German 'hypocrisy' over Greek military spending has critics up in arms

23.05.2012 14:50

 

The Guardian: Athens' fondness for weaponry, and willingness of Germany and France to feed it, under fire as Greece struggles with debt crisis

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."

Greek profligacy may be blamed for triggering the debt crisis that now threatens to tear the eurozone apart, but if there is one area where Berlin is less excoriating of state largesse it is in Athens's extravagant taste for arms.

Behind the frequent exhortations that Greece rein in spending after living "beyond its means" – admonishments made most loudly by Merkel and her finance minister Wolfgang Schäuble – there is another reality that paints Germany in a less than flattering light, according to MPs, military experts, economists and scholars.

"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.

Greek arms imports

"Just under 15% of Germany's total arms exports are made to Greece, its biggest market in Europe," Papadimoulis said the MP, 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."

Under the latest EU-IMF-sponsored rescue programme – which is propping up the near-bankrupt Greek economy with an extra €130bn in emergency loans until 2015 – Athens has agreed to cut defence expenditure by €400m. Even so, its military budget accounts for nearly 4% of national economic output, compared with the eurozone average of around 2%. The country has cited perceived security risks from Turkey and, in addition to state-of-the-art submarines, has bought hundreds of Leopard tanks, howitzers, Mirage fighter planes and F-16 jets from Germany, France and the US since the late 1990s.

Speculation is rife that international aid was dependent on Greece following through on agreements to buy military hardware from Germany and France.

Greek defence spending

"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 problem is that unlike Britain, for example, Greece has never had a transparent and democratic defence procurement strategy. Instead, everything is veiled in secrecy and people like me have to go to Sipri to find out information that in other countries would be readily available."

The murkiness has ensured that over the years the Greek arms tradehas become increasingly associated with high-level bribery and corruption – the very practices abhorred by Berlin, Athens' main provider of rescue funds.

This week 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. To date, Athens has taken delivery of only one of the subs after the vessels were found to have technical glitches.

Tsochadzopoulos, the most senior official yet to be arraigned in connection with corruption, stands accused of funnelling the cash, initially deposited in a Swiss bank account, via offshore companies to buy two properties in Athens, including a luxury home on the capital's most expensive boulevard. His wife and daughter also appeared in court on Thursday accused of money laundering. They, along with the veteran socialist, denied the charges.

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.

Last year, 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."

At the time of the settlement, Siemens said it was "committed to ensure, going forward, full and overall compliance to sound corporate principles".

Given Greece's financial predicament – illustrated last week by IMF managing director Christine Lagarde's refusal to rule out a default – growing numbers have begun to question the probity of the nation's defence expenditure.

Deputy prime minister Theodore Pangalos publicly rued the fact that Athens was spending so much money on arms, exclaiming during a visit by the Turkish prime minister, Recep Tayyip Erdogan, that Greece was being "forced to buy weapons we do not need".

No other area has contributed as heavily to the country'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 – more than its last bailout. Instead, Greece dedicates up to €7bn a year to military expenditure – down from a high of €10bn in 2009.

"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%."

The imbalance has spawned speculation that peripheral countries in Europe with vulnerable frontiers likesuch as Greece are being exploited in terms of defence spending by wealthier states at Europe's core.

Thanos Dokos, a leading Greek defence expert, says rational debate on such military extravagance has been made impossible by the supposed Turkish threat and a fear among politicians of being labelled unpatriotic.

"One could argue that with 1,300 tanks, more than twice the number in the UK, Greece has many more than it needs. But no one forced it to spend so much. It happened because of the threat perception from Turkey and the need to balance Turkey militarily," he said.

He said there was an element of hypocrisy in the criticism being levelled at Greece in France and Germany.

"Knowing the economic situation of the country, and all the talk about Greece's overspending for the last 20 years, one feels like saying 'hold off, gentlemen, with the criticism'," he said. "It's hypocritical to ignore the fact that a not insignificant amount was spent on buying weapons systems from EU members Germany and France."

Helena Smith in Athens

 

 

Greece's austerity doesn't extend to its arms budget
 
Greece continues to spend the most on arms in the EU as a percentage of GDP, while its people suffer economic hardship
In the wake of the private sector debt swap agreed last week, European leaders have continued to call for major structural reforms to Greece's economy and society. The current EU-IMF bailout remains conditional on further austerity measures, including reducing pensions, the minimum-wage and civil service jobs. However, one area of the Greek budget doesn't seem to have received much scrutiny: its huge military spending.
 
The fact that Greece, a relatively small and democratic country with not much in the way of global ambitions, should spend as much on its military as it does is perplexing. In 2006, as the financial crisis was looming, Greece was the third biggest arms importer after China and India. And over the past 10 years its military budget has stood at an average of 4% of GDP, more than £900 per person. If Greece is in need of structural reform, then its oversized military would seem the most logical place to start. In fact, if it had only spent the EU average of 1.7% over the last 20 years, it would have saved a total of 52% of its GDP – meaning instead of being completely bankrupt it would be among the more typical countries struggling with the recession.
 
The supposed threat from Turkey is often cited as the major reason for such a high military budget. However, this argument just doesn't hold up for several reasons. First, both countries are part of Nato and share a number of mutual allies, not least the US, and so all-out war between the two is highly unlikely to occur. Second, Turkey has on several occasions proposed a mutual reduction in arms spending, something Greece has repeatedly refused to agree to. Finally, relations between the two countries have markedly improved in recent years, making such a massive military build-up seem even more unnecessary. All Greece's military spending seems to achieve is to polarise the situation and goad Turkey into an arms race. 
 
The second justification given by the Greek government, that its forces are responsible for defending its porous borders from illegal immigration, is only marginally more convincing. While this might account for some increases in spending, it is unclear what role the latest fighter jets, submarines and tanks could play in stemming the tide of migrants arriving by foot or in small boats. So why has Greece continued to spend such huge amounts on its army?
 
One major factor is that France and Germany's arms industries have greatly profited from this profligate military spending, leading their governments to put pressure on Greece not to cancel lucrative arms deals. In the five years up to 2010, Greece purchased more of Germany's arms exports than any other country, buying 15% of its weapons. Over the same period, Greece was the third-largest customer for France's military exports and its top buyer in Europe. Significantly, when the first bail-out package was being negotiated in 2010, Greece spent 7.1bn euros (£5.9bn) on its military, up from 6.24bn euros in 2007. A total of £1bn was spent on French and German weapons, plunging the country even further into debt in the same year that social spending was cut by 1.8bn euros. It has claimed by some that this was no coincidence, and that the EU bail-out was explicitly tied to burgeoning arms deals. In particular, there is alleged to have been concerted pressure from France to buy several stealth frigates. Meanwhile Germany sold 223 howitzers and completed a controversial deal on faulty submarines, leading to an investigation into accusations of bribes being given to Greek officials.
 
Admittedly Greek military spending has been significantly reduced over the last year or two, although not nearly as much as government expenditure on healthcare or social welfare. Nonetheless, Greece continues to spend the most in the EU as a percentage of GDP and remains one of the biggest weapons importers in the world. Recent months have also seen continued pressure from Merkel and Sarkozy on Greece to honour its arms deals amid ongoing negotiations over the current bailout deal.
 
The importance of the global arms trade was highlighted in a recent report showing that sales have increased by a quarter in the last four years, driven by growing demand in Asia. Amid economic stagnation in Europe and the west, military technology remains one of the key areas in which competitive advantage has been maintained over emerging economies. However, while this growth has benefited major arms-exporting countries such as Germany, France and the UK, it has deepened even further the economic divide within Europe. Interestingly, Portugal – another country currently in the news for its economic woes – is Germany's second largest arms buyer after Greece.
 
In the current context, it is easy to blame all Greece's troubles on its problems with corruption, tax evasion and its oversized state sector. Yet one cannot help but speculate that if Greece's military spending had been reined in sooner, it would not be experiencing the dramatic crisis it is going through now. And the Greek people, instead of facing austerity measures that have reduced living standards by 30%, might have been able to take a more moderate and sustainable route to reform.
 
Paul Haydon

 

Zpět

Kontakt

Vyhledávání

© 2011 Všechna práva vyhrazena.