Budget deficit

The Troika returned to Athens last Monday  to assess what measures Greece could take in 2013 and 2014 to save more than 11.6 billion Euro to stay on track with the fiscal targets set by its lenders.

One area that offers scope for savings that does not further squeeze employees and pensioners that has yet to be fully explored is defense spending. Even though Greece has trimmed its military spending, it is still the highest in the region.

If, over the past decade Greece would have spent only the euro zone average of 1.7% of GDP on defense, rather than 4%, it would have saved a little more than 50% of GDP or roughly 150 billion Euro – more than the second aid package.

And where is Greece buying its weapons from? In the five years to 2010, Greece was Germany’s number one customer for munitions, accounting for 15% of Germany’s arms sales. Greece is also France’s third largest armament customer (and the largest arms customer of France in Europe).
Incidentally, but not entirely unrelated, Portugal is Germany’s second largest arms purchaser.
This may help to understand why the creditor nations have been less insistent on Greece cutting back  on arms spending. In 2010, the last year data is available, Greece actually increased defense spending by about 900 million Euro as it cut social spending by 1.8 billion Euro.

All in all it makes it quite clear that the creditor nations were essentially engaged in producer financing: loans from countries such as Germany and France were used to buy  their goods.

And meanwhile most of the German politicians and populist press want us to believe that they are doing Greece a huge favour at the expense of the German taxpayers.


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3 Responses to Budget deficit

  1. Yorgos says:

    For those that might be sceptical about the matters reported above there is a German TV report covering the same issues that can be seen here: (Unfortunately it is in German with Greek translation only)


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