυ υπoυργε´ιoυ Oικoνoμικων, ´ Eκτ´ιμησις τoυ πρoκνψαντoς ´ oικoνoμικoν´ oϕšλoυς εκ των παραχωρηθšντων κινητρων ´ επενδνσεων, ´ undated. [1969], IMS-FORTH, AAIA, F174/A; and the author’s interview with Konstantinos Thanos, Athens, 17/4/2011. 19 Ch. Tsakas, “Shipping Tycoons and Authoritarian Rulers: Doing the Oil Business with the Greek Dictatorship, 1967–1974,” Journal of Modern Greek Studies 38.1 (2020): 185–208. 20 See, for example, the papers presented at the third conference of the Greek Society of the Economic Sciences (Eλληνικης ´ Eταιρε´ιας Oικoνoμικων ´ Eπιστημων, ´ EEOE) in the volume To Iσ oζ ν´ γ ιoν τ ων εξ ωτ ερικ ων ´ π ληρωμων ´ τ ης Eλλαδ ´ oς : Eισ ηγ ησ ´ εις και σ υζ ητ ησ ´ εις , Aθ ηναι, ´ 3–4 Ioυν´ιoυ 1966 (Athens: EEOE, 1967). 21 See Chapter 9. 22 These were mainly companies outside the EEC who wanted to avail themselves of

Greece’s associate status in order to avoid the external tariff walls of the Community, but there were also some European companies that sought to exploit the opportunities created by the initially unilateral removal of EEC tariffs on imports from Greece.

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of much-needed capital equipment, thanks to the ongoing tariff reductions.23 Association with the EEC thus enhanced technology transfer, but also increased the dependence of Greek firms on Western European and American companies,24 to the extent that it became difficult to find—or even to seek out—alternative ways of doing business. From 1962 until 1975, more than 50% of Greek imports of industrial goods came from the EEC-6—more than 60% if one includes the three new members of the Community.25 These numbers did not simply reflect changing patterns of consumer spending as a result of economic growth. To a much greater extent, the issue was structural: the technical base of Greek industry depended heavily on technology transfer from abroad.26 In 1973, the peak year for Greek industrial production, the total value of capital goods imports soared to $1.18 billion (up from $334 million in 1968), surpassing spending on imports of manufactured consumer goods for the first time.27 In theory, this development represented a welcome restructuring of the Greek production model, but it also contributed to a looming balance-of-payments crisis. Greek industry’s reliance on imported machinery and equipment also involved a special political burden. In the early 1970s—when, in the wake of its forced withdrawal from the Council of Europe, the dictatorship was threatening a reorientation of Greece’s foreign trade toward the Eastern bloc—the West German ambassador to Athens challenged the credibility of those threats by pointing out that Greek corporations were constrained by their ever-greater need for machinery. Such machinery was imported mainly from Western Europe and, secondarily, from the United States.28

23 For the consistently low tariff costs imposed on capital goods imports between 1968 and 1974, see Giannitsis, H šντ αξ η σ τ ην Eυρωπ α¨ικ η´ Koιν o´ τ ητ α και επ ιπ τ ωσ ´ εις , 79. 24 ELEMEP (Greek Society for Research and Scientific Concerns; Eλληνικη ´ Eταιρε´ια Mελετων ´ και Eπιστημoνικoν´ ⊓ρoβληματισμoν), ´ «H τεχνoλoγικη´ εξαρτηση ´ και oι πρooπτικšς της ελληνικης ´ βιoμηχαν´ιας στo χωρo ´ της EOK», in H Eυρωπ α¨ικ η´ ´ Koιν o´ τ ητ α και oι Eλληνες Mηχ ανικ oι´ (Athens: TEE, 1978), vol. 1, 47–56. 25 Hassid, Eλληνικ η´ βιoμηχ αν´ια και EOK, 72. 26 A. Giannitsis, Private Auslandskapitalien im Industrialisierungsprozess Griechenlands

(1953–1970) (PhD diss., Freie Universität Berlin, 1974). 27 Bank of Greece, Mακρ oχ ρ o´ νιες σ τ ατ ισ τ ικ šς σ ειρ šς τ ης ελληνικ ης ´ oικ oν oμ´ιας . 28 Limbourg to Aurwärtiges Amt, Auswirkungen des Austritts Griechenlands aus dem

Europarat aus hiesiger Sicht, 14/2/1970, Politisches Archiv des Auswärtigen Amts, Berlin (PA AA), B26, Bestellnr. 416.

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And indeed, the possibility of opening up trade with communist regimes was never much more than a bargaining chip employed by the Greek government in negotiations with its Western European partners. After 1969, Eastern Bloc countries never provided more than 6–8% of total imports to Greece.29 The political and economic importance of capital goods imports from Western Europe—and from West Germany in particular—also illustrates another point. The proportion of foreign direct investment provided by a particular country was not a perfect indicator of that country’s importance to the Greek economy: ever since the era of Marshall Plan aid, the source of the funding used for investments was not necessarily the same as the country (usually West Germany) in which orders for machinery and equipment were placed. The system of export credits, best exemplified in the Greco-German agreement of 1953, was a temporary departure from this rule during a period when needed investment capital was still relatively scarce. Under that system, West German, French, and Italian credits were meant to be used in a way that would prioritize contracts with firms in the respective countries. The 1958 loan from the West German government, however, was already being used differently. Greece employed much of that generous loan to support investments by countries other than Germany—prompting exasperation from the West German ambassador in Athens30 —but it was Germany itself that ultimately benefited when the source of funding was no longer closely linked to the placement of orders. After all, West Germany remained the primary supplier of the capital equipment required for Greek industrialization—even when it was other countries that were making investments in Greece. Typical in this regard was Aristotle Onassis’s ambitious investment project for the establishment of an industrial complex that included a mammoth oil refinery. In 1970, Onassis obtained approval to bring $560 million into Greece31 —the largest sum ever covered by the protections extended to foreign capital by LD 2687/53. OMEGA Industrial Investments, founded by Onassis to attract foreign investors, solicited and 29 S. Walden, Π αρ ατ ´ αιρ oι ετ α´ιρ oι: Eλληνικ η´ δικτ ατ oρ´ια, κ oμμoυνισ τ ικ α´ καθ εσ τ ωτ ´ α και Bαλκ ανια, ´ 1967–1974 (Athens: Polis, 2009), 158–168 and 253. 30 Seelos (West German ambassador to Athens) to Auswärtiges Amt, Die politische Bedeutung der Entwicklungshilfe für Griechenland, 18/11/1960, BA Koblenz (BAK), B102/74715. 31 FEK 184A’/11.9.1970.

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received bids from American, British, French, German, Japanese, Canadian, and even Soviet firms. These companies based their bids on their ability to obtain funding from major credit institutions, and also on bids that they themselves had received from prospective subcontractors concerned with specific aspects of the project. These potential funders and prospective subcontractors often came from third countries. For example, the bid submitted for construction of the oil refinery by a British subsidiary of the American company Bechtel envisioned the possibility of obtaining credit from French or Franco-British sources, and West German companies dominated its list of prospective suppliers for certain categories of machinery and equipment.32 But Onassis’s industrial investment program was also typical in another respect: the contemplated investments never materialized. Throughout the period under consideration, only a fraction of the investment funds covered by the system of protections for foreign capital translated into real projects. In fact, out of approximately $3 billion whose importation was approved under the terms of LD 2687/53 between 1954 and 1974, barely a third—just under $1 billion—was actually invested. This low percentage should alter—even if it does not entirely overturn—our understanding of where foreign direct investment in Greece was coming from. As the West German ambassador to Greece pointed out in 1975, German investments were characterized by a higher rate of completion than those from other countries: the German share in foreign direct investments that were ultimately carried out was 8%, even though Germany accounted for only 4% of total authorizations under LD 2687/53.33 West German direct investments were concentrated chiefly in light, export-oriented industries,34 often through partnerships with Greek banks and domestic businesses. Siemens, for example, took advantage of its privileged relationship with OTE and in 1963 partnered with the National Bank to establish a Greek subsidiary focused on the production of telecommunications equipment. Six years later, Peter von Siemens 32 Bechtel, [complete bid dossier], PIOP HA, Omega Archive, F82. 33 Oncken to Auswärtiges Amt, Kurzfassung zum Bericht Nr. 578/75 vom 28. Mai

1975: Investitionen des Auslands in Griechenland, 28/5/1975; and the attached report, BAK, B102/293108. 34 Oncken to Auswärtiges Amt, Kurzfassung zum Bericht Nr. 578/75 vom 28. Mai 1975: Investitionen des Auslands in Griechenland, 28/5/1975; and the attached report, BAK, B102/293108.

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himself personally traveled to Thessaloniki to preside over the opening of the subsidiary’s new manufacturing plant—a move intended to help promote the company’s exports.35 Meanwhile, in 1968, Siemens had taken a greater interest in its partnership with Viohalco and had even gone so far as to acquire part ownership of the Greek company.36 Later, in 1975, Siemens also acquired an interest in BIOMETAL-Eskimo, a manufacturer of household appliances.37 But however important such investments were to Siemens, their size was relatively limited. Elsewhere, the West German intervention in the Greek economy was far more consequential. The establishment of the PPC’s government monopoly on the generation and distribution of electricity may have sidelined Bodossakis—previously a major player—but it did not limit the extent and importance of Greco-German economic cooperation. On the contrary, projects to expand Greece’s energy-generation capacity remained the linchpin of Germany’s involvement in the Greek economy. Already in 1963, West Germany had signed a new bilateral agreement in which it promised to provide Greece with an additional DM 200 million in development aid. This sum was intended for the exploitation of lignite deposits around Megalopolis, and in 1968 the money was finally allocated38 to AEG-Telefunken for construction of a brown coal-fired power plant near the town.39 Shortly thereafter, in 1971, a consortium led by the

35 Rede anlässlich der Einweihung der Siemens Tele Industrie am 7. Mai in Thessaloniki [7/5/1969], Siemens Historisches Institut, Berlin (SHI), Siemens Archiv, 4.LI786. 36 Agreement between Viohalco Cables and Siemens AG, 26/6/1968, SHI, Siemens

Archiv, 24298; Tazedakis to Blaimer (Siemens), Koordinationsministerium, 25/10/1968; and the attached Siemens, Application concerning the investment of foreign capital in Greece under the provisions of LD 2687/53, 25/9/1968 [draft], SHI, Siemens Archiv, 21503. 37 For the relevant documentation, see SHI, Siemens Archiv, 21565. 38 Reduced by twenty million marks, which were given to Greece in the form of export

credits. See Elson (BMW/Abteilung V/Leiter) to Schöllhorn (BMW/Staatssekretär), Griechenland: Kapitalhilfe für das Braunkohlekraftwerk Megalopolis, 17/1/1968, BAK, B102/100846. 39 Elson (BMW/Abteilung V/Leiter) to Schöllhorn (BMW/Staatssekretär), Griechenland: Kapitalhilfe für das Braunkohlekraftwerk Megalopolis, 17/1/1968, BAK, B102/100846.

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Kraftwerk Union—a joint venture of AEG-Telefunken and Siemens—was commissioned to construct a second facility on the site.40 With these projects, West German participation in the PPC’s development program would reach its apogee, following a declining course thereafter. When Greece and France developed a closer relationship in the wake of the 1967 coup, the French became serious contenders as well, and secured some important energy contracts of their own. Here again the same basic model of financing was employed, with the contracting parties finding the required capital in France. In the spring of 1969, PPC obtained a $70 million loan, guaranteed by the Greek government, from the Banque Nationale de Paris. The loan would be used to pay the French company Alsthom to construct a hydroelectric plant at Polyphytos and expand the energy-generation installations at Ptolemais.41 These contracts represented a dramatic upgrading of the French role in Greece’s energy development program and thus created the conditions for more widespread French investment in the Greek economy. We have already seen how Alsthom and Pechiney helped to lay the groundwork for Makarezos’s visit to Paris in June 1969. During that visit, Makarezos spoke to executives from the French aircraft manufacturer Dassault and discussed the possibility of Greco-French partnerships in the field of military aviation.42 Early in the following year, the Greek government began to take more definite steps by looking into whether French financing would be available for such an investment in Greece.43 The subject was discussed once again when France’s undersecretary of

40 Kraftwerk Union AG, Erweiterung des Kraftwerkes Megalopolis, 25/6/1971, SHI,

Siemens Archiv, 54.Li319. 41 Kαρδαμακης ´ (PPC) to Mακαρšζoς, 20/3/1969; and the attached final draft Protocol; and Iδια´ιτερo ⎡ραϕε´ιo ϒπoυργoν´ (Ministry of Coordination), handwritten note, 2/4/1969, ANIM, IMS-FORTH, F25/B, (subf.«⊓oλνϕυτoν-⊓τoλεμα ΐς»). ´ 42 ⊓ρ´oγραμμα επισκšψεως εις ⎡αλλ´ιαν ϒπoυργoν ´ κ. Mακαρšζoυ. Eπαϕα´ι και εκδηλωσεις, ´ undated, ANIM, IMS- FORTH, F438/A. 43 Mωρα ΐτης

(MEX/air force general) to Mακαρšζo, ϒπoβoλη´ Eκθšσεως απoτελεσματων ´ μεταβασεως ´ μελων ´ της MEX εις ⎡αλλ´ιαν, 16/2/1970; and the attached report, ANIM, IMS-FORTH, F233(στ)/A; and ⊓ερ´ιληψις ⊓ρακτικων ´ της κατα´ την 21/2/1970 και ωραν ´ 10:00 γενoμšνης Συσκšψεως εις τo ⎡ραϕε´ιoν τoυ ϒπoυργoν´ Συντoνισμoν´ κ. Mακαρšζoυ μετ’ εκπρoσωπων ´ της Banque de Paris et des Pays-Bas, ANIM, IMS-FORTH, F438/A.

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state for foreign affairs, Jean de Lipowski, visited Greece in early 1972,44 and plans for the investment project were drawn up soon afterward. The Greek government approved, among other proposals, a bid from a consortium consisting of Dassault, the American firm Lockheed, and Onassis’s Olympic Airways. The consortium’s bid was accepted not only in the face of rival offers from the United States and Germany,45 but also despite Joseph Strauß’s desperate attempt to leverage his connections with the dictatorship in order to secure the contract for an interested West German firm.46 As it turned out, the ambitious plan to manufacture military aircraft in Greece never materialized. Greek sources ascribed the failure to Dassault’s withdrawal from the project,47 but there were also structural limits to France’s investment in Greece. Despite the impressive size of the 1969 loan to the PPC, France’s overall share in Greek energy projects—both those in progress and those which had been completed—never rose above 21.8%.48 Moreover, despite the Greek government’s gradual diversification of its sources of credit throughout the 1960s, there was a limit to how much could be borrowed from the French. France’s contribution would be channeled mainly through transnational institutions such as the European Investment Bank (EIB), but it nevertheless proved unable to keep pace with Greece’s ever-increasing financing needs.49 After the 44 Hooper (British Ambassador Athens), Diplomatic Report (No. 197/72): Visit by the French Under-Secretary for Foreign Affairs, 9/2/1972, The National Archives, Kew, Richmond (TNA), FCO 30/1327. 45 Φαμπρικšζης (armed forces HQ), Eνημερωτικ´oν σημε´ιωμα to ⊓ρωθυπoυργ´oν:

Eξšλιξις θšματoς B.A.ϒ. (Bιoμηχαν´ιας Aερoπoρικoν´ ϒλικoν), ´ 2/6/1972, ANIM, IMS-FORTH, F262/A.

46 Strauß to Makarezos, 29/8/1972; and Makarezos to Strauss, 14/9/1972, ANIM,

IMS-FORTH, F6/ ⎡. 47 Mανιακης ´ (Ministry of National Economy/advisor) to Mακαρšζo, 15/7/1972, ANIM, IMS-FORTH, F262/A. 48 ⎡αλλικη ´ συμμετoχη´ εις την αναπτυξιν ´ της ηλεκτρικης ´ ενεργε´ιας εν Eλλαδι, ´ undated [6/1969], ANIM, IMS- FORTH, F438/A. 49 From 1973, Greek borrowing from foreign sources increased significantly. Nevertheless, Greece’s high growth rate and increased borrowing via publicly owned enterprises during the two years 1972–1973 meant that its debt-to-GDP ratio did not register an increase until 1974. See Bank of Greece, Mακρ oχ ρ o´ νιες σ τ ατ ισ τ ικ šς σ ειρ šς τ ης ελληνικ ης ´ oικ oν oμ´ιας (Athens, 1992); and Ministry of National Economy (ϒ⊓E⊝O), H ελληνικ η´ oικ oν oμ´ια, 1960–1997: Mακρ oχ ρ o´ νιες μακρ ooικ oν oμικ šς σ τ ατ ισ τ ικ šς σ ειρ šς (Athens, 1998).

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EIB funds were frozen (in response to the 1967 military coup), the Greek regime resorted to the emerging—yet more expensive—international financial markets, which were dominated by American firms. It is illustrative that, in 1971, the French contributed only $160 million to an effort by the Hellenic Industrial Development Bank to raise $1.95 billion in capital; the West German and British contributions were $200 million and $130 million, respectively.50 The Greek economy’s exposure to financial markets would not become a serious problem so long as high growth rates allowed the borrowing to continue. Only in 1974 did Greece’s balance-of-payments issue become acute. The drastically contractionary fiscal policy of the last military government soon aggravated the effects of the economic crisis.51 Alienated both from the dominant elements of the power bloc and from ordinary workers, the authoritarian regime would also fail to fulfill the army’s foremost mission, the safeguarding of “national security.” The chain reaction triggered by the reckless decision to launch a coup d’état in Cyprus soon administered the coup de grâce to the dictatorship. What remained were a host of difficulties, both domestic and international. These became the responsibility of the civilian officials who were called upon to prevent the collapse of the state.

50 Mνημ´oνιoν επ´ι θεματων ´ δραστηριoπoιησεως ´ και πoλιτικης ´ της Eλληνικης ´ Tραπšζης Bιoμηχανικης ´ αναπτνξεως, ´ 5/1971, ANIM, IMS-FORTH, F88/B. 51 On the economic policy of the Ioannides regime, see Ch. Tsakas, «Oι Eλληνες ´ βιoμηχανoι ´ μπρoστα´ στην ευρωπα¨ικη´ πρ´oκληση: Kρατικη´ στρατηγικη´ και ιδιωτικα´ συμϕšρoντα απ´o τη σννδεση ´ με την EOK στην απoκατασταση ´ της Δημoκρατ´ιας» (PhD diss., University of Crete, 2015), 211–218.

PART V

Europe and Democracy, 1974–1981

CHAPTER 15

Metapolitefsi: Karamanlis’s Second Transition

It was our great good fortune that the change . . . occurred peacefully and smoothly, without the sort of serious complications and problems whose possibility was naturally frightening, especially to industrial leaders. A violent overthrow of the dictatorial regime could have had very serious effects on the economic and social life of the country. —Marinopoulos at the UNICE presidents’ meeting, December 19741 Let us clarify once and for all whether we want to identify ourselves with the economic and social environment of Europe or whether we want to succumb to an irresponsible mania for socialism. —SEV Press Conference, 5 March 19762 The Government . . . will not allow anyone—neither the pseudo-socialist demagogues, nor those nostalgic for an antiquated and unaccountable free market—to obstruct the Greek people’s path to economic and social progress. —Minister of Coordination Panayis Papaligouras’s response to the SEV statements3

1 SEV Bulletin, 299, 15/12/1974. 2 To Vima, 6/3/1976. 3 Oikonomikos Tachydromos, 18/3/1976.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_15

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The Third Hellenic Republic was the product of a multifaceted political, economic, and national crisis. Despite the rapid transition to democracy and the prevention of a Greco-Turkish war, the depth of the economic crisis revealed structural rigidities and foreshadowed more far-reaching transformations. After 1975, a modest resurgence in growth rates and a temporary stabilization of oil prices may have prolonged somewhat the viability of the postwar development model, but they could not hide the fundamental problem: the conditions that had enabled the “Greek miracle” no longer existed. It was not just the speeding up of Greek tariff reductions; nor was it simply the disappearance, amid an economic crisis, of the material basis for an indiscriminate policy of industrial incentives. The problem was in fact political and revolved around the question of the social pact that would emerge under the new circumstances. The political framework that for years had kept labor cost increases from keeping up with productivity growth had now collapsed, and it had done so at a time when, internationally, an alarming change was occurring in the macroeconomic contours of the postwar world.4 Among Greek business leaders, the question of how to achieve a smooth transition to a viable political order without jeopardizing the social and economic effects of industrialization was a longstanding one. It was concern with this issue that had led industrialists and shipowners to actively support Markezinis’s attempts to liberalize the dictatorship. And when Markezinis’s experiment had failed, it was this same concern that led those captains of industry—who had previously identified themselves with the Papadopoulos regime—to promptly congratulate Adamantios Androutsopoulos on his appointment as prime minister of the Ioannides regime in hopes of opening channels of communication with the new leadership.5 The fall of the dictatorship in the wake of the Cypriot tragedy in July 1974 seemed to confirm the worst fears of the bourgeois political imagination. The aftermath of the Ioannides regime’s disorderly collapse felt like a voyage into uncharted waters, and the situation was especially alarming in light of contemporaneous events in Portugal, where the fall 4 For characterizations of the international economic situation, see B. Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond (Princeton, NJ: Princeton University Press, 2007), 225–293; and J. A. Frieden, Global Capitalism: Its Fall and Rise in the Twentieth Century (New York: Norton, 2006), 339–372. 5 Bιβλ´ιoν υπoβαλλ´oντων ευχας ´ επ´ι τη αναληψει ´ καθηκ´oντων κ. ⊓ρωθυπoυργoν, ´ 11/1973, AAIA, IMS-FORTH, [not filed].

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of the authoritarian government a few months earlier had paralyzed the state and called private ownership of the means of production into question.6 In Greece, however, political stability seemed to have returned within a few months, thanks to the strong governmental majority that emerged from the November elections. In December, moreover, a referendum finally settled the constitutional question that had long plagued Greek politics, and this settlement was officially ratified when the new Constitution was approved in June 1975.7 The worst fears concerning the democratic transition’s possible repercussions had been laid to rest, but that did not mean that all of Greece’s problems had been resolved. Keenly alert to the contradictions of the present moment, SEV adapted with extraordinary nimbleness to developments in the period between the fall of the dictatorship and the adoption of the new constitution. No sooner had Karamanlis arrived in Athens on July 24, 1974 than the Federation engaged in public self-criticism for its accommodation with the colonels and declared its support for the new political leaders. Meanwhile, in a series of public statements in SEV’s Bulletin, the industrialists expressed the view that the return to democracy would contribute to an improvement of the investment climate. They also stressed the need to abandon contractionary fiscal policies, strengthen domestic demand, and reinvigorate Greek industry’s commitment to an export-oriented approach.8 Despite an economic downturn, the hitherto suppressed social forces unleashed by the fall of the dictatorship necessitated wage increases for the sake of public tranquility. However advantageous or disadvantageous Greece’s postwar development might have been, its benefits had not been evenly distributed. The labor movement’s atrophy in the wake of the civil war had allowed labor costs to remain low, and under the dictatorship the absence of parliamentary oversight had enabled a substantial expansion of 6 See, for example, J. J. Linz and A. Stepan, Problems of Democratic Transition and Consolidation: Southern Europe, South America, and Post-Communist Europe (Baltimore, MD: Johns Hopkins University Press, 1996); A. C. Pinto, “Coping with the Double Legacy of Authoritarianism and Revolution in Portuguese Democracy,” South European Society and Politics 15.3 (2010): 395–412. 7 S. Rizas, H ελληνικ η´ π oλιτ ικ η´ μετ α ´ τ oν εμϕ ν´ λιo π o´ λεμo: Koιν oβ oυλευτ ισ μ´oς και δικτ ατ oρ´ια (Athens: Kastaniotis, 2008); D. A. Sotiropoulos, “The Authoritarian Past and Contemporary Greek Democracy,” South European Society and Politics 15.3 (2010): 449–465. 8 SEV Bulletin, 290, 31/7/1974.

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the web of informal (and selective) non-tariff protections for certain large corporations.9 Greek industry’s profit rate thus rose from 19.48% in 1967 to a record high of 28.81% 1973, while labor’s share of industrial output during the same period was squeezed from 44.4% down to 34%.10 In all sectors of the economy, there had been a significant increase in the average real wage, which grew at an average annual rate of 6.3% over the period 1967–1973 (compared to 4.8% over the period 1961–1963 and 9.5% for 1964–1966). Labor’s share of national income, however, although it had seen a transient increase during the years when the dictatorship was being consolidated (1967–1968), failed to keep pace with the growth of productivity, and ultimately slumped from 31.8% in 1967 to 28.7% in 1973.11 Although wages rose in the first years after the fall of the dictatorship, resulting in a decline in surplus value extraction and a sharp increase in labor’s share of industrial output, those measures did not return to pre-dictatorial levels during the two years 1975–1976.12 In late 1975, an American report on the situation in Greece noted that demonstrations by workers and students were a source of danger to the democratic constitution—not because they could bring down the government, but because the government’s willingness to tolerate the protests might alienate the army. The report also took the view that Karamanlis would make it a top priority to preserve the army’s goodwill.13 And indeed it was not long afterward, as factory shutdowns and strikes began to increase, that the

9 A. Giannitsis, H šντ αξ η σ τ ην Eυρωπ α¨ικ η´ Koιν o´ τ ητ α και επ ιπ τ ωσ ´ εις σ τ η βιoμηχ αν´ια και σ τ o εξ ωτ ερικ o´ εμπ o´ ριo (Athens: Foundation for Mediterranean Studies, 1988), 78–81; S. Katranidis, «Eλληνικη´ μεταπo´ιηση, oμαδες ´ συμϕερ´oντων και oι επιδρασεις ´ τoυς στη διαρθρωση ´ της δασμoλoγικης ´ πρoστασ´ιας», in H ελληνικ η´ κ oινων´ια τ ην π ρ ωτ ´ η μετ απ oλεμικ η´ π ερ´ιoδ o (1945–1967) (Athens: Sakis Karagiorgas Foundation, 1994), 185–196; and G. Ch. Katsos and N. I. Spanakis, Bιoμηχ ανικ η´ π ρ oσ τ ασ ι´α και šντ αξ η (Athens: KEPE, 1983), 55–92. 10 Th. P. Lianos, Υ π εραξ ι´α, oργ ανικ η´ σ ν ´ νθ εσ η τ oυ κεϕαλα´ιoυ και κ šρδ oς σ τ ην ελληνικ η´ βιoμηχ αν´ια (Athens: Economic Chamber of Greece–Foundation for Mediterranean Studies, 1992), 90, 99, and 129–131. 11 Ministry of National Economy (ϒ⊓E⊝O), H ελληνικ η´ oικ oν oμ´ια, 1960–1997: Mακρ oχ ρ o´ νιες μακρ ooικ oν oμικ šς σ τ ατ ισ τ ικ šς σ ειρ šς (Athens, 1998). 12 Lianos, Υ π εραξ ι´α, oργ ανικ η´ σ ν ´ νθ εσ η τ oυ κεϕαλα´ιoυ και κ šρδ oς, 69–91. 13 Foreign Relations of the United States (FRUS), 1969–1976, XXX, 183–193 (doc.

55).

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government undertook legislative and political measures whose principal aim was the suppression of the emergent industrial unionism.14 After the disastrous experience of the Ioannides era, Greek industrialists accepted perforce the first wage increases announced by the National Unity government under Karamanlis (July–November 1974) as a way of partially compensating workers for the losses they had suffered in the preceding years.15 But the industrialists grew more nervous when they realized that these increases were just the beginning. Cooler heads— such as SEV Vice-President for Labor Relations Nikolaos Svoronos, who believed that fears regarding the labor movement’s power and ambitions were excessive—did not always prevail.16 In fact, some Federation officials, including Secretary-General Theodoros Papalexopoulos, even went so far as to propose that the government should establish a “coordinated concessions” task force to forestall protests by public sector employees, on the grounds that such protests, if successful, might serve as examples for industrial workers.17 Complicating the situation was the nascent democracy’s effort to redefine its relationship with the elements of the business community that had served as pillars of the dictatorship. Tensions increased sharply at the end of 1975, when the government went ahead with its nationalization of the Emporiki Bank Group,18 a move interpreted by many at SEV as a harbinger of greater interventionism on the part of the state and a threat to the primacy of the private sector. At the beginning of March

14 Ch. Ioannou, Mισ θ ωτ η´ απ ασ χ o´ λησ η και σ υνδικαλισ μ´oς σ τ ην Eλλαδα ´ (Athens:

Foundation for Mediterranean Studies, 1989), 120–121. 15 SEV Bulletin, 291–292, 31/8/1974 and 293, 15/9/1974. These increases, however, could not offset the erosion of real wages (which eventually declined by 6 percent in 1974) due to high inflation during the previous months and the Androutsopoulos government’s refusal to allow wage increases. See Ministry of National Economy, H ελληνικ η´ oικ oν oμ´ια, 1960–1997 . 16 Author’s interview with Nikolaos Svoronos, vice-president of SEV (1970– 1978), Athens, 30/3/2012, Oral History Collection, Institute for Mediterranean Studies/Foundation for Research and Technology Hellas, Rethymno (OHC, IMS/FORTH). 17 Author’s interview with Theodoros Papalexopoulos, CEO of Titan, secretarygeneral of SEV (1974–1982), and, later, SEV President, Athens, 24/10/2011, OHC, IMS/FORTH. 18 A. Drougoutis, Eπιχειρησεις ´ και πoλιτικη: ´ η κρατικoπo´ιηση τoυ oμ´ιλoυ της Eμπoρικης ´ Tραπεζας ´ (MA thesis, University of Crete, 2018).

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1976, SEV held a press conference at which it unleashed a broadside against the “mania for socialism” (social-mania was the Greek term)—a trend which it set against the prospect of convergence with the Common Market.19 Widespread displeasure with the way SEV had presented its message20 drew attention away from the central dilemma expressed in its controversial statement that it was necessary to “clarify once and for all whether we want to identify ourselves with the economic and social environment of Europe or whether we want to succumb to an irresponsible social-mania.”21 In any case, the dilemma was not a real one. As we shall see, state intervention—a “mania for socialism,” in the idiom of the industrialists—could be combined quite harmoniously with the pursuit of full membership status in the EEC. What was real was uncertainty about the extent to which post-dictatorship political leaders would try to impose limits on the rights of investors—what Papaligouras termed the free market’s lack of accountability.22 West German ambassador Dirk Oncken expressed misgivings on this score when he reported to Bonn that an anti-investment climate had taken hold of Greece during the first months after the fall of the dictatorship.23 Less anxious observers, including the West German Foreign Ministry’s own representative in Athens, Georg Hermann Schlingensiepen, pointed out that the Federation was well aware that stability and uninterrupted growth—and above all, full integration with the EEC—would necessarily involve an adjustment to the Community model, even if Greek industry had to pay a high price for it. A similar point of view was articulated by Marinopoulos himself on the

19 The press conference was not attended by the Federation’s president, Dimitrios Marinopoulos, who pleaded illness. For behind-the-scenes details, see Maria Mavroeides’s interview with Marinopoulos, Athens, 19/4/2002, Economia Group, “Oral History Archive” [F Mαριν´oπoυλoς]. 20 For a summary of reactions with extensive commentary, see OT , 18/3/1976. 21 To Vima, 6/3/1976. 22 For the similarly phrased response of the minister of coordination, see M. ´ ρα (Athens: Eolos, 1996), 532. Psalidopoulos, Π αναγ ης ´ Π απ αληγ oν´ ρας : Oμιλ´ιες – Aρθ 23 Oncken to Auswärtiges Amt, Änderung des Klimas für Auslandsinvestitionen in Griechenland, 21/11/1974, Bundesarchiv Koblenz (BAK), B102/293108.

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eve of the SEV press conference in a discussion with the economic adviser to the West German embassy.24 The governor of the Bank of Greece, Xenophon Zolotas, often alluded to the need for the Greek economy to adapt to new circumstances: the country’s economic growth, he argued, had been based on irrational and excessive industrial incentives. Zolotas underscored the necessity for Greece to align itself with Common Market norms by abandoning protectionism, reviewing contracts made during the dictatorship, and establishing a clear constitutional basis for the state’s role in the economy.25 Such declarations, however, did not automatically translate into a complete reversal of the policy of excessive industrial incentives. During the three years 1974–1976, the ratio of tax revenue to tax exemptions held steady at 1:2. This represented a significant change from the period 1969–1973, when the ratio had risen to 1:5.95, but it was still a long way from the 1:0.89 ratio of the period 1966–1968.26 The need for rationalization was also publicly recognized, in 1977, by the American ambassador, Jack B. Kubisch: The Embassy believes that GOG economic policies appear measured and reasonable, and that certain observers here and abroad have made too much of the recent Andreadis and Niarchos takeovers and other implications for the investment climate generally. In our view, these were special cases, and do not represent any creeping tendency toward statism, but rather are part of an honest attempt by the GOG to remove some of more glaring inequalities of free-wheeling capitalism à la Grecque. There is indeed a tendency toward somewhat more government control over economic forces than many of Greece’s flamboyant entrepreneurs are used to, or would like to see, but GOG policies and objectives are not out of line with the pattern of most western industrial democracies. In our view, the GOG, in attempting to rationalize and modernize the economy, prepare 24 Schlingensiepen to Auswärtiges Amt, Wirtschaftsordnung Griechenlands: Reformprogramm der Regierung, 11/3/1976, Politisches Archiv des Auswärtigen Amtes, Berlin (PA AA), B200, Bestellnr. 105611. 25 Kubisch to Secretary of State, Bank of Greece Governor Zolotas speaks on industrial investment, 24/12/1975, DSCF, NARA, Record Group 59 (last accessed via http:// ´ εσ ις τ oυ Διoικητ oν´ τ ης aad.archives.gov/aad on 3 June 2015); Bank of Greece, Eκθ Tραπ šζ ης δια´ τ o šτ oς 1974 (Athens, 1975); and X. Zolotas, Guidelines for Industrial Development in Greece: An Address (Athens: Bank of Greece, 1976). 26 A. Giannitsis, H ελληνικ η´ βιoμηχ αν´ια: Aν απ ´ τ υξ η και κρ´ισ η (Athens: Gutenberg, 1985), 20–21.

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for full EC membership, and achieve reasonable social goals, remains well within the context of traditional western economic/social philosophy.27

Kubisch was correct in observing that many Greek businessmen would have preferred a much lower level of state intervention in the economy, but this was hardly peculiar to Greece. A smaller state role in the economy was in fact a standard aim of all Western European industrial associations—a fact reflected in UNICE’s memoranda and public statements in support of a “free market” and against state interventions that “could undermine the project of integration.”28 In the twilight of the Keynesian era, when most governments in Western Europe were trying to cope with the stagflation of the 1970s by relying on prescriptions from the past,29 SEV was advertising the anti-governmental anxieties of Western European companies as if they were part of the acquis communautaire.30 Flights of rhetoric concerning a “mania for socialism” overstated the (admittedly real) worries of the business community. When a high-level delegation from the Federation of German industry (BDI), headed by the organization’s president and including representatives of Siemens, Krupp, and other large firms, visited Greece in November 1975, an upbeat mood prevailed in the delegation’s successive meetings with the prime minister, the minister of coordination, the governor of the Bank of Greece, the president of SEV, and other prominent figures on the Greek political and economic scene. In those meetings, the BDI declared its support for Greece’s newly submitted application for membership in the EEC. The delegation also emphasized that West German companies saw their involvement in the Greek economy quite positively, and both sides took note of the opportunities for expanding the scope of Greco-German business partnerships, especially with regard to the exploitation of Greece’s mineral resources and the development of its export industries. Such discussions suggest that German businesses were more concerned with 27 Kubisch Secretary of State, Greece re-emphasizes free market economy, need for private investment and incomes policy, 18/2/1977, DSCF, National Archives and Records Administration at College Park, MD, RG 59 (accessible through http://aad.archives. gov/aad; last retrieved on 18 June 2015). 28 SEV Bulletin, 342–343, 15/10/1976. 29 L. Warlouzet, Governing Europe in a Globalizing World: Neoliberalism and Its

Alternatives Following the 1973 Oil Crisis (London: Routledge, 2018). 30 See SEV Bulletin, 329, 15/3/1976 and 334, 31/5/1976.

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the severity of the 1974 economic crisis than with a supposedly antibusiness climate in Greece (and, indeed, there is no reference to such a climate in the records of the delegation’s meetings).31 In any case, SEV’s opposition failed to check the growing involvement of the state in the Greek economy. It did however expedite another sort of state intervention—one that the industrialists welcomed—in the form a new law, Law 330/76, that imposed tougher limits on trade unionism and made it easier to suppress industrial actions. Specifically, Law 330/76 introduced a series of restrictions on the manner in which a strike could be declared, enacted harsh penalties for those who violated those restrictions, recognized employers’ right to use lockouts against their employees, and facilitated the dismissal not only of strikers but even of workers who were merely active in trade unions.32 As it turned out, these measures did not have the anticipated results: in the short term, the effect of Law 330/76 was to intensify the conflict between industrialists and workers, triggering a wave of wildcat strikes and other protests aimed solely at securing the law’s repeal and simultaneously fostering new forms of coordination among industrial unions.33 The industrial actions, centered in the mining industry, were notable for their prolonged duration.34 They also had an unmistakable adverse economic impact: 1977—the year of the strikes— saw a dramatic decline in the output of basic metallurgy (−17.3%) and a stagnation of total industrial production (1.3%).35 The symbolic break with the era of nationalizations launched by the first New Democracy government of the post-dictatorship era would come a little later. In 1977, SEV members managed to place Stefanos Manos—a figure from the world of industry—on the party’s slate of

31 Bundesverband der Deutschen Industrie, Griechenland, 12/1975, Bundesverband der Deutschen Industrie Archiv, Berlin (BDIA), S Dok 57. 32 OT , 15/4/1976 and 17/6/1976. 33 Ch. Ioannou, Mισ θ ωτ η´ απ ασ χ o´ λησ η και σ υνδικαλισ μ´oς σ τ ην Eλλαδα, ´ 135 and

164 (particularly Fig. 2.8.2); and, for relevant reportage, see Anti, vol. 46, 29/5/1976 and vol. 47, 12/6/1976; Ch. Ioannou, Mισ θ ωτ η´ απ ασ χ o´ λησ η και σ υνδικαλισ μ´oς σ τ ην Eλλαδα, ´ 120–121; and S. Sakellaropoulos, H Eλλαδα ´ σ τ η Mετ απ oλ´ιτ ευσ η: Π oλιτ ικ šς και κ oινωνικ šς εξ ελ´ιξ εις , 1974–1988 (Athens: Livanis, 2001). 65. 34 Anti, vol. 67, 19/3/1977, vol. 70, 30/4/1977, and vol. 89, 31/12/1977; G. Katsigianis, «Tα γεγoν´oτα στo Mαντšμ Λακo», ´ Politis 11 (June–July 1977): 6–8; and A. Stavropoulou, H μεγ αλη ´ απ εργ ι´α τ oυ 1977 σ τ α μετ αλλε´ια τ oυ Mαντ šμ Λακκ ´ o και τ ης Oλυμπ ιαδας ´ (Athens: Enallaktikes Ekdoseis–Notios Anemos, 2003). 35 Federation of Greek Industrialists (SEV), H Eλληνικ η´ Bιoμηχ αν´ια κατ α ´ τ o šτ oς 1977 (Athens, 1978).

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candidates.36 Then, in May 1978, Konstantinos Mitsotakis’s appointment as minister of coordination was greeted with relief—and indeed, with enthusiasm—by the devotees of private enterprise.37 The 1978 reshuffle that brought Mitsotakis into the government also brought to a close a period of energetic state intervention in the economy,38 one which had witnessed the revision of several contracts that the military government had granted to major corporations. It was also in 1978 that the government abandoned its attempt to cope with the labor movement through a twofold strategy that combined generous wage increases and the violent suppression of workers’ protests. From then until PASOK came to power in 1981, institutional opposition to trade unionism would no longer be accompanied by wage increases to offset the erosion of workers’ incomes by runaway inflation in the wake of the second oil crisis.39 Yet the eventual defeat of the grassroots labor movement did not mean the automatic return of social tranquility. Instead, wildcat strikes gave way, in 1979– 1980, to a different sort of trade union movement that focused on change through legislation and electoral politics. This new movement, centered in banking and the public sector, preferred symbolic protests coordinated across various sectors—typically one- or two-day-long strikes with massive turnout—to longer-lasting industrial actions at individual firms or factories.40 The new movement’s emergence—together with the decline of independent actions on the part of workers—was an omen of the special significance of the 1981 elections. Held amid conditions of economic insecurity, they would mark the end of the early Metapolitefsi period and its hopes for a more comprehensive social transformation through grassroots mobilization. 36 Author’s interview with Stefanos Manos, chairman of the board of the flour milling company Allatini, who later held a number of ministerial posts, Athens, 19/3/2012; and SEV Bulletin, 368, 31/10/1977. 37 SEV Bulletin, 382, 31/5/1978, and 384, 30/6/1978. 38 Author’s interview with Konstantinos Mitsotakis, Athens, 23/3/2011; and Stefanos

Manos, Athens, 19/3/2012. For Mitsotakis’s views on the challenges facing the Greek economy in light of Greece’s prospective EEC membership, see his speech at the Propeller Club in Viomichaniki Epitheorisis, 523, 5/1978. For a contemporaneous insider account, see J. C. Loulis, “The Greek Conservative Movement in Transition: From Paternalism to Neo-Liberalism,” in The New Liberalism: The Future of Non-Collectivist Institutions in Europe and the U.S. (Athens: Centre for Political Research and Information, 1981), 5–28. 39 Ministry of National Economy (ϒ⊓E⊝O), H ελληνικ η´ oικ oν oμ´ια, 1960–1997 . 40 Ch. Ioannou, Mισ θ ωτ η´ απ ασ χ o´ λησ η και σ υνδικαλισ μ´oς σ τ ην Eλλαδα, ´ 175–180.

CHAPTER 16

Preconditions and Expedients

Even at the time of the dictatorship in Greece it was the firm position of the German government that the path to accession was open to the Greek people whenever the political and economic preconditions for it should be met. We stand by this. —German Ministry of Foreign Affairs, Greece’s Relationship to the European Community, 4 September 19741 The opposition claims that accession is economically harmful and politically dangerous … Karamanlis, for his part, regards accession (justifiably) as providing indispensable support for his own reform efforts. With the passage of time, the likelihood that it will have this effect is diminishing. —Gisbert Poensgen (ambassador of the FRG in Athens), Meeting of the Chancellor with PM Karamanlis, 17 January 19782 Sir Brooks Richards sounds a warning about the chances of Mr Karamanlis not remaining in power for long. The rise of Mr Papandreou’s PASOK has been the most striking recent event in Greek politics. Sir 1 Auswärtiges Amt, Deutsch-griechisches Ministertreffen am 9. September: Verhältnis Griechenlands zur Europäischen Gemeinschaft, 4/9/1974, PA AA, B200, Bestellnr. 105623. 2 Poensgen to Auswärtiges Amt, Begegnung des Bundeskanzlers mit MP Karamanlis 31.1.78 in Bonn. Zur Information und Vorbereitung der Gesprächsunterlagen, 17/1/1978, PA AA, B200, Bestellnr. 121687.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_16

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Brooks Richards argues that Britain must do its utmost to bring the Greek accession negotiations to an end this year while Mr Karamanlis is still in power. —Winchester (FCO/Southern European Department), Sir Brooks Richards Valedictory from Athens, 31 March 19783

Immediately after the adoption of Greece’s new constitution in June 1975, the Greek government’s first order of business was to submit a formal application for full membership in the EEC. Negotiations commenced the following year, and the Accession Treaty was signed in May 1979 and entered into force in January 1981. Ever since then, the accession process’s swift completion has commonly been presented as a way of ensuring the stability of Greek democracy, and this is perhaps the most pervasive myth of the Greek Metapolitefsi.4 Despite Greek slogans about the importance of accession for the nascent republic’s survival, however, democratic stability was in reality not the goal of Greece’s accession to the EEC, but rather its precondition.5 Greek pursuit of integration with Western Europe was a longstanding strategy, going back, as we have seen, to the 1950s. The speeding up of the negotiation process in the early Metapolitefsi, however, was dictated by domestic political considerations that were specific to era. And these had nothing to do with protecting 3 Winchester (FCO/Southern European Department) to Hibbert (FCO), Sir Brooks Richards Valedictory from Athens, 31/3/1978, The National Archives, Kew, Richmond (TNA), FCO 9/2744. 4 For a typical presentation of this view, see S. N. Kalyvas, Kατ ασ τ ρ oϕ šς και θ ρ´ιαμβ oι: Oι 7 κ ν´ κλoι τ ης σ ν´ γ χ ρ oνης ελληνικ ης ´ ισ τ oρ´ιας (Athens: Papadpoulos, [2015] 2020), 203–206; K. Kostis, «Kακ oμαθ ημšνα π αιδια´ τ ης Iσ τ oρ´ιας »: H διαμ´oρϕωσ η τ oυ νε oελληνικ oν´ κρ ατ ´ oυς 18oς –21oς αιωνας ´ (Athens: Patakis, [2013] 2018), 801–802; A. Liakos, O ελληνικ o´ ς 20oς αιωνας ´ (Athens: Polis, 2019), 468– 470; and E. Hatzivassiliou, Eλληνικ o´ ς ϕιλελευθ ερισ μ´oς : To ριζ oσ π ασ τ ικ o´ ρε ν´ μα, 1932–1979 (Athens: Patakis, 2010), 477–478. 5 A process that should not be confused with that of the more recent eastern enlargement in which systematic efforts to promote institutional change in the direction of greater democracy were in fact made a precondition for accession of the candidate countries as an integral part of the negotiation process. See, for example, F. Schimmelfennig, “The Community Trap: Liberal Norms, Rhetorical Action, and the Eastern Enlargement of the European Union,” International Organization 55.1 (2001): 47–80; and F. Schimmelfennig and U. Sedelmeier, eds., The Europeanization of Central and Eastern Europe (Ithaca, NY: Cornell University Press, 2005). For the concept of enlargement in the history of European integration, see H. A. Ikonomou, A. Andry, and R. Byberg, European Enlargement across Rounds and beyond Borders (London: Routledge, 2017).

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democracy from the menace of resurgent authoritarianism. (After 1975, that danger was already slight.) Instead, the aim was to guard against the political consequences that might follow from a possible change of government, an eventuality that had become increasingly likely ever since PASOK’s electoral gains in 1977. Ioannides’s attempt to overthrow the Cypriot leader Archbishop Makarios and the subsequent Turkish invasion of Cyprus had far-reaching effects that inevitably impacted Greece’s international relationships.6 Greek frustration during the crisis with the positions taken by its allies— the United States in particular—and the country’s consequent withdrawal from NATO’s military command after a second intervention by Turkey, created a new reality that elicited a twofold response from the Greek government. On the one hand, Greek leaders would seek to increase their country’s freedom of action in the international arena by diversifying its sources of foreign credit and reducing its reliance on the United States for war materiel.7 On the other hand, since it was now clear that neither the United States nor the Western Europeans were willing or able to take decisive action in the face of Turkish aggression, Greece would not hesitate to ask these allies for other forms of support. The implication was that such support would be a form of compensation for these countries’ failure to stand by Greece in its hour of need.8

6 V. Karamanolakis, E. Nikolakopoulos, and T. Sakellaropoulos, eds., H μετ απ oλ´ιτ ευσ η, 74–75: Στ ιγ μšς μιας μετ αβασ ´ ης (Athens: Themelio, 2016); and E. Hila, «Eλληνικη´ εξωτερικη´ πoλιτικη´ και διεθνšς σνστημα ´ κατα´ την περ´ιoδo της μεταπoλ´ιτευσης», in Π ρακτ ικ α´ σ υνεδρ´ιoυ: H δικτ ατ oρ´ια τ ων σ υντ αγ ματ αρχ ων ´ και η απ oκατ ασ ´ τ ασ η τ ης δημoκρατ ι´ας, ed. P. Sourlas (Athens: Hellenic Parliament Foundation, 2016), 609–626. On Greece’s relations with the United States under the new circumstances, see the recent account of A. Antonopoulos, Redefining Greek–US Relations, 1974–1980: National Security and Domestic Politics (Basingstoke, UK: Palgrave Macmillan, 2020). 7 For American views on Greece’s overtures to France and West Germany, see, for example, FRUS, 1969–1976, XXX, 86–90, 90–94, and 158–161 (doc. 22, doc. 23, and doc. 49 respectively). 8 On America’s policy during the Cyprus crisis and the Greek reactions to that policy, see, for example, Karamanlis’s talks with President Ford in May and July 1975: FRUS, 1969–1976, XXX , 161–169, and 169–178 (doc. 50 and doc. 51 respectively). For the CIA’s assessment (as of November 1974) of the Greco-Turkish conflict’s implications for Greece’s relations with its Western Europe, see FRUS, 1969–1976, XXX, 105–113 (doc. 28). For Greek Foreign Minister George Mavros’s talks with French and West German officials in September 1974, see. K. Svolopoulos, ed., Kωνσ τ αντ ι´ν oς Kαραμανλης ´ :

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As it turned out, Greece’s withdrawal from NATO’s military command proved to be merely symbolic,9 and there was in fact very little attenuation of the country’s military and economic dependence on the United States. As early as the spring of 1975, Kissinger had informed President Ford that economic assistance to Greece from the United States, the World Bank, and the International Monetary Fund had far exceeded original projections, and that American planning for 1976 called for Greece and Turkey to receive the same amount of US military aid.10 But the Greek government’s requests for assistance were not addressed exclusively to the United States. Reducing Greece’s dependence on the Americans required the cultivation of closer relationships with the country’s strongest allies in Western Europe—not only in order to create a diplomatic counterweight to Turkish intransigence, but also in hopes of finding additional sources of economic and military support.11 From the very first days of its existence in late July of 1974, the post-dictatorship National Unity government focused its efforts on securing immediate disbursement of an $800 million loan from Greece’s European allies.12 American authorities were anxious to learn how much the new government was borrowing and where the

Aρχ ε´ιo, γ εγ oν o´ τ α και κε´ιμενα, 12 vols. (Athens: Konstantinos G. Karamanlis Foundation and Ekdotiki Athinon, 1992–1997), vol. 8, 149–151. On Greek requests for economic assistance and American perceptions thereof, see, for example, the conversation between President Ford and American Ambassador Jack B. Kubisch, FRUS, 1969–1976, XXX , 181–182 (doc. 54). 9 A CIA report in November 1974 observed that, although Greece had announced its withdrawal from NATO, it had done little to implement this decision. See FRUS, 1969–1976, XXX , 105–113 (doc. 28). 10 FRUS, 1969–1976, XXX, 151–153 (doc. 46). 11 K. Ifantis, “State Interests, External Dependency Trajectories and ‘Europe’: Greece,”

in European Union Enlargement: A Comparative History, ed. W. Kaiser and J. Elvert (London: Routledge, 2004), 75–98; G. Valinakis, Eισ αγ ωγ η´ σ τ ην ελληνικ η´ εξ ωτ ερικ η´ π oλιτ ικ η, ´ 1949–1988 (Thessaloniki: Paratiritis, 1989); and P. K. Ioakimidis, «O K. ´ Kαραμανλης ´ και η šνταξη της Eλλαδας ´ στην Eυρωπα¨ικη´ Eνωση: H εξωτερικη´ πτυχη» ´ and S. Economides, “Karamanlis and the Europeanisation of Greek Foreign Policy,” in O Kωνσ τ αντ ι´ν oς Kαραμανλης ´ σ τ oν εικ oσ τ o´ αιωνα, ´ 3 vols., ed. K. Svolopoulos, K. Botsiou, and E. Hatzivassiliou (Athens: Konstantinos G. Karamanlis Foundation, 2008), vol. 2, 154–162 and 163–176, respectively. 12 Auswärtiges Amt, Hausbesprechung Griechenland am 19.8.1974: Ergebnisprotokoll, 20/8/1974, PA AA, B200, Bestellnr. 105623.

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money was coming from, but conflicting information kept them from getting clear answers to those questions until spring of 1975.13 The effort to achieve a balance-of-payments equilibrium through foreign borrowing preoccupied Greece’s young democracy. The problem was rendered urgent by the severe recession that struck the Greek economy in 1974 and also by a steep increase in the country’s defense spending in the wake of the Cyprus crisis.14 Even apart from such pressing but temporary needs, however, the multifaceted crisis of 1973– 1974 marked the beginning of an era during which increased foreign borrowing would constitute a basic element of Greece’s economic policy. Still, the existence of very serious problems did not negate the substantial economic progress that already had been achieved. In a series of reports, the West German Foreign Ministry noted that Greek per capita income had risen and Greece’s industrial development had progressed to the point that it could now be numbered among the industrialized nations.15 On the other hand, the country’s gains were not a cause for complacency; in fact, they meant that the Greek economy would have to face new challenges in the years to come. As Greece sought to achieve greater freedom of action in the international arena and find the resources it needed to address its immediate and long-term economic challenges, its relationship to the EEC would naturally play a decisive role.16 The nine member-states of the Community 13 Kubis[c]h to Secretary of State, Bank of Greece: Call on Dep. Gov. Nicholas Kyriazides, 23/12/1974, DSCF, NARA, Record Group 59 (accessible through http://aad. archives.gov/aad, last retrieved on 3/6/2015); and FRUS, 1969–1976, XXX, 151–153 (doc. 46). 14 On the Turkish military superiority at the time of the Cyprus crisis, see Svolopoulos, Kαραμανλης, ´ vol. 8, 69–75. Following the Turkish invasion, the United States had imposed an embargo on arms sales to Turkey, but this embargo was soon circumvented. For Greek reactions to this development, and also to the 1976 agreement between Turkey and the United States, see S. Rizas, Oι ελλην oτ oυρκικ šς σ χ šσ εις και τ o Aιγ α´ιo, 1973–1976 (Athens: Sideris, 2006), 109–130. 15 Auswärtiges Amt, Hausbesprechung Griechenland am 19.8.1974: Ergebnisprotokoll, 20/8/1974, PA AA, B200, Bestellnr. 105623; and Auswärtiges Amt, Beitritt Griechenlands zur EG, 1/10/1974, PA AA, B200, Bestellnr. 105611. 16 On the role assumed by the EEC as a result of the collapse of dictatorial regimes in the European South, see, for example, A. Varsori, “Crisis and Stabilization in Southern Europe during the 1970s: Western Strategy, European Instruments,” Journal of European Integration History 15.1 (2009): 5–14; M. Del Pero, “A European Solution for a European Crisis: The International Implications of Portugal’s Revolution,” Journal of European

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had applauded Constantinos Karamanlis’s return to Greece,17 and, just a few days later, the French ambassador in Bonn had notified the West German Foreign Ministry that France—which then held the presidency of the Council of Ministers—intended to push for reactivation of the Association Agreement (particularly its financial provisions). In principle, the Germans supported this plan.18 But the EEC’s warm acclamations and declarations of goodwill represented only a single step toward fulfillment of Greece’s objectives. As the Greek leaders would soon discover, there was still a long road ahead. On August 22, 1974, the Greek government presented the European Commission and its members’ ambassadors in Athens with a memorandum requesting full reactivation of the Association Agreement.19 At the same time, Greece submitted to the Council of Ministers an additional request for $800 million in loans within the next two years. Just two days before Greece’s submission of the memorandum, however, a document produced by the West German Foreign Ministry had observed that, encouraging words notwithstanding, the German government had very little room for maneuver on the question of Greece’s association with the EEC.20 Fully aware of the difficulties ahead, Germany ultimately proposed that the Council of Ministers should immediately reactivate the Association Agreement as a way of demonstrating its political support for the new Greek government. The proposed reactivation would be only partial, however, since France and Italy both had objections to the Agreement’s treatment of Greek agricultural products, and agricultural policy generally had become a source of contention within the Community. West Germany’s proposal was thus only a starting point for negotiations Integration History 15.1 (2009): 15–34; and A. Muñoz Sánchez, “A European Answer to the Spanish Question: The SPD and the End of the Franco Dictatorship,” Journal of European Integration History 15.1 (2009): 77–93. 17 See Svolopoulos, Kαραμανλης, ´ vol. 8, 17–19. 18 Ruyter, Beziehungen EG-Griechenland, 2/8/1974,

PA AA, B200, Bestellnr.

105623. 19 Eλληνικη ´ Kυβšρνηση to πρšσβεις των κρατων-μελ ´ ων ´ των Eυρωπα¨ικων ´ Koινoτητων ´ στην Aθηνα ´ and to Eπιτρoπη´ των EK [aide-memoire], 22/8/1974, in F. Tomai, ed., H σ υμμετ oχ η´ τ ης Eλλαδας ´ σ τ ην π oρε´ια π ρ oς τ ην ευρωπ α¨ικ η´ oλoκληρωσ ´ η: Aπ o´ τ o π αγ ´ ωμα τ ης Συμϕων´ιας Σ ν´ νδεσ ης σ τ ην šντ αξ η σ τ ις Eυρωπ α¨ικ šς Koιν o´ τ ητ ες (1968–1981) (Athens: Papazisis, 2006), vol. 2, 197–199. 20 Auswärtiges Amt, Hausbesprechung Griechenland am 19.8.1974: Ergebnisprotokoll, 20/8/1974, PA AA, B200, Bestellnr. 105623.

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aimed at harmonizing Greece’s agricultural policy with that of EEC. As a result, reactivation of the Association Agreement would consist mainly of disbursing the sums specified in the Financial Protocol (a process that would require the circumvention of some significant legal obstacles), reaching agreement on a new financial protocol, and finalizing the Association Agreement’s extension to the three new member-states that had joined the Community in 1973.21 West Germany’s proposal met with positive reactions from Britain, France, and the Commission.22 The EEC countries’ ambassadors in Athens expressed reservations, and issued a joint memorandum in which they stressed that the situation in Greece was still precarious and argued for a more gradual unfreezing of the Association Agreement.23 Nevertheless, the governments of the eight other member-states were inclined to support the West German proposal. On 28 August, Hans Werner Lautenschlager, head of the section of the German Foreign Ministry dealing with foreign economic policy and European economic integration, reviewed the diplomatic situation and concluded that the German proposal had met with a positive reception. At the same time, however, he noted the Community’s unwillingness to lift the restrictions that had been imposed on Greek agricultural products during the dictatorship.24 It goes without saying that the Community position on reactivating the Association Agreement did not entirely satisfy the Greek government. During talks in Bonn early in September, Greek Foreign Minister Georgios Mavros was at pains to clarify that Greece’s interest in reactivation was based principally on its desire to see its agricultural products once again (or, more precisely, at last) treated like those of the member-states. According to Mavros, the issue of financial assistance to Greece could

21 Auswärtiges Amt, Verhältnis EG-Griechenland, 22/8/1974; and Trumpf, Beziehungen EG-Griechenland, 27/8/1974, PA AA, B200, Bestellnr. 105623. 22 Abel to Auswärtiges Amt, Assoziierungsabkommen mit Griechenland, 27/8/1974, Hase to Auswärtiges Amt, Assoziierungsabkommen mit Griechenland, 27/8/1974; and Lebsanft to Auswärtiges Amt, Assoziierungsabkommen mit Griechenland, 27/8/1974, PA AA, B200, Bestellnr. 105623. 23 Conclusions des Ambassadeurs à Athènes représentant les Pays Membres de la C.E.E. Sur le problème des relations entre la Grèce et le Marché Commun, 27/8/1974, PA AA, B200, Bestellnr. 105623. 24 Lautenschlager, Assoziierungsabkommen mit Griechenland, 28/8/1974, PA AA, B200, Bestellnr. 105623.

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be addressed through bilateral negotiations, regardless of the Association Agreement’s status.25 The Greek government hoped that reactivation of the Association Agreement would mean the removal of countervailing duties on Greek agricultural products, while Greece would be permitted to keep certain of its own protectionist measures in place. (It was this latter issue that would preoccupy Community officials for several months during the autumn of 1974).26 But Greek objectives went beyond reactivation of the Association Agreement. Already during a visit to Paris and Bonn in early September, Mavros had conveyed his government’s intention to pursue full EEC membership without delay. It was unnecessary, the Greek leaders believed, to wait for the target dates specified in the Association Agreement.27 The West German Foreign Ministry had been aware of Greece’s ambitions and, during preparations for the upcoming meeting with Mavros, relevant documents had advised the German foreign minister not to be the first to raise the issue. In the event that Mavros sought West German support for the Greek government’s plans, however, he was to be answered with generalizations about the need to meet the political and economic preconditions that a Greek application for full membership would entail.28 Despite Germany’s adoption of a policy of ambiguity on this issue, the real West German views were clearly revealed in their internal communications. Following Mavros’s visit to Bonn, a series of documents produced by the Foreign Ministry in September and October set forth the reasons why immediate Greek accession to the EEC was undesirable. These included, inter alia, the uncertain political situation in Greece, the GrecoTurkish crisis and Greece’s problematic relations with NATO, Greece’s acute economic problems, and the lack thus far of a serious evaluation of the effects of Greece’s association with the EEC. Rounding out this

25 Auswärtiges Amt, Deutsch-griechische Ministergespräche am 9.9.1974, 10/9/1974, PA AA, B200, Bestellnr. 105623. 26 Lebsanft to Auswärtiges Amt, 479. Tagung des AstV 2. Teil am 22.11.1974,

23/11/1974, PA AA, B200, Bestellnr. 105623. 27 Auswärtiges Amt, Deutsch-griechische Ministergespräche am 9.9.1974, 10/9/1974, PA AA, B200, Bestellnr. 105623; and Svolopoulos, Kαραμανλης, ´ vol. 8, 149–151. 28 Auswärtiges Amt, Deutsch-griechisches Ministertreffen am 9. September: Verhältnis Griechenlands zur Europäischen Gemeinschaft, 4/9/1974, PA AA, B200, Bestellnr. 105623.

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list were the larger difficulties faced by the project of Western European integration in the wake of the Community’s first admission of new members in 1973. The upshot of the Foreign Ministry’s assessments was that support for Greece’s accession would require the stabilization of the new democracy in both political and economic terms, and that the West German government should therefore adopt a wait-and-see approach. Meanwhile, the unfreezing of the Association Agreement was to be treated as an essential test phase that would have to precede any German endorsement of a Greek application for full membership.29 But even as they meticulously itemized the reasons to reject Greece’s request to begin the accession process immediately, the authors of these reports nevertheless emphasized that Greece’s level of economic development— which seemed comparable to that of Ireland—would in fact permit its full integration into the Community.30 The Greeks naturally laid great stress on this aspect of the situation and highlighted Greek industry’s readiness to meet the challenges that accession would bring.31 The decision to begin negotiations with Greece came eight months later, and only after serious hesitations. At the end of January 1976, the European Commission took a position in favor of a pre-accession trial period, citing, in the first place, the political and financial costs that Greek accession would impose on the Community as a result of Greece’s quarrels with Turkey and its troubled relations with NATO; and, in the second place, general reservations as to the Greek economy’s readiness to bear the burdens of full EEC membership.32 The Commission’s opinion was overruled by the Council of Ministers a few days later, but not before it had generated a storm of criticism. Naturally, some of this criticism had come from the Greeks,33 but the dissenting commissioners had also publicly 29 Referat 410 des Auswärtigen Amts, Beitritt Griechenlands zur EG, 23/9/1974; and Trumpf, Beitritt Griechenlands zur EG, 1/10/1974, PA AA, B200, Bestellnr. 105611. 30 Trumpf, Beitritt Griechenlands zur EG, 1/10/1974, PA AA, B200, Bestellnr. 105611. 31 Auswärtiges Amt, Deutsch-griechische Ministergespräche am 9.9.1974, 10/9/1974, PA AA, B200, Bestellnr. 105623; and Referat 200 des Auswärtigen Amts, EuropaGriechenland, 13/9/1974, PA AA, B200, Bestellnr. 105611. 32 Commission, Avis sur la demande d’adhésion de la Grèce, 29/1/1976, Historical Archives of the European Union, Florence (HAEU), BAC-COM (1976)0030. For coverage of the Commission’s opinion in the Greek press, see To Vima, 30/1/1976. 33 See Svolopoulos, Kαραμανλης, ´ vol. 9, 153–155; G. L. Kontogeorgis, H Eλλαδα ´ σ τ ην Eυρ ωπ ´ η: H π oρε´ια π ρ oς τ ην šνωσ η και η π oλιτ ικ η´ τ oυ Kαραμανλη´ (Athens:

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aired their objections to the opinion and this, along with the divergence of views between the Commission and the Council, gave proof of the conflicting priorities that obtained among the EEC member-states.34 The Commission’s adverse opinion played a key role in persuading the Greek government to adopt a more positive approach by focusing on the benefits that the Community could derive from Greece’s membership.35 If the previous Greek negotiating strategy had been to secure a better deal by playing on Western Europe’s fears, the new strategy presented Greece’s accession in terms of a choice to embrace the future. At the same time, a desire to see negotiations concluded as quickly as possible led the Greek leaders to abandon some of their principal demands for the sake of sidestepping the difficult technical issues that arose in connection with the agricultural sector.36 Personnel changes among the Greek negotiators reflected the new strategy. Most notably, Nikolaos Kyriazides, deputy governor of the Bank of Greece, was replaced as chief negotiator at the beginning of 1977 by Vyronas Theodoropoulos, secretary-general at the Ministry of Foreign Affairs.37 The change in Greek negotiating tactics notwithstanding, 1977 would prove to be a difficult year. The ongoing consolidation of the Third Giovanis, 1985), 60–68; A. Zaharopoulos, H oδ ν´ σ σ εια τ ης ευρωπ α¨ικ ης ´ μας π oρε´ιας . Mαρτ υρ´ιες γ ια τ o π αρελθ o´ ν και σ κ šψεις γ ια τ o μšλλoν (Athens: Minoas, 2011), 59– 65; and S. Stathatos, Σαρ αντ ´ α χ ρ o´ νια σ τ η διπ λωματ ικ η´ αρ šνα (Athens: Potamos, 2007), 54–62. 34 E. Karamouzi, Greece, the EEC and the Cold War: The Second Enlargement (Basingstoke, UK: Palgrave, 2014), 45–49 and 59–62; The Economist, 31/1/1976, 7/2/1976, 14/2/1976; and Der Spiegel, 8/76, 16/2/1976. 35 See X. Zolotas, Greece in the European Community (Athens: Bank of Greece, 1976) and H σ υμβ oλη´ τ ης Eλλαδ ´ oς σ τ ην Eυρωπ α¨ικ η´ Koιν o´ τ ητ α (Athens: Bank of Greece, 1978). 36 EOK [Minutes of a Conversation], 14/12/1976; Kυριαζ´ιδης (Deputy Governor

of the Bank of Greece) to ⊓απαληγoνρα ´ (Minister of Coordination), 14/12/1976; and Koντoγεωργης ´ (Deputy Minister of Coordination) to ⊓απαληγoνρα, ´ 28/12/1976, Georgios Kontogeorgis Archive, Konstantinos G. Karamanlis Foundation, Athens (AGKKKF), F81. 37 For German accounts of this episode, see Botschaft der Bundesrepublik Deutschland to Auswärtiges Amt, Beitritt Griechenlands zur EG, 8/1/1977; and Oncken to Auswärtiges Amt, Griechische Wirtschaftspolitik: Rücktritt des Vize-Gouverneurs der Bank von Griechenland, Kyriazidis, 8/1/1977, PA AA, B200, Bestellnr. 114305. For an American perspective, see Mills to Secretary of State, Greek Parliament debates policy toward European Community, 19/1/1977, DSCF, NARA, Record Group 59 (accessible through http://aad.archives.gov/aad; last accessed on 3 June 2015).

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Hellenic Republic had not achieved the unequivocal success to which the West German Foreign Ministry had once looked forward. In fact, the gradual lessening of political instability in Greece had been accompanied in Western Europe by heightened skepticism about the urgency of Greece’s accession to the EEC and a greater sensitivity to estimates of the short-term costs that accession would impose. Such estimates had been an important factor even in the deliberations of the West German government,38 and this was still true in the spring of 1977, when the German embassy in Athens reported that the Federal Republic now appeared to be the only country openly in favor of Greek membership.39 By then, the scenario of a Mediterranean enlargement that would involve the simultaneous admission of Greece, Portugal, and Spain appeared to be gaining ground, and pursuit of such an initiative would necessarily postpone Greece’s own accession. Meanwhile, negotiations with the Greek government seemed to be going nowhere, and France had yet again refused to accept equal treatment for Greece’s agricultural products.40 The inertia that had overtaken the accession negotiations was ultimately overcome, and the Greek elections of November 1977 were the turning point. Earlier in the year, observers had already begun to express doubts about whether New Democracy could maintain its ascendancy—and even whether it could remain united—when the aging Karamanlis eventually ceased to lead it.41 But for now, Karamanlis was

38 See, for example, Auswärtiges Amt, Bundesministerium für Wirtschaft, Bundesministerium der Finanzen, Bundesministerium für Landwitschaft, Bundesministerium der Arbeit, Bundesministerium für Zussammenarbeit, Problematik weiterer Beitritte zur Europäischen Gemeinschaft. Zusammenfassung und Entscheidungsvorschlag, 16/9/1975, PA AA, B200, Bestellnr. 105611. 39 Botschaft der Bundesrepublik Deutschland to Auswärtiges Amt, Beitritt Griechenlands zur EG, 30/4/1977, PA AA, B200, Bestellnr. 114306. 40 Σταθατoς ´ (Greece’s permanent representative in the EEC) to Ministry of Coordination, ⊓ερ´ι εναρμoν´ισεως της γεωργικης ´ πoλιτικης ´ εις τoν τoμšα των oπωρoκηπευτικων, ´ 10/5/1977; Moλυβιατης ´ (Prime Minister’s Office), Σημε´ιωμα [16/5/1977]; and Moλυβιατης, ´ Σημε´ιωμα [31/5/1977], AGK-KKF, F123. 41 Clements (British Embassy in Athens) to Allen (FCO), Dissension in New Democracy, 19/1/1978; and Clements to Rawlinson (FCO/Southern European Department), Dissension in New Democracy, 9/3/1978, TNA, FCO 9/2732.

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still in command of his party, and it came as a surprise when PASOK doubled its share of the vote and New Democracy’s support experienced a significant decline.42 Meanwhile, support for the Centre utterly collapsed while the far-right National Alignment party made a vigorous showing.43 These results prompted doubts as to whether Greece’s position in the international system would remain unchanged in the years to come. In fact, they made it easy to imagine a not-so- distant future in which Greek foreign policy commitments could no longer be taken for granted. As it turned out, the resurgence of the Far Right was a transient phenomenon, attributable to the presence on the ballot of certain older politicians—mostly, but not exclusively, from the former ERE, Karamanlis’s pre-dictatorship party44 —running on a royalist platform. Once in parliament, these individuals quickly aligned themselves with the ND.45 But the rise of PASOK, at that time not merely socialist but radically so, would have more lasting consequences. The shock waves from the elections were still being felt at the beginning of 1978 when Karamanlis made a tour of the European capitals.46 In fact, it was precisely the alarm created by the election results that allowed the prime minister’s trip to achieve its fundamental objective—namely, a speeding up of the process that would lead to Greece’s becoming an EEC member-state. The Greek

42 Richards to Sutherland, 9/3/1978, TNA, FCO 9/2732. 43 On the electoral battles of the early post-dictatorship era, see Ch. Vernardakis,

«Tα πoλιτικα´ κ´oμματα στην Eλλαδα, ´ 1974–1985. Σχšσεις εκπρoσωπησης ´ και σχšσεις νoμιμoπo´ιησης στo ϕως τoυ πoλιτικoν´ και κoινωνικoν´ ανταγωνισμoν» ´ (PhD diss., University of Athens, 1995); G. Voulgaris, H Eλλαδα ´ τ ης Mετ απ oλ´ιτ ευσ ης , 1974–1990: Στ αθ ερ η´ δημoκρατ ι´α σ ημαδεμšνη απ o´ τ η μετ απ oλεμικ η´ ισ τ oρ´ια (Athens: Themelio, 2002); and G. Mavris, «Oι κoινωνικšς συντεταγμšνες της κoμματικης ´ επιρρoης: ´ Oι σχšσεις εκπρoσωπησης ´ στην περ´ιoδo 1974–1985» (PhD diss., University of Athens, 1993).

44 For an insider’s account, see the memoirs of Spyros Theotokis, co-founder and chief parliamentary representative of the National Alignment: S. I. Theotokis, Π oλιτ ικα´ι αναμν ησ ´ εις (Athens: Eptalofos, 1986). Theotokis had held important ministerial appointments under the pre-dictatorship governments of Papagos and Karamanlis. 45 Vernardakis, «Tα πoλιτικα ´ κ´oμματα στην Eλλαδα, ´ 1974–1985», 86. 46 Poensgen to Auswärtiges Amt, Begegnung des Bundeskanzlers mit MP Kara-

manlis 31.1.78 in Bonn. Zur Information und Vorbereitung der Gesprächsunterlagen, 17/1/1978, PA AA, B200, Bestellnr. 121687; and Winchester (FCO/Southern European Department) to Hibbert (FCO), Sir Brooks Richards Valedictory from Athens, 31/3/1978, The National Archives, Kew, Richmond (TNA), FCO 9/2744.

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application was permanently separated from those of the other Mediterranean candidates, and efforts were made to conclude negotiations on all major issues by the end of 1978.47

47 Cartledge (Private Secretary to the Prime Minister) to Prendergast (FCO), Visit of Mr Karamanlis: 25 January 1978, 26/1/1978; and attached Summary note of a conversation between the Prime Minister and the Prime Minister of Greece, Mr Constantine Karamanlis; FCO, Background note: Visit by the Prime Minister of Greece on 25 January 1978, 6/2/1978; Muirhead (British Ambassador to Brussels) to FCO, Mr Karamanlis’ visit to Brussels: 26/27 January, 30/1/1978; and Wright (British Ambassador to Bonn) to FCO, Visit of Mr Karamanlis to Bonn, 3/2/1978; and Richards (British Ambassador to Athens), Karamanlis’s European Tour: Greek Press Reaction, 1/2/1978, TNA, FCO 9/2744.

CHAPTER 17

Downplaying Doubts

Industry in the three countries [Greece, Portugal, and Spain] will be able to adapt to competition from the existing member-states only with the greatest difficulty (this is less true of Spain) ... . If nothing is done, integration into the European Community may serve only to fix the existing industrial structure in place and may impede the development of modern, hi-tech industries which are capable of competing for markets in countries outside the EEC. —German Development Institute (DIE), Taking a stance on the enlargement of the European Community regarding Greece, Spain and Portugal. Provisional manuscript, December 19761 The changes suggested at the meeting of 11 January [1977] have all been incorporated. Furthermore, I have excised or altered all passages that might provoke any sensitivity on the part of the three countries [Greece, Portugal, and Spain]. —Heimpel (DIE) to Trumpf (German Ministry of Foreign Affairs), 26 January 19772 1 Deutsches Institut für Entwicklungspolitik, Stellungnahme zur Erweiterung der Europäischen Gemeinschaft um Griechenland, Spanien und Portugal. Vorläufiges Manuskript, 12/1976, Politisches Archiv des Auswärtigen Amtes, Berlin (PA AA), B200, Bestellnr. 114303. 2 Heimpel (Deutsches Institut für Entwicklungspolitik) to Trumpf (Auswärtiges Amt), 26/1/1977, PA AA, B200, Bestellnr. 114304.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0_17

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The early stages of Greece’s return to democracy came at a time of national humiliation and economic crisis, but the political uncertainties that characterized the era did not negate what had already been accomplished during two decades of industrial development. They did mean, however, that steps had to be taken to keep things from going awry. An indication of the political priorities that prevailed in the first months after the fall of the dictatorship is provided by West Germany’s extraordinary provision of money for Greece from its aid fund for developing countries3 —even though German officials now classified Greece’s economy as fully developed.4 Nor did the urgency of the situation prevent the continued pursuit of longstanding economic and political strategies, even if those strategies had to be modified in light of the shifting landscape: In December 1975, an American study highlighted the important role that the Community could play in strengthening relations between the West and the nations of the European South in an era when the American presence in the Mediterranean was gradually diminishing.5 In fact, political coordination between the United States and its allies in Western Europe had become one of America’s leading strategies for maintaining its influence in that region. Greece, as a result of its troubled relationship with NATO, had emerged as a particular focus of interest.6 Although West Germany had advised Greece not to treat the EEC as a substitute for NATO,7 a belief that tensions between Greece and NATO could be resolved more easily if Greece were part of the Community had weighed heavily in Germany’s decision to champion Greece’s bid for membership.8 Moreover, concerns about the cost of enlarging the EEC to include

3 Auswärtiges Amt, Deutsch-griechische Ministergespräche am 9.9.1974, 10/9/1974, PA AA, B200, Bestellnr. 105,623; and Svolopoulos, Kαραμανλης, ´ vol. 8, 149–51. 4 Auswärtiges Amt, Hausbesprechung Griechenland am 19.8.1974: Ergebnisprotokoll, 20/8/1974, PA AA, B200, Bestellnr. 105623; and Auswärtiges Amt, Beitritt Griechenlands zur EG, 1/10/1974, PA AA, B200, Bestellnr. 105611. 5 FRUS, 1969–1976, XXX, 150–151 (doc. 45). 6 Ibid., 194–207 (doc. 56). 7 See, for example, Mavros’s note to Karamanlis in K. Svolopoulos, ed., Kωνσ τ αντ ι´ν oς Kαραμανλης ´ : Aρχ ε´ιo, γ εγ oν o´ τ α και κε´ιμενα, 12 vols. (Athens: Konstantinos G. Karamanlis Foundation and Ekdotiki Athinon, 1992–1997), vol. 8, 149–151. 8 Trumpf to Botschaft der Bundesrepublik Deutschland, Griechische EGVollmitgliedschaft: Politische Problematik, 8/12/1975, PA AA, B200, Bestellnr. 105611.

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less developed countries did not stop the West German government from favoring, as early as the fall of 1975, the decoupling of Greece’s candidacy from those of the Iberian countries (which would make a faster Greek accession possible).9 Although officials in various countries were working hard to estimate the fiscal effects of Greece’s accession,10 strategic considerations seemed to be pushing such technical questions into the background.11 (France was an important exception to this tendency.) The American embassy in Athens was content to note that “Greece’s economic well-being and future growth have been and are dependent upon close ties to the United States, Western Europe, and the Common Market,”12 and to remark that the Greeks could not assess with any precision the impact that rapid integration into the Community would have on their economy.13 But this inability to foresee consequences was not a problem only for the Greeks: the Germans were just as incapable of producing reliable estimates. In early 1976, the German Development Institute (DIE14 ), a private think tank, approached the West German Foreign Ministry to ask for support in carrying out a study of the economic implications of a prospective Mediterranean enlargement. Officials at the ministry welcomed the request: such a study would be useful in formulating West German policy. The findings, however, were to circulate only within the 9 Auswärtiges Amt, Bundesministerium für Wirtschaft, Bundesministerium der Finanzen, Bundesministerium für Landwitschaft, Bundesministerium der Arbeit, Bundesministerium für Zussammenarbeit, Problematik weiterer Beitritte zur Europäischen Gemeinschaft, 22/9/1975, PA AA, B200, Bestellnr. 105611. 10 See, for example, Auswärtiges Amt, Bundesministerium für Wirtschaft, Bundesministerium der Finanzen, Bundesministerium für Landwitschaft, Bundesministerium der Arbeit, Bundesministerium für Zussammenarbeit, Problematik weiterer Beitritte zur Europäischen Gemeinschaft. Zusammenfassung und Entscheidungsvorschlag. Anlage Finanzielle Belastungen bei einem Beitritt Griechenlands/Spaniens, 16/9/1975, PA AA, B200, Bestellnr. 105611. 11 Trumpf to Botschaft der Bundesrepublik Deutschland, Griechische EGVollmitgliedschaft: Politische Problematik, 8/12/1975, PA AA, B200,Bestellnr. 105611. 12 Kubisch to Secretary of State, Background for visit of Zolotas and [Pap]aligouras,

27/9/1974, DSCF, NARA, Record Group 59 (accessible through http://aad.archives. gov/aad; last retrieved on 3 June 2015). 13 Kubisch to Secretary of State, Accelerated Greek Membership in EC, 31/7/1975, DSCF, NARA, Record Group 59 (accessible through http://aad.archives.gov/aad, last retrieved on 3/6/2015). 14 Deutsches Institut für Entwicklungspolitik.

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government, away from the public eye. Perhaps this was a prudent stipulation: when a preliminary draft of the study was shown to ministry officials in December 1976, they realized with alarm that its assessments of the European South’s economic future under EEC membership were quite pessimistic.15 In response, the Ministry of Foreign Affairs asked that some particularly negative parts of the report be excluded from the published version. The DIE complied with this request.16 The pessimism that characterized the confidential version of the DIE study was not universal. Not long after its publication, the German government’s Rationalisierungs-Kuratorium der Deutschen Wirtschaft (Economic Rationalization Board) released a similar study which presented a far more positive—if somewhat banal—perspective on the economic opportunities that Greece’s partnership in the process of European integration would create.17 Another encouraging appraisal of the outlook for the Greek economy was provided by the EEC’s Economic and Social Committee,18 and a special commission that the French parliament sent to Greece to examine the issue arrived at rather noncommittal conclusions.19 So perhaps what was particularly troubling about the DIE study was not so much its gloomy outlook as the West German Foreign Ministry’s insistence on whitewashing whatever in it was disagreeable. But an even bigger problem seemed to be that the DIE’s pessimism resonated with similar concerns that were steadily gaining a larger audience within Greece itself. 15 Heimpel to Trumpf, 15/12/1976; and the attached DIE, Stellungnahme zur Erweiterung der Europäischen Gemeinschaft um Griechenland, Spanien und Portugal, PA AA, B200, Bestellnr. 114303. 16 Heimpel to Trumpf (Auswärtiges Amt), 26/1/1977, PA AA, B200, Bestellnr. 114304. 17 Rationalisierungs-Kuratorium der Deutschen Wirtschaft, Strukturveränderungen der deutschen Wirtschaft: Die Industrialisierung der Entwicklungsländer und Ihre Rückwirkungen auf die deutsche Wirtschaft. Perspektiven bis 1990. Länderstudie Griechenland (Frankfurt: RKW, 1979). 18 Comité économique et social [Dossier: Ext/13 Grèce], Etude du Comité économique et social sur “Les relations entre la Communauté et la Grèce [Rapporteur: M. De Ridder], 11/7/1978, Historical Archives of the European Union, Florence (HAEU),CES-7657. 19 Koτζιας ´ (Ministry of the Government Presidency) to Ministry of Coordination, 11/4/1978; attached summary in Greek; and the attached Rapport d’information, Konstantinos Karamanlis Archive, Konstantinos G. Karamanlis Foundation, Athens (AKKKKF), F107A.

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In the spring of 1978, SEV published the preliminary conclusions of a study that it had commissioned from the Foundation for Economic & Industrial Research (IOVE) on the economic implications of EEC membership and Greek industry’s readiness to face them. The study, which included a seemingly interminable list of general and sectorspecific non-tariff protectionist measures that would be necessary to ensure Greek industry’s survival in the Community environment, was not particularly encouraging.20 Despite occasional strains in its relationship with New Democracy, SEV had actively supported Karamanlis’s strategy of rapid accession to the EEC. In October 1976, the Federation had submitted two reports to the European Commission in which it surveyed the progress made by Greek industry, offered a favorable assessment of Greece’s association with the EEC, and expressed confidence that the results of the country’s hypothetical accession would be similarly positive.21 In essence, these reports adopted the new national line—an emphasis on the benefits that would accrue to the Community’s economy as a result of Greek membership—that had recently been established by Zolotas.22 They thus sought to allay the Commission’s concerns not only with regard to the problems that might be caused by Greek industry’s relative disadvantages in a competitive market, but also with respect to the difficulties that competition from Greece might create for certain European industrial sectors already hard-hit by the global economic crisis. In the wake of the IOVE study, however, SEV sought to have the Greek negotiators demand exemptions that would allow state protections for industry to be extended.23 Its efforts were unsuccessful. Negotiations were already in progress, and SEV’s proposed additions to the Greek negotiating positions provoked a direct reaction from the Greek government in the form of a letter from Georgios Kontogeorgis to the SEV president. After the 1977 elections, Kontogeorgis had become a minister without portfolio charged with overseeing relations with the EEC, and 20 For the text of IOVE’s findings, see OT, 13/4/1978. 21 SEV Bulletin, 342–343, 15/10/1976. 22 X. Zolotas, Greece in the European Community (Athens: Bank of Greece, 1976); and—even more definitively—H σ υμβ oλη´ τ ης Eλλαδ ´ oς σ τ ην Eυρωπ α¨ικ η´ Koιν o´ τ ητ α (Athens: Bank of Greece, 1978). 23 Διαπραγματενσεις ´ Eνταξεως: ´ ⊓ρακτικα´ της 6ης συν´oδoυ σε επ´ιπεδo υπoυργων, ´ 4/4/1978, AKK-KKF, F102A. For reactions to the publication of the SEV demands and Marinopoulos’s use of them to achieve leverage in the negotiations, see OT, 20/4/1978.

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he was thus responsible for the conduct of the negotiations. His letter pointed out that SEV’s views had received serious consideration during the period when the Greek negotiating positions were first being formulated; at this stage, however, it was more or less impossible to make new demands.24 Both the West German Foreign Ministry’s whitewashing of the DIE study and Kontogeorgis’s response to SEV reflected a convergence between the official German and Greek positions that was meant to paper over last-minute disagreements. It was not just a matter of the two governments’ aversion to public scrutiny of the negotiating process, nor was anyone calling into question the validity of concerns over the economic implications of Greece’s imminent accession. In fact, at the time of the DIE study, West Germany’s ambassador in Athens had declared his substantial agreement with its conclusions,25 and Kontogeorgis conveyed to SEV the Greek government’s intention to satisfy, insofar as possible, the new demands suggested by the IOVE.26 But the negotiating process itself was putting pressure on all parties involved. At the beginning of 1978, Karamanlis had persuaded the European Commission and its principal member-states to prioritize Greece’s accession over those of the other young democracies of the European South. This did not mean, however, that Greece’s membership was a fait accompli. On the contrary: the Greek and German leaders were all aware that the final and most sensitive phase of the negotiations would come in the second half of 1978, when the presidency of the Council of Ministers passed to the FRG. Thus far, the most serious areas of disagreement between the two sides— the accommodation of Greece’s agricultural sector and the length of the transition period—had not yet been resolved.27 West Germany’s presidency of the Council proved decisive for the progress of the negotiations, even though there were plenty of stickingpoints on questions that had special importance in Greco-German relations. (e.g., there was the issue of how much social welfare benefits for Greek workers in the FRG would cost the German government once 24 SEV Bulletin, 379, 15/4/1978. 25 Oncken to Auswärtiges Amt, Beitritt Griechenlands zur EG: Studie des Deutschen

Instituts für Entwicklungspolitik, 10/2/1977, PA AA, B200,Bestellnr. 114305. 26 SEV Bulletin, 379, 15/4/1978. 27 Referat 410 des Auswärtigen

Amtes, Stand der Beitrittsverhandlungen EGGriechenland, 13/6/1978, PA AA, B200, Bestellnr. 121688.

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Greece’s accession had taken place). As the end of 1978 approached, and the negotiations were in danger of collapsing, the Germans managed to prevent such a disastrous outcome by relying on their personal contacts with the Greek negotiators. Moreover, in cases where divergent interests among the nine EEC members had led the Community to adopt negotiating positions that were unacceptable to the Greeks, the Germans, holding the presidency of the Council, were able to enforce vital compromises. Nevertheless, they did not abandon their own national positions on issues to which the German government attached particular importance. (This included the financial burden that Greek accession threatened to impose on the FRG’s social welfare system).28 Nearly all parties to the negotiations had a stake in the question of how long Greece’s transition period should be—in other words, how much time should elapse between accession and Greece’s full assumption of all the rights and obligations of its fellow Community members. The Greek government wanted the shortest possible transition—a stark contrast to its policy at the time when the Association Agreement was being negotiated. The Greek negotiators were proposing a five-year transition, as in the cases of the three new member-states that had joined the Community in 1973. The preference for a relatively short transition reflected a desire—itself grounded in Greek domestic politics—for a ratification of Greece’s status as an equal partner in the Community. The Nine, on the other hand, had their own particular interests, and their own domestic electorates to consider. The French government’s concern with agricultural products was perhaps the most typical example of this, but it was by no means unique: the Italians’ interest in olive oil was an equally serious factor in the negotiations. In cases like these, a longer transition period would postpone the impact of Greek competition on vital

28 Sigrist (Ständiger Vertreter bei der Europäischen Gemeinschaft in Brüssel) to Auswärtiges Amt, Beitrittsverhandlungen mit Griechenland: Verhandlungen am Rande des Europäischen Rates (4.12.1978) u. Verhandlungen am 6.12.1978, 9/12/1978; Lautenschlager (Abt. 4 des Auswärtigen Amtes) to Trumpf, Aktuelle Situation in den Verhandlungen über den Beitritt Griechenlands zu den EG, 15/12/1978; Ellerkmann (Auswärtiges Amt), Zur 10. Ministertagung der Beitrittsverhandlungen EGGriechenland am. 20./21.12.1978, 28/12/1978, PA AA, B200, Bestellnr. 121689; and Σταθατoς ´ (Permanent Representative to the European Communities) to Foreign Ministry, 13/12/1978, Georgios Kontogeorgis Archive, Konstantinos G. Karamanlis Foundation, Athens (AGK-KKF), F118.

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sectors of the Community members’ domestic economies—and this, in turn, would make the attendant political costs easier to manage. Although the Greek government’s preference for a short transition was based on its desire to present the Greek economy as flourishing and robust, displays of national self-confidence also had the potential to work against the government’s aims. The Greeks made the case that the huge Greek-owned merchant fleet was one of the principal benefits that their country’s accession would bring to the Community.29 With the accession of Britain and Denmark to the EEC in 1973, the Community’s merchant fleet had already doubled in size, and Greece’s entry was expected to further increase EEC shipping capacity by approximately 70%. It would also make the Community much more self-sufficient in maritime transport, since Greece’s merchant fleet was already heavily involved in intra-EEC trade. Yet not all member-states were prepared to welcome this apparently positive development. In 1973, the European Court of Justice had ruled that the shipping sector was covered by the terms of the Treaty of Rome, but the EEC was still far from adopting a common shipping policy. There were many reasons for this failure, but one of the main obstacles was a difference of opinion among the member-states. Some members (including France) wanted Community-owned shipping to be protected against competition from ships sailing under third country flags. Other members (such as Britain) wished to promote a more liberal maritime regime.30 The accession of Greece, a major seafaring nation that favored the freedom of the seas, had the potential to tip the balance in favor of the British side in this debate, and this probably had the effect of strengthening France’s skepticism about Greece’s candidacy.31 To be sure, maritime issues affected the accession negotiations only indirectly—primarily through questions about freedom to establish businesses and freedom of movement for workers.32 The negotiations were

29 X. Zolotas, H σ υμβ oλη´ τ ης Eλλαδ ´ oς σ τ ην Eυρωπ α¨ικ η´ Koιν o´ τ ητ α, 59–61. 30 H. Ikonomou and Ch. Tsakas, “Crisis, Capitalism and Common Policies: Greek and

Norwegian Responses to Common Shipping Policy Efforts in the 1960s and 1970s,” European Review of History 26.4 (2019): 636–657. 31 ⊓απαδ´oγγoνας (minister of mercantile shipping) to Ministry of Coordination, ⎡αλλικη´ θšσις επ´ι ναυτιλιακων ´ θεματων ´ εν o´ ψει Eισ´oδoυ Eλλαδoς ´ εις EOK, 22/61977, AGK-KKF, F123. 32 ⊓απαδ´oγγoνας to ⊓απαληγoνρα, ´ Συνšπειαι επ´ι της Nαυτιλ´ιας εκ της εϕαρμoγης ´ τoυ πρoβλεπoμšνoυ υπ´o της συνθηκης ´ EOK δικαιωματoς ´ ελευθšρας εγκαταστασεως, ´

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more immediately impacted by contemporary changes in the terms of international trade, changes which exacerbated the already existing disagreements over Greek agricultural products. In 1973, in the aftermath of the Bretton Woods system’s final collapse, the EEC had managed to have its textile industry exempted from the provisions of the General Agreement on Tariffs and Trade (GATT). Subsequently, with the signing of the Multi-Fibre Agreement, the EEC succeeded in imposing restrictions on the importation of cheap textiles from developing countries. In 1977, the European Commission updated these restrictions, adopting an even stricter protectionist policy that was now extended to cover imports from the nations of the European South.33 The imposition of these new restrictions on Greek textiles coincided with the announcement of the European Commission’s negotiating positions on the agricultural issue,34 and the effect was to highlight the contrast between the EEC’s jealous defense of its members’ interests and the flowery rhetoric that characterized those same members’ public declarations of support for Greece’s accession. In spite of the complex situation that resulted from the often opposed and always disparate interests of the Nine, the Greek government’s approach to the negotiations ultimately paid off. The Accession Treaty was signed. But the impressive flexibility that had allowed the government to achieve its fundamental aim—namely, the hastening of Greece’s admission to the Community—had come at a price. This chiefly took the form of Greek concessions regarding certain agricultural products and the extension of some elements of transitional period beyond the five-year principle.35 During the final stages of the negotiations at the beginning of 1979, the French held the presidency of the Council and the Greek government was seeking to resolve the outstanding issue of Greece’s 23/6/1977, AGK-KKF, F123; Naftika Chronika, 976/735 (1/2/1976); 1052/811 (1/4/1979); and 1053/812 (15/4/1976); and I. Tzoannos, Eλληνικ η´ εμπ oρικ η´ ναυτ ιλ´ια και E.O.K.: Eπ ιπ τ ωσ ´ εις εκ τ ης εντ αξ ´ εως (Athens: IOBE, 1977). 33 L. Warlouzet, Governing Europe in a Globalizing World: Neoliberalism and its Alternatives following the 1973 Oil Crisis (London: Routledge, 2018), 112–113. 34 M. Syrianos, «H πoρε´ια πρoς την šνταξη: Aπoλoγισμ´oς–⊓ρooπτικη», ´ Synchrona Themata 5 (Summer 1979): 7–16. 35 The Greek concessions were offset to some extent by a last-minute compromise on the transitional period for Greek olive oil. This was shortened to five years (instead of the original eight-year-long transition proposed by the Community): see Σταθατoς ´ to Foreign Ministry [Tηλεγραϕημα ´ ϒπoυργoν´ κ. Koντoγεωργη], ´ 21/12/1978, AGK-KKF, F118.

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participation in the EEC budget (i.e., the Community’s complex system of payments and receipts). By now, however, the focus was on appearances rather than substance. A typical example of this was Karamanlis’s personal attempt to persuade the vice-president of the Commission to reallocate to Fiscal Year 1981 Community transfers to Greece that had been earmarked for Fiscal Year 1982.36 1981, of course, would be the first year of Greece’s membership in the Community. It was also, as it happened, the year in which Greece would hold its next parliamentary elections. Membership in the Community was becoming a means to achieve partisan ends in the context of domestic politics.

36 E. Karamouzi, Greece, the EEC and the Cold War, 1974–1979: The Second Enlargement (Basingstoke, UK: Palgrave, 2014), 174–175.

CHAPTER 18

1981: Bound by Europe

Despite everything, the expectation that participation in the EEC represents a positive step for the progress of our country is now generally shared. This conviction is the result of systematically concealing problems and cultivating the myth that the EEC is a progressive political entity. For this reason it is necessary, first and foremost, to inform the people about the real significance of our accession. This recommendation rejects accession; it also rejects accession under conditions. It is not possible to escape our relationship of dependency through the help of the industrialized nations. —Constantinos Simitis, foreword to the recommendation of the panel of experts of the PASOK Center for Studies and Enlightenment Work1 The consequences of our accession will not be limited in time nor will they affect only a minority of people ... . This is a choice that will impact the economic, social, political, and cultural fabric of our nation, the framework of thought and behavior for us all. —Andreas G. Papandreou, “Greece-EEC”2

1981 was a watershed in postwar Greek history. In January, Greece officially joined the European Economic Community, marking the beginning of a new era. In October, PASOK swept to victory in the parliamentary 1 PASOK, Eλλαδα ´ και Koιν η´ Aγ oρ α: ´ O Aντ ι´λoγ oς (Athens: PASOK, 1976), 15–16. 2 A. G. Papandreou, «Eλλαδα-EOK», ´ ´ in H Eυρωπ α¨ικ η´ Koιν o´ τ ητ α και oι Eλληνες

Mηχ ανικ oι´ (Athens: TEE, 1978), vol. 2, 11–19.

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elections, and a long journey that had begun with the consolidation of power by the civil war’s victors now ended with a willingness to embrace the losing side as well. Allagi (“Change” ) was not just a rallying cry: the word represented a program for dealing with the radicalism of the early post-dictatorship era. Among that program’s elements were a generous increase in the minimum wage, the democratization of labor unions, and the use of nationalization as a tool of economic policy. The Greek economy, which had never quite managed to complete its transition to an export-led growth model, would now base its hopes for growth on increased domestic demand.3 In the wake of the 1979–1980 oil crisis, however, a sharp rise in wages dealt a serious blow to labor-intensive industries—Greece’s biggest employers—leading to a surge in structural unemployment. The structural weaknesses of the Greek economy, the negative economic situation generally, and the government’s social welfare commitments all forced the Greek government to take on more foreign and domestic debt. A dramatic worsening of the country’s current account deficit was imminent. PASOK’s policies would be tested within the new framework imposed by Greece’s membership in the European Community. The antiEuropean descants that had been heard in the run-up to the election had been not accompanied by any serious challenges to Greece’s decision to join the EEC. At most, anti-European feelings had been employed as a bargaining chip in hopes of extracting further concessions,4 and this continued to be the case after the new government took office. Ultimately, PASOK did not mount any fundamental challenge to Greece’s place within the Community. In part, this was because Constantinos Karamanlis had presented his political opponents with a series of faits accomplis: he had signed the Accession Treaty in 1979 and then had assumed the presidency in 1980 with the backing of far-right MPs.5 But

3 Ch. Tsakas, “Growth Models and Core-Periphery Interactions in European Integration: The German-Greek Special Relationship in Historical Perspective,” Journal of Common Market Studies (28 December 2020), available online at https://doi.org/10. 1111/jcms.13160. 4 S. Verney, «H ευρωπα¨ικη ´ εξšλιξη τoυ Aνδρšα ⊓απανδρšoυ», in O Aνδρ šας Π απ ανδρ šoυ και η επ oχ η´ τ oυ: Bιoγ ραϕικ o´ σ χ εδ´ιασ μα, μελετ ηματ ´ α και μαρτ υρ´ιες, ed. V. Panagiotopoulos, vol. 2 (Athens: Ellinika Grammata, 2006), 175–202. 5 Relevant material may be found in the Konstantinos Karamanlis Archive at the Konstantinos G. Karamanlis Foundation, Athens, (AKK-KKF), F370A.

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that was not the only reason. It is true that, as we have seen, the strategy of a quick accession to the EEC had aimed to preserve Greece’s social arrangements and international commitments in the face of the bold departures promised by PASOK. (The same was true of Greece’s 1980 return to NATO’s military command). SEV had highlighted this goal as early as October 1976 in reports addressed to the European Commission: “We believe that [Greece’s] entry into the European Community will provide an external source of pressure and a catalyst that will allow resistance to necessary changes to be overcome.”6 Three years later, when the Accession Treaty was signed, most politicians, journalists, and pundits were similarly eager to stress the domestic political aspect of EEC membership.7 In reality, however, it was not primarily the institutional protections provided by the Community that kept the Third Hellenic Republic on a pro-Western, liberal trajectory. The real obstacles to a departure from that path had been created by the changes that had taken place in Greek society over the course of the previous decades. Allagi—a “historic bloc,” in Gramscian terms—fought for legal recognition of the communist-led national resistance to the Axis occupation and for an end to the persecutions of the post-civil war era.8 At the same time, it sought to redistribute the benefits that Greece’s postwar growth had produced. It was not simply a question of improving the living standards of blue- and white-collar workers9 (though living standards remained a salient issue even after the wage increases granted under the Karamanlis governments).10 Allagi also represented a demand for a comprehensive democratization of the power structure that existed within 6 SEV Bulletin, 342–343, 15/10/1976. 7 See, for example, the feature story in Oikonomikos Tachydromos, 31/5/1979. 8 Ch. Lyrintzis, «O Aνδρšας ⊓απανδρšoυ και η Aριστερα», ´ in Panagiotopoulos, O

Aνδρ šας Π απ ανδρ šoυ και η επ oχ η´ τ oυ, vol. 2, 27–52; and K. Karpozilos, “Transition to Stability: The Greek Left in 1974,” in Rethinking Democratisation in Spain, Greece and Portugal, ed. M. L. Cavallaro and K. Kornetis (Basingstoke, UK: Palgrave, 2019), 179–197. 9 S. Vamiedakis, «Eργασιακšς σχšσεις και συνδικαλιστικ´o κ´ινημα μετα ´ τη Mεταπoλ´ιτευση: H εργατικη´ πoλιτικη´ τoυ ⊓AΣOK, 1981–1985» (MA thesis, University of Crete, 2009). 10 A delegation of the EEC Economic and Social Committee which visited Greece in March 1978 observed that Greek workers’ wages and real purchasing power remained significantly lower than those of their counterparts in most of the nations of the Community: see Comité économique et social [Dossier: Ext/13 Grèce], Etude du Comité

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Greek society. Such a demand had a special relevance for the radicalized youth of the former Centre Union, who, under the leadership of Andreas Papandreou, had constituted PASOK’s original core membership. From this core, PASOK had expanded to become an unprecedented alliance of different generations and social strata. Those groups that had benefited economically from Greece’s postwar development miracle— engineers,11 for example—were still excluded from the commanding heights of politics, which were controlled by a closed circle of industrialists, shipowners, the judiciary, the university establishment, senior political figures on the Right, and—until quite recently—the palace and the army. These rising groups sought to obtain a share of power via a strategy which, though expressed in neo-Marxist terminology, was in fact one of modernization.12 At the same time, however, they expected that Greece’s integration with Europe would ensure that their own material well-being continued to improve. In the societal landscape of post-dictatorship Greece, the complementary yet contradictory relationship between democratization and Europeanization made demands for modernization appealing to the emergent new social movements. Women, youth, environmentalists, people with disabilities, and other social groups sought a break with the authoritarian postwar model in ways that went

économique et social sur “Les relations entre la Communauté et la Grèce [Rapporteur: M. De Ridder], 11/7/1978, HAEU, CES-7657. With the exception of 1979, real wage growth in industry was, indeed, faster than productivity growth. This trend was especially strong during the three years 1976–1978 as a result of very large wage increases (1976 and 1978) or a decline in labor productivity (1977): see Ch. Iordanoglou, «H oικoνoμ´ια 1974–2000. Eπιβραδυνση-στασιμ´ ´ oτητα-ανακαμψη», ´ in Iσ τ oρ´ια τ oυ Nšoυ Eλληνισ μoν´ 1770–2000, vol. 10, H Eλλαδα ´ τ ης oμαλ´oτ ητ ας , 1974–2000: Δημoκρατ ικ šς κατ ακτ ησ ´ εις –oικ oν oμικ η´ αν απ ´ τ υξ η και κ oινωνικ η´ σ τ αθ ερ o´ τ ητ α, ed. V. Panagiotopoulos (Athens: Ellinika Grammata, 2003), 70 and 74. Nevertheless, despite this trend, the country’s low international ranking with respect to the per-unit cost of labor remained unchanged: see E. Ioakimoglou, K´oσ τ oς εργ ασ ι´ας , αντ αγ ωνισ τ ικ o´ τ ητ α και σ υσ σ ωρευσ ´ η κεϕαλα´ιoυ σ τ ην Eλλαδα ´ (1960–1992) (Athens: INE/GSEE, 1993), 15–17. 11 For the results of the first post-dictatorship elections held by the Technical Chamber of Greece (TEE), see TEE Bulletin, vol. 851, 26/7/1975. 12 For the phenomenon of a new social demand finding expression in the familiar language of an earlier era, see A. Badiou, H κ oμμoυνισ τ ικ η´ υπ o´ θ εσ η (Athens: Patakis, 2009), with the May 1968 uprising as a case in point.

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well beyond the narrow limits of economics and politics as they had traditionally been understood.13 By 1978, many things had changed and, party politics notwithstanding, a broad social consensus in favor of Greece’s accession to EEC had emerged. In February of that year, the Technical Chamber of Greece (TEE) organized a major international conference on “The European Community and Greek Engineers.” Despite an attempt by PASOK to undermine the event, it nevertheless took place,14 and its seemingly specialized focus did not prevent it from assuming a political character, with many Greek politicians and various international luminaries attending in person. Although various opinions were expressed at the conference, the topic which attracted the greatest attention was the increasing role played by Greek construction companies in North Africa and the Middle East.15 The opportunities offered by those emerging markets had already attracted the attention of Greek engineering firms in the early postwar years,16 but it was only after the fall of the dictatorship that Zolotas drew a connection between Greece’s involvement in those regions and its ambitions with respect to Europe. Zolotas argued that Greece’s accession to the EEC would enable it to become a “bridge” between companies in Western Europe and markets in the Arab world. At

13 V. Chalaza, Ch. Tsakas, and K. Kavoulakos, “From Charity to Welfare: Disability Movement, Institutional Change and Social Transformation in Post-Dictatorship Greece, 1974–81,” Disability Studies Quarterly 40.3 (2020), available at http:// dx.doi.org/10.18061/dsq.v40i3.6875; N. Papadogiannis, Militant around the Clock? Left-Wing Youth Politics, Leisure, and Sexuality in Post-Dictatorship Greece, 1974– 1981 (New York: Berghahn Books, 2015); Th. Tsakiris, «⊓AΣOK και κoινωνικα´ κινηματα: ´ Συνδικαλιστικ´o, oικoλoγικ´o και ϕoιτητικ´o», in Π AΣOK, 1974–2018: Π oλιτ ικ η´ oργ ανωσ ´ η, ιδε oλoγ ικ šς μετ ατ oπ ι´σ εις , κυβερνητ ικ šς π oλιτ ικ šς, ed. V. Asimakopoulos and Ch. D. Tassis (Athens: Gutenberg, 2018), 162–193. 14 E. Kouloubis, Δεκαπ šντ ε χ ρ o´ νια δημιoυργ ι´ας (Athens: TEE [Technical Chamber of Greece], 2008), 96–105. 15 TEE (Tεχνικ´o Eπιμελητηριo ´ ´ Eλλαδας), ´ H Eυρωπ α¨ικ η´ Koιν o´ τ ητ α και oι Eλληνες Mηχ ανικ oι´: Π ρακτ ικ α´ σ υνεδρ´ιoυ τ oυ Tεχ νικ oν´ Eπ ιμελητ ηρ´ιoυ τ ης Eλλαδ ´ oς , Aθ ηνα, ´ Φεβρ oυ αρι ´ oς 1978, 3 vols. (Athens: n.d.); and TEE (Tεχνικ´o Eπιμελητηριo ´ ´ Eλλαδας), ´ «⊓oρ´ισματα συνεδρ´ιoυ TEE: H Eυρωπα¨ικη´ Koιν´oτητα και oι Eλληνες Mηχανικo´ι», Technika Chronika 1–3/80 (January–March 1980). 16 Department of State, Memorandum of conversation: Development Projects in the Middle East (Doxiadis et al.), 25/11/1958, National Archives and Records Administration at College Park, MD (NARA), RG84, Series: Classified General Records, 1943–1963, UD2650A, Box 66: 500 General Classified 1956–1957–1958.

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the TEE conference, Greece’s ability to play such a role was presented not only as a source of profit opportunities for Greek businesses but also as one of the principal economic benefits that the country’s accession offered to the EEC.17 The conference thus illustrated the increasing fascination that the possibilities of Greek integration with Europe held for a certain audience. Such a development could hardly have escaped the notice of a political genius like Andreas Papandreou (given that this was the same audience from which the recently established PASOK had drawn many of its functionaries). Papandreou had made PASOK into a party that relied heavily on his own personal leadership18 and from 1975 onward he was able to adapt to the changing conditions of Greek politics with extraordinary skill. Paradoxically, however, such flexibility was sometimes only possible because it was overlaid with a rigid consistency where rhetoric was concerned. Typical in this respect was PASOK’s reaffirmation, at the beginning of 1978, of its decision to reject participation in the Socialist International.19 Papandreou repeatedly used anti-German boilerplate to justify this choice, claiming that the International was controlled by Germany’s Social Democratic Party (SPD)—an organization which he described as an instrument of “modern-day monopoly capitalism.20 ” Yet there was nothing fortuitous about Papandreou’s characterization of the German socialists. PASOK’s attitude toward the SPD was one of existential aversion. PASOK traced its own origins to the Panhellenic Liberation Movement (PAK), one the most important Greek organizations established in opposition to the dictatorship. Much of PAK’s

17 X. Zolotas, H σ υμβ oλη´ τ ης Eλλαδ ´ oς σ τ ην Eυρωπ α¨ικ η´ Koιν o´ τ ητ α (Athens: Bank of Greece, 1978), 55–59. 18 M. Spourdalakis, «H πoρε´ια πρoς την εξoυσ´ια, 1974–1981», in O Aνδρ šας Π απ ανδρ šoυ και η επ oχ η´ τ oυ: Bιoγ ραϕικ o´ σ χ εδ´ιασ μα, μελετ ηματ ´ α και μαρτ υρ´ιες, ed. V. Panagiotopoulos (Athens: Ellinika Grammata, 2006), vol. 1, 235–275; and T. Pappa, To χ αρισ ματ ικ o´ κ o´ μμα: Π AΣOK, Π απ ανδρ šoυ, εξ oυσ ι´α (Athens: Patakis, 2009). 19 Stephen (Political Adviser) to Sutherland (British Ambassador in Athens), 7/3/1978, The National Archives, Kew, Richmond (TNA), FCO 9/2732. 20 Clements (British Embassy in Athens) to Rawlinson (FCO/Southern European Department), PASOK, 2/3/1978; and the attached translation of excerpts from Papandreou’s interviews in To Vima, 26/2 and 28/2/1978, TNA, FCO 9/2732.

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leadership was provided by Greek migrants,21 and although Papandreou had announced the creation of PAK in Stockholm, most of the movement’s members outside Greece lived in West Germany.22 Naturally, it could not be forgotten that Germany’s 1966–1969 coalition government, when SPD leader Willy Brandt served as foreign minister, and Brandt’s subsequent SPD government (1969–1974) had both adopted an accommodationist stance toward the colonels. Even centrist politicians who distanced themselves from PAK and PASOK and generally had kind words for Brandt could not hide their disappointment with this aspect of his policy (Georgios Mylonas, a prominent member of the Democratic Defense resistance group, was one such figure23 ). During the dictatorship, Papandreou made it a priority to collect information on West German investments in Greece.24 In shaping his strategy toward the dictatorship, he actively sought advice from prominent opponents of the Greek regime based in the FRG (including those who were not members of PAK)25 and senior members of PAK in West Germany would formulate the core elements of PASOK’s founding document, the Declaration of 3 September 1974.26 The intraparty crisis of 1975, when Papandreou made up his mind to place all party organizations under his absolute control, did not leave PASOK’s West German affiliates unaffected. Leaving PASOK once and for all in March 1977, the former secretary-general of PAK in West Germany claimed that PASOK’s mixing of “left-wing phraseology” with “right-wing political practice” could no longer be called inconsistent, since it had evidently become the party line.27

21 A. Pantazopoulos, «⊓ανελληνιo ´ Aπελευθερωτικ´o K´ινημα (⊓AK)», in H σ τ ρατ ιωτ ικ η´ δικτ ατ oρ´ια, 1967–1974, ed. B. Karamanolakis (Athens: Ta Nea, 2017), 155–167. 22 S. Draenos, «Tι ηταν ´ και τι ηθελε ´ τo ⊓AK», in Panagiotopoulos, O Aνδρ šας Π απ ανδρ šoυ και η επ oχ η´ τ oυ, vol. 1, 203–214. 23 Mylonas to Brandt, 20/11/1972, Georgios Mylonas Archive, Contemporary Social History Archives, Athens (ASKI), K11:F6. 24 ⊓απανδρšoυ to Mαυρ´ιδη (Association of Greek Scientists), 19/10/1968; and Mαυρ´ιδης to ⊓απανδρšoυ, 28/10/1968, Vassilis Mavrides Archive, ASKI, K13:F1β. 25 ⊓απανδρšoυ to Mαυρ´ιδη, 24/6/1968, Vassilis Mavrides Archive, ASKI, K13:F1β. 26 Spourdalakis, «H πoρε´ια πρoς την εξoυσ´ια», 235–236. 27 D. Vassiliadis, Π AK-Π AΣOK: Mν ´ θ oς και π ραγ ματ ικ o´ τ ητ α (Γ ιατ ι´ π αραιτ ηθ ´ ηκα απ o´ τ o Π AΣOK) (Athens: Dialogos, 1977), 9.

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PASOK’s position on Greece’s imminent accession to the EEC seemed to confirm this assessment.28 In the spring of 1979, as the Accession Treaty was being finalized, a serious incident occurred within the party when Papandreou removed Costas Simitis from PASOK’s executive secretariat. Simitis’s offense was employing turns of phrase that could— with enough exaggeration— be regarded as making concessions to a pro-European perspective.29 Yet only two months previously, the West German embassy in Athens had noted an interesting change in the position taken by the Proini Eleftherotypia, a newspaper which, according to the ambassador, mirrored the views held by PASOK. According to the paper, the question after the signing of the treaty was no longer whether Greece should join the EEC, but how best to improve Greece’s position within the Community.30 Ambiguity as to PASOK’s position on Europe persisted for quite some time. After a meeting between Papandreou and a delegation from the Bundestag in May 1980, the Bundestag president reported to the West German foreign ministry that Papandreou was in favor of a referendum on whether or not Greece should remain in the EEC.31 In the final weeks before the 1981 elections, however, a senior German government official who had recently spoken to Papandreou informed the foreign ministry that PASOK’s leader had given up on the idea of a referendum, on the grounds that Karamanlis, as president, would refuse to give his approval.32

28 K. Gartsou-Katsouyanni, “Backdoor Colonialism or Anchor of Modernity? A Short

History of Ideas about European Integration within the Greek Left,” in Euroscepticisms: The Historical Roots of a Political Challenge, ed. M. Gilbert and D. Pasquinucci (Leiden: Brill, 2020), 164–189; and A. Nafpliotis, “From Radicalism to Pragmatism via Europe: PASOK’s Stance vis-à-vis the EEC, 1977–1981,” Southeast European and Black Sea Studies, 18.4 (2018): 509–528. 29 K. Simitis, Δρ o´ μoι ζ ωης ´ (Athens: Polis, 2015), 211–220. 30 Poensgen to Auswärtiges Amt, EG-Beitrittsverhandlungen

mit Griechenland: Griechisches Medienecho auf Verhandlungsabschluss, 5/4/1979, Politisches Archiv des Auswärtigen Amtes, Berlin (PA AA), B200, Bestellnr.121690. 31 Botschaft der BRD Athen to Auswärtiges Amt, Offizieller Besuch von Bundestagspräsident Stücklen und einer Delegation in Griechenland vom 01.–06.05.1980, 9/5/1980, PA AA, B200, Bestellnr. 121925. 32 Gröning (Büro Staatsminister Dr. Corterier), Gesprächsvermerk: Gespräch Staatsminister Dr. Corterier mit dem griechischen Oppositionsführer Andreas Papandreou am 2.7.1981 16.00 bis 17.00 Uhr, 2/7/1981, PA AA, B200, Bestellnr. 121925.

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This apparent alteration in PASOK’s stance was in fact the culmination of a negotiating tactic that, a few years later, enabled Greece to secure additional aid for the countries of the European South. The aid was organized under the aegis of the Integrated Mediterranean Programmes (IMP),33 an early form of Community regional policy that would aim to close the gap between the poorer southern member-states and the richer countries of the north. At this stage, the creation of the IMP could still be sold to the Greek domestic audience as an anti-European success—the result of a tough negotiating stance that had borne fruit in terms of real national interests. PASOK’s ultimate acceptance of a European identity for Greece would come later, and without a hint of national pride. By the time of the 1985 elections, the limits of Greece’s demandled growth model were becoming apparent. As labor’s share of national income reached levels unprecedented in postwar Greece, the value of imports had increased by 26% and the trade deficit now exceeded 15% of GDP. These developments underscored Greece’s serious payments imbalances—especially since rising incomes had led to a significant increase in the total value of imported consumer goods.34 Meanwhile, unemployment was rising. The problem of the lack of a clear plan for an alternative development path was exemplified by the growing phenomenon of “troubled enterprises.” These were formerly successful industrial firms which had been unable to cope with rising labor costs in conditions of heavy indebtedness and economic downturn, and which therefore had been taken over by the state.35 Confronting this acute crisis required a dramatic shift in economic policy. To deal with runaway inflation and put its public finances in order, the second PASOK government agreed to a stabilization program that would permit Greece to receive additional support from the EEC.36 The economic effects of this approach were rather mixed, but its social costs

33 F. Papageorgiou and S. Verney, “Regional Planning and the Integrated Mediterranean Programmes in Greece,” Regional Politics and Policy 2.1–2 (1992): 139–161. 34 Bank of Greece, Mακρ oχ ρ o´ νιες σ τ ατ ισ τ ικ šς σ ειρ šς τ ης ελληνικ ης ´ oικ oν oμ´ιας

(Athens, 1992); and Ministry of National Economy (ϒ⊓E⊝O), H ελληνικ η´ oικ oν oμ´ια 1960–1997: Mακρ oχ ρ o´ νιες μακρ ooικ oν oμικ šς σ τ ατ ισ τ ικ šς σ ειρ šς (Athens, 1998). 35 M. Karamesini, Bιoμηχ ανικ η´ π oλιτ ικ η, ´ ευρωπ α¨ικ η´ εν oπ oι´ησ η και μισ θ ωτ η´ εργ ασ ι´α (Athens: Ellinika Grammata, 2002), 188–200. 36 G. Pagoulatos, Greece’s New Political Economy: State, Finance and Growth from Postwar to EMU (New York: Palgrave Macmillan, 2003), 103–114.

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were evident and indisputable. In 1986, per capita remuneration across all sectors and minimum wages underwent their most drastic reduction in the country’s postwar history.37 PASOK’s U-turn ensured that labor’s share of industrial output would return to its lowest level since 1975. More broadly, the party’s embrace of Europe signaled the end of the second phase of the Metapolitefsi. The hopes that Allagi had represented—hopes for social transformation through a broad electoral coalition assembled around a charismatic leader—were ultimately disappointed.

37 Ministry of National Economy (ϒ⊓E⊝O), H ελληνικ η´ oικ oν oμ´ια, 1960–1997.

PART VI

Conclusion

CHAPTER 19

Epilogue: Crisis, History, Politics

Two days before the referendum of Sunday, July 5, 2015, the “No” campaign held its main rally in Athens, where a vast crowd overflowed the city’s Syntagma Square. Prime Minister Alexis Tsipras addressed the assembled multitude, describing the nature of the event in the following terms: “Today we are not protesting. Today we are celebrating … today we celebrate the victory of democracy. Whatever we awaken to on Monday, we are already winners ….1 ” These words were carefully chosen and highly symbolic. Tspiras was repeating almost exactly—and with the same distinctive intonation—what Andreas Papandreou had said at PASOK’s main pre-election rally in the very same location in October 1981. On that occasion, Papandreou had declared that “our gathering tonight is not a political rally. It is a victory feast … tonight we are made free. This is the gathering of Democracy, of Peace, of Change [Allagi]. Tonight the battle has been won.2 ” Despite the confidence that they exuded, both leaders’ pronouncements would prove false. There was, however, a significant difference. Allagi spent four years pursuing 1 Alexis Tsipras’s speech at “No” rally in Syntagma Square on 3/7/2015 (accessible via https://www.youtube.com/watch?v=2gOhKUGyEKI&t=1699s last retrieved on 16/4/2021). 2 Andreas Papandreou’s speech at PASOK’s pre-election rally in Syntagma Square on 15/10/1981 (accessible via https://www.youtube.com/watch?v=oJ9G9PmIJ7k&t=235s last retrieved on 16/4/2021).

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redistributive policies and expanding social welfare programs before it was obliged to accept the strict fiscal conditions attached to the 1985 Community loan.3 In contrast, Alexis Tsipras’s “victory of democracy” lasted little more than a week. At dawn on 13 July, the prime minister had no choice but to acquiesce to the harsh terms dictated by his European partners—Germany in particular—in order to secure another bailout package that would permit Greece’s continued membership in the eurozone.4 Seeing the referendum result disregarded was a painful experience for the many who had believed that the voice of the people could overturn the rules that governed public finance. But was it really a coup, as the viral hashtag #ThisIsACoup5 proclaimed at the time? The German preoccupation with adherence to rules (so-called ordoliberalism) was one of the forces shielding the European edifice against democratic pressures.6 At least as important, however, were the constraints imposed by the Greek economy’s integration into the European Union and the eurozone over the course of the previous decades. When Alexis Tsipras spoke of his desire to overturn austerity policies all over Europe, it was not simply because he was subject to delusions of grandeur. European solutions were the only ones being considered. At no point during the crisis was the Greek government prepared to engage in anti-European rhetoric or to raise the issue of an alternative path beyond the limits of the eurozone. Instead, the Greek government professed its allegiance to the “European values,” ruled out the option of abandoning the euro and described their enforced capitulation as “the rape of Europa.7 ” Behind such seemingly naive idealism, however, it was easy to discern the predicament that “hard bargaining” with Greece’s European partners had created.

3 See Chapter 18. 4 A. Tooze, Crashed: How a Decade of Financial Crises Changed the World (London:

Penguin, 2018), 531–532. For a detailed account, see P. Roufos, A Happy Future Is a Thing of the Past: The Greek Crisis and Other Disasters (London: Reaktion Books, 2018). 5 Tooze, Crashed, 533. 6 See Q. Slobodian, Globalists: The End of Empire and the Birth of Neoliberalism

(Cambridge, MA: Harvard University Press, 2018). 7 This was the Greek title of a book which Yanis Varoufakis, Greece’s minister of finance, published after resigning in response to his government’s U-turn: see Y. Varoufakis, And the Weak Suffer What They Must? Europe’s Crisis and America’s Economic Future (New York: Nation Books, 2016).

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As the global economic crisis loomed, Greece’s “reduced reform capacity”8 was chalked up to its “limited Europeanization,9 ” and such a premise may perhaps appear reasonable to those who embrace the teleological view that characterizes neo-institutional approaches to the European project.10 In reality, however, Greece’s problem was just the opposite—its entrenched Europeanization. But this Europeanization had little to do with the one-sided way the field of European studies defines the term—i.e., as the ever-increasing convergence of national systems as a result of external pressure.11 It had still less to do with the idealized version of the concept that Greece’s left-wing government had pressed into service shortly before its rude awakening to the harsh—but indisputably European—reality. Greece’s entrenched Europeanization, after decades of participation in the European project, had to do with “an increase in cross-border relations (transactions, social and political linkages, cultural transfers, etc.) including its effects on the perceptions, motives and opportunity structures of individual or collective action.12 ” Increasing foreign trade, an influx of foreign capital, privatization, greater flexibility in the job market, participation in foreign infrastructure projects, internationalization of the services sector, expanded tourism, liberalization of the financial sector, and participation in monetary union—all these developments, which had intensified since

8 S. Kalyvas, G. Pagoulatos, and H. Tsoukas, eds., From Stagnation to Forced Adjustment: Reforms in Greece (New York: Columbia University Press, 2012). 9 K. Featherstone and D. Papadimitriou, The Limits of Europeanization: Reform Capacity and Policy Conflict in Greece (Basingstoke, UK: Palgrave, 2008). 10 M. Gilbert, “Narrating the Process: Questioning the Progressive Story of European Integration,” JCMS: Journal of Common Market Studies 46.3 (2008): 641–662. 11 From a vast literature, see, for example, K. Featherstone and C. M. Radaelli, The Politics of Europeanization (Oxford: Oxford University Press, 2003); and C. M. Radaelli, “Europeanization: Solution or Problem?” in Palgrave Advances in European Union Studies, ed. M. Cini and A. K. Bourne (Basingstoke, UK: Palgrave, 2006), 56–76. 12 V. Schneider and J. R. Grote, “Introduction: Business Associations, Associative Order and Internationalization,” in Governing Interests: Business Associations Facing Internationalization, ed. W. Streeck, J. R. Grote, V. Schneider, and J. Visser (Abingdon, UK: Routledge, 2006), 6.

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the mid-1990s, were not just part of the EU reform agenda.13 Collectively, they determined the matrix of opportunities and possibilities within which Greece’s political, administrative, and technocratic elites as well as Greek corporations could act—and, of course, they served to raise the stakes of both action and inaction. This is not to imply that the Greek development model did not have its own distinctive features. Despite assertions that national economies would inevitably converge—on pain of system-wide failure—to a single optimal paradigm,14 we now know that the mechanisms which act to accentuate the peculiarities of national economies remain operative even in a globalized world.15 As early as the mid-1950s, Greece was pursuing a growth path that was very much idiosyncratic, even if it was doing so via an unwavering commitment to the European prospect. As this book has shown, the success of that strategy was due to Greece’s special relationship with West Germany, the country which played the leading role in the reconstruction of Western Europe’s economy in the decades after World War II. Of course, this path was not always a smooth one. The milestones along Greece’s particular road included the political and economic repercussions of the Greco-German rapprochement in the mid-1950s; the signing of Greece’s 1961 Association Agreement with the EEC—the first of its kind between the Community and a sovereign European state; a departure from constitutional government in the mid-1960s, culminating in the army’s seizure of power; the seven years of authoritarian rule that followed; a conflict with Turkey and the challenges of the transition to democracy in the mid-1970s; and, in 1981, an expedited accession to the EEC (ahead of the other newly established democracies of the European South) and a smooth transfer of power from the conservative ND

13 I. T. Berend, The History of European Integration: A New Perspective (London: Routledge, 2016), 158–230; A. Giannitsis, «Διεθνε´ις κεϕαλαιακšς ρošς», in Oικ oν oμικ η´ ισ τ oρ´ια τ oυ ελληνικ oν´ κρ ατ ´ oυς, vol. 2, Oικ oν oμικ šς λειτ oυργ ι´ες και επ ιδ o´ σ εις, ed. Th. Kalafatis and E. Prontzas (Athens: Piraeus Bank Group Cultural Foundation, 2011), 525–597; and Tooze, Crashed, 323–332 (esp. the table on p. 327). 14 D. Acemoglu and J. A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (New York: Crown Business, 2012). 15 B. Hancké, M. Rhodes, and M. Thatcher, Beyond Varieties of Capitalism: Conflict, Contradictions, and Complementarities in the European Economy (Oxford: Oxford University Press, 2007); and P. A. Hall, “Varieties of Capitalism in light of the Euro Crisis,” Journal of European Public Policy 25.1 (2018): 7–30.

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to socialist PASOK that confirmed the consolidation of Greece’s democracy. The ascendancy of PASOK marked the final abandonment of the export-led growth model at the very moment of Greece’s accession, but the crisis of 1973–1974 and the radicalism of the Metapolitefsi had already subjected that model to very severe strains. Spring 2010 was not the first time that Greece had availed itself of European aid. In 1985, Community intervention had allowed the Greek economy to avoid a train wreck—on the condition that Greece would adopt austerity policies and promote institutional reforms. The reforms mainly involved liberalizing the country’s financial system, a process in line with international trends in this area and one which paved the way for the important developments of the following decade (deregulation of capital flows, independence of the Greek central bank, etc.). After 1992, these processes were subsumed by the more extensive measures that were being undertaken to prepare Greece’s economy for participation in the monetary union. At the same time, however, they facilitated the international mobility of capital and thus gave financial markets leverage over the country’s economic policy. If they wanted to avoid capital flight, Greek leaders would now have to send the proper signals to the markets.16 Needless to say, the existence of this constraint was not exclusive to Greece: it was a European phenomenon, and it reflected global trends. Despite a widespread belief that Europe was passively complying with international developments in the post-Bretton Woods era, it was in fact Europe’s leaders that were spearheading the systematic liberalization of markets.17 The second PASOK government (1985–1989) oversaw a major reorientation of priorities in the direction of fiscal adjustment. The first PASOK government had relied on debt to fund its redistributive policies, and this had created very severe difficulties for Greece’s balance of payments.18 By 1985, the limits of Greece’s demand-led growth model were becoming 16 G. Pagoulatos, Greece’s New Political Economy: State, Finance and Growth from Postwar to EMU (New York: Palgrave Macmillan, 2003). 17 R. Abdelal, Capital Rules: The Construction of Global Finance (Cambridge, MA: Harvard University Press, 2007). 18 For the data used in this paragraph, see Ministry of National Economy (ϒ⊓E⊝ O), H ελληνικ η´ oικ oν oμ´ια, 1960– 1997: Mακρ oχ ρ o´ νιες μακρ ooικ oν oμικ šς σ τ ατ ισ τ ικ šς σ ειρ šς (Athens, 1998); and Bank of Greece, Mακρ oχ ρ o´ νιες σ τ ατ ισ τ ικ šς σ ειρ šς τ ης ελληνικ ης ´ oικ oν oμ´ιας (Athens, 1992). For a more detailed account of the period in question, see Ch. Tsakas, «H oικoνoμ´ια 1974–1989», published 2018 at Metapolitefsi

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apparent: labor’s share of national income reached levels unprecedented in postwar Greece, the value of imports had increased by 26% and the trade deficit now exceeded 15% of GDP. In response, the government embarked on a Community-funded stabilization program aimed at tackling rampant inflation and getting its public finances under control. The social costs of these new priorities were immediate. 1986 saw the most drastic reduction in wages in postwar Greek history (up to that point). As a result, labor’s share of industrial output reached its lowest level since 1975. The government’s policies were maintained throughout the following year, but structural weaknesses of the Greek economic model persisted. In 1986–1987 the gap between expenditures on capital goods imports and expenditures on imports of manufactured consumer goods began to widen significantly, with the latter exceeding the former by about $2.5 billion over those two years. This trend was consistent with the composition of Greece’s industrial exports, where intermediate goods lost ground to consumer goods and capital goods exports remained low. If the government’s policy yielded any fiscal benefits, they were not sufficient to convince most people of the value of continued austerity. In fact, the ruling party’s bond with certain social groups was jeopardized, as dissatisfaction among workers undermined Allagi’s trade union support. Even apart from its political costs, however, austerity’s recessionary effects—together with its failure to improve critical indicators such as labor productivity—argued in favor of a volte-face. Faced at the same time with a grave scandal over Papandreou’s alleged relations with George Koskotas, a banker and emerging media tycoon,19 the government looked to economic policy as its life preserver. As a result, the policy of restraint was completely reversed as PASOK sought to restore its standing among the groups that its post-1985 approach had adversely affected. With new elections approaching in 1989 and 1990, Greek public finance would now be managed according to principles diametrically opposed to those which had prevailed in 1986–1987. In the 1990s, a more strategic version of fiscal adjustment was adopted by successive ND governments under Konstantinos Mitsotakis and by (1974–1989) website, Contemporary Social History Archives (ASKI), ed. V. Karamanolakis, K. Karpozilos, D. Lampropoulou, and E. Nikolakopoulos, www.metapolitefsi. com. 19 G. Voulgaris, H Eλλαδα ´ τ ης Mετ απ oλ´ιτ ευσ ης , 1974–1990 (Athens: Themelio, 2001).

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PASOK governments led by Andreas Papandreou and Konstantinos Simitis. The policy now signaled a commitment to fulfilling the Maastricht Treaty’s preconditions for membership in the monetary union. Dedication to this goal reached its height during Simitis’s eight years as prime minister (1996–2004)—ironic, given that Simitis had previously been opposed to the Common Market20 —and led to Greece’s joining the eurozone in 2001. Nevertheless, the unwavering pursuit of this policy did not produce—indeed, it did not even try to produce— any transformation of the Greek development model, which continued to rely on domestic demand. Once Greece had joined the Economic and Monetary Union (EMU), the fundamental contradiction between observing of the fiscal rules of the Stability Pact and creating conditions for growth through expansionary policies could be evaded only by means of the low-cost borrowing that was the most tangible privilege of EMU membership. Such borrowing was the rational choice,21 and to one degree or another all the countries of the European South resorted to it. In so doing, they were continuing a practice pioneered by Germany, France, and Italy immediately after the establishment of the EMU.22 And the reason for this was simple: once monetary sovereignty had been surrendered, countries could no longer deal with a temporary or persistent lack of competitiveness by devaluating their national currencies. In the favorable conditions that characterized the global economy at the turn of the twenty-first century, Greece’s debt-based strategy seemed to be yielding splendid results.23 Greece’s hosting of the 2004 Olympic Games was a turning point in the so-called modernization strategy initiated by Simitis. It seemed only logical that a country known for the Acropolis, Aegean islands, and moussaka should invest in a (very expensive) marketing campaign to promote itself as a center of culture, tourist destination, and, ultimately, as a brand. This approach worked perfectly to boost demand—and, at the same time, 20 See Chapter 18. 21 P. A. Hall, “Varieties of Capitalism and the Euro Crisis,” West European Politics 37.6

(2014): 1223–1243. 22 B. Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond (Princeton, NJ: Princeton University Press, 2007), 370–376. 23 Between 2001 and 2007, the average annual growth rate of Greece’s GDP was 4.1 percent (see the World Bank database, accessible via https://data.worldbank.org/; last accessed 18 May 2021).

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to legitimize the growth of Greece’s foreign debt. On the other hand, it also led to intense upward pressure on prices: during preparations for the Olympics, inflation in Greece was running at almost two times the European average.24 The result was that Greek goods and services were becoming less competitive at the very moment when projects undertaken in preparation for the games were being completed and the question of what was next for Greece’s economy demanded an answer. Under these circumstances, the conservative government of New Democracy (2004– 2009) faced growing pressure to raise incomes, but it lacked the fiscal resources and monetary tools that would permit an escape from the vicious cycle in which Greece now found itself. Bereft of options, the government chose to shut its eyes to the problem, fueling the expansion of Greece’s debt while looking forward to the day when conditions in the international economy would become more favorable.25 That day never came. Once the global financial crisis erupted in 2008, Greece’s bankruptcy was only a matter of time. It comes as no surprise that those in charge of Greek economic policy should respond to the impending catastrophe with an attitude of denial.26 Far more interesting was the resounding disappointment of those who had expected the eurozone to serve as a safe refuge for its members in their hour of need. It is not only by comparison with the United States that Europe’s management of the crisis can be regarded as a failure.27 After 2008, the economies of southern Europe suffered no less than, for example, the economies of East and

24 Foundation for Economic and Industrial Research (IOBE), To απ oτ ν ´ π ωμα τ ης

διoργ ανωσ ´ ης τ ων Oλυμπ ιακ ων ´ Aγ ωνων ´ τ oυ 2004 σ τ ην ελληνικ η´ oικ oν oμ´ια (Athens: IOBE, 2015). See also I. K. Mourmouris, «Oι συνšπειες των Oλυμπιακων ´ Aγωνων ´ στην oικoνoμ´ια και στην αναπτυξη», ´ in H ελληνικ η´ π oλιτ ικ η´ oικ oν oμ´ια, 2000–2010, ed. S. A. Roukanas and P. G. Sklias (Athens: Livanis, 2014), 174–210. 25 For this assumption, see the recent assessment of then-minister of economics and finance G. Alogoskoufis, Π ριν και μετ α´ τ o ευρ ω: ´ Oι κ ν´ κλoι τ ης Mετ απ oλ´ιτ ευσ ης και η ελληνικ η´ oικ oν oμ´ια (Athens: Gutenberg, 2021), 22– 25. 26 See, for example, the announcements made by then-minister of economics and finance: «⎡. Aλoγoσκoνϕης: ´ Aντšχει η ελληνικη´ oικoνoμ´ια», Naftemporiki, 23/9/2008 (available through https://www.naftemporiki.gr/finance/story/193624/g-alogoskoufisantexei-i-elliniki-oikonomia; last accessed on 16 April 2021). 27 Tooze, Crashed, 13–18.

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Southeast Asia during the 1997 Asian financial crisis.28 In the Greek case in particular, the effects of the crisis were not only more severe but also more permanent: Greece fell into a de-development spiral, its GDP shrinking by 29.4% between 2009 and 2015.29 This debacle was caused by the very policies that had been implemented to deal with the crisis— policies whose quasi-metaphysical underpinnings provided cover for the creditor countries’ efforts to shift the costs of the crisis onto their heavily indebted European partners.30 Greece’s European partners were not the only ones who responded to the crisis with moralizing rhetoric. But the moralism of the “ordoliberals” was at least backed by the intellectual prestige of neoliberalism—though this, admittedly, was not what it used to be—and by a creditor’s financial clout. The Greek version of this moralizing, on the other hand, seemed like a burlesque. One Greek historian, surveying the progress of modern Greece, actually referred to the Greeks as “history’s spoiled children.31 ” Another observer succeeded in identifying the “seven deadly sins” of post-dictatorship Greece,32 then blamed the crisis on PASOK’s 1981 rise to power.33 Such perspectives, I would note in passing, were 28 For comparative data, see the World Bank database (accessible via https://data.wor ldbank.org; last accessed 18 May 2021). For the Asian countries’ recovery from the 1997 crisis, see, for example, W. T. Woo, J. D. Sachs, and K. Schwab, eds., The Asian Financial Crisis: Lessons for a Resilient Asia (Cambridge, MA: MIT Press, 2000). For an in-depth analysis of South Korean economy’s response to both the Asian crisis and the more recent global crisis, see B. Eichengreen, D. H. Perkins, and K. Shin, From Miracle to Maturity: The Growth of the Korean Economy (Cambridge, MA: Harvard University Asia Center / Harvard University Press, 2012), 270–305. 29 Data from the World Bank (accessible via https://data.worldbank.org/; last accessed 18 May 2021). The comparative severity with which Greece experienced the effects of the 2008 crisis has recently been noted in the “General Introduction” to Ch. I. Iordanoglou, H ελληνικ η´ oικ oν oμ´ια, vol. 1, Π ερ´ιoδ oς 1950–1973: Aν απ ´ τ υξ η, ν oμισ ματ ικ η´ σ τ αθ ερ o´ τ ητ α και κρατ ικ o´ ς π αρεμβατ ισ μ´oς (Athens: Bank of Greece, 2020), though this work’s exclusive focus on Greece and its author’s teleological approach obscure to some extent the role played by the international environment. 30 M. Matthijs and K. McNamara, “The Euro Crisis’ Theory Effect: Northern Saints, Southern Sinners and the Demise of the Eurobond,” Journal of European Integration 37.2 (2015), 229–245; A. Mody, Euro Tragedy: A Drama in Nine Acts (Oxford: Oxford University Press, 2018); and Tooze, Crashed. 31 K. Kostis, «Kακ oμαθ ημšνα π αιδια ´ τ ης Iσ τ oρ´ιας »: H διαμ´oρϕωσ η τ oυ νε oελληνικ oν´ κρ ατ ´ oυς 18oς –21oς αιωνας ´ (Athens: Patakis, [2013] 2018). 32 S. Kalyvas, «Eπτα ´ θανασιμα ´ αμαρτηματα», ´ Kathimerini, 2/5/2010. 33 S. Kalyvas, «H δυσβασταχτη ´ κληρoνoμια», ´ Kathimerini, 16/10/2011.

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in perfect harmony with the collective self-flagellation that characterized Greek public discussion during the early years of the crisis: contrary to what is often asserted, a sizeable majority of Greeks typically attributed the crisis to internal factors rather than external ones.34 In any event, the attempt to trace Greece’s problems back to the 1980s, the so-called lost decade of populism, had a very definite purpose. The Metapolitefsi, a staple of every Greek public debate on fundamental issues, inevitably became a bone of contention in the controversy over the origins of Greece’s economic crisis. The essentially ahistorical and one-sided conception of the Metapolitefsi as a period—rather than as a process of transition and consolidation with its own dynamics, constraints, and stages—was a happy hunting ground for fashionable proEuropeanism. In debates over the Metapolitefsi that accompanied the economic crisis, there was little discussion of the importance of state intervention as a means to restructure social alliances during the early phases of the young democracy. The Metapolitefsi was not so much the era of the Left’s ideological hegemony; rather, it was a time during which the social radicalism unleashed by the collapse of the dictatorship was assimilated into the mainstream of Greek society. The capstone of this transformation, which necessarily had all sorts of electoral, political, and social concomitants, was the signing of the Accession Treaty and Greece’s full membership in the EEC. This development provided the framework within which the newly ascendant PASOK would be able to operate— and this, as we have seen, was one of the reasons why Karamanlis’s governments had pursued a strategy of rapid accession. In the early 1980s, PASOK’s reluctant acquiescence to the European framework was combined with a paradigm shift in the ways of securing allegiance to the nascent democratic regime. Redistributionist policies were not the whole story. PASOK undertook the creation of the National Health System, the institutionalization of civil marriage, the democratization of Greek trade unions, the modernization of higher education, the recognition of the National Resistance, and a series of other institutional reforms that together constituted a watershed in Greece’s postwar history. These decisive steps toward modernization left a deep imprint in 34 « Eρευνα: ´ Kυβερνητικη´ ανεπαρκεια, ´ υπερδανεισμ´oς και διαϕθoρα´ oι αιτ´ιες της κρ´ισης», Naftemporiki, 11/2/2016 (in www.naftemporiki.gr); and N. Marantzidis and G. Siakas, Στ o o´ ν oμα τ ης αξ ιoπ ρ šπ ειας : Oι ανατ ρ oπ šς τ ης κ oιν ης ´ γ ν ωμης ´ στα χ ρ o´ νια τ ων Mνημoν´ιων (Athens: Papadopoulos, 2019), 68–69.

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the nation’s collective memory. According to a survey published in 2007 by I Kathimerini,35 the leading newspaper of the liberal Right, Andreas Papandreou was the most beloved prime minister of the post-dictatorship era (48%, compared to 26% for Konstantinos Karamanlis, the founder of New Democracy) and PASOK’s first government (1981–1985) was the one evaluated most favorably by those polled (36% vs. 16% for the first post-dictatorship government led by Karamanlis in 1974–1977).36 It is unsurprising, therefore, that Papandreou loomed large in debates over the causes of the Greek financial crisis that took place fifteen years after his death. Just as Alexis Tsipras had strong motives for exploiting Allagi’s rhetoric, the apologists for austerity found it convenient to demonize, in the person of PASOK’s founder, demands for a political program other than the one imposed by the Memoranda. This last observation should remind us that the question of the Greek crisis’s origins has never been an academic one. It was—and remains— essentially political. As this book has sought to demonstrate, Greece’s participation in European integration is not just one among many issues to be considered. Rather, it forms an organic part of modern Greek history throughout almost the entirety of the postwar period. Seen in this light, the old question regarding the possibilities, character, and preconditions of Greek economic development takes on a new relevance amid the country’s current difficulties, but we must not fail to appreciate either Greece’s past successes or the social costs that they imposed. We are now witnessing an unprecedented increase in the tensions between the pursuit of supranational integration and nationalism’s renewed popularity as a refuge for those whom globalization has disadvantaged. The question, however, is not whether the dynamics of Euroskepticism can be arrested, but what Euroskepticism may come to signify. The extraordinary public health crisis, moreover, coming as it does after ten years of the global financial crisis, means that the course of European societies during the coming decades will be determined primarily in economic terms.

35 «Toμη ´ στην Mεταπoλ´ιτευση τo 1981», Kathimerini, 30/12/2007. I am thankful to Stefanos Vamiedakis for bringing this survey to my attention. 36 These findings caused consternation both among the journalists at Kathimerini and among other observers who were appalled by what they considered to be the public’s lack of historical consciousness. See, for example, S. Zoulas, «O A. ⊓απανδρšoυ ως πρ´oτυπo πoλιτικoν´ και πρωθυπoυργoν», ´ Kathimerini, 5–6/1/2008.

Appendix---Chronology of Major Events in Postwar Greece

October 1944 December 1944–January 1945

1946–1949 1952–1955 Spring 1953 1955–1963 May 1958 1962 May 1963 1963–1965 Summer 1965

Liberation of Athens “December Events”: Clashes in Athens between the British-backed government forces and the communist-led Greek People’s Liberation Army Greek Civil War Alexandros Papagos government Monetary reforms Konstantinos Karamanlis governments (elections: 1956, 1958, 1961) Left (EDA) emerges as the main opposition party Greece joins EEC with associate member status (association agreement signed 1961) Assassination of left-wing MP Grigoris Lambrakis Georgios Papandreou governments (elections 1963, 1964) “July Events”: Papandreou’s forced resignation following king’s intervention and violent clashes in Athens

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0

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APPENDIX—CHRONOLOGY OF MAJOR EVENTS …

1965–1966:

April 1967

June 1973 November 1973

July 1974

August 1974

1974–1980 June 1975 May 1979 1980–1981 Fall 1980 January 1981 1981–1989 1990–1993 1993–1995 1996–2004 January 2001

Successive governments led by MPs—“the Apostates”—defecting from Papandeou’s Centre Union party “Colonels’ coup” led by Georgios Papadopoulos, Nikolaos Makarezos, and Stylianos Pattakos Colonels initiate a liberalization of the dictatorship under military control Athens Polytechnic student uprising and subsequent backlash by regime hardliners frustrate plans of regime’s old guard to establish a tutelary democracy National Unity government under Karamanlis takes power in Athens after Greek junta-inspired coup in Cyprus leads to a Turkish invasion of the island Expansion of Turkish occupation in Cyprus; Greece’s withdrawal from NATO’s military command Karamanlis governments (elections 1974, 1977) Constitutional amendments and establishment of the Third Hellenic Republic Greece’s accession treaty with the European Community Georgios Rallis government Greece returns to NATO’s military command Greece officially becomes the tenth member of the European Community Andreas Papandreou governments (elections 1981, 1985) Konstantinos Mitsotakis government Andreas Papandreou government Costas Simitis governments (elections 1996, 2000) Greece joins the Economic and Monetary Union (Eurozone)

APPENDIX—CHRONOLOGY OF MAJOR EVENTS …

2004–2009 August 2004 2009–2011 May 2010 2011–2012 February 2012 2012–2015 2015–2019 July 2015

July–August 2015 August 2018

265

Kostas Karamanlis governments (elections 2004, 2007) Summer Olympics in Athens George Papandreou government First bailout agreement Lucas Papademos provisional government Second bailout agreement Antonis Samaras government Alexis Tsipras governments (elections in January and September 2015) Referendum on draft agreement submitted by “Troika” (European Commission, ECB, and IMF) Third bailout agreement End of third bailout program

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Index

A Abs, Hermann, 42 Abwehr, 52, 55 ACCI. See Athens Chamber of Commerce and Industry (ACCI) Acheloos River, 34, 120, 127 Adenauer, Konrad, 40, 41, 53, 54, 60, 74, 76, 102 AEEXPL (corporation), 85, 88 AEG (corporation), 160 AEG-Telefunken (corporation), 198, 199 AGET (corporation), 89, 115 Alcoa (corporation), 128 Algeria, 15, 123, 130 Al Malik Saud Al Awal (oil tanker), 41 Alsthom (corporation), 153, 199 Altenburg, Günther, 50, 53 Aluminium of Greece (AoG) (corporation), 8, 43, 91, 124 America. See United States Amoss, Ulius L., 51, 52

Andreades, Stratis, 89–91, 116, 119, 120, 148 Androutsopoulos, Adamantios, 206, 209 Angelopoulos, Angelos, 110, 114 AoG. See Aluminium of Greece (AoG) (corporation) Apostolides, Andreas, 84, 86, 87 Aramco (corporation), 43 Arliotis, Karolos, 85, 118 Aslanides, Konstantinos, 172 Aspropyrgos, refinery at, 152 Association of German Shipyards/Verband Deutscher Schiffswerften, 119, 120 Athens, 6, 10, 16, 17, 21, 22, 28–30, 33–35, 48–52, 61–63, 66, 69, 71, 72, 74–76, 78, 82, 84, 86, 87, 95, 99, 102, 110, 112, 114, 118, 124, 127, 129, 134, 143, 144, 146, 147, 149, 155, 158, 165, 171, 174, 175, 177, 178, 184–187, 191, 195, 200, 209–211, 214, 216, 221, 225,

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 C. Tsakas, Post-war Greco-German Relations, 1953–1981, https://doi.org/10.1007/978-3-031-04371-0

297

298

INDEX

226, 231, 232, 234, 243–245, 255, 259 Athens Chamber of Commerce and Industry (ACCI), 112 Athens-Piraeus Electric Railway (corporation), 90 Athens Polytechnic, student uprising at, 264 Averoff, Evangellos, 86, 90, 98, 106 B Balopoulos, Michael, 172 Bank of Greece, 7, 9, 31, 52, 55, 85, 91, 92, 113, 118, 143–145, 173, 191, 192, 195, 211, 212, 219, 224, 233, 244, 247, 255, 259 Banque Nationale de Paris, 199 Barlos Bauxites-Hellas (corporation), 133 Batsis, Dimitris, 31 Bavaria, 154, 155, 175 Bavarian Broadcasting, 151 BDI. See Federation of German Industry (BDI) Belgium, 14 Berg, Fritz, 22, 174, 175 Berlin, 8, 15, 40, 41, 45, 46, 53, 65, 101 BIOMETAL-Eskimo (corporation), 198 Blücher, Franz, 96, 100 Bodossaki (Gebauer), Ioanna, 52 Bodossakis (Prodromos Athanassiades), 20, 47, 53 Bonn, 4, 8, 16, 19, 21, 23, 34, 40, 41, 60, 61, 64, 65, 72, 74, 99, 101–104, 116–118, 127, 128, 150, 161, 162, 210, 215, 220–222, 226, 227 Brandt, Willy, 155, 160, 245 Bremen, 39, 160 Britain. See United Kingdom

British Petroleum (corporation), 32, 33 Brosio, Manlio, 158, 159 Brussels, 98, 168, 227 C Cable & Wireless (corporation), 50 Cairo, 51, 52 Canaris, Wilhelm, 52 CAP. See Common Agricultural Policy (CAP) CDU. See Christian Democratic Union (CDU) (German political party) Centre of Planning and Economic Research (KEPE), 113, 114, 191, 193 Centre Union (Greek political party), 16, 98, 114, 143, 149, 242 Christian Democratic Union (CDU) (German political party), 16 Christian Social Union (CSU) (German political party), 154 Collaborators Court (Greece), 55 Common Agricultural Policy (CAP), 105, 112 Common Market, 6, 7, 18, 23, 98, 100, 105, 107, 113, 131, 135, 141, 173, 182, 184, 189, 191–194, 210, 211, 231, 257 Compadec (corporation), 129, 130 Constantine II, king of Greece, 142 Council of Europe (CoE), 156–158, 161, 163, 164, 168, 172, 173, 175 Council of Ministers, 168, 220, 223, 234 CSU. See Christian Social Union (CSU) (German political party) Cyprus, 15, 23, 43, 79, 84, 87, 101, 102, 128, 185, 201, 217, 219, 264

INDEX

D Dahrendorf, Ralf, 182 Damalas, Vassilios, 114 Dassault (corporation), 199, 200 Debré, Michel, 130, 153 de Gaulle, Charles, 130 de Lipowski, Jean. See Lipowski, Jean de Democratic Defense (Greek resistance movement), 245 Denmark, 5, 14, 163–165, 178, 236 Dertilis, Leonidas, 114 Deter, Walter, 46, 52–54 Deutsche Babcock (corporation), 155 Deutsche Bank, 42 Deutsche Welle, 151 Deutsche Werft (corporation), 65 DIE. See German Development Institute (DIE) Dimopoulos, Aristides, 146, 175, 177–179 Drakos, George, 116, 142, 144, 145 Dritsas, Nikolaos, 115 E Eastern bloc, 16, 62, 101, 103, 195, 196 Economic and Monetary Union (EMU), 173, 255, 257 Economic and Social Committee (EESC), 232, 241 Economic Cooperation Administration (ECA), 126 Economic Development Financing Organization (EDFO), 10, 63, 89, 92 ECSC. See European Coal and Steel Community EDA (Greek political party), 16, 98, 101, 103 EDFO. See Economic Development Financing Organization (EDFO)

299

EEC. See European Economic Community (EEC) EEE. See Union of Greek Shipowners (EEE) EESC. See Economic and Social Committee (EESC) EFTA. See European Free Trade Association (EFTA) Egypt, 77 EIB. See European Investment Bank (EIB) ELBYN (corporation), 32 Elefsis Shipyards (corporation), 90 Emporiki Bank, 89, 90, 209 EMU. See Economic and Monetary Union (EMU) ERE (Greek political party), 81, 85, 86, 145, 146, 226 Erhard, Ludwig, 20, 60, 61, 64, 66, 74–77, 80, 88, 96, 100, 102, 103, 117, 127, 128, 134, 136 Ericsson (corporation), 77, 78 Esso (corporation), 89 ETVA. See Hellenic Industrial Development Bank (ETVA) European Coal and Steel Community (ECSC), 13 European Commission, 21–23, 165, 166, 168, 172, 174–176, 182, 186, 220, 223, 233, 234, 237, 241 European Economic Community (EEC), 6, 14, 15, 21–23, 98, 100, 104, 105, 108, 109, 111–114, 125, 127, 128, 131–133, 135, 136, 142, 143, 145, 147, 152, 157, 158, 161, 162, 165–168, 172, 173, 175–182, 184, 186, 190, 192–195, 210, 212, 214, 216, 219–223, 225, 226, 230, 232,

300

INDEX

233, 235–237, 239–241, 243, 244, 246, 247, 254, 260 European Free Trade Association (EFTA), 14, 125, 131 European Investment Bank (EIB), 99, 104, 105, 112, 166, 200 European Recovery Program. See Marshall Plan European Union (EU), 216, 252

F Federal Association of Private Banks/Bundesverband des privaten Bankgewerbes, 119, 120 Federation of German Industry (BDI), 21, 212 Federation of Greek Industrialists/Industries (SEV), 31, 89, 114 Ford, Gerald, 217, 218 Foundation for Economic and Industrial Research (IOVE), 233, 234 France, 9, 13–16, 19, 23, 34, 100–103, 124, 130, 131, 152, 154, 157, 159, 160, 166–168, 178, 180, 190, 199, 200, 220, 221, 225, 231, 236, 257 Frank, Paul, 181

G Gebauer, Ioanna. See Bodossaki, Ioanna Gebauer, Maria, 54 Georgakopoulos, Konstantinos, 86 German Development Institute (DIE), 229, 232, 234 German Shipowners’ Association/Verband Deutscher Reeder, 119

Germany, Federal Republic of, 59, 124 Greek Rally (Greek political party), 29, 70 Greek Social Insurance Institute (IKA), 144 Griswold, Dwight P., 31

H Halyvourgiki (corporation), 91 Hamburg, 37–42, 65 Hellenic-German Chamber of Commerce and Industry, 155 Hellenic Industrial Development Bank (ETVA), 92, 201 Hellenic Shipyards (corporation), 89, 90, 129 Hellenic Telecommunications Organisation (OTE), 71 Helmis, Dimitrios, 84 Heubl, Franz, 155, 156 Hillery, Patrick J., 182 Hilton Hotels (corporation), 90 Howaldtswerke (corporation), 38, 41, 42

I IDC. See Industrial Development Corporation (IDC) IKA. See Greek Social Insurance Institute (IKA) IMF. See International Monetary Fund (IMF) IMP. See Integrated Mediterranean Programmes (IMP) Industrial Development Corporation (IDC), 89, 101, 121, 124, 129, 130 Integrated Mediterranean Programmes (IMP), 247

INDEX

International Monetary Fund (IMF), 218 Ioannides, Dimitrios, 183, 187, 201, 206, 209, 217 IOVE. See Foundation for Economic and Industrial Research (IOVE) Ireland, 5, 14, 165, 178, 223 Italy, 3, 14, 23, 34, 220, 257 IZOLA (corporation), 116

J Jeanneney, Jean-Marcel, 124, 134 Jouven, Pierre, 135

K Kanellopoulos, Angelos, 177 Kanellopoulos, Leonidas, 143 Kanellopoulos, Panagiotis, 78, 117, 127 Kapsalis, Thanos, 73, 74 Karamanlis, Konstantinos, 19, 21, 35, 44, 70, 76–79, 81–92, 97–99, 102, 103, 105, 116, 118, 119, 123, 127, 128, 130, 137, 141, 145, 146, 182, 183, 205–218, 220, 225, 226, 230, 232–234, 238, 240, 241, 246, 260, 261, 264 Kastraki, 120 Katsambas, Christosforos, 101, 115, 116, 145, 146 KEPE. See Centre of Planning and Economic Research (KEPE) Kiel, 39, 42, 160 King. See Constantine II, king of Greece; Paul, king of Greece Kissinger, Henry, 165, 218 Klöckner (corporation), 155 Knoke, Karl Hermann, 59–66, 69, 127

301

Kontogeorgis, Georgios, 223, 224, 233–235 Kordt, Theodor, 33, 34, 74, 78, 82 Koskotas, George, 256 Koutsoumaris, Georgios, 114 Kraftwerk (corporation), 199 Kreditanstalt für Wiederaufbau, 155 Kremasta, 121 Krupp, Alfried, 63. See also von Bohlen und Halbach, Berthold Krupp (corporation), 46, 155, 212 Kubisch, Jack B., 211, 212, 218, 231 Kyriakopoulos, Vassilios, 84–86, 89 Kyriazides, Nikolaos, 219, 224 L Ladas, Ioannis, 172 Lambrakis, Dimitrios, 81, 84 Larymna, nickel mines at, 61, 62, 83 Lautenschlager, Hans Werner, 221, 235 Limbourg, Peter, 151, 156, 162, 164, 168, 177, 180, 181, 195 Lipowski, Jean de, 178, 200 LIPTOL (corporation), 88 Lockheed (corporation), 200 Luxembourg, 14, 60 M Makarezos, Nikolaos, 9, 146, 147, 150, 152, 153, 155, 162, 176, 177, 179, 181, 182, 199, 200, 264 Makarios, Archbishop, 217 Malta, 43 Mangakis, George-Alexandros, 151 Manos, Stefanos, 213, 214 Marinopoulos, Dimitrios, 146, 147, 173–175, 182, 205, 210, 233 Markezinis, Spyros, 20, 27, 28, 73, 108, 146, 184

302

INDEX

Marshall Plan, 5, 9–13, 17, 28–32, 62, 88, 125, 196 Mavros, Georgios, 221, 222, 230 Megalopolis, 120, 151, 198 Megdovas River, 34 Merten, Max, 19, 97 Messmer, Pierre, 153 Metapolitefsi, 2, 23, 214, 216, 248, 255, 260 Metaxas, Ioannis, 48–50 Middle East, 15, 51, 52, 101, 243 Mitsotakis, Konstantinos, 112, 214, 256 Mobil/Socony Mobil (corporation), 32 Monaco, 41 Montanindustrie (corporation), 53, 54 Müller-Armack, Alfred, 75, 76 Munich, 65, 66, 71, 73 Mylonas, Georgios, 245

N Nassoufis, Ioannis, 151, 154, 155 National Alignment (Greek political party), 226 National Bank of Greece, 55, 85, 118 NATO. See North Atlantic Treaty Organization (NATO) Nazi occupation. See Occupation of Greece, 1941–1944 Netherlands, 14, 19, 157, 166 New Democracy (Greek political party), 213, 223, 225, 233, 260 Niarchos, Stavros, 8, 20, 33, 37, 39–44, 83, 88, 90, 91, 129, 211 Nixon, Richard, 165, 172, 185, 186 North Africa, 243 North Atlantic Treaty Organization (NATO), 13, 14, 98, 99, 152, 157–159, 161–164, 167, 217, 218, 222, 223, 230, 241

Norway, 5, 10, 14, 126–128, 131, 134, 178

O Occupation of Greece, 1941–1944, 18, 97 OEEC. See Organization for European Economic Co-operation (OEEC) Olympic Airways (corporation), 43, 89, 200 Onassis, Aristotle, 20, 37, 38, 41–43, 148 Oncken, Dirk, 184, 210 Organization for European Economic Co-operation (OEEC), 13–15, 31, 98–104, 109, 112, 115, 128, 131 Ortoli, Francois-Xavier, 153, 182 OTE. See Hellenic Telecommunications Organisation (OTE)

P Panhellenic Liberation Movement (PAK), 244, 245 Papadopoulos, Georgios, 146, 148, 172, 176, 177, 179, 183–185, 187, 206, 264 Papagos, Alexandros, 28, 32, 34, 70, 72–74, 76, 78, 79, 86, 185, 226 Papakonstantinou, Konstantinos, 77–79 Papalexopoulos, Theodoros, 209 Papaligoura, Panagis, 21, 75–78, 81, 84, 86, 87, 99–101, 104, 114, 116, 127, 133, 136, 205, 210 Papandreou, Andreas (son of Georgios), 149, 239, 242, 244, 246, 251, 257, 261, 264

INDEX

Papandreou, George (son of Andreas), 265 Papandreou, Georgios, 136, 142, 187, 263 Papastratos, Evangelos, 117 Pappas, Tom, 32, 43, 89, 127, 176, 185 Paris, 19, 34, 35, 62, 108, 123, 126, 130, 153, 162, 182, 199, 222 Parnassos Bauxites (corporation), 136 PASOK (Greek political party), 23, 214, 215, 217, 226, 239–247, 251, 255–257, 259–261 Patras, Lukas, 146, 177 Pattakos, Stylianos, 146, 264 Paul, king of Greece, 82 Pechiney (corporation), 43, 89, 91, 124, 125, 127, 129–132, 135, 137, 153, 199 Pepelassis, Adamantios, 113 Peru, 42 Pesmazoglou, Ioannis, 95, 99, 106, 109, 110, 181, 194 Petrofina (corporation), 32 Philon, Philonas, 130 Phosphate Fertilizers Industry (corporation), 91 Pintsch Bamag (corporation), 160 Pipinelis, Panayiotis, 146, 161, 162, 164, 172, 176 Piraïki-Patraïki (corporation), 146 Poensgen, Gisbert, 215 Polyphytos, 154, 199 Porter Report, 30 Portugal, 3, 14, 206, 225, 229 Potamianos, Charalambos, 82 PPC. See Public Power Corporation (PPC) Psychiko, 54 Ptolemaida/Ptolemais, 10, 60, 63, 64, 81, 83, 120, 127, 154, 199

303

Public Power Corporation (PPC), 88, 129, 163, 183, 198–200 PYRKAL (corporation), 51–54, 118 R Rallis, Georgios, 77, 86, 264 Rallis, Ioannis, 77 Rally (Greek political party). See Greek Rally (Greek political party) Reinhardt, Hermann, 59–65, 69, 72, 76, 119, 120 Rendsburg, 39 Rey, Jean, 174 Reynolds (corporation), 43, 91, 124, 128–132 Rheinmetall Borsig (corporation), 52, 54 Rheinstahl (corporation), 155 Rodinos-Orlandos, Ioannis, 151, 154, 175 Roussos, Stavros, 168, 169 S Sachs, Hans-Georg, 180 Sackmann, Franz, 155, 156 Saudi Arabia, 41, 42 Scandinavia, 159, 161, 162, 164. See also Denmark; Norway Schäffer, Fritz, 40 Schecker, Theodor, 37 Schlingensiepen, Georg Hermann, 210 Schlitter, Oskar Hermann Artur, 152–154, 167, 175, 178 Seelos, Gebhard, 96, 124, 132, 196 SEV. See Federation of Greek Industrialists/Industries (SEV) Shell Oil (corporation), 32, 33 Siemens (corporation), 20, 46, 47, 64–66, 70–75, 77, 121, 155

304

INDEX

Siemens, Peter, 197 Simitis, Constantinos (Costas), 239, 246, 257 Simon, Wolfgang, 134 Siniosoglou, Symeon, 89 Sisco, Joseph, 186 Skalistiris Group, 125, 133 Skaramagas shipyards. See Hellenic Shipyards Skouras, Spyros, 32, 43 Soames, Christopher, 171, 186 Social Democratic Party of Germany, 244 Société d’Armement Maritime et Transports, 160 South Africa, 51 Spain, 3, 45, 225, 229 Stefanopoulos, Stefanos, 70, 74, 76–78, 136, 143, 145 Stratos, Christophoros, 146 Strauß, Franz Joseph, 154, 155, 200 Svoronos, Nikolaos, 147, 175, 209 Syriotis, Stefanos, 44, 90 T Tacke, Gerd, 69, 71, 72, 80 Tasca, Henry, 169, 185, 186 Technical Chamber of Greece (TEE), 242–244 Telefunken (corporation), 20, 45–50, 59, 64–66, 77 Theodoropoulos, Vyronas, 186, 224 Thessaloniki, 19, 75, 97, 153, 198 Thomson, George, 182 Tina Onassis (oil tanker), 37–39 Titan (corporation), 177 Triantis, Stefanos, 113, 114, 193 Tsatsos, Alexandros, 89, 101, 115 Tsipras, Alexis, 251, 252, 261, 265 Tsolakoglou, Georgios, 49 Turkey, 23, 102, 159, 217–219, 223, 254

U Ugine (corporation), 129 UNICE. See Union of Industries of the European Community (UNICE) Union of Greek Fascists, 52 Union of Greek Shipowners (EEE), 89, 90, 148 Union of Industries of the European Community (UNICE), 171, 174, 175, 184, 205, 212 Union of Private Shipping Banks/Arbeitsgemeinschaft privater Schiffsbanken, 120 United Kingdom, 162 United Kingdom Atomic Energy Authority (UKAEA), 162 United States, 4, 16, 28, 61, 99, 101, 152, 159, 161, 164, 168, 185, 190, 200, 217, 218, 230, 258

V Varoufakis, Yanis, 252 Varvaressos, Kyriakos, 31 Vereinigten Aluminium-Werke (VAW), 123 Viohalco (corporation), 198 von Bohlen und Halbach, Berthold, 62 von Clemm-Hohenberg, Karl, 50 von Siemens, Peter. See Siemens, Peter Voulpiotis, Ioannis, 20, 45, 47–50, 54, 55, 59, 62, 64–67, 69–80, 83

W Washington, DC, 10, 27–29 Wehrmacht, 46, 48, 49, 51–53 Wellenstein, Edmund, 186 Western European Union (WEU), 159

INDEX

West Germany. See Germany, Federal Republic of Westrick, Ludger, 124, 134 WEU. See Western European Union (WEU) World Bank, 31, 218, 259

305

Y Yom Kippur War, 187 Ypsilantis, Theodoros, 52 Yugoslavia, 75 Z Zolotas, Xenophon, 91, 92, 145, 211, 224, 231, 233, 236, 243, 244