By Ibon Villelabeitia and Dina Kyriakidou
ANKARA/ATHENS (Reuters) - Greece's debt crisis may lead to improved ties with its old rival Turkey as the prime ministers of the two countries meet to discuss issues from cuts in defence spending, to financial crisis management.
Turkey's Prime Minister Tayyip Erdogan visits Athens on Friday for talks with his Greek counterpart George Papandreou in what Turkish and Greek officials hope will bring a new era in relations between the often feuding Aegean neighbours.
With debt-choked Greece undergoing austerity measures, both Ankara and Athens have said they want to achieve the goal of demilitarising the Aegean as a way of cutting defence spending.
"Neither the people of Greece or Turkey need new submarines or fighter jets," Turkey's EU Affairs Minister Egemen Bagis said, noting the contradiction of two NATO members spending billions on defence to counter potential threat from each other.
Greece, which spends more of its gross domestic product on the military than any other European Union country, has said it also wants to reduce regional tensions with Turkey.
"In order for our people to enjoy the benefits of arms spending reductions, we must first erase the threats and create the necessary trust," said Gregory Delavekouras, Greek Foreign Ministry spokesman.
"This meeting will deepen and widen the cooperation between our two countries," Delavekouras said.
Western officials and economists have advocated a reduction of Greece's armed forces as a way of reducing spending.
Greece's Deputy Defence Minister Panos Beglitis said in March that overall defence spending in recent years was as high as 5.6 percent of GDP, about 13.4 billion euros (11.6 billion pound). The target for this year is to cut below 3 percent of GDP.
According to the International Strategic Studies group Turkey spent $9.9 billion (6.8 billion pound) on defence in 2009 and $10.2 billion in 2008, but with its economy forecast to grow faster than any in the EU this year, Ankara's need to make cuts is not as great.
MELTDOWN EXPERTISE
With wide experience of financial disasters and IMF bailout packages, Turkey has said it is happy to share its expertise with Greece on surviving a debt crisis a decade ago.
In the first official visit by a Turkish prime minister since 2004, Erdogan will be accompanied by 10 ministers and 80 businessmen.
He and Papandreou will chair a joint cabinet meeting with seven Greek ministers on issues that will include foreign, transport and infrastructure, tourism and culture, education, police and emergency services, energy and environment.
"We need to give a fresh momentum to Turkish-Greek relations and to carry them to a whole new level of cooperation which will contribute to issues that seemed problematic between the two countries," Turkey's Economy Minister Ali Babacan said.
Greece and Turkey nearly came to blows in 1996 over an uninhabited Aegean islet. The two have skirmished over Turkey's occupation of Cyprus and territorial rights in the Aegean.
But ties improved since 1999, when earthquakes in both countries sparked spontaneous outpouring of aid and prompted their leaders to improve relations and sign accords.
EMPATHY DURING TRAGEDY
Erdogan is likely to solicit Papandreou's help to help push a solution for the reunification of the divided island of Cyprus, long an obstacle to Turkey's EU membership aspirations.
Greece says it wants to see changes in behaviour from Turkey in areas such as overflights and air space violations.
"We openly and clearly support Turkey's EU accession but we want to see concrete signs that some behaviours have changed," a Greek Foreign Ministry official said.
Semih Sediz, a columnist for Radikal, a liberal Turkish daily, said that despite their history, Turkey and Greece have ironically found sympathy for each other in times of crisis.
Earthquakes, Great Depression deprivations or persecution from military juntas have provoked Turkish-Greek empathy.
"There is a lot of empathy in Turkey for Greece right now," now," Sediz said. "We know a lot about IMFs, belt-tightening, union unrest, all those things. We've been down that road."
(Additional reporting by Tulay Karadeniz in Ankara and Simon Cameron-Moore in Istanbul)
(Editing by Jon Hemming)
