Oil field dispute may cost Greece foreign investors

A tug of war over an untapped oil field in the Aegean Sea is becoming a political test of wills that could backfire economically for Greece. Greece and Turkey have squabbled over mineral rights in the region for the past 14 years.

Tensions have mounted in recent weeks since the Canadian firm Denison Mines Ltd. announced it would start drilling at the end of the month in waters that Turkey claims are off limits.

Greece has threatened to take the issue to the World Court.

What has complicated this controversy is Athens' intentions to purchase a controlling stake in the company. Some observers say the Greek government is seeking to ease tensions with Turkey, since the takeover would mean an indefinite delay in the new drilling.

Such political intentions, however, run the risk of chasing away the foreign investors that Greece's stagnant economy so desperately needs.

For the past 18 months, Prime Minister Andreas Papandreou's government has shunned many of its socialist economic principles and applied severe belt-tightening measures. Last month, Mr. Papandreou took another stride down the capitalist road when he told a meeting of economists in Switzerland he would welcome ``foreign direct investment'' in Greece.

Nationalization of the oil consortium, some observers and the opposition New Democracy Party maintain, would hark back to earlier days when a number of private enterprises were absorbed by the state. This point has not been lost on the government, which has tried to head off any further tarnishing of the investment climate here.