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Wednesday, May 12, 2010     GET REAL

With Turkey on the move, geopolitically, Greece won't cut deep on defense

ATHENS — Despite a severe financial crisis, Greece is not expected to order a significant cut in its defense budget.


Analysts and European Union diplomats agreed that Greece would not consider a significant reduction in defense spending unless neighboring Turkey does the same. They said Greece was committed to military modernization to maintain deterrence toward the much larger forces of Turkey.

"The benefits of such budgetary thriftiness would be felt more in Ankara than in Athens, as this would allow Turkey to continue increasing its geopolitical influence eastward and southward into its former Ottoman domain," Dan Darling, a defense analyst with Forecast International, said.

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Forecast International, based in the U.S. city of Newtown, Conn., assessed that Greece would not cut its defense budget much more than 10 percent over the coming three years. Forecast said much of Greece's defense budget was being used to pay for the first phase of its military modernization program.

"The problem for Greece will come primarily in its defense equipment budget," Forecast said.

In 2006, the Greek Defense Ministry launched a plan to invest nearly $40 billion toward military procurement and maintenance. The first five-year plan, which ends in 2010, was employed to finance the orders under the previous modernization project, known by its Greek acronym EMPAE.

"The second program, covering the period from 2011-2015, planned on a 15.4 billion euro [$22.7 billion] budget," Forecast said. "Instead, what remains for the second-term budget will likely be used much like its predecessor — to pay off debts accrued under the preceding EMPAE."

Athens has been under pressure from the International Monetary Fund to cut deeply into defense spending as part of a Greek austerity program. On May 2, IMF president Dominique Strauss-Kahn said he expected defense investment to be "clearly reduced" under a program that would lend nearly $150 billion to Athens.

Greece has been engaged in the production and procurement of naval frigates, diesel submarines, advanced air trainers and the F-16 multi-role fighter. Analysts said these platforms were required for an intensive air and sea surveillance along the disputed borders with Turkey.

"Despite their shared NATO membership, Greece will continue to view Turkey as its principal strategic threat, and unless Ankara reciprocates with hard evidence of a military climb-down — reducing its air and sea presence from disputed territory, removing forces from northern Cyprus, shrinking its defense budget — Athens will no doubt feel it necessary to maintain a worthy state of military preparedness," Forecast said.

Until the austerity program, the Greek defense budget had risen by 6.9 percent in 2009 — to 6.24 billion euro. The EU has demanded that Greece reduces its budget deficit from the current 13 percent to three percent by 2014.

"Expecting it to fall by much more than 10 percent over the coming three years might prove untenable," Forecast said. "A 20 percent reduction would bring annual allocations through 2013 down below five billion euro."

So far, the defense budget for 2010 has been reduced to six billion euro, or 2.8 percent of the gross domestic product. The defense spending ratio has exceeded that of the two largest military powers in the EU — Britain and France.

"As part of the sharp austerity measures confronting Greece, the armed forces will have to accept the bad-tasting medicine the rest of the country is being forced to swallow in order to spare the nation from bankruptcy," Darling, who specializes in European defense, said. "How severe the budgetary shrinkage will be remains to be seen, but with the Greek economy expected to contract by up to four percent this year and again in 2011, the reality is that meeting the current investment level of 2.8 percent of GDP is a near impossibility."

Still, EU defense contractors have been lobbying to ease pressure on Athens. Most of Greece's defense procurement budget has been allocated to British, German and French companies.

"In the past three months we have forced Greece to confirm several billion dollars in arms contracts," EU parliamentarian Daniel Cohn-Bendit said. "French frigates that the Greeks will have to buy for 2.5 billion euro. Helicopters, planes, German submarines."

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