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The New Greece
In the aftermath of its failure to gain control of Cyprus by political manipulation there, the Gizikis government, in July, 1974, voluntarily turned over power to a civilian government headed by Karamanlis, who returned from exile. Most exiled politicians (notably Andreas Papandreou) returned to Greece, all political parties (including the Communist party) were allowed to operate freely, and the 1951 constitution was reinstated. In a 1974 referendum, Greek voters rejected reestablishing the monarchy in favor of a presidential parliamentary republic. Karamanlis and the New Democratic Party were reelected and retained their majority in 1977. In 1980, Karamanlis was elected to a five-year term as president, and Giorgios Rallis succeeded him as prime minister.
The Pan-Hellenic Socialist Movement (Pasok), under Papandreou, won majorities in the elections of 1981 and 1984, ending 35 years of pro-Western, conservative rule. Under the Socialist governments of the 1980s, support of the public sector grew, and many state-owned businesses continued to lose money. Pasok failed to retain power in 1989, but three elections were needed before the conservative New Democratic party secured a parliamentary majority of one vote in 1990. Constantine Mitsotakis then became premier, and Karamanlis was elected president for a second time. Facing a record deficit and high inflation, the Mitsotakis government instituted a severe austerity program and started large-scale privatization of state-owned industries.
In the 1993 elections, Pasok regained power, with Papandreou as premier, and privatization programs were cut back. A dispute with Yugoslav Macedonia was resolved in 1995 when the new republic agreed to modify its flag and renounce any territorial claims against Greece. Karamanlis retired as president in 1995 and was succeeded by Costis Stephanopoulos, who was reelected in 2000. In Jan., 1996, Papandreou, who was then severely ill, resigned and was replaced by the moderate Socialist Costas Simitis, who continued economic reforms aimed at shrinking Greece's welfare state and preparing the nation to participate in the European Union's single currency (the euro), which was adopted by Greece in 2001. Thoughout the 1980s and 1990s Greece's ongoing disputes with Turkey over Cyprus and the status of the Aegean Sea resisted solution, but relations with Turkey began to improve in 1999 after both nations were separately hit by earthquakes and sent aid to each other. In Apr., 2000, Simitis and Pasok retained power after a narrow victory in the general election.
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