Simitis's tight economic policy stems from his eagerness to bring Greece closer to the North Atlantic Treaty Organization (NATO) and to transition to full EU membership, a process that began in 1981. Since coming to power Simitis has visited the nations of Western Europe and the United States to improve relations. He believes that Papandreou's policies created an economy that could not meet the demands of the EU standards. His policies emphasize Greece's obligations—reducing inflation, unemployment, and the budget deficit. At the cornerstone of his foreign policy is his effort to harmonize the Greek economy with that of other EU countries.
Simitis is also involved in the rotating presidency of the EU. (The presidency of the EU rotates among the member countries every six months.) Greece's EU presidency began in January 2003.
On 16 April 2003, Simitis presided over a ceremony at the foot of the Acropolis in Athens where European leaders signed a treaty to bring ten more nations—Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia—into the EU. The new members were scheduled to receive the full right to vote in May 2004, following ratification of the new treaty by the legislatures of all 25 member nations.
At the outset of his term as president of the EU, Simitis had set enlargement of its constituency as a priority for the EU; his other goals included economic growth, control of immigration, preparing a conference on the structure of Europe, the EU's common defense and security policy, and environmental issues. Simitis has pledged that one of the top priorities off the presidency will be to work toward expanding and strengthening relationships with the EU in the Middle East. Since the mid-1990s, Greece has encouraged the peace process in that region. In 1997 and 1998, Greece hosted meetings of both Israeli and Palestinian politicians. In 2002, with violence escalating in the Israeli-Palestinian conflict, Simitis pledged EU support for the establishment of an independent Palestinian state.
At the March 2003 EU summit, Simitis largely ignored the U.S.-led war in Iraq and the deep divisions it had caused in the EU, choosing instead to focus on economic issues. Simitis tried to keep the meeting focused on the Lisbon Agenda, a plan for making Europe's economies more flexible and more competitive globally.
The United States and Greece have a long history of excellent political and cultural ties based on a common heritage, shared democratic values, and participation as military allies during World War II, the Korean conflict, and during the Cold War. In 2001, as President George W. Bush initiated the War on Terror (in response to the 11 September 2001 terrorist attack targeting the U.S. Pentagon in Washington, D.C., and the World Trade Center, New York) Simitis has shown full support in the U.S. fight against terrorism and toward the actions against the Afghanistan al-Qaeda and Taliban fighters. Greek troops were included in the international assistance security force in Afghanistan and the Greek government joined others in offering financial assistance for the families of victims of the New York attacks. Simitis, however, has shown wariness with regard to U.S. plans to target other nations, such as Iran, in efforts to eliminate international terrorism. Simitis and Iranian president Mohammed Khatami have worked closely to establish political and economic ties between the two nations as well as establishing a better relationship between Iran and the EU.
Concern over Turkish actions in the region has prompted Simitis to pursue a pragmatic approach to regional affairs. A top priority for the Simitis administration is dealing calmly with Turkey. After serving in the office for barely a month Simitis had to deal with a dispute, which brought Greece and Turkey close to war, over two islets in the Aegean Sea. His capable handling of this dispute without resorting to harsh means sent a positive signal to the international community. He adeptly managed the crisis through negotiation, much to the anger of opposition politicians. He hopes to solve the long-standing conflict with Turkey through mediation in the international court at The Hague.
Simitis's third year in power (1999) provided the moderate leader with his most serious challenges in foreign relations. That February, relations with Turkey reached a new low following the capture of Kurdish terrorist leader Abdullah Ocalan by elements of the Turkish secret services in Nairobi, Kenya. His capture led to Turkish charges that Greece was a state sponsor of terrorism. In the wake of the fiasco, Simitis fired his outspoken foreign minister, Theodoros Pangalos, and replaced him with George Papandreou. The American-born younger Papandreou pursued a more amiable approach in his dealings with Western diplomats. The outbreak of the Kosovo war the following month demonstrated an outpouring of popular anti-NATO sentiment among the Greek population. Nevertheless, Simitis succeeded in walking a diplomatic tightrope by offering logistical support to its NATO allies without actually participating in a combat role.
In late summer, however, relations with Turkey underwent a drastic improvement following earthquakes in the two countries. The devastating quake killed over 20,000 Turkish citizens. In response, Simitis offered Greek humanitarian assistance, which was gladly accepted by its stricken neighbor. A smaller quake in Greece the following month killed more than 100, and Turkey reciprocated the gesture. Following these twin tragedies, the Simitis government proceeded to reach agreement with Turkey in several areas of mutual interest, including trade and the fight against terrorism. Central to these efforts at Greek-Turkish reconciliation was the personal rapport that developed between George Papandreou and his Turkish counterpart Ismail Cem.
Another issue affecting Greek-Turkish relations is the effort to reunify the island of Cyprus, which has been divided into Greek and Turkish factions since a 1974 coup against Cyprus President Makarios. Greece has a military contingent on Cyprus, and Greek officers fill some key positions in the Greek Cypriot National Guard, as permitted by the constitution of Cyprus. On behalf of his government, Simitis has offered full support to the Republic of Cyprus and has called for the removal of Turkish troops and the restoration of a unified state as Cyprus moves toward membership in the EU. Unfortunately, in March 2003 negotiations, brokered by UN president Kofi Annan, broke down after the Greek and Turkish Cypriot leaders rejected a UN-drafted plan. Turkey abandoned talks partly because it was distracted by a concurrent U.S.-led war against Iraq. After the breakdown of talks, the EU planned to go ahead with admitting the Greek sector of the divided island only.
The Simitis government stresses the importance of improving relations with its Balkan neighbors through diplomatic and legal channels instead of resorting to inflammatory rhetoric. If peace in Balkans can be sustained, Greece hopes to prosper as a major trading partner in the region.
Greece will find itself at the center of the world stage when it hosts the Summer Olympics in 2004. Agencies involved with staging the event were struggling in 2003 to complete the many infrastructure and bureaucratic projects necessary to host the international sporting event. The arrangements were further complicated by the threat of international terrorism witnessed around the world in the early years of the twenty-first century.