Greece Defence and Security Report Q1 2009

Former Yugoslav Republic of Macedonia (FYR Macedonia) in November said it was bringing a case against Greece to the International Court of Justice (ICJ), accusing it of breaking a 1995 UN agreement when it vetoed FYR Macedonia’s application to join the North Atlantic Treaty Organisations (NATO) in April 2008. Greece and FYR Macedonia have an ongoing dispute over the latter’s constitutional name.

Greece says its neighbour cannot call itself the Republic of Macedonia, its preferred name, because that would imply a territorial claim over Greece’s northern province of Macedonia. The 1995 UN agreement was designed to provide an interim solution. In exchange for FYR Macedonia agreeing to change its flag and constitution and being represented under the name ‘Former Yugoslav Republic of Macedonia’, Greece pledged not to stop it from joining international bodies. The April 2008 NATO veto was in direct contradiction of that agreement, FRY Macedonia said in its appeal to the ICJ. Greece’s immediate reaction was to say FYR Macedonia had itself ‘previously and blatantly violated a series of basic articleobligations listed in this agreement, as well as the fundamental principle of good-neighbourly relations’.

Legal experts say the court case could take three years and an eventual ICJ ruling might be difficult to enforce. Since Greece used its NATO veto, tensions between the two countries increased, with a series of trade and border disputes. The legal action might, it was also feared, further complicate substantive negotiations to resolve the name issue.

The Greek defence industry’s good relationship with the US, plus NATO and EU membership, should ensure that it continues to benefit from a significant number of subcontracts and plays an important role in exporting arms to the Middle East and emerging European countries. There appear to be no immediate threats on the positive path that Greece, a long-term member of Europe, is steering. Although limited by the ruling party’s precarious parliamentary majority and a more difficult international climate, Government reforms have supported consumer and business confidence, and the economy is expected to continue growing in 2009.

In early December 2007, Greece agreed to buy 415 BMP-3 fighting vehicles from Russia, worth an estimated EUR1.7bn (US$2.5bn). Defence spending in Greece runs at around 3% of GDP, one of the highest levels in the EU, partly because of a policy to keep an arms balance with Turkey. Greece has a 10-year defence procurement plan worth a total of EUR27bn in 2006-2015, including the purchase of fighter planes. Russian-built Sukhoi SU35s are being considered among other models to meet the country’s need for 30 fourth-generation fighter jets in a contract worth EUR4bn. Greece’s relations with Russia have improved in recent years, with a joint oil pipeline project launched in 2007. Former Russian president Vladimir Putin visited Greece three times in 2006-2007.

Greece’s military expenditure has remained at a steady level over recent years, but decreased over 2005.

Growth will be limited by Greece’s ongoing EU obligation to bring its budget deficit down to under the 3% GDP limit applied to eurozone countries. The Greek defence industry continues to be involved in the manufacture and export of ammunition of all classes. Its imports, although slow over the last year or two, are expected to recover over the next couple of years. However, the arms trade continues to be affected by cuts to the defence budget.