On March 25, 2021, the Modern Greek State celebrated the 200th anniversary of the War of Independence, which ultimately led to its establishment. It is thus an excellent opportunity to reconsider some of the main events of Greek history over these 200 years and how they shaped the character of modern Greece. This article covers the period from 1863 to 1897 and looks at the instability that Greece and the wider region felt over the period before bankruptcy and military defeat came for Greece in the 1890s. Thomas Papageorgiou explains.
You can read part 1 on 1827-1862 here.
A photo of influential Greek politician Charilaos Trikoupis.
Acemoglu and Robinson describe why the establishment of a virtuous cycle of inclusive political and economic institutions is a prerequisite for the prosperity of nations. (Acemoglu & Robinson, 2013) In the previous article though, it was shown that in the first thirty years after its independence, the Modern Greek State did little to suppress the remaining tradition of the extractive institutions of the Ottoman occupation. (Papageorgiou, 2021) It tried to speed up after that by doing too much too fast in a turbulent political scenery. The result was bankruptcy in 1893 and military defeat in 1897.
Introduction
After the deposition of King Otto I in 1862, the search for a new king of the Greeks begun. Several candidates were considered including the nephew of the Tsar Nikolao and Alfred, the second born son of the English Queen Victoria. British foreign policy was especially interested in avoiding another champion of the Great Idea, namely, the liberation of all Greeks under Ottoman rule by all means, including war. Finally, it was Prince William of Denmark who ascended to the throne under the regal name of George I. To increase its influence, Great Britain ‘offered’ George the Ionian Islands under the condition that they would be rendered demilitarized. This infuriated the locals, but a compromise restricting neutrality to the islands of Corfu and Paxous, facing mainland Epirus still under Ottoman occupation, allowed for the integration of the islands to Greece in 1864. This was the first expansion of Modern Greece. The Ionian Islands added 1,813 square miles to the Greek territories and increased the population by 236,000, among which were significant intellectuals and politicians. A key figure during the negotiations for the integration of the new territories was the debutante 32-year-old politician Charilaos Trikoupis. (Divani, 2010)
Charilaos Trikoupis
Trikoupis was a shining example of the Greek political oligarchy. (Kostis, 2018) His father Spyridon and uncle A. Mavrokordatos were former prime ministers. (Tricha, Charilaos Trikoupis, 2016) This is a ‘tradition’ that lasts to this day. The current prime minister of Greece is also the son of a former prime minister. Other members of the Mitsotakis family serve(d) as ministers, members of parliament and mayors of Athens. The father Georgios, the son Andreas and the grandson, also Georgios, of the Papandreou family have all also served as prime ministers in the period from the Second World War to the beginning of the 21st century. The last prime minister of the Papandreou family succeeded Konstantinos Karamanlis who is the nephew of another former prime minister with the same name. So much for the inclusiveness of Greek political institutions.
Following his service at the Consulate in London and the negotiations for the Ionian Islands, Trikoupis was elected Member of Parliament in 1865. His appointment as minister of foreign affairs in 1866 coincided with another crisis of the early years of modern Greece, the Cretan Revolution. Trikoupis believed that Greece was unable to undertake any military initiative on its own. On the contrary, Athens ought to look for allies in the Balkans and beyond and coordinate its diplomatic and military actions with them. (Klapsis, 2019) Politically, this is a particularly turbulent period though. Between 1863 and 1875 twenty-two governments were formed. (Malesis, 2018) The system of government after 1864 was Crowned Democracy with the power for the appointment of the government resting in the hands of the king. The latter did not necessarily consider the balance of power in parliament, and it was not unlikely that minority governments were appointed. Thus, coordination for internal and external affairs was lost.
The gap was filled by National Associations, similar to the Society of Friends (Filiki Eteria) that prepared the War of Independence. They had a diversified membership including university professors, journalists, bankers, politicians and officers of the army pervaded with the Great Idea. (Malesis, 2018) These associations substituted the official state in the conduct of foreign policy. They supplied the Cretan rebels with material resources and organized the dispatch of volunteers so the island. This infuriated the Ottomans as well as the European Powers, although the Greek State officially did not approve of the Associations’ actions after the debacle of 1854, during the Crimean War. At the same time though no action was undertaken to restrain the Associations in fear of the political cost. (Klapsis, 2019)
Trikoupis was describing the National Associations as ‘the fungus of national policy’ and believed that all resources of the nation should be subject to the national center. Foreign policy was to be mandated by the government and not by ‘irresponsible clubs’, he said. (Malesis, 2018) Thus, as minister of foreign affairs, Trikoupis contributed significantly to the signing of the Greek state’s first alliance treaty with Serbia against the Ottomans (Vöslau, August 1867). (Kostis, 2018)Nevertheless, the king was skeptical, opting for a more moderate approach and refused, at first, to ratify the treaty. (Klapsis, 2019) Furthermore, a few months later George I married the Grand duchess Olga of Russia. This enraged Trikoupis. The Ionian Islands were given as a dowry to the king upon his ascendance to the throne, but now the British and the French had absolutely no reason to endow with Crete the Tsar’s niece. (Tricha, Charilaos Trikoupis, 2016) By the time the Cretan crisis was settled in 1869 at the Paris Conference, with no gains for Greece, Trikoupis had long resigned his post (December 1867).
1870s
By 1872 Trikoupis was the leader of the ‘Modernist Party’ pursuing political stability. His most famous action to this end is the publication of the article ‘Tis ptaiei?’ (Whose fault, is it?), accusing the king of a lack of respect for the terms of parliament and holding him responsible for the country’s political situation. The king succumbed to the pressure and in August 1875 declared that the principle of declared confidence of Parliament would govern the appointment of the government from that point on. This did not help much though as between 1875 and Trikoupis’ retirement in 1895 another 21 governments were formed. (Kostis, 2018)
Thus, the quirky foreign policy continued after 1875 during another Balkan crisis initiated by the revolt in Bosnia and Herzegovina. This expanded to Bulgaria in May 1876. Serbia and Montenegro considered that the circumstances were favorable and went to war against the Ottoman Empire in June. Nevertheless, the Ottomans suppressed the revolt and defeated the joint forces of Serbia and Montenegro. Russia intervened and an armistice was signed in November. A conference was held in Constantinople in December, where the Great Powers envisaged increased autonomy for Bosnia, Herzegovina and Bulgaria. The crisis was not resolved though because the Ottoman government rejected the decisions of the conference.
The intransigent stance of the sultan caused yet another Russo-Turkish war in the spring of 1877. After all, Russia’s intervention in the first place was the result of a secret treaty with Austria–Hungary in July 1876, which, in the case of Serbian victory that year, provided for significant territorial gains not only for the cosignatories, but also for Serbia, Montenegro, the independent Bulgaria and Greece. The latter was to receive Epirus, Thessaly and Crete. Eventually, the content of the treaty became known to Greece, and this caused significant excitement to the public. (Klapsis, 2019)
Greece’s response was similar to that of 1866–69. The realistic policy of neutrality was opposed by the pro-war and anti-ottoman stance of the public forged by the activity of National Associations. The compromise reached by the universal government of the elderly admiral K. Kanaris included military preparation, instigation of revolts in the Ottoman territories and the development of diplomatic initiatives. (Malesis, 2018) In fear of the political cost, the successor of K. Kanaris, A. Koumoundouros, decided to invade Thessaly in early 1878 under the pretense of the protection of the Greek populations in the area. This came to the dismay of both Great Britain, which demanded Greek neutrality, and Russia, which signed an armistice with the Ottomans two days before the Greek invasion and was hoping that this would have come much sooner.
To make things worse, the Treaty of St Stefano in March 1878 between the Russians and the defeated Ottoman Empire attempted to set in motion the plans for the creation of Great Bulgaria and provided for significant gains for Russia, Serbia, Montenegro, Romania and Bosnia–Herzegovina. This would significantly increase Russia’s influence in the Balkans and Greece was to face significant competition in the face of the pan-Slavic movement.
1880s
Luckily, the other Great Powers reacted to the Russian plans and the Treaty of St Stefano was revised in Berlin in the summer of 1878. Despite its disorientated policy, Greece was to negotiate with the Ottoman Empire for the settlement of their borders in Thessaly and Epirus. The Powers intervened once more to overcome the obstructionist tactics of the Ottomans, which delayed the settlement for another two years. Finally, in July 1881 most of Thessaly but only a small part of Epirus around the city of Arta was ceded to Greece. Crete remained under Ottoman rule and Great Britain, for its diplomatic services to the sultan, acquired the right of ‘temporary’ administration of another very important island for Greece, that of Cyprus. (Klapsis, 2019)
At about this time Trikoupis formed, as prime minister, the first ‘long term’ government of Greece from March 1882 to April 1885. This was followed by another one from May 1886 to October 1890. By that time (1882) clientelism weakened the state institutions (Hazony, 2018). In response, Trikoupis expanded the election districts to break the bonds between politicians and their supporters. He also took measures to discourage the participation of army officers in the elections. Stricter rules for hiring and promoting public servants aimed for an increased effectiveness of public administration.
The most striking feature of Trikoupis’ government though was his extensive program of public works. This included the construction of roads and railways, bridges and ports, the Isthmus of Corinth and land reclamation. (Tricha, Charilaos Trikoupis and the Public Works, 2001) These were prerequisites for the development of the economy and allowed for a rapid deployment of the army.
Trikoupis took special care of the latter with measures for better training, the reorganization of the officers’ schools and the utilization of the reservists. He also carried out an extensive rearmament program including the construction of several new battleships. (Malesis, 2018) In short, Trikoupis aimed for efficient representation at international level based on a well-administered state of justice, with an efficient economy and strong armed forces. (Klapsis, 2019)
It was very risky. Trikoupis relied on external and internal borrowing to go through with his reform. From 1879 to 1890 Greece took out external loans amounting to 630 million drachmas plus 65 million from internal loans. Although Greece had settled the loans that led to the bankruptcy of 1843, the new ones were agreed under very unfavorable terms with only 72% of the nominal value collected at the end. (Eleftheratos, 2020)
It was crucial that the economy would grow fast enough to allow for consistent loan servicing. But Greece remained an agricultural country and after the recovery of the French vineyards from phylloxera in 1890, currant exports, which after 1860 accounted for 50–60 % of the total value of Greek exports, decreased dramatically. (Eleftheratos, 2020) The exploitation of the fertile lands of Thessaly also did not bring much for the peasants. Wealthy expatriates bought the large manors from the Ottomans and the feudal system of the empire remained in place. This prepared the way for the peasants’ revolts at the beginning of the 20th century. (Divani, 2010) Trikoupis did not actually get the help he was hoping for from the expatriates’ investments. Although many of them developed philanthropic activity in the country, some were also involved in financial scandals, e.g. that of the Lavrio silver mines, with devastating effects for the general public. (Eleftheratos, 2020) The growing financial problems led to an unprecedented immigration wave, mainly to the USA. (Klapsis, 2019) So much for the inclusiveness of the Greek financial institutions.
Thus, the amount of public expenditure going to the service of public debt grew from 9% in the period 1871-1878 to 53% in the years 1887-1892. Considering that military spending remained high during this period (100 million of the 460 million drachmas of foreign loans that reached Greece were spent on military equipment), it comes as no surprise that from 1887, 70% of the new loans were used to serve the older ones. Taxation was another measure used by Trikoupis to support his program at the cost of his popularity among the people. (Eleftheratos, 2020)
It was the disagreement for taking out yet another loan, for the service of older ones, between king George and Trikoupis that led to the latter’s resignation in 1890. He became prime minister two more times after that (out of seven times in total between 1875 and 1895) but could not prevent state bankruptcy in December 1893. Interestingly, when comparing with recent experience, at the time of the bankruptcy the public debt was 200% of the GDP, somewhat higher than the 182% that led to Greece’s ‘rescue’ by the European Commission, the ECB and the IMF in 2010.[1] (Eleftheratos, 2020) Trikoupis suffered a devastating defeat at the elections of 1895, when he was not elected member of the parliament, retired and died the next year. (Tricha, Charilaos Trikoupis, 2016)
From bankruptcy to defeat
Trikoupis’ archrival was Theodoros Deligiannis. The two alternated in the prime minister’s office, inaugurating bipartisanship in Greece. Deligiannis was often described as anti-Trikoupis aiming to systematically cancel the latter’s work (e.g., the expansion of the election districts, the discouragement of army officers to enter politics and the rules for hiring and promoting public servants) and for this he is blamed by some authors as the main culprit for the bankruptcy of 1893. (Tricha, Charilaos Trikoupis, 2016) One should keep in mind though that Trikoupis’ governments ruled four times as long as those of Deligiannis and that it was he that took out seven colossal loans. (Eleftheratos, 2020)
There can be no doubt though that Deligiannis’ foreign policy was catastrophic. Back in 1885, when he succeeded Trikoupis for a brief period of one year, he had to handle another Balkan crisis. That was the annexation of Eastern Roumelia by Bulgaria. Under public pressure and with parliamentary support, Deligiannis mobilized the army, but for months he was taking no military initiative, apart from some skirmishes in Thessaly because of some hotheaded army officers. At the same time the Great Powers demanded that Greece demobilize its army and abstain from any war effort. Deligiannis’ indecisiveness finally led to another naval blockade by Britain, Austria, Germany, Italy and Russia and his resignation in 1886. (Malesis, 2018)
By 1895, when he was again prime minister, it was Crete’s turn to rise once more. Greece had regained confidence after holding the first Olympic Games of the new era in 1896 and the pattern was once more the same: public pressure under the propaganda of a National Association (Ethiniki Etaireia) for military action, demands for self-restraint from the Great Powers and the government trying to balance in between. To that end, Deligiannis sent the fleet and an army detachment to the island hoping for another naval blockade that would help him save face on the internal front and avoiding, at the same time, war with the Ottoman Empire. (Klapsis, 2019) Things did not go that way though. The Powers asked for a withdrawal of the armed forces of both the Greeks and the Ottomans and opted for an autonomous Crete under the rule of the Sultan. The Ottomans accepted. Deligiannis attempted a catastrophic maneuver: he withdrew the fleet, but not the army suggesting this way that Greece preferred the union with Crete. At the same time guerrillas were sent into Thessaly under the command of officers of the army. (Malesis, 2018) This gave the Ottomans the opportunity they were looking for. In April 1897 they declared war on Greece and having overwhelming numerical superiority the Ottoman army had retaken most of Thessaly within days, stopping only thanks to the intervention of the Powers. In a sign of weakness, Greece was not invited to the peace negotiations of the Powers with the Ottomans and luckily it had to make only small territorial concessions. On the other hand, war reparations to the amount of four million Turkish lira were imposed and to make sure that Greece would honor its obligations to the lenders the Powers set up an international committee to oversee the fiscal policy. (Klapsis, 2019) The International Financial Committee remained in Greece for 81 years - until 1978.
Conclusion
A critical juncture is a major event or confluence of factors disrupting the existing economic or political balance in society. It is a double-edged sword that can cause a sharp turn in the trajectory of a nation. On the one hand it can open the way for breaking the cycle of extractive institutions and enable more inclusive ones to emerge. Or it can intensify the emergence of extractive institutions. (Acemoglu & Robinson, 2013) The 19th century included several such junctures for Greece. Revolution, independence, expansion to the Ionian Island, Thessaly and part of Epirus. Political and economic developments though did not allow for the emergence of inclusive institutions.
Exclusive institutions do not rule out growth. And indeed, Greece was (inevitably) slowly growing. Cities were developing and the distribution of GDP in different economic sectors was changing. Whereas in 1861, 74% of the economically active population were employed by the primary sector, by 1881 the figure dropped to 69.9% with the secondary sector employing 11.8% and the tertiary sector 18.3%. (Kostis, 2018) The expansion of the road and railway network and the rest of the public works would be Trikoupis’ legacy for the future. However, growth under extractive institutions has moderate results, as it does not allow for creative destruction through innovation. It is therefore not sustainable. (Acemoglu & Robinson, 2013)
Social and political ills discussed previously (Papageorgiou, 2021) were not cured by the end of the 19th century. To this we can add, new ones like the establishment of para-statal organizations playing a significant role in political developments and officers’ mentality that they constitute a special group increasingly autonomous from the political leadership and with support from the palace. (Malesis, 2018)
What do you think of these years in the Modern Greek State? Let us know below.
[1] The word ‘rescue’ is in brackets because of the conflicting views regarding the necessity and effectiveness of the implemented policies whose analysis is beyond the scope of this work.
Bibliography
Acemoglu, D., & Robinson, J. A. (2013). Why Nations Fail. London: Profile Books ltd.
Divani, L. (2010). The Territorial Completion of Greece (1830-1947), An Attempt at Local Lore. Athens: Kastaniotis (in Greek).
Eleftheratos, D. (2020). An Oblique Look at History, 200 Years of Modern Greek Laughter and Cry. Athens: Topos (in Greek).
Hazony, Y. (2018). The Virtue of Nationalism. Basic Books: New York.
Klapsis, A. (2019). Politics and Diplomacy of the Greek National Completion 1821-1923. Athens: Pedio (in Greek).
Kostis, K. (2018). History’s Spoiled Children, The Formation of the Modern Greek State. London: Hurst & Company.
Malesis, D. (2018). '... let the Revolution Begin' Great Idea & the Army in the 19th Century. Athens: Asinis (in Greek).
Papageorgiou, T. P. (2021, May 16). History Is Now Magazine. Retrieved from http://www.historyisnowmagazine.com/blog/2021/5/16/the-modern-greek-state-1827-1862-a-bad-start#.YLe-yqFRVPY
Tricha, L. (2001). Charilaos Trikoupis and the Public Works. Athens: Kapon (bilingual in Greek and French) .
Tricha, L. (2016). Charilaos Trikoupis. Athens: Polis (in Greek).
