ATHENS — Greece is getting out the credit card and going on a big military spending spree as it faces growing tensions with Turkey.
Despite the deep recession caused by the coronavirus crisis and a rising budget deficit, Athens has decided it’s time to act. Fighter jets, frigates, torpedoes and helicopters are all on Prime Minister Kyriakos Mitsotakis’ shopping list.
France, which has given Athens political and military backing in its confrontation with Ankara, will be a big beneficiary of the procurement push. A deal between the two countries was on the agenda when Mitsotakis met French President Emmanuel Macron in Corsica ahead of a summit of Mediterranean leaders on Thursday.
But other key allies are also likely to benefit from plans that are expected to raise military spending by some €10 billion over the next 10 years, according to Greek officials. That would amount to an increase of about one third on current levels.
Some €1.5 billion will be spent on arms and equipment in the coming months and most of it will come from a recent 10-year bond issue.
“The pie will be shared, as Greece always does defense diplomacy,” said a senior Greek official. “But the biggest share will be given to France, in order to consolidate French cooperation in defense with common military exercises and to be able to more easily move together.”
Mitsotakis will outline the procurement program on Saturday during the prime minister’s annual economic policy speech in Thessaloniki.
“The prime minister will be specific on the triptych in which we are moving: armaments programs, strengthening the human resources of the armed forces and reorganizing the defense industry, which is able, after all, to contribute to technological development and stimulate employment,” government spokesman Stelios Petsas told reporters this week.
Greek officials have justified the plans to ramp up spending in part by citing the rising tensions with Turkey in the Eastern Mediterranean.
Since early August, an official Turkish vessel, the Oruç Reis, has been conducting seismic research in what Greece considers its continental shelf, south of the Greek island of Kastellorizo. Both sides exchange barbs on a daily basis, while Turkish President Recep Tayyip Erdoğan has repeatedly threatened war.
Dozens of Greek and Turkish navy flotillas are lined up in the area against each other and diplomats fear an accidental or deliberate escalation could spark a full-blown conflict. A Greek frigate collided with a Turkish ship last month.
“Wherever we need to make those targeted investments, which unfortunately our geopolitical position imposes — even if that means some small additional sacrifices by the Greek people — we must all agree that these sacrifices must be made in order to finally protect the armed forces,” Mitsotakis told parliament late last month.
French fighters
Athens and Paris are in the final stages of negotiating a deal that is expected to lead to the purchase of around 18 Rafale fighter jets. The package is also expected to include the purchase of missiles and the maintenance of Greece’s Mirage jet fighters.
Importantly for Greece, officials say they expect the deal will be followed by agreement on mutual defense assistance if either country is involved in a military confrontation.
However, Athens is also aiming to spread the money around. Greece is in talks with other countries over the purchase of military equipment, according to senior Greek officials, in a move that apart from boosting its armed forces also aims to purchase military backing from arms manufacturing countries, like the U.S., Germany, the U.K., Spain and the Netherlands.
There is a long line of ambassadors parading with their brochures into Greece’s defense ministry these days, one official said.
The Greek government is also looking into procuring two to four new frigates. France’s offer had a very hefty price tag and Athens will likely move ahead with an international tender to get more offers. Athens also plans to buy torpedoes — probably from Germany — and upgrade its Apache helicopters.
An upgrade to Greece’s F-16 jet fleet is already underway by Lockheed Martin of the United States and will be completed in 2027 at a cost of around €1.25 billion.
Crisis cuts
Due to the financial crisis that hit Greece hard over a decade, successive governments were forced to cut the budget to the bone and military spending was slashed by almost half, from €7.24 billion in 2008 to €3.75 billion in 2018, when Greece exited its bailout programs.
In terms of military spending as a percentage of GDP, Greece comes near the top of the NATO charts. Last year it spent some 2.28 percent of GDP on defense — more than the alliance’s target of 2 percent and far above the EU average of 1.2 percent.
However, Greece’s GDP also shrank by around a quarter over the past decade.
“Under the effect of the decade-long crisis and despite the threat from the East, Greece has not proceeded with a purchase of a major weapons system since 2005,” said Faithon Karaiosifidis, a defense expert and publisher of the Greek magazine Flight.
He said the last serious effort to equip Greece’s military took place after the Imia crisis of the mid-1990s, when Greece and Turkey came to the brink of war over two uninhabited islets in the Aegean.
“There is no armaments policy, there are no continuous purchases,” Karaiosifidis said. “You leave long periods without any purchases and then a crisis is coming and Greece is heading to the markets at the last minute to meet its needs and based on its diplomatic relations. When you go shopping in a supermarket-style, you buy expensive and not exactly what you need.”
Still, Karaiosifidis said that many of the problems accumulated over the last 15 years will be fixed and some important upgrades will be made.
Risks ahead
However, the decision to boost military spending also carries significant risks for the government.
Before the financial crisis, some of the country’s biggest scandals and corruption cases involved military procurement deals.
And while the planned spending boost currently enjoys broad political support, Mitsotakis could later find himself accused of focusing too much on the military.
“Mitsotakis was elected to turn the page on the economy, which was struggling even before the coronavirus outbreak. He is going to get distracted from what is the main objective and why he was elected,” said Wolfang Piccoli, co-president of political risk consulting firm Teneo Intelligence.
The Greek budget deficit is expected to slide to 5 percent of GDP, as the pandemic has blown large holes in the state budget.
The European Commission has lifted the deficit rules for this year and next to help governments deal with the pandemic. But sooner or later, Greece will face the problem of how to return to surpluses — as it is required to do according to its bailout exit terms — and pay back its debts.
“There should be a debate on where this money is coming from and how it will be used and this cannot take place effectively at the moment because of the threat [of conflict with Turkey],” Piccoli said.
“The track record in terms of defense spending in Greece is not a great one. So the government has to manage these purchases in a very transparent way,” he said.
Piccoli said it also remained to be seen whether the agreement with France would be just a business deal or would really ensure that Athens could rely on Paris for military backing in a crisis.
“We can see that the French support is not that cheap. It raises a big question mark,” he said.
CORRECTION: This article has been updated to correct a time reference related to the collision between a Greek and a Turkish ship. The collision took place last month.
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