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Greece gets unexpected helping hand

Regional rival Turkey offers diplomatic support and hope for Greek financial institutions.

Indeed, between its growing regional status, membership in the G20 group of leading world economies, and dynamic rate of growth (expected to exceed 5 percent this year), Turkey is undoubtedly on the rise economically. However, Erdogan's diplomatic largesse has gained easily as much attention domestically.

His visit to Athens — the first by a Turkish prime minister since 2004 — led to the signing of 21 accords in fields as diverse as illegal immigration, boosting tourism and energy.

The keystone proposal to jointly trim their defense budgets was the elephant in the room for much of the visit. Though widely commented upon by both sides, no deal was signed.

"The development of relations between Greece and Turkey will boost the climate of trust and stability [and] ultimately the natural consequence could be arms reduction," Erdogan told Greek newspaper Ta Nea.

The issue is key to the Greeks. Having reached out to the EU and IMF for a multi-billion-dollar bailout package, Athens is being forced to take a fresh look at its military spending. A country of just 11 million, Greece spends a higher percentage of its GDP than any other European Union country on its military — much of it for defense against Turkey.

"We are afraid that one day Turkey might decide to take away a Greek island," said Papandreou. "Don't laugh," he continued, in response to amusement from the audience. "This is really what we fear."

Turkey has its own reasons for wanting to prune back their military. With Erdogan and the ruling Justice and Development Party endlessly locking horns with Turkey’s military and secular elite, this could be an opportunity to knock the once untouchable army down yet another peg. Their 600,000-strong army is currently one of the biggest in NATO, second only to the U.S.

Rebuilding a friendship between such age-old rivals will take more than a temporarily outstretched arm and burgeoning economy, however. Many of the most contentious issues still remained unresolved.

"The intentions are good but the thorns remain," headlined Greek paper Ta Nea.

http://www.globalpost.com/dispatch/turkey/100517/greece-turkey-economic-crisis-cyprus