Racked by financial woes since 2008, Greece has all but defaulted on its loans after the failure of talks with with the European Union and its various creditors. The country is heading towards a high-stakes referendum next week that could result in the country eventually leaving the Eurozone.
Still, despite Greece’s staggering economic problems, the country has consistently maintained one of the highest defence expenditures as a percentage of GDP in all of Europe.
For 2015, NATO projects that Greece will spend 2.4% of its GDP on defence, which is actually a 0.1% increase in spending over 2014. The previous year, the country’s debt as percentage of GDP was at 175%, while its economy contracted by 3.3%.
At a time when Greece’s economy is in complete tumult — citizens are being allowed to withdraw only €60 (£42.30, $US66.40) a day from banks — and the government is seeking ways to trim overall spending, an increase in Greece’s defence budget may appear puzzling. But there are three major reasons Greece has kept its military budget so high even in a time of economic crisis: personnel costs, regional geopolitics, and domestic political pressures.
First, NATO estimates 73.3% of Greece’s 2015 military budget will go towards personnel expenditure. Only six other NATO countries have personnel costs higher than Greece’s. Additionally, in 2013, 2.7% of Greece’s labour force was employed in the military according to Judy Dempsey of Strategic Europe at Carnegie Europe. By sparing the military budget cuts, Greece can continue to pay personnel salaries — although high pay could also be another example of the public sector bloat that fed into the economic crisis.
Secondly, Greece’s military budget reflects a legacy of distrust towards every country it borders, most notably Turkey. Although both Turkey and Greece are members of NATO and are technically allies, the two states have been competing militarily since the Turkish invasion of Cyprus over four decades ago. These tensions cooled considerably but have begun warming again as the two states compete over possible oil and gas resources in the Mediterranean — midair confrontations between Turkish and Greek jets increased sharply in 2014.
Greece’s overall fear of Turkey has kept the country consistently over-spending.
“One could argue that with 1,300 tanks, more than twice the number in the UK, Greece has many more than it needs. But no one forced it to spend so much. It happened because of the threat perception from Turkey and the need to balance Turkey militarily,” Greek defence expert Thanos Dokos told the Guardian.
The 2.4% of GDP that Greece is projected to spend on defence in 2015 is actually a sharp decrease from the country’s previous spending habits. Throughout the 1980s, Greece’s average defence budget was 6.2% of its GDP largely due to tensions with its Turkish neighbour.
And Greece doesn’t have particularly friendly relations with its some of its other neighbours either: in 2008, Greece blocked Macedonia’s membership in NATO over a long-simmering naming controversy, while Athens has taken a customarily hard line on the resolution of the Cyprus dispute.
The final reason Athens may have been reluctant to cut defence spending is political pressure from Germany and France, the Guardian notes. Berlin sent almost 15% of its arms exports to Greece in 2012, with France sending almost 10% in 2012.
According to the Stockholm International Peace Research Institute, Greece continued to buy large quantities of weaponry from the two countries between 2010 to 2014, some of the worst years of its economic depression. During this time, Athens bought $US551 million worth of military equipment from Germany and $US136 million of equipment from France.
Athens may soon have to cut spending anyway: On June 16, Yiannis Bournous, the head of international affairs for Greece’s ruling Syriza party, signalled a willingness to reassess the military budget.
“We already proposed a 200 million euro cut in the defence budget,” Bournous said at a Center for Economic Policy and Research event. “We are willing to make it even bigger — it is a pleasure for us.”