Arms trade and the Greek debt crisis

Both Greece and the euro currency have bought extra time to recover from the financial crisis after eurozone leaders agreed a new 109 billion euro rescue deal for the debt-laden country. But worries persist over the size of Greece’s debt mountain and the ability of other troubled economies in Europe to overcome their budgetary challenges.

Rarely mentioned in the discussions on the Greek crisis is their history of sustained excessive military spending over the past decade. It is surely not the ultimate answer to the hardships many Greek people will have to endure for may years to come, but it is safe to state that if Greece had allocated just half the money for its military budget since the end of the Cold War, its economic outlook would have been much healthier – without the slightest compromise to the safety of the country.

No other European country has bought more arms from abroad than Greece. Over the past twenty years it was the world’s fifth arms importer – after China, India, South Korea and Turkey. Similarly, its military budget in terms of the size of its economy is unparalleled in Europe for many years. No other central or western European country spent more than the 3.2 per cent of its gross domestic product (GDP) that Greece spends.

Exemplary is its 1.2-1.8 billion euro submarine procurement programme known as Project Archimedes, plagued for many years by cost-overruns, delays and corruption. A parliamentary commission is currently investigating former defence minister Akis Tsochatzopoulos and others over bribes allegedly paid to Greek officials in relation to the order for four U-214 submarines signed in 2002. According to the Kathemerini newspaper “at least 120 million euros was paid in bribes by the German firm that struck a deal with the Greek government for the sale of four navy submarines, according to German court documents seen by Kathimerini. […] Two former executives of Ferrostaal, the Germany firm that was part of the consortium which won the contract, gave depositions in Munich concerning the kickbacks paid to secure the deal”.

Insistence to built part of the submarines in Greece only made things worse. According to Evangelos Venizelos, until a month ago the defence minister, the delays “had placed in danger the country’s largest shipbuilding industry, thousands of jobs, the entire Greek Navy submarine program and over two billion euros already paid by the Greek state without tangible result.”

Last year Franco-German lawmaker Daniel Cohn-Bendit said that Paris and Berlin were seeking to force Prime Minister George Papandreou to spend Greece’s scarce cash on submarines, a fleet of warships, helicopters and war planes, accusing Germany’s Chancellor Angela Merkel and France’s President Nicolas Sarkozy of blackmailing Papandreou.

Another major supplier of military hardware to Greece is the Netherlands, having earned 830 million euro since 2000, making Greece its third largest arms export destination.

While the current debt situation may have troubled arms dealing with Greece a tiny little bit, thanks to government support it is business as usual for military electronics producer Thales Nederland. With commercial parties reluctant to provide export credits on a regular basis, Atradius Dutch State Business (DSB) in late April jumped in, agreeing to guarantee an export credit for Smart radar spare parts worth 386,000 euro.

Of course, this is a relatively minor amount of money, but it is hard to explain why the EU spends billions of euros to save Greece from bankruptcy, while at the same time pushing arms deals with a country forced to execute radical austerity measures. In the end ordinary Greeks remain victims of a greedy and irresponsible elite that has brought their society close to collapsing.
And if it were to collapse other EU taxpayers pay the bill for arms deals financially guaranteed by their governments.

[FS, 24 July 2011]