Greece: Into the Market

In a bold move that would have excited the imagination of Homer, though he might be hard put to make poetry out of it, Greece wheeled its fragile economy into Europe’s Common Market last week. As the first associate member, Greece will benefit from the Market’s present 50% tariff reduction for insiders and has been given twelve to 22 years to lower its own tariffs to zero—the near-term goal of the other six nations. This is a special dispensation to give Greece time to shape its inadequate, overprotected and disorganized industries to compete in Western Europe.

The marriage seems sensible, though Greece does not bring much of a dowry. Eager to show that theirs is more than just a rich man’s club, the Common Marketeers can now hold Greece up as an example. Some other fringe economies-Spain, Portugal, Turkey—are also thinking about Common Market ties. Greece hopes to get much-needed foreign investment and to increase its exports, which now total barely one-third as much as its annual imports of $740 million.

Exporting Men. To compete on even terms with industrial Europe, Greek business has to make seven-league strides. Emerging from the devastating war years, Greece had runaway inflation, scant capital resources and a technically innocent labor force. Since the free-enterprising government of Premier Constantine Karamanlis took office in 1954, it has stabilized the drachma and set Greece on the course toward industrialization. The economy is still lopsidedly agrarian. More than half of the 8,400,000 Greeks scratch out a living on uneconomic fruit, tobacco and cotton farms; 8% of the non-farm labor force is jobless, and 25% of those on the land are “underemployed.”

In the Common Market, underemployment becomes an advantage: Greece is the only Market member that offers surplus labor. Recruiters from the great companies of Western Europe scour whitewashed Greek villages for willing workers, and 100,000 Greeks are now working in West Germany alone. To keep the men at home but get them off the farm, Greece’s economic policymakers are pushing through many business-priming laws.

Fast tax write-offs and special tax reductions of up to 40% have attracted more than $100 million in foreign investment this year. With wages for skilled labor averaging 50¢ an hour, an investor could even make money selling Edsels. The Greeks are also profiting. The gross national product is climbing almost 6% a year, and the per capita income in Athens is up to Italy’s annual average of $1,000 (but the rest of Greece is so poor that the nationwide average is $325).

Though industrialization is just beginning in earnest, the companies that have spread branches in Greece read like a Who’s Who of international business: Germany’s Krupp, Italy’s Pirelli, France’s Pechiney and Saint-Gobain. The U.S.’s Reynolds Metals is breaking ground near Delphi for a $59 million aluminum plant using Greece’s ample reserves of bauxite, and Dow Chemical has opened a polystyrene plant at Lavrion, site of ancient Greek gold and silver mines. From the rocky perch near Athens where Xerxes once helplessly watched his mighty Persian armada being turned back by the tiny fleet of ancient Greece one can see welders’ torches winking blue in the three-year-old Niarchos Shipyards. Not far away, a scaffolding marks the building site of Greece’s first steel mill.

Razing Walls. While the Common Market has given challenge and impetus to Greek businessmen, they admittedly face some stern readjustments in their cherished protectionist attitude. Greek tariff walls, rising as high as 280%, have created what one top Greek economist, finding a Greek-originated word for it, calls a “prophylactic economy.” The Greek rendezvous with Common Market free trade and industrialization is a unique experiment, with perils and promise. Says Banker John Pesmazoglu, Greece’s Common Market negotiator: “What our treaty amounts to is a test case for the Common Market and for the free world. Greece must do in ten years what highly industrialized nations of the West did in centuries.”