No
other area has contributed as heavily to the Greece’s debt mountain. If Athens
had cut defence spending to levels similar to other EU states over the past
decade, economists claim it would have saved around €150bn.
As
the demands on Greece to repay €313 billion it owes its external creditors have
grown, it has been unclear how a small country of only 11,125,000population
could build up such a debt.
One aspect of the political
priorities of the right wing New Democracy Government of Antonis Samaras and
the earlier social democratic government of George Papandreou, and the interim governments
under central banker Lucas Papademos
and senior judge Panagiotis Pikrammenos, is the addiction to arms puchases
Three years ago, under Papademos, it emerged how indebted Greece was to Germany and France over its massive weapons and military purchases, presumably to confront its eastern neighbour, Turkey, with whom Greece share NATO membership. As the Guardian newspaper put it on 19 April 2012:” Athens' fondness for weaponry, and willingness of Germany and France to feed it, under fire as Greece struggles with debt crisis”
Three years ago, under Papademos, it emerged how indebted Greece was to Germany and France over its massive weapons and military purchases, presumably to confront its eastern neighbour, Turkey, with whom Greece share NATO membership. As the Guardian newspaper put it on 19 April 2012:” Athens' fondness for weaponry, and willingness of Germany and France to feed it, under fire as Greece struggles with debt crisis”
("German
'hypocrisy' over Greek military spending has critics up in arms";
The newspaper
explained that a few months before submarines became the talk of Athens,
Yiannis Panagopoulos, who heads the Greek trade union confederation (GSEE),
found himself sitting opposite Angela Merkel at a private meeting the German
chancellor had called of European trade unionists in Berlin.
When it came to his turn to address the leader, he instinctively popped the question that many in Greece have wanted to ask. "After running through all the reasons why austerity wasn't working in my country I brought up the issue of defence expenditure. Was it right, I asked, that our government makes so many weapons purchases from Germany when it obviously couldn't afford such deals and was slashing wages and pensions?"
Merkel's reaction was instant. "She immediately said: 'But we never asked you to spend so much of your GDP on defence,'" Panagopoulos recalled. "And then she mentioned the issue of outstanding payments on submarines she said Germany had been owed for over a decade."
"If there is one country that has benefited from the huge amounts Greece spends on defence it is Germany," said Dimitris Papadimoulis, an MP with the Coalition of the Radical Left party(Syriza) .
Just under 15% of Germany's total arms exports are made to Greece, its biggest market in Europe," Papadimoulis said, reeling off figures from a scruffy armchair in his party's parliamentary office. "Greece has paid over €2bn (£1.6bn) for submarines that proved to be faulty and which it doesn't even need."It owes another €1bn as part of the deal. That's three times the amount Athens was asked to make in additional pension cuts to secure its latest EU aid package."
According to the Stockholm International Peace Research Institute (Sipri), France is not far behind. Some 10% of its total arms sales go to Greece, which is a member of Nato. From 2002 to 2006, Greece was the world's fourth biggest importer of conventional weapons. It is now the 10th.
"As a proportion of GDP, Greece spends twice as much as any other EU member on defence," said Papadimoulis, who is also a former MEP.
"Well after the economic crisis had begun, Germany and France were trying to seal lucrative weapons deals even as they were pushing us to make deep cuts in areas like health."
"Since the 1974 Turkish invasion of Cyprus, Greece has spent an estimated €216bn on armaments, although I am 100% certain that in absolute terms its defence expenditure is much greater than official documents would show due to the so-called secret funds the state has access to," said Katerina Tsoukala, a Brussels-based security expert.
The Guardian also reported that in that week in april 2012 the former defence minister Akis Tsochadzopoulos was jailed pending trial on charges of accepting an €8m bribe from Ferrostaal, the German company that helped oversee the scandal-marred sale of four Class 214 submarines to the Greek navy 12 years ago. In the course of a two-year investigation by prosecutors in Munich, senior Ferrostaal employees, including its chief executive, resigned after acknowledging that money had been exchanged to secure the sale of submarines to Greece and Portugal.
In 2011, after publicly apologising for its role in the furore, Ferrostaal agreed to pay a €140m fine. In a similar case the German engineering group Siemens recently reached an out of court settlement with Greece following claims it had bribed cabinet ministers and other officials to secure contracts before the 2004 Olympic Games in Athens. Tassos Mandelis, a former socialist transport minister, admitted he had accepted a €100,000 payment from Siemens in 1998.
The settlement has paved the way for the company to bid for public procurement tenders in Greece, but it has also highlighted the unsavoury business practices of leading German firms. "There's a level of hypocrisy here that is hard to miss," said Papadimoulis. "Corruption in Greece is frequently singled out as a cause for waste but at the same time companies like Ferrostaal and Siemens are pioneers in the practice. A big part of our defence spending is bound up with bribes, black money that funds the [mainstream] political class in a nation where governments have got away with it by long playing on peoples' fears."
"Germany became Germany partly because for 62 years it did not have to think about military expenditure," said Angelos Philippides, a prominent economist. "For a long time Greece spent 7% of its GDP on defence when other European countries spent an average 2.2%. If you were to add up that compound 5% from 1946 to today, there would be no debt at all," he said. "It's vital that if the European Union wants to speak about fair deals it should at least guarantee Greek borders [with Turkey] so the country can bring down military spending to 2.2%."
A few years earlier, media reports revealed that “As Greece slashes spending to avoid default, it hasn't moved to skimp on one area: defence. (“The Submarine Deals That Helped Sink Greece,” Wall Street Journal, 10 July 2010: http://www.lepointinternational.com/it/politica/europa/550-the-submarine-deals-that-helped-sink-greece-.html#sthash.nTtjWEi2.dpuf)
Greece was spending more
than a billion euros on two submarines from Germany.
It's also looking to spend big on six frigates and 15 search-and-rescue helicopters from France. In recent years, Greece has bought more than two dozen F16 fighter jets from the U.S. at a cost of more than €1.5 billion.
Greece is the largest importer of conventional weapons in Europe—and ranks fifth in the world behind China, India, the United Arab Emirates and South Korea. Its military spending is the highest in the European Union as a percentage of gross domestic product. That spending was one of the factors behind Greece's stratospheric national debt.
"Greece became the front line in the Cold War, and that began, right then and there, the Greek economic crisis of today," says Andre Gerolymatos, a professor of Hellenic studies at Simon Fraser University in Vancouver.
By the mid-1950s, the U.S. pulled back aid, much of which had been in the form of military hardware, shifting much of the burden for Greek military spending to Athens.
By this time, Greece's worsening relations with Turkey led to yet more arms spending. Despite being fellow members of the North Atlantic Treaty Organization, the two nations are bitter rivals. The discovery of oil in the northern Aegean Sea and disagreements over territorial waters and airspace became the source of numerous—and expensive—altercations between the two countries.
It was in that environment that Greece in 1998 went shopping for submarines. It decided on three German-built class-214 submarines, a state-of-the-art diesel-electric powered vessel, with the option of buying a fourth—for a total of €1.8 billion. The first was to be built at the Kiel headquarters of Howaldtswerke-Deutsche Werft GmbH, with the others built at the affiliated Hellenic Shipyards SA, in Skaramangas, Greece.
The arrangement, called the Archimedes Program, would preserve thousands of jobs at the Greek shipyard.
Greek officials in 2002 expanded it to include the modernization of three older class-209 submarines—work to be done at the Skaramangas shipyard using materials and help from the Germans. The increase would cost another €985 million.
The German side consisted of a company owned by German truckmaker MAN SE, called Ferrostaal, and Howaldtswerke-Deutsche Werft, now owned by ThyssenKrupp Marine Systems AG. (MAN has since reduced its stake in Ferrostaal to 30%.)
The total cost of the new and renovated subs: €2.84 billion.
As the military expenditures rose, Greece's two main political parties used them as a political football, each trying to make the budget deficit figures look worse when the other was in charge.
When the Socialist government first bought the submarines, it post-dated the accounting for them to the day when the vessels were to be delivered, rather than when they were purchased.
Other media outlets filled in some information gaps (“EU accused of hypocrisy for £1 billion in arms sales to Greece,” Daily Telegraph, 8 March 2012; http://www.telegraph.co.uk/news/worldnews/europe/greece/9129234/EU-accused-of-hypocrisy-for-1-billion-in-arms-sales-to-Greece.html)
European Union countries have been accused of hypocrisy over imposing savage austerity measures on Greece while at the same time selling the highly indebted country over £1 billion of arms.
It's also looking to spend big on six frigates and 15 search-and-rescue helicopters from France. In recent years, Greece has bought more than two dozen F16 fighter jets from the U.S. at a cost of more than €1.5 billion.
Greece is the largest importer of conventional weapons in Europe—and ranks fifth in the world behind China, India, the United Arab Emirates and South Korea. Its military spending is the highest in the European Union as a percentage of gross domestic product. That spending was one of the factors behind Greece's stratospheric national debt.
"Greece became the front line in the Cold War, and that began, right then and there, the Greek economic crisis of today," says Andre Gerolymatos, a professor of Hellenic studies at Simon Fraser University in Vancouver.
By the mid-1950s, the U.S. pulled back aid, much of which had been in the form of military hardware, shifting much of the burden for Greek military spending to Athens.
By this time, Greece's worsening relations with Turkey led to yet more arms spending. Despite being fellow members of the North Atlantic Treaty Organization, the two nations are bitter rivals. The discovery of oil in the northern Aegean Sea and disagreements over territorial waters and airspace became the source of numerous—and expensive—altercations between the two countries.
It was in that environment that Greece in 1998 went shopping for submarines. It decided on three German-built class-214 submarines, a state-of-the-art diesel-electric powered vessel, with the option of buying a fourth—for a total of €1.8 billion. The first was to be built at the Kiel headquarters of Howaldtswerke-Deutsche Werft GmbH, with the others built at the affiliated Hellenic Shipyards SA, in Skaramangas, Greece.
The arrangement, called the Archimedes Program, would preserve thousands of jobs at the Greek shipyard.
Greek officials in 2002 expanded it to include the modernization of three older class-209 submarines—work to be done at the Skaramangas shipyard using materials and help from the Germans. The increase would cost another €985 million.
The German side consisted of a company owned by German truckmaker MAN SE, called Ferrostaal, and Howaldtswerke-Deutsche Werft, now owned by ThyssenKrupp Marine Systems AG. (MAN has since reduced its stake in Ferrostaal to 30%.)
The total cost of the new and renovated subs: €2.84 billion.
As the military expenditures rose, Greece's two main political parties used them as a political football, each trying to make the budget deficit figures look worse when the other was in charge.
When the Socialist government first bought the submarines, it post-dated the accounting for them to the day when the vessels were to be delivered, rather than when they were purchased.
Other media outlets filled in some information gaps (“EU accused of hypocrisy for £1 billion in arms sales to Greece,” Daily Telegraph, 8 March 2012; http://www.telegraph.co.uk/news/worldnews/europe/greece/9129234/EU-accused-of-hypocrisy-for-1-billion-in-arms-sales-to-Greece.html)
European Union countries have been accused of hypocrisy over imposing savage austerity measures on Greece while at the same time selling the highly indebted country over £1 billion of arms.
New
official figures show that bailouts and an EU austerity programme aimed at
reducing Greek living standards by 30 per cent have not dented lucrative arms
sales to Greece.
In
2010, as Greece was plunged into crisis and the EU began a scheduled £200
billion in aid payments, European countries continued to sell aircraft, tanks,
artillery and submarines to the Greek military.
In
the same year, France concluded a £662 million military aircraft deal with
Greece, a lucrative deal for the French arms industry that will be underwritten
by EU bail-out funds.
In October 2011,
as the EU negotiated a second bail-out for Greece, Angela Merkel and the then French conservative President Nicolas
Sarkozy, told the Greek government that all existing arms contracts “must be
honoured.”
"No one has explicitly tied the EU payments to arms deals but there is an understanding with Greece that support will be more palatable if present, and future, sales go ahead," said a European diplomat.
Hilmar Linnenkamp, of the German Institute for International and Security Affairs, described the sales as "totally irresponsible" at a time when Greece is sinking into a toxic spiral of debt and recession. "The latest arms export report reveals that in 2010 Greece imported exactly 223 howitzers and a submarine from Germany," he told the Die Zeit newspaper. "The total value of the arms sales was 403 million euros, which contributed greatly to the explosion of Greece's public debt."
Corruption in military sales from Germany and France has bled
the Greek Treasury dry.
(“German arms firms in bribery claims over
sale of Leopard tanks to Greece,” Independent on Sunday
29 December 2013, http://www.independent.co.uk/news/world/europe/german-arms-firms-in-bribery-claims-over-sale-of-leopard-tanks-to-greece-9029546.html)
As the newspaper reported: “Chancellor Angela Merkel’s insistence that Greece tackle corruption to beat the Euro crisis took an embarrassing turn on Sunday with allegations that German arms manufacturers bribed a top Athens defence official to buy their tanks and submarines for the Greek armed forces.
Germany’s Süddeutsche Zeitung newspaper said a clampdown on a culture of illicit payments to officials had led Athens state prosecutors to arrest a former top Greek Defence Ministry official who is reported to have confessed to taking €8m (£6.7m) in bribes in return for buying weapons from arms manufacturers in five countries.”
Endnote:
In 1953 the Greek Finance minister signed an agreement with his German counterpart cancelling 50% of Germany's debt to Greece.
Martin Callanan, the leader of Conservatives MEPs in the European Parliament, accused Germany and France of not caring about the future of Greece. "They are effectively subsidising their own defence industries via the bail-out funds," he said.
"They are making Greece pay for ships and planes they don't need – with money they don't have. The Greeks need a life-raft – not another U-boat."
More details
on military sales corruption at:
(“France and Germany 'to blame for Greece crisis,' Independent, 20 February 2012, http://www.independent.co.uk/news/world/europe/france-and-germany-to-blame-for-greece-crisis-7218923.html);
(German-Greek Arms Deal Corruption Allegations Stir Renewed Debate
http://www.ti-defence.org/what-we-do/news-events/blog/280-german-greek-arms-deal-corruption-allegations.html)
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