The Evolution of Greece's Economic Relations with Its Balkan Neighbors: A Critical Analysis

By Danopoulos, Constantine P. | Serbian Studies, Summer-Fall 2005 | Go to article overview

The Evolution of Greece's Economic Relations with Its Balkan Neighbors: A Critical Analysis


Danopoulos, Constantine P., Serbian Studies


Despite geographic proximity, Greece's economic relations with its Balkan neighbors have been inconsistent and often erratic. Periods of economic cooperation alternated with spells of conflict, trade barriers, and low levels of transactions. The demise of communism in the late 1980s to early 1990s, and the end of the Cold War that followed, inaugurated a new era of economic cooperation between the countries of Southeastern Europe (SEE), as the Balkans are also known. Although lagging behind its European Union (EU) partners, the post-Cold War era found Greece in a relatively strong position vis avis its Balkan neighbors. Along with Turkey, Greece was the only other Balkan country not to succumb to communism. As a result, Greece emerged with the region's strongest, most developed market economy and a stable democratic political system. For example, while the per capita Gross Domestic Product (GDP) in Greece stands at about $19,000, Bulgarians, Albanians, Romanians, and most other Balkan neighbors earn much less, some less than one fourth. (1)

This competitive advantage has prompted official Athens and Greek entrepreneurs to seek closer and wider economic cooperation with SEE countries who are struggling to democratize their societies and climb out of the economic morass left behind by the departed communist regimes. Taking advantage of cheap labor, inexpensive raw material, and emerging markets, scores of Greek companies have invested in these countries with an unprecedented intensity. Since 1990, Greece's exports to Balkans countries have increased by nearly 400 percent. (2)

Many analysts see this increasing economic activity, cooperation, and Greece's relatively competitive advantage as a very positive development, boding well for the future of the country's economy. Axel Sotiris Wallden and Yiannis Valinakis are two social scientists who take this view and project a rosy picture for Greece's economy. In a chapter entitled "Greece and the Balkans: Economic Relations," Wallden surveys the history and evolution of Greco-Balkan economic relations during the last two centuries. In contrast, Valinakis' essay on "Greece and the Black Sea Economic Cooperation Group (BSEC)" discusses, analyzes, and evaluates regional efforts to establish a regional cooperation framework, which would provide the basis for continuous economic and other forms of cooperation among SEE countries. The task of my essay is to summarize the main arguments advanced by the two authors and to evaluate their conclusions in light of the data and emerging trends and developments.

The Case for Cooperation

Geographic proximity and a host of topographic and historical factors placed the area that makes up the modern Greek state in the Balkan economic sphere. This was especially true with the northern portion of the country that maintained "close economic ties with the surrounding Balkan region." (3) The situation continued when Greece and much of the Balkan Peninsula came under Ottoman rule (1453 to the early 1830s). During this period the port city of Thessaloniki, for example, was a major economic center of commerce and trade.

However, the rise of nationalism in the nineteenth century and the eventual creation of states led to competition and conflict among the new states over the hearts and the minds of the people in the area. These negatively affected the chances of cooperation and "raised effective political barriers to regional trade and communications." (4) Trade relations were also hampered by the nature of Greek imports. The poor and peasant dominated Greek economy could only export limited amounts of agricultural commodities, mainly raisins, tobacco, and ores--nearly all of which came from the geographically more distant southern part of the country. As a consequence, until World War II "economic relations between Greece and the rest of the Balkans were quite limited, the main exception being important wheat imports from Romania. …

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