Hard choice for the home of democracy

The Greek stock possesses both spirit and intelligence: the one quality makes it free; the other enables it to attain the highest development -- if only it could achieve political unity.m Aristotle, 4th century BC

Next Sunday, the cradle of democracy swings right or left.

In an election as significant as any in Greece since World War II, voters will not only choose between two parties, but two economic systems and two paths for ties with Western Europe.

Greece, the classical mother of Europe, has had a yearlong debate on whether it will be treated as a neglected child within the Common Market, which it joined in 1981, and within NATO, which welcomed the return of Greece to its southern flank last year.

Over 6 million Greeks will go to the polls to elect a 300-member Parliament. The ruling center-rightists, pro-Western New Democracy party headed by Premier George Rallis now holds 174 seats.

Ironically, the country that invented democracy now finds the institution under severe test. This is the third election since the 1974 downfall of the military junta, and the first in which a strong second party could take power.

That party is Pasok, the Panhellenic Socialist Movement headed by Andreas Papandreou, a former economics chairman at the University of California, who calls himself the "Mitterrand of Greece" and promises "socialization" of the economy.

A victory for the leftist Pasok would be a surprise in a country that had a post-World War II civil war against communists, which left a bitter aftertaste for anything socialist. Claims of class struggle have never appealed to Greeks, whose notion of getting ahead means being a little smarter than others.

But Pasok offers "allaghi" (change) after seven years of New Democracy rule. And the personality cult developed by Dr. Papandreou could boost his party's poularity from the 25 percent it received in 1977 to over 40 percent this time.

A Moscow-oriented communist party of Greece, known as KKE, was legalized in 1974 and has since split with Pasok, trying for 17 percent of the vote. Under the 1974 Constitution, any tally above this percentage allows a party to get extra seats. If Papandreou comes up shy of a majority vote, some Greeks wonder if he might make concessions to KKE for support, even though he has ruled this out.

Papandreou's anti-Western policies have softened during the campaign to attract centrist and undecided voters. Instead of advocating a pullout from the Common Market, he now says he will only seek a referendum on the subject. The question of allowing US military bases to stay in Greece depends on US willingness to supply arms, rather than automatic expulsion as once advocated. Exiting from the North Atlantic Treaty Organization, as he once championed, may not be so automatic. New Democracy charges that a NATO pullout would tip Western sentiments to Turkey, Greece's feared rival.

Pasok's leader, the son of George Papandreou, who was the centrist prime minister before the military coup in 1967, has made appeals to Greeks who have doubts about the country's agreement for EC entry and believe New Democracy gave too many economic concessions.

Greeks have always had a hard time believing that a deal might be mutually beneficial, says William H. McNeill, a University of Chicago scholar. Historic patterns of agriculture bred individualism, a healthy suspicion of others, and skills necessary to survive in the marketplace. Without abundant natural resources, selling and buying became a part of Greek life as far back as the 6th century BC, when ancient Miletus pioneered sea trade in oil and wine. Ever since, Greek pride has rested on craftiness in striking the best deal.

New Democracy leaders admit that the EC may hurt Greece's economy during the five-year transition period.

In an economy where only about 100 companies have more than 100 employees, European competition could force major changes. About 2,000 Greek companies could measure up to EC standards and efficiency, says the minister of industry and energy, Stephanos Manos. Small firms account for 43 percent of industrial production -- the highest percentage in the EC.

"I expect a fairly steady industrial expansion from now on," he adds. "All depends on our political stability."

New Democracy's political support lies in rural areas. "Joining the EC gives the possibility of new life to Greek farms," says Premier Rallis. "For the last 30 years, farm families have been moving to Athens or abroad." A recent census showed the Athens population boom had been curbed, although the city's gray haze and snarled traffic are still thorny political issues.

Greece's avid consumer appetites began to emerge after 1970 when television was introduced nationwide. "The standard of living went way up, and the quality of life went down. TRaffic, pollution, and a housing crunch hit us," says Consumer Institute president H. Kouris. The fastest-growing area is the north, where a $7 billion investment program in minerals and other projects has helped boost population 10 percent in the last decade. The government plans a $450 million program to exploit zinc, lead, gold, silver, and uranium. And the EC and United Nations are supporting a project to connect the Axios River to the Danube, making Thessaloniki a "Europort" on the Aegean Sea. "We will be the Hamburg of the south," the minister for northern Greece, Nicholas Martis, says.

The idea of a managed economy has been popular in Greece since the American post-war involvement. "I'm for free enterprise -- not for 'socialization' -- but intervention of the state is needed where the social interest commands," says President Constantine Caramanlis, who gave up the premiership last year. If New Democracy retains power, it may free government's hand on business, especially banks. That possibility, however, depends to a large degree on who appears politically stronger in their local races for Parliament -- Miltiades Evert, the minister of finance and a conservative, or Industry Minister Manos, a Harvard-educated free-enterprise advocate.

"We want to liberate the economy further to increase private investment in Greece," says Premier Rallis, a gentle, husky-voiced politician who was jailed three times during the military junta. "It can't be done all at once. But in six months we can liberate the private sector."

For President Caramanalis, who led Greece into the EC, the task ahead is harmony between Common Market nations. "The unification of Europe is a question of life or death for Europe." As a new member, Greece now sees all the weaknesses of the EC.

Visibly, Greece's economy is not unhealthy. Personal consumption has had a spectacular rise. Shopping has replaced talking politics as a national pastime. From 1964 to 1975, industry enjoyed a growth rate of over 10 percent, a rate exceeded only by Japan.

"We're doing better than we have reason to expect," says Efthymios Christodoulou, governor of the National Bank of Greece.

The secret to "the Greek miracle" has been the tightknit nuclear family. Unemployment here is the lowest in Europe, and one reason is that "everyone lives out of each other's pockets." Hard work, saving for the future, and a relentless drive to get ahead mark the tight bonds of the Greek family.

Greece's industrial competitiveness ranks with Portugal, Ireland, Spain, and Italy. It is half of France's and less than one-fourth of Japan's, according to assessments by the European Management Forum.

Inflation is over 23 percent -- double that in the other EC nations. And unemployment, low by tradition, is expected to rise. The nation must import 70 percent of its oil, contributing to an estimated $7.6 billion trade deficit this year. The currency, the drachma, was put under a "controlled float" last year and will undergo further loosening under EC pressure. The Athens stock exchange , begun in 1969, is a "disaster," fue to the dominance of family-own companies in Greece. The Greek economy is "horizontal" -- companies are small and close to markets, which makes for flexibility and quick reaction. "Our country is too small for the capitalization of big, industrial, integrated companies," says Mr. Christodoulou. "It's easier to adjust with small investments."

"The economy can make jumps not quite expected. The people are waiting to fill the gaps being made in other areas," he says. Direct competition with Europe will produce plenty of victims in Greece, he adds, but the economy will adjust.

Even in ancient Greece, the city-state was an aristocracy of warriors and sailors and a city of consumers -- unlike the European city, made up of producers. With few natural resources and a population not docile enough to settle easily into an assembly-line industrial society, modern Greeks have a high reliance on the "tertiary" sector: living off the wealth of others by being traders, service workers, shippers, tourist business operators, and small-scale craftsmen in the commerical sector. This accounts for its heavy reliance on shipping and tourism (about $4 billion for 1981). And as "the Europe of the Middle East," Greece is rapidly expanding exports to Arab nations, led by cement , fruits, olive oil, and "intermediate" technology.

Textbook economics deosn't quite fit Greece. Over the centuries it has shown a flexibility as pliant as the Golden Fleece.

In a land of about 2,000 villages, three major urban centers, and 80 percent mountains -- where shepherds tend sheep next to steel factories and black-enshrouded women buy electric blenders -- Greece's character is as certain as the stone-laden landscape.

"We forget the natural attributes of Greeks," Christodoulou says.