Financial crisis and defense cuts: The view from Greece


The financial crisis that hit Greece in 2010 has forced the country to undertake severe public spending cuts as demanded by both the International Monetary Fund and the European Union in order to get access to bailout funds. The defense budget has not been immune to these measures. However, if compared to other public sectors such as welfare, transportation and education, the defense budget has suffered a relatively lower share of cuts. Consequently, despite cuts amounting up to 30% since 2010 and the economy having shrunk by 25%, Greece’s defense budget is still one of the highest among NATO countries (European NATO members averaging at 1.6%) in terms of percentage of the GDP (approximately 2.3% in 2013). The main reason can be found in Greece’s perception of external threats such as Turkey and the Former Yugoslavian Republic of Macedonia, ones that keep a strong hold on the people’s mindset as well as on its foreign policy. During the 1980s, Greece allocated 6.2% of its GDP to defense spending, a percentage that gradually decreased to a 3.8% during the 1990s and finally reached a 3% low during the 2000s[i].While defense cutting today is moving at a slower pace, one needs to point out that Greece has been successfully shrinking its defense budget during the last three decades.

In contrast to its European partners, Greece does not perceive its national borders to be secure. This perception is stirred up by two main foreign and security issues. Firstly, Greece was and still remains today under the threat of a casus belli[ii] by its neighbor Turkey. Moreover, ever since 1974 and the Turkish invasion of The Republic of Cyprus, Greece had to bear witness to the undermining of its territorial sovereignty by successive Turkish demands and allegations. To name a few, besides the casus belli concerning its international customary right to extend the length of its territorial waters from 6 (as of 1936) up to 12 nautical miles[iii] (which is every country’s right according to the International Convention of Montego Bay of 1982), disputes regarding its continental shelf as well as a few thousand islets on the eastern Aegean Sea[iv] are still on the forefront. It is noteworthy that the two countries’ NATO membership does not curb the fear regarding conflict. As clearly seen during the Cyprus Incident of 1974, NATO decided not to intervene, stating that the North Atlantic treaty would come into force against an external enemy but not against a member-state.

Secondly, the other security issue concerns a territorial dispute with the Former Yugoslav Republic of Macedonia (FYROM)[v]. FYROM seems to hold a claim on Greece’s northern territories, allegedly housing an ethnic “Macedonian” minority as being part of the “wider Macedonian” territory, as evidenced by its Constitution[vi]. Whereas this article’s purpose is not to go into detail about the legitimacy of these demands or the validity of these allegations, its focus is to stress the reasons and ramifications behind Greece’s lack of deep spending cuts in the defense department.

The Greek economy’s diminishing returns, its systemic issues and the disparity in its imports and exports’ balance sheets required moving forward with drastic reforms regarding the country’s way of thinking as well as putting a new spin on the state’s priorities.

However, due to the foreign policy issues mentioned above, the country was unable to put aside the accumulated grievances with its adjacent countries and move forward. One could certainly argue that these concerns should be non-existent due to Greece’s membership in the European Union[vii] given the sense of security and solidarity that this relationship entails. Nonetheless, one should take into account the fact that the European Union is not familiar in dealing with matters of this nature and desperately lacks the necessary institutional groundwork and political drive. To make matters worse, Greece’s membership since 2010 has deteriorated and has been put to the test, while its perception as a weakened or even failed state has gifted the country’s “adversaries” with the perfect opportunity to eventually further their claims. Furthermore, Greece’s NATO membership[viii] requires certain military commitments that have to be met[ix]. This is the conundrum that Greece is facing. On the one hand it needs to hastily fix and rebuild its economy with the most efficient remedies at its disposal, while on the other it needs to maintain a strong defensive presence acting as a strong deterrent against external threats[x]. Seeing as this is not an easy task that requires a coordinated defense doctrine and foreign policy perspective[xi], progress on this front is moving at an alarmingly slow pace.

Another matter that has to be accounted for, is the one deeply rooted in the country’s geographical position in the wider region of the European Union. Greece, along with Italy and Spain, represents for most of the European Union’s immigrants the easiest and nearest access point. In 2010, 90% of the European Union’s immigrants came through Greece[xii]. To put it bluntly, Athens holds the key to the EU’s illegal middle-eastern immigration wave of the previous and possibly next decade. Hence the implication that Greece has a vital responsibility as a member-state, an obligation that limits the defense department’s budget-cutting even further while its prominent security shortcomings are in plain sight. This issue, coupled with the country’s ineffective, mismanaged and shorthanded police force gave rise to the political party of the Golden Dawn[xiii] – well-known and denounced in most countries due to its ideological affiliation with the neo-Nazi movement. Despite the above-mentioned politically damaging connection, the party and its paramilitary forces were able to take advantage of the State’s inability to deal with its internal security failings, all the while establishing a presence that could develop – if left unattended – into a state within a state, a hopefully farfetched scenario where the will of the strongest overthrows common sense, strong-arms public opinion and destabilizes the country’s priorities[xiv].

Needless to say that while budget-cutting is considered by some as virtually non-existent in the national defense department, the same cannot be said regarding public safety and police matters. While demonstrations are not in vogue nowadays, crime is rampant in disadvantaged areas and the police forces are growing accustomed to protecting political figures rather than ensuring the safety of Greek citizens. Every once in a while peaceful protests are hijacked by anarchist forces that effectively terminate any possibility of legitimate demands being heard and met. One needs to look no further than the events of February 2012[xv] when a significant area of Athens was set ablaze and historical buildings were burned to the ground, while the police and Special Forces were ill-prepared and unable to manage the events of that infamous night.

One must highlight that one of the prerequisites of the bail-out package of 2010 was that Greece would fulfil the obligations related to the arms deals with Germany and France it had agreed to. This means that despite the State’s financial situation and the necessity for austerity measures, those contracts would have to be honored[xvi]. In contrast, military training centers were shut down[xvii] and repurposed, giving way for further trimming of military training and facilities[xviii]. For instance, the number of training flights of the military aviation has been reduced severely. Since 2010, the military’s operational costs have dropped by nearly 30%, while military salaries have taken a 37% reduction, one that was implemented – as in other public expenditures – retroactively. This means that employees not only saw a decline in their monthly pay, but also a monthly percentage of their salary taken back, those reductions needing to have taken place the year before. In the context of reducing the salaries of the public and private sector, the police was affected as well[xix]. This led to a feeling of discontent widespread throughout the members of the police force, severely underpaid with an income disproportionate to the requirements and dangers of their work[xx]. Progress, however, has been achieved in moving forward with a restructuring and a repurposing of the police personnel formerly assigned to the protection of political personalities. As of late, the police presence in cities has risen and new Special Forces with specific powers are being trained, this restructuration is considered to have dealt a significant blow to crime and corruption.

If anything, the financial crisis has forced Greece to adjust its defense spending according to its recently undermined perception of sovereignty, while at the same time pushing forward with budget cuts marginalizing the state’s presence in the day to day life of its citizens. Although the dissatisfaction of the military and the risk of regional instability led to some warning of a possible coup d’état, such a predicament is improbable and a product of fear mongering and financial speculating. The real danger that the Greek political system and the country are facing is the rising popularity of the Golden Dawn, an influence that – despite successive political scandals and arrests[xxi] – seems to be here to stay.

Photo credit: Bloomberg

[i] Thanos Dokos & Christos Kollias, Greek Defense Spending in Times of Crisis: The urgent need for defense reform, ELIAMEP, March, 2013.

[ii] Justification for acts of war, supported by the Turkish parliament as early as 1995.

[iii] As stipulated by the International Convention of Montego Bay of 1982, ratified by Greece in 1994. Turkey refuses to ratify the Convention and even to acknowledge its customary provisions.

[iv] Islands-accessories to the Dodecanese island complex, integral part of Greece since 1947.

[v] Former Yugoslavian Republic of Macedonia, independent as of 1991.

[vi] Evangelos Kofos, Greece and the New Balkans, Pella Publishing Company, New York, p.361-394.

[vii] Greece is a member since 1981.

[viii] Greece joined the North Atlantic Treaty Organization in 1952.

[ix] Judy Dempsey, Military in Greece is spared cuts, New York Times, January 7, 2013.

[x] World Tribune, Greek military outgunned by Turkey amid deep budget cuts, April 5, 2013.

[xi] Thanos Dokos, The debate about Greek defense expenditures, eKathimerini, January 16, 2013.

[xii] Charalambos Kasimis, Greece: Illegal immigration in the midst of Crisis, Migration Information Source, March, 2012.

[xiii] Le Monde, La Grèce dévoile les actions criminelles d’Aube Dorée, September 30, 2013.

[xiv] Anthee Carassava, Spending cuts hurt Greek defense and democracy, Deutsche Welle, April 1, 2013.

[xv] Helena Smith, Greek protesters fight with police as parliament cuts deal, The Guardian, February 17, 2012.

[xvi] Paul Haydon, Greece’s austerity does not extend to its arms budget, The Guardian, March 21, 2012.

[xvii] Kostas Attias, Ποια στρατόπεδα κλείνουν, Hellenic Army, January 9 2012.

[xviii] Dimios Berikios, Κλείνουν στρατόπεδα και αεροδρόμια, To Ethnos, August 27, 2011.

[xix] Hmerisia, Κόβονται οι μισθοί στρατιωτικών, αστυνομικών, δικαστικών, γιατρών, πανεπιστημιακών, July 9, 2012.

[xx] Aggelos Tsinkris, Χωρίς προσωπικό, μέσα και σύγχρονες πολιτικές η χώρα μας, στη μάχη με το έγκλημα, To Vima, December 14, 2013.

About Author

Stavros I. Drakoularakos

Stavros I. Drakoularakos is a contributor at the International Security Observer (ISO). Stavros is a PhD Candidate at the Panteion University of Athens, where he is currently writing his thesis on Turkey, Israel and the Arab World. He holds a BA from the National University of Athens and a Masters in International and European Relations from the University Paris I – Panthéon – Sorbonne. He worked as a Research Expert for the European Council on Foreign Relations (ECFR) and is a Research Associate at the Centre for Mediterranean, Middle East and Islamic Studies (CEMMIS). He is a Greek, French and English native speaker and has a working knowledge of German.

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