The political economy of Greek–Turkish relations

Abstract

This paper revisits the Greek–Turkish rapprochement, taking as its point of departure the two states’ economic relations, and explores possible linkages to political cooperation. The paper finds growing collaboration in a context characterized by the proliferation of non‐state actors in economic decision‐making, and underlines the role played by FDI flows and trade decisions in stimulating cooperation. At the same time, it rejects an uncritical acceptance of economic functionalism and stresses the salience of politics, above and beyond Turkey’s EU candidacy, to consolidate the gains from the rapprochement.

Keywords:

• Greece
• Turkey
• economic relations
• rapprochement
• interdependence

Acknowledgements

Part of the research for this paper was conducted whilst the author was J.F. Costopoulos Junior Research Fellow in Greek‐Turkish Relations at Istanbul Bilgi University. I wish to acknowledge the financial support of the J.F. Costopoulos Foundation and thank Harry Tzimitras, Umut Özkirimli and Yavuz Tüyloğlu for facilitating my stay at Bilgi. I also wish to thank all of my interviewees for their time. Ioannis N. Grigoriadis and an anonymous referee have provided valuable feedback and suggestions for improving earlier drafts of this paper. The usual disclaimer applies.

Notes

1. The term ‘Golden Age’ is here used rather loosely. 1950 to 1975 was a golden age for Western Europe in terms of growth and welfare, but in countries such as Greece, where the civil war traumas had yet to heal and the welfare state was hardly existent, the same term can only connote rapid rates of economic growth.

2. Interview with Mr. Selim Egeli, Chairman of Turkish–Greek Business Council in Foreign Economic Relations Board (Diş Ekonomik İlişkiler Kurulu, DEİK), March 2008.

3. Interview with Eurobank official, April 2008.

4. Figures are inexact, as the Greek and Turkish authorities report slightly different figures (see Papadopoulos 2008).

5. Interview with Mr. Selim Egeli, March 2008; interview with Eurobank official, April 2008.

6. Interview with Mr. Bülent Taş, Revenue Administration, June 2008. Mr. Taş was at the time head of the department responsible for the Double Taxation Agreement in the Turkish Ministry of Finance, and was personally involved in the negotiations.

7. Interview with Greek Consulate official to Turkey, February 2008.

8. Interview at Trade and Economic Affairs of the Greek Embassy to Turkey, February 2008.

9. FDI here means a) the establishment of a long‐term relationship between the investor and the entity abroad and b) the ability by the investor to seriously affect the management of the entity (Kitonakis and Kontis 2008, 279).

10. Information obtained from the Trade and Economic Affairs Office of the Greek Embassy to Turkey, February 2008.

11. Interview with NBG official, March 2008.

12. Interview at Trade and Economic Affairs of the Greek Embassy, February 2008.