Desperate Greece still needed to produce deadly weapons

Sigh (via The Independent):

As Greece is forced by European leaders to abandon a referendum to allow the people the chance to vote on its latest bailout conditions, the country is preparing for yet another dose of austerity.

The conditions of the next €130bn rescue package will be severe, yet there is an elephant in the room: the extent to which the German but also the French military industries rely on Greece.

The small, crisis-hit nation, whose prime minister, George Papandreou, narrowly survived a vote of confidence on Friday, buys more German weapons than any other country. Some Greeks want to know why it is that France and Germany are demanding cuts in pensions, salaries and public services, but the buying of arms is allowed to continue unabated.

Yanis Varoufakis, professor of economics at Athens University, says: “When Greek hospitals are running out of bandages, the only bit of the budget not being attacked by the EU and IMF is military expenditure.”

Greece is the highest military spender, in terms of percentage of GDP, in the EU. Professor Varoufakis adds: “Greece is a disproportionately crucial customer for the arma-ments industry. In comparison to Greece’s size, it’s preposterous.”

Despite its dire financial straits, the country’s military expenditure has risen during the global financial crisis. It spent €7.1bn in 2010, compared with €6.24bn in 2007.

Some 58 per cent of Greece’s military expenditure in 2010 went to Germany, according to the Stockholm International Peace Research Institute (Sipri).

The US is the major beneficiary of Greek military expenditure, with the Americans supplying 42 per cent of its arms. In second and third place are Germany, with 22.7 per cent, and then France, with 12.5 per cent.

Professor Varoufakis believes: “The EU and IMF keep giving loans to Greece to stop it going bankrupt, but countries such as Germany need to justify this to voters, hence the demand for spending cuts. But with Greece being such a crucial arms customer, it only takes a phone call to the German government from an armaments manufacturer to ensure that Greece’s military budget stays intact.”

Greece’s defence budget is historically high due to the perceived threat from neighbouring Turkey. Arms companies have benefited by playing the two sides off against each other. Professor Varoufakis says: “Typically, one side buys, say, a frigate, and then the other buys the same frigate – with the only difference being the colour of the paint.”