As the Olympics kick off, Huw Richards looks at the birthplace of the modern state in the last of our series.

The Greeks certainly had a word for it - indeed the word for it - since "democracy", like many significant pieces of political terminology, is Greek coinage. Inventors are not, though, necessarily the greatest practitioners and for parts of the 20th century Greek democracy was a historical rather than a current concept. Greece, though, will host the Olympics buoyed not only by its wholly unexpected, though far from undeserved, status as European football champion, but also as a nation that has made the transition from backward military dictatorship to fully functioning democracy, member of the European Union and fastest growing economy in the Eurozone.

With Spain and Portugal, it made up a trio of south European military dictatorships that fell in the early to mid-1970s. Its experience diverges a little from that of the Iberian duo. Greece's dictatorship was short-lived, less than a decade (1967-74) compared with regimes that dated back to the 1930s. Portugal's dictatorship came to an end amid the cheerful anarchy of a drawn-out popular revolution, while Spain endured a transition lasting several years. By contrast, points out Dimitris Papadimitrou, lecturer in European politics at Manchester University and a visiting fellow at the London School of Economics Hellenic Observatory, "in Greece it happened almost overnight. The military regime was discredited when it was humiliated by Turkey in Cyprus and collapsed. There was a swift and bloodless transition to democracy that was very much to the credit of the senior politicians of the time."

And where Spaniards would give much of the credit for their successful democratic transition to their restored monarchy and King Juan Carlos, the Greeks began their process by throwing out King Constantine.

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The ex-King, a former medallist in sailing, will be in Greece for the Olympics but as a representative of the International Olympic Committee rather than as a representative of the country he once ruled. He does not hold a Greek passport. Kevin Featherstone, LSE's professor of Greek politics and director of the Hellenic Observatory, argues: "In Spain, the monarchy offered a solution. In Greece, it was part of the problem."

Papadimitrou says: "The country has never been constitutional, instead having a history of intervention in politics and a close identification with the right. As a result, it never enjoyed widespread political support and was always rejected by the left."

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In 1974, Constantine was denied the chance to campaign in the referendum that abolished the crown. The prohibition was not issued by vengeful leftwingers, but by Prime Minister Konstantinos Karamanlis, a veteran rightwinger determined to break with the partisanship and authoritarianism of the past. Karamanlis had been prime minister three times between 1956 and 1963.

Philip Carabott, lecturer in Greek history at King's College London, describes the years from 1949 to 1967 as "controlled democracy" with a "para-state" of authoritarian rightwingers representing the real power in the nation, even during periods of attempted liberalisation such as the two short-lived 1960s administrations of Giorgios Papandreou. The Communist Party was banned after its defeat in the savage Civil War from 1946 to 1949, in retrospect a distinctly hot overture to the Cold War in Europe.

Papadimitrou says: "Anyone on the centre Left attracted the suspicion of the Government and possible authoritarian measures. Since the Government was very publicly backed by the Americans, this left a legacy of anti-Americanism on the Greek Left."

It was, he says, a "low-quality democracy, constantly in crisis and vulnerable to intervention by the army and the monarchy. The political parties were weak, built around personalities rather than a coherent set of principles, and were overreliant on the influence of local bosses." There were more than 30 administrations between the end of the German occupation in 1944 and the coup in 1967.

Spyros Economides, lecturer in international relations at LSE, points to a strikingly different story in the past 30 years. "Greece is now very much like any other European democracy." he says. "It has regular elections, with an alternation of power between two major parties - New Democracy and Pasok have had almost equal amounts of time in power and the transitions have been uncontested."

Still, Greek democracy retains some distinctive elements. The most recent general election was a contest for the premiership between leaders with familiar names - Costas Karamanlis of the centre Right New Democracy defeating George Papandreou of the centre Left Pasok. Karamanlis is the nephew of former premier Konstantinos while Papandreou is the grandson of Giorgios and son of Andreas, Pasok Prime Minister from 1981 to 1989 and again from 1993 to 1996. Dynasties still matter. Economides says: "There is a long tradition of dominant local families who could guarantee to deliver votes and this modern phenomenon, with major families replicating themselves, is a continuation of that. Patronage is still an important part of the system and the seeking of favours by appealing to the influential is common at all levels of society."

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Nevertheless, to have the same names recurring at the very highest levels of politics is not, as citizens of India and the US would confirm, incompatible with democracy. Nor, Economides notes, is it necessary to have a famous name to reach the top in Greek politics. Pasok's Costas Simitis has some claim to be the most successful of all modern Greek prime ministers after eight years (1996-2004) in office attended by rapid economic growth, rapprochement with historical regional rival Turkey and adoption of the euro. And while Konstantinos Karamanlis and Andreas Papandreou were the key actors in the earlier days of transition, building up effective political parties in place of personal factions, their descendants practise modernisation rather than filial piety. Papadimitrou describes the US-educated George Papandreou as a more orthodox, tolerant politician than his mercurial, charismatic father. "He has spent much of his life in Canada and Sweden and is a social democrat of the Scandinavian kind," he says. "Some see him as a Blair apostle, but he is closer to the European mainstream. He has promoted liberal positions on issues such as soft drugs, while as foreign minister he was the architect of rapprochement with Turkey."

He sees Costas Karamanlis as a modern centre Rightist in the mould of Spain's former Prime MinisterJose-Mar!a Aznar. "He has successfully repositioned New Democracy as a centre party, breaking the association with the authoritarian Right that his uncle, for all of his importance in rebuilding democracy after 1974, could not completely throw off because of memories of the 1950s."

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Both Army and monarchy have been marginalised politically. Threats to a democratic system can come from within and some saw dangers to a still youthful democracy in the erratic political path pursued by Andreas Papandreou in the late 1980s. But Carabott argues: "The fact that Greek democracy survived the problems of the late 1980s with so little difficulty shows quite how well established it was by then."

Featherstone regards the democratisation of the past 30 years a resounding success. But this does not mean he feels there is nothing to worry about.

He sees cause for concern in the massive popularity of the unquestionably charismatic Archbishop Christodolou of Athens. Featherstone says: "His style is stridently populist and appeals strongly to people who have felt marginalised by the changes of the past ten to 15 years. He attracts huge crowds to his rallies, far larger than any current Greek politician could hope to pull in. Until the past ten to 15 years, Greece was probably the most ethnically and religiously homogeneous society in Europe - about 97 per cent Greek Orthodox. The past decade has seen an influx of people from Albania, the rest of the Balkans and Eastern Europe. For the first time there are districts and schools where ethnic minorities predominate."

He points to two notable related phenomena. "There is a tradition in Greece that the pupil with the best results carries the flag in the school parade on the national day. In one school in the North, a pupil of Albanian origins has come top two years running, but as a result of local protests he wasn't allowed to carry the flag. The row this caused has reverberated through Greece."

The European elections saw the emergence of the rightwing People's Party, which Featherstone describes as "xenophobic, racist and anti-modern, rather in the style of (France's National Front leader) Jean-Marie Le Pen". While the Athenian political establishment condemned it, the Archbishop conducted an open flirtation, implying he expected devout members of his congregation to support it.

Featherstone emphasises that nobody should panic over the immediate future of Greek democracy. Greece will be able to host the Olympics as secure in its pride at the political transformation of the past 30 years as it is in its ancient achievements, history and traditions. But if the next 30 years are to be similarly successful, the challenges of the country's new diversity will have to be met.

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