Greece 2nd biggest defence spender among the 27 NATO countries

Πηγή: Digital Journal

By Katerina Nikolas

Jan 13 2013

In spite of crippling austerity measures, a shrinking economy and reliance on bail-out loans, Greece remains the second-biggest defence spender among the 27 NATO countries.

Although Greece's overall expenditure on defence has fallen over the last two years, the debt ridden nation still managed to rack up spending of 2.1 percent of GDP on defence.

The New York Times reported NATO's secretary general, Anders Fogh Rasmussen, said that Greece was only one of two European countries which still continues to spend more than two percent of GDP on defence.

While Greek expenditure on healthcare, education, pensions and wages have been dramatically slashed, and taxes raised, the cut to the €10 billion defence budget was a mere €516 million in August 2012.

Der Spiegel cited the independent Stockholm International Peace Research Institute listing Greece as "one of the top five arms importers globally" during the 2000's, lining the pockets of German and French armament suppliers. Although there is now a freeze on new armaments purchases, the total expenditure on defence remains shockingly high.

As probes continue into the Lagarde list and further revelations are made, the issue of bribery scandals connected to the Ministry of Defence are beginning to surface again. Bribery and corruption could well feature as a key motivation in the continuation of Greek defence spending as the scandal unravels further.

Military in Greece Is Spared Cuts

Πηγή: New York Times
By JUDY DEMPSEY
Jan 7 2013

BERLIN — The euro crisis has not been good for NATO’s secretary general, Anders Fogh Rasmussen. Mr. Rasmussen has used every occasion to cajole alliance members into investing and collaborating more in defense.

He said recently that allied defense expenditures had declined by more than $56 billion compared with 2009. Practically all of those cuts happened in Europe, reducing defense spending there by an average of 15 percent.

Speaking at a meeting of the NATO Parliamentary Assembly in Prague, Mr. Rasmussen added that among the European allies, “only two devoted more than 2 percent of the gross domestic product to defense.”

One of those countries was Greece.

That seems astonishing given that Greece is in a deep economic and financial crisis. Greece’s economy has shrunk by 25 percent over the past two years.

During that time, the middle and lower classes — not the rich business community — have been hit hardest. The International Monetary Fund and the European Commission have imposed stringent austerity measures in return for loan guarantees. As a result, pensions and health care, transportation and education have all been cut drastically.

The armed forces, so far, have gotten away relatively lightly. During the height of the global financial crisis of 2008, Greek defense expenditures accounted for 3.1 percent of gross domestic product. Over the past two years, Greek defense spending still amounted to 2.1 percent of G.D.P.

“In relative terms, defense expenditure has been reduced given how much gross domestic product has fallen,” said Alexander S. Kritikos, an economics professor at the German Institute for Economic Research in Berlin.

“But the defense budget is still very high. It has been largely insulated from the huge cutbacks borne by the middle classes and poorer people,” he added.

Last August, the €10 billion, or $13 billion, defense budget was trimmed by €516 million. Even at that, Greece is the second-biggest defense spender among the 27 NATO countries after the United States, according to NATO statistics.

More than 73 percent of its budget is for personnel costs alone, making it one of the highest among NATO allies. Furthermore, military and civilian personnel account for 2.7 percent of Greece’s total labor force during, also making it one of the highest in NATO, according to alliance figures.

It is particularly hard to see how the armed forces can justify the current budget, as the money is not spent on supporting NATO or E.U. missions. According to the latest figures from the NATO-led International Security Assistance Force, Greece has 10 soldiers based in Afghanistan, out of a total of 102,011 troops from 50 countries.

In its neighborhood, Greece has 118 soldiers serving in NATO’s stabilization mission in Kosovo, out of a total of 5,565 troops from 30 contributing countries.

NATO does not publicly comment about any ally. But officials, speaking on condition of anonymity, said the Greek government has not used the financial crisis to overhaul its armed forces by making the purchase of military equipment transparent, or reducing the personnel count of 136,000, of whom 90,000 are soldiers.

Curiously, the Greek public, which has often protested against the austerity measures, has yet to demand that the armed forces carry some of the burden. One reason, analysts say, is Greece’s residual fear of Turkey, a leading NATO member — despite the improvement of relations between the two countries over the past decade.

“It’s all very well calling for deeper defense cuts, but geography still matters. Certain fears still run deep,” said Tomas Valasek, president of the Central European Policy Institute, a security think tank in Bratislava, Slovakia.

Other analysts agree that the Greek armed forces can always resist big defense cuts by playing the Turkey card. “The generals will always have an excuse to keep the budget high,” Mr. Kritikos said.

Indeed, over the past several months, the Greek media have written that Turkey violated Greek airspace at least once. In response, the Turkish General Staff said its airspace had been repeatedly violated by Greece, Italy and Israel.

There is another political reason for exempting the army from cuts. Closing some of the 500 military bases and 17 training centers would mean sending tens of thousands of young soldiers into the ranks of the unemployed, adding a dangerous component to social unrest, according to Sipri, a Swedish research institute. Perhaps, analysts said, the Greek armed forces will have to wait for any major restructuring until the country’s economy picks up.

Judy Dempsey is editor in chief of Strategic Europe at Carnegie Europe. (www.carnegieeurope.eu)

Arms imports and the Greek debt: "The intriguing story of huge weapons sales and the Greek debt crisis…"

Πηγή: The Daily Organ
By Paul Haydon
August 12 2012

Last week Czech Prime Minister Petr Nečas made the usual grim diagnosis about the debt crisis in Greece.The country was in dire need of structural reforms, he said, both to its economy and society.

Leaders across the continent have been making similar criticisms, with Sarkozy and Merkel warning the Greek government last month that it wouldn’t receive new bailout funds unless it fully implemented austerity measures. And despite the significant debt swap agreed on recently, any EU bail-out remains conditional on the country implementing a further round of budget cuts.

Yet one area of the Greek budget doesn’t seem to have received such scrutiny, its huge military spending. The reason is simple, France and Germany still account for the vast majority of arms sales to Greece.

Admittedly, Greek military spending has been reduced massively over the last few years, although not nearly as much as government expenditure on healthcare, pensions or social welfare. However it still spends the most in the EU as a percentage of GDP, and remains one of the biggest weapons importers in the world.

Moreover, in 2010 when the first bail-out package was being negotiated, the Greeks spent €7.1bn on its military, compared with €6.24bn in 2007, with £1 billion spent on French and German weapons, plunging it even further into debt. Many suspect that this is no co-incidence, and that the rescue package was explicitly tied to burgeoning arms deals. In particular, there is evidence of pressure from France to buy six frigates, whilst Germany was content to sell off some faulty submarines.

The fact that Greece, a relatively small and democratic country with not much in the way of global ambitions, should spend so much on its military is fairly perplexing.

In 2006, as the financial crisis was looming, Greece was the third biggest arms importer after China and India. It has a standing army of 156,000 men, more than the UK which has 6 times its population, and still has a compulsory military service of 9 months. Over the last 10 years its military budget has stood at 4% of GDP, over $1500 per person. If Greece is in need of structural reform, then its oversized military would seem the most logical place to start.

In fact, if it had only spent 1.7% like a typical EU country over the last 20 years, it would have saved 52% of its GDP.

Of course, the supposed threat from Turkey is always used as a justification by Greece for its profligate arms spending. However, this argument just doesn’t hold up on several grounds. Firstly, both countries are part of NATO and share a number of mutual allies, not least the US, and so all-out war between the two is highly unlikely to occur.

Secondly,Turkey has proposed on several occasions a mutual reduction in arms spending, something Greece has repeatedly refused to do. Finally, despite all this relations between the two countries have markedly improved in recent years, making such a massive military build up seem even more unnecessary. All Greece’s military spending seems to achieve is to antagonise the situation and goad Turkey into an arms race.

So why has Greece continued to spend such huge amounts on its army? It’s not altogether clear, although it may well be due to populist pressure on the previous right-wing government not to appear soft in the ongoing tensions with Turkey over Cyprus.

What is certain is that the French and German arms industries have gained a lot from Greece’s extravagant spending. In the five years up to 2010, Greece purchased more of Germany’s arms exports than any other country, buying 15 per cent of its weapons. Over the same period, Greece was the third-largest customer for France’s military exports, and its top buyer in Europe, with 12 per cent. The Netherlands also has been a significant exporter.

However, the US is perhaps the biggest beneficiary, accounting on average for 40% for Greek imports, and has been known to intervene in military spending decisions. In addition, with each new new fighter plane or battleship sold creating yet more sales to regional rival Turkey, it is easy to see why Greece has made such a lucrative market.

In the current context, it is easy to blame all Greece’s troubles on its problems with corruption, tax evasion and its oversized state sector. These are all undeniable issues which no doubt require significant ‘structural reforms.’ Yet, arms imports aside, is Greece really that different from Spain or Portugal, countries also in dire straits but not standing on the brink of collapse?

I cannot help but speculate that if Greece’s military spending had been reined in sooner, at the expense of the French and German arms industries, we might not be facing the crisis we are now. And the Greek people, instead of facing austerity measures which have reduced living standards by 30%, might have been able to take a more moderate and sustainable route to reform.

Paul Haydon is currently studying a masters in European Public Policy at University College London. He has previously worked at the European Parliament, and at a magazine in Shanghai, China. You can read his blog here 

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See related article : German 'hypocrisy' over Greek military spending has critics up in arms