Oh... Makes sense now....

Why Is Greece Cutting Pensions Instead of Its Massive Military Budget?

By Sam Ross-Brown

The Greek Parliament is set to vote today on reforms required for opening negotiations on a badly needed 86 billion euro bailout. Those reforms mostly include tax increases and budget cuts—conditions now painfully familiar to millions of Greeks who have already suffered through more than five years of crushing austerity.

But one part of the Greek budget that’s unlikely to be seriously cut back is defense. Which is a shame, because unlike pensions or fuel subsidies, it’s one area the government could easily afford to trim. Since the mid-1970s, in fact, and right through the last five years of fiscal crisis, Greek military spending as a percentage of GDP has been the highest among EU or NATO countries (aside from the U.S.).

That’s right: The nation at the heart of the Eurozone’s existential crisis, an economy that’s contracted by a full 25 percent since 2009 and has suffered Great Depression-level unemployment for the past five years, also has the continent’s biggest military budget. And it’s not just the budget itself. Despite participating in little more than peacekeeping operations in recent decades, Greece has the highest ratio of military personnel to population in Europe. And to this day, Greece’s 1,300-strong inventory of tanks is twice the number of the United Kingdom.

Why the massive military? Since the end of Greece’s military junta in the mid-’70s successive governments in Athens have justified the large defense budget as a safeguard against neighboring Turkey, with which Greece has fought numerous wars throughout its history. But more recently that argument has come to make less and less sense. After all, since 1952, both countries have been members of NATO, and thus bound by treaty to come to the other’s defense. And in the late 1990s when Turkey unsuccessfully attempted to join the EU, Greece’s then-Foreign Minister George Papandreou offered critical support.

But even stranger is the fact Germany has been one of Greece’s leading suppliers of arms right through the last five years. As Helena Smith reports for The Guardian, German-made weapons account for more than a quarter of Greek arms imports. Despite Germany’s critical role in demanding round after round of harsh austerity, Greece has long been its largest market for weaponry.  

To be fair, Greece’s defense budget hasn’t totally escaped cuts during the crisis. Since 2009, Greece has reduced its military spending by a full 54 percent, and while that’s significant, defense still accounts for 2.4 percent of Greece’s GDP—higher than Britain, Germany, or France, all nations that, unlike Greece, have seen major combat within the last two decades. In other words, the cuts since 2009 have moved the share of Greece’s defense spending from more than 3 percent of its economy to around 2.4 percent (higher than all Eurozone nations, but just below the Pentagon).

What’s more, it seems unlikely that defense cuts will be allowed to go much further. A few weeks ago, as Greece faced enormous pressure to once again cut its pension program, the European Commission came up with a compromise. If Greece slashed its military budget by 400 million euros, it could defer the pension cut. But the International Monetary Fund reportedly balked at the proposal, and the deal didn’t go through. Greeks braced themselves for another round of deep pension cuts and Greece’s military budget—enormous for the size of the country—remained unscathed. In fact, NATO recently estimated that instead of shrinking, Greece’s defense budget may actually increase over the next year.

For the past five years, ordinary Greeks have overwhelmingly paid the price for their government’s financial misdeeds. It’s time Greece’s defense budget shares some of that pain.