In 1947, President Harry Truman launched the strategy Of communist containment by declaring that we would aid the Greek government in a civil war with Soviet-linked communist insurgents. The Truman Doctrine, as this policy came to he known, was the opening American salvo of the Cold War.

Recently, we returned to Greece to speak with the present Prime Minister, Andreas Papandreou, who was once an economics professor at the University of California. We talked about Greece's controversial stance toward NATO - Papandreou opposes nuclear installations on Greek sod and seeks the removal of US military bases. We also spoke about the conflict between rich and poor nations ad what socialism has come to mean in the countries of southern Europe.

Our discussion took place at Papandreou's home on the outskirts of Athens in February.

NPQ - You have taken a distinctly independent stance in world affairs, emphasizing the conflict between rich and poor nations as more important than the antagonism between the US and the USSR. What is behind this view; what are your proposals?

AP - First of all, this point of view is based on a certain optimism that the conflict between the United States and the Soviet Union will not result in nuclear war, but that they will bring to a conclusion the arms race and prohibit the production of nuclear weapons, as well as chemical and biological weapons.

The North-South issue will remain to create the more significant problems for the world community beyond the East-West struggle. The toughest problem to resolve will be the gap in living standards between the technologically modem world - the industrialized world - and the rest which we call the South. The most significant thing is that the gap between the rich and the poor keeps increasing.

The greatest part of humanity lives in misery, the consequences of which must mean continuous conflict - a succession of uprisings and military dictatorships in that part of the world.

It used to be that these poor countries offered very substantial benefits to the North. During the postwar period and the rebuilding of Europe, a part of the income of the poor countries of the South, over and above their consumption needs, was transferred to the North through a variety of means

business interest on loans, and low-commodity prices. Commodity prices are key to this. The only commodity price that raised its head was oil - and now that has run into trouble. It was the only time the Third World had a card. Most of this transfer came from Latin America to the US, giving the US a surplus, like Japan's today, which was used to help rebuild what is now contemporary Europe.

Today, the world economy is undergoing a change in character, and we are emerging into a new period - a period of crisis in capitalism. Unemployment is here to stay. We also see the most spectacular technological changes that affect our lives in every possible way. The conquest of space, microelectronics, biotechnology, information systems. Change is so rapid that even the best firms find it difficult to absorb new technologies or rely on a technology for more than a very short period.

It is very interesting that we have a crisis of capitalism going hand in hand with technological change. We have seen these kinds of changes before, when every 40-60 years new technology develops to help resolve the crisis.

In this crisis situation, unemployment mounts in Europe, yet Europe must find ways to store excess butter even as starvation stalks Africa.

The fact is that the new technologies are so capital intensive that labor is not of much importance. So we get structural unemployment of unknown dimensions and unknown duration.

What do we do with these people? Perhaps we can subsidize them, but to do what? Will there be a marginal class of people whose life cycle will only see unemployment and idleness? Will there be internal pressures generated that will force institutional changes - a different conception of work? The reduction of work hours will clearly be one of the changes. Will reduction of wages be necessary? All of these issues must be faced.

Now, how does this relate to the Third World? In the past, we economists always thought that it was in the powers of government, with appropriate fiscal and monetary policies, to resolve problems by generating effective demand-purchasing power among the broad population. That used to work.

Today, it is not that things have gone wrong. What has happened is that it is not possible to think in terms of one country - production and trade are interdependent. We no longer can talk effectively about domestic policy. We can no longer talk about the American economy, the British economy or the Greek economy. There is only the world economy.

If any one country tries a Keynesian, or growth-oriented, approach domestically, its balance of payments and inflation will go entirely crazy.

This interdependence also links the Third World problems to our own. With low commodity prices - that's exploitation, no doubt about it - the debt burden and the social pressures of a high birth rate, the Third World will not only be incapable of joining in technological development, but also unable to purchase exports from Europe, America or Japan. That causes unemployment at home.

While the growth-oriented approach can no longer work on a national level alone, it will work if we think of the whole world economy as a unit.

This is understood by US Treasury Secretary Baker. His plan is based on this kind of thinking, It's about the same as I am talking about. For the first time, the US Administration has officially recognized that the debt problem, primarily in Latin America, is here to stay and austerity has to give way to growth. The debt is so heavy and the real interest rates so high that those countries cannot even pay interest on the debt without increased economic growth.

Just as the US played a role in financing the rehabilitation of Europe after the war when it was the country with a large surplus, today Japan and northern Europe must also play a role by providing resources to the debtor nations to get out from under the debt and return to economic growth.

There are two desiderata in this process of resolving the debt problem, One is that the financial system not collapse. The other is that the banks must take some cut - some part of the principal will have to be reduced in order to assist the debtors to make payments.

So, the solution to the North-South gap must mean a conscious policy to revitalize the economies of the South so that they can participate in a growing international economy in a way that will also permit the standard of living to rise in the advanced countries so that unemployment can be reduced. This is a package.

NPQ - Socialism has come to power across southern Europe in the past five years - in France, in Spain, here in Greece. While all these governments started with the traditional socialist concerns of enhancing the welfare state, full employment and, in some cases nationalization, today you are all, Greece included, implementing austerity policies.

What does socialism mean now in southern Europe? What does socialism mean in Greece?

AP - Whether a socialist country or not, it is clear that there are constraints imposed by the international economic situation we have been talking about. These constraints are imposed by factors beyond out control, whether we are an Eastern European country or a country from Western Europe.

As the image of socialism suggests, we are concerned with the welfare state - good pensions, good medicine, good education and so on - as well as full employment. These are high priorities. However, the present situation forces socialists to redefine their objectives. We must now find a new list of priorities since, indeed, there are limits to how much can be done in the traditional agenda.

So, what does PASOK (The Panhellenic Socialist Party) socialism mean in Greece? Without any question, I say surely the welfare state and full employment are objectives. Now, however, the process by which we pursue these objectives are an important part socialism as we see it in Greece.

We have our own list of requirements about what it means to be socialist. They are, first of all, the question of who performs, and in what fashion, the process of investment.

If you ask me to define why a country is socialist, what I look for - the country could be a very poor country and unable to meet the welfare state objectives - I would look at who controls the process of investment.

In the Soviet Union and the Eastern bloc - with some permutations just recently in Hungary and perhaps now even in the Soviet Union with Gorbachev - it is the state. The banks are owned by the state. Firms are owned by the state. In the context of the five-year plans, the state directs investment from central authority.

In a pure capitalist system, the state is only "the night guardian of freedom" and the decisions in the economy are made by private, individual entrepreneurs who then either make it or they don't, as Mrs. Thatcher would say. The profit objective is the dominant mechanism by which investment is made.

So privatization and nationalization are poles apart. Economists have been eager to prove for a long time that the free market yields the best results if government stays out of the process except for broad social needs and defense needs. Others, of course, say, yes the private system will work if certain conditions are avoided - namely monopoly or oligopoly.

But there is another way which we are trying in Greece. That is where investment priorities, while supervised by the government, emerge from the conscious choice of the community, the citizens of the country. This is done through a structure of decentralized planning.

In Greece, our socialism has three active groups that run the economy. Here we recognize the role of the entrepreneurs. They coexist with the public sector. But there is also what we call a "socialized sector."

We promote a dialogue with the citizens at large in devising our five-year economic plans. The citizens, of course, belong to cities, municipalities and some administrative provincial subdivisions, and they are also organized in trade unions, farmer unions, student unions.

What we want to do is have all of these groups participate in determining how investment is allocated. From the bottom, this process will move upward ultimately to a Council of Social and Economic Policy. We want a program, formulated in this fashion and made consistent at the top, where the values of the government and the party in power at the time are meshed with the regional voices and the city governments, as well as the private sector voices, including the trade unions and business. This we call democratic programming.

Decentralization is at the heart of the issue for Greek socialism. This is different from the other socialist parties of Europe. We want planning that is consistent with decentralization and the reduction of the power of the central state.

I suppose this is an odd package. But in Greece we have always had a central government that was very strong. Before my party took power in 1981, 60% of the gross domestic product was produced in the public sector. With the exception of the foreign banks, banks are owned by the state. Olympic Airlines, the telephone system, the public power corporation, the trains and so on. Indeed, practically the whole service sector is government owned.

Decentralization for us has been an effort to turn over the powers that had resided in the central government back to the citizenry and the community.

NPQ - What do you intend to tell Secretary of State George Schultz during his upcoming visit to Athens about the future of American bases in Greece?

AP - The 1983 agreement on the bases says they are here for five years. Five months prior to its termination a note will have to be issued by one party as to its intent to terminate the agreement. The US then has seventeen months to organize removal of the bases.

This agreement says very clearly that the bases are going to go. Very clearly. It's something both sides signed and which was accepted by the US and passed as a law by our parliament.

What I have said to (US Under Secretary of State Michael) Armacost, to (US Assistant Secretary of State) Rozanne Ridgway and undoubtedly will say to Secretary Schultz is this: If there is a wish to talk about changing this agreement, then the first step is to legally terminate the accord. After renouncing it, then each side would have to appoint a team to meet and see where we are on the issue. For us, the document remains valid as signed and made into law.

NPQ - How would you characterize Greek relations with the United States at this time?

AP - I don't think either one of us has any interest in having difficult relations. We have our own list of complaints about the past. The United States has a long list of complaints also. There have been good times in relations between the two countries, spoiled somewhat by the dictatorship in Greece, events in Cyprus and the strong preference of the United States in favor of Turkey.

But the purpose on both sides is to reduce the differences of view as much as possible, and in any event to face issues objectively and avoid statements and acts which may be offensive to the other side. Under no circumstances do we wish to create problems of challenge the United States, the number one power in the world.

NPQ - What would it take to bring about an improvement in strained Greek-Turkish relations, which are at the heart of Greek differences with NATO?

AP - Two things. The first is to end the Turkish occupation of 37% of Cyprus.

Cyprus belongs neither to Turkey nor to Greece. It's an independent country, a member of the United Nations. We will take out our last soldier along with the departure of the last Turkish soldier. Of course, we have only 1,000 troops there; they have some 25,000.

Second is that Turkey merely declare and accept the legal status of the Aegean as defined by existing laws and international treaties, which demarcate the sovereign space of Greece and of Turkey.

Turkey lies along the Aegean Sea. Given our population, our needs, says Turkey, we should split this sea down the middle of the continental shelf. The eastern islands of the Aegean, which are from ancient days Greek, should according to this view belong to Turkey. They want discussions on this issue. How can any Greek prime minister enter into discussions from which the only possible result is that we give up some part of our sovereignty to somebody else? After all, we are not asking for part of Turkey? We're not interested in it.

NPQ - Why are you critical of the North Atlantic Treaty Organization's role in the Aegean issue?

AP - NATO insists that the Turkish Air Force, in its NATO context, cover the defense of our eastern Greek islands. What country would accept the notion that somebody else has the primary responsibility to defend its territory? Would the US permit Canada to protect its northern region?

We don't mind what strategic role the Americans have in mind for Turkey and how strong an army they want Turkey to have, provided we feel secure that this Turkish power will not one morning turn west, as it did in Cyprus.

We expect that the Turkish threat to Greece will extend into the next century and will become increasingly more difficult because we have a smaller population base and because military aid given to Turkey is huge when you add up all the donors.

I'm not talking about imaginary things. I'm talking about things that happened and may happen again. And this time it will be war, because I am committed to defend Greece and Greek interests. We will not give up one inch. What this will mean, I don't know. Let the West think about it.

NPQ - What is behind your government's efforts to create a nuclear-free zone in the Balkans?

AP - We have been working - not only we, but also preceding governments with the exception of the military dictatorship - to develop good relations with the North Yugoslavia, Bulgaria, Romania and Albania. We no longer see a threat from the North. There is no chance that either Bulgaria or Yugoslavia, with whom we have contiguous territories, will ever have an interest in invading Greece. Why should they? Our relations with them are excellent, and our cooperation on many fronts is good. Such a thing could only happen in the context of a clash between the United States and the Soviet Union. Some of our neighbors are in one camp, we are in another. But that will be a world war where our problems are more likely to come from the sky than from the ground.

In this context of good relations we decided we could make a contribution to denuclearizing Europe. The catch at this moment is that Turkey has pulled out of the process. So we have to be satisfied with participation by less thin all the involved countries.

One should understand that the creation of zones free of nuclear weapons contributes to the balanced reduction of armaments. It helps push such a balance downwards. The creation of geographical enclaves free of nuclear weapons in the Balkans, Scandinavia and Central Europe could lead to a novel situation in Europe - a nuclear free zone which would stretch from the northernmost to the southernmost tips of Europe. It could be the beginning of general nuclear disarmament in all of Europe.

Our efforts will contribute to the emergence of a different and demonstrably better climate in international relations than the one we live in today. This effort should be seen as a demonstration of the determination of the smaller nations which are threatened by nuclear annihilation although they have no nuclear weapons of their own.

NPQ - Now that Reagan and Gorbachev have had their summit, what is the status of the Five Continent Peace Initiative?

AP - The heads of government of India, Tanzania, Argentina, Sweden, Mexico and Greece met with parliamentarians from all over the world in New Delhi and Athens in January, 1985. The purpose was to impress upon the two superpowers the need to stop all development and testing of nuclear weapons, including weapons in space, if this planet is to remain secure and stable.

After Gorbachev's recent proposal for the elimination of nuclear weapons by the year 2000, The Five Continent Peace Initiative Group decided to get together again and issue a collective statement before Reagan and Gorbachev meet this fall.

The heads of government of the initiative have offered to provide on-site monitoring service for verification, which has been one of the major obstacles to an agreement between the US and USSR. There are technicalities to be discussed, but I hope President Reagan will look constructively at our proposal. We will most likely be meeting in Mexico City because it is close to the United States.

NPQ - Aren't your independent antinuclear stands and other differences with the Western alliance at odds with Greek membership in NATO?

AP - Greek foreign policy has two objectives: the protection of our own frontiers, what we call territorial integrity; and pursuit of humanitarian and peace-oriented values.

There is an iron rule in NATO: unanimity. It's never been challenged. But we do not accept the notion that there is a "directorate" in NATO. We don't feel that NATO protects us against our main threat, Turkey. Second, its nuclear policies are not ours because we have a very definite commitment against nuclear, chemical and biological weapons.

We are a small country, but one with views and opinions which we don't violate unless we are persuaded that this would be consistent either with our national interests, or in the long run in the establishment of peace.

We don't act to create difficulties, to embarrass the United States or other allies. We have a certain view and it should be respected.

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