In 1928 Venizelos emerged from exile once more to lead his party to win 71 percent of the seats contested in the parliamentary election. As before, his presence galvanized political support and opposition--but this time Venizelos fashioned an effective parliamentary coalition based on the old Liberal Party and refugees, and he presided over four years of economic growth and political stability.

In spite of a strong parliamentary base, Venizelos had to negotiate treacherous waters as prime minister in order to control the hard-line antiroyalists, most of whom were conservative in other respects, and placate old-style Liberals, leftists, and refugees, an important support group that increasingly was leaning to the left. The conservative Populist Party provided the main opposition, and the central issue separating the two major parties in this period was the constitutional question.

Venizelos was able to implement a number of changes, most of them funded by external loans. He introduced numerous reforms aimed at improving Greek agriculture: land reclamation schemes, agricultural credit programs, and price supports for agricultural produce. The highway and railroad infrastructures were improved and expanded. Protective tariffs were raised to make indigenous products more competitive in the domestic market. Public housing projects were erected and made available to poor Greeks, especially refugees. A British loan of more than £1,000,000 was contracted for the building of public schools.

Venizelos also scored some notable successes in foreign policy. The most important of these was his rapprochement with Atatürk, culminating in the October 1930 Treaty of Ankara, by which Greece and Turkey officially recognized their respective territorial boundaries and accepted naval equality in the eastern Mediterranean. Venizelos also normalized relations with neighbors Albania, Bulgaria, Italy, and Yugoslavia.