I've been to Crete two times in the past, and a lot of elderly locals carried old fashioned daggers on their belt, so knives where no problem at all. But the Island has its own knife culture, so it's not really representative for Greece itself I'm afraid.
I was there approximately three years ago. At that time there was no concern (obviously things can change). I marveled at the laxity of "security" for a nation revolving around tourism. They seemed most worried that you didn't allow flashes from cameras but you could take all the photos you want (most international museums allow no cameras in my experience yet the Greeks were cool with it).
I found Greece a great place for an ugly American to travel. Most of the folks speak at least some English, and the country has a history of liking the US.
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