Greece keen on unsustainable military spending despite economic woes

Greece stands apart globally with its extremely high military expenditure and an ambitious armament program in the wake of skyrocketing energy prices and a severe downturn in the European economy.

Defence expenditure to gross domestic product (GDP) of the country rose to 3.76 percent as of 2022 – up from 2.45 percent in 2019 – when the conservative New Democracy (ND) government took over from the leftist SYRIZA-PS.

This figure is higher than even the US.

Consequently, Greece’s defence expenditure soared to around $8.4 billion in 2022, from $5 billion in 2019, which indicates an astonishing increase of over 60 percent.

That is to say, Greece’s defence spending per person stands at a whopping $730 as of 2022.

Comparably, the share of defence spending in Türkiye’s GDP is forecast to be around 1.22 percent, clocking in the country's per-person expenditure at only $166.

What is noteworthy is that over 45 percent of Athens’s massive defence budget is allocated to new weapon purchases.

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France reaping big benefits

France, a traditional arms supplier to Athens, has benefited the most from Greece’s accelerated drive for armament, according to the arms transfers database by the Stockholm International Peace Research Institute.

As such, Paris secured big-ticket deals, including 24 Rafale warplanes and FDI frigates, along with developed missiles and electronic warfare systems.

The cost of these two deals is estimated to be around $6 billion.

Washington, to which Athens provided access to numerous military facilities through the update of the Mutual Defense Cooperation Agreement in 2019 and 2021, has recently expedited the transfer of the vast amount of weapons.

Consequently, the transfer of 1,200 M-117 armoured vehicles, 10 CH-47D heavy-lift cargo helicopters, and 60 OH-58D reconnaissance/combat helicopters is underway.

In September, the US also delivered the first pair of the country’s 83 F-16, which will be updated to Viper configuration, as part of a deal worth $1.5 billion.

What is more, according to the US Department of State, Greece also expressed keen interest in joining the F-35 Joint Strike-Fighter program, as well as future procurements of MQ-9 Unmanned Aerial Systems, AH-64E Apaches, as well as upgrades to their M-270 MLRS and Patriot systems.

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During the same period, Germany agreed to sell 44 DM2A4 heavy torpedoes at the cost of $110 million for Greek submarines and the UK sold 2 Vita-type fast attack crafts for $300 million.

Spain, which sold five Alpha-900 UAVs, and Italy, which supplied two 76mm naval guns, are other Western arms providers for Athens.

Russia is perhaps the most surprising arms exporter on this list. In 2019, it provided Greece with four SA-15 air defence systems.

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Dwindling finances

As the country spends tens of billions of dollars on military expenditure, its economy is far from being in promising shape as claimed by the government. 

According to OECD data, Greece’s government debt to GDP ratio is 222 percent as of 2021, the highest among OECD countries, after Japan.

The Greek Statistical Authority confirms the worsening state of Greek public finances. Accordingly, the Greek government’s nominal debt, as of 2022 Q1, exceeded $357 billion.

The country also posted a record 12 percent annual inflation, the highest in the last three decades.

While natural gas prices in Greece have hit a record high with a 332 percent annual increase, air transport saw a 58.7 percent rise, followed by electricity at 30.5 percent.

Meanwhile, the deteriorating quality of public finance and rising inflation, coupled with immense military spending, have led to a decline in the quality of life for people living in the country.

According to recent statistics, over 28 percent of the Greek population lives at risk of poverty or social exclusion, while almost 30 percent experiences material deprivation.