Turkish prime minister leads delegation to debt-plagued Greece on landmark visit

Turkish PM visits troubled Greece, backs arms cuts

ATHENS, Greece — Longtime foes Greece and Turkey held a historic joint cabinet meeting and signed nearly two dozen agreements in Athens Friday, in a new top-level effort to overcome old grudges through better neighborly ties and economic cooperation that comes in the midst of Greece’s debt crisis.

“I am optimistic that the groundbreaking and courageous step we are taking today can bring results, exactly because the will exists,” Greek Prime Minister George Papandreou said during a joint news conference with Turkish Prime Minister Recep Tayyip Erdogan, who was on his first trip to Greece since 2004.

The two NATO allies came to the brink of war three times between 1974 and 1996 over the ethnically divided island of Cyprus and territorial rights in the Aegean Sea, and military tension remains.

Although relations improved markedly after both countries were struck by successive earthquakes in 1999, the momentum wore off. In 2006, a Greek fighter pilot died after colliding with a Turkish jet in one of the frequent mock dogfights between the two air forces over the Aegean.

This time, the two countries are going big. Turkey’s 380-strong delegation in Athens on Friday included 10 Cabinet ministers and about 100 businessmen.

Erdogan and Papandreou, who was instrumental in easing Greek-Turkish hostility during his 1999-2004 tenure as foreign minister, chaired a first-ever joint Cabinet meeting, dubbed the high level cooperation council — launching a series of annual meetings that will alternate between the two countries.

The ministers signed 21 agreements, on issues from energy cooperation, protecting forests and combatting illegal immigration, to promoting Greece and Turkey as joint destinations for Chinese tourists and advancing a gas pipeline dubbed ITGI that links Turkey, Greece and Italy.

“The number and the depth of the agreements that we just signed is an indication, if not proof, of the historic nature of this visit,” Papandreou said.

Before arriving, Erdogan promised to support the country’s efforts toward financial recovery. Faced with the specter of bankruptcy, Athens has secured euro110 billion ($138 billion) in rescue loans from European countries and the International Monetary Fund — after pledging deep-cutting austerity measures.

Greece is the European Union’s largest military spender in proportion to its annual output, due to an arms race with its eastern neighbor, and Erdogan said that should change for both.

“Both countries have very large defense budgets. … We must reduce these expenditures and use the money for other purposes,” he said.

Greece has announced plans to slash military operating costs by up to 25 percent this year, to about euro6 billion, although the cuts would not affect arms procurement programs — many from key European partners involved in the country’s debt bailout.

Officials in Athens have long argued that tension with Turkey must be resolved before military spending can be reduced.

But Deputy Prime Minister Theodore Pangalos sounded less cautious.

“I honestly feel national shame each time I am forced to buy weapons we do not need — based on an objective and correct estimate of the dangers the world as it is holds for Greece,” he said. “I know that on the other side of the border too the Turks are also buying weapons they do not need … due to an imaginary threat that arises from a political confrontation, which can be solved and must be solved.”

Pangalos said that would allow Greeks and Turks alike to prosper “making productive use of the colossal sums that both you and we currently waste on defense spending.”

Erdogan said the business conference would open a new era in trade. The countries in 2007 inaugurated a natural gas pipeline connecting their grids, a year after Greece’s largest lender, NBG, acquired Turkey’s Finansbank AS.

Selim Egeli, chairman of the Turkish-Greek business council, said improved diplomatic relations was key to good business.

“Businessmen don’t feel comfortable when diplomatic relations are bad,” Egeli said. “If the politicians manage to solve the remaining problems, the benefits will be tremendous.”

Bilateral trade grew over the past 23 years from some $200 million to $3.5 billion. Greece is currently the seventh biggest foreign investor in Turkey, with direct investments of some $6 billion.

Erol User, CEO of Turkish investment banking firm User Corp., said the time had come for both countries to look forward.

“When we had the big disaster of the earthquake in 1999 Prime Minister Papandreou was the first person who tried to help Turkey, so now there’s an economic earthquake in Greece now is the time for our Prime Minister Erdogan to help Greece,” he said.

But User said business cooperation should go beyond Greece’s debt crisis. “We are looking for long-lasting cooperation, not short-term opportunities,” he said.

Security in Athens was tight, with at least 1,500 police deployed a day after a bomb exploded and injured one person outside Greece’s largest prison on the capital’s outskirts.

A fringe nationalist group was planning a protest later Friday against what it described as “the Sultan’s visit.”

Associated Press writers Elena Becatoros and Derek Gatopoulos in Athens and Selcan Hacaoglu in Ankara contributed to this report.