World Report

Drastic restructuring to create smaller, highly flexible, mobile and effective military units

Greek firms like Hellenic Defence Systems are to receive more of the armaments budget.

member of Nato since 1952, Greece maintains armed forces at a high level of operational capability both to defend its own territorial integrity and security and to contribute to the promotion of peace and stability in the Eastern Mediterranean, the Balkans and the wider region.

“The Hellenic armed forces’ capability and effectiveness is already well-known to Nato and EU member-states, which have shown their appreciation during our cooperation with them,” says Spilios Spiliotopoulos (INTERVIEW), Minister of National Defence. He cites the huge and successful effort to ensure the security of the 2004 Olympic Games as irrefutable evidence of the armed forces’ capabilities.

Greece’s armed forces comprise an army, a navy and an air force. Defence expenditure accounts for 4.3 percent of GDP, compared with 1.5 percent of GDP in most other EU states, making Greece one of the biggest spenders on defence in Europe.
Changes are under way, however. The thaw in relations with old rival Turkey, now on the way to joining Greece in the EU, the government’s desire to spend more on social policy and the general need to tighten up on spending have led the government to reduce defence costs.

The armed forces are being restructured. “We have decided to move towards a drastic reorganisation and modernisation,” says Mr Spiliotopoulos. “The foremost goal of our strategic defence planning is the transition to a smaller, more flexible, mobile and effective form of forces, possessing effective firepower and deployability, capable of meeting the country’s national priorities as well as its commitments to the Nato, the European Union and other international organisations.”

Over the next two years, the number of conscripts will be reduced and the proportion of professional personnel increased to at least 50 percent. The armaments programme is being rationalised and a new procurements law will ensure transparency and a high level of competition. Savings of 40 million euros (£27.7 million) have been achieved over 12 months through renegotiation of defence projects and procurements.

“Operational capability is being enhanced by focusing on new concepts and application of advanced technology,” says Mr Spiliotopoulos. “Saving money by reducing the cost of the deployed forces is an excellent way to increase investments in technological development and acquire modern systems.”

Spilios Spiliotopoulos
Minister of National Defence
“Saving money is an excellent way to increase investment in technology”

The minister anticipates gradual reductions in the cost of weapon systems through cost sharing among states with common research and development projects, and the development of economies of scale and specialisation. The establishment of the European Defence Agency (EDA) provides an opportunity, along with cooperation with industries in the United States and other countries.

The sustainability and competitiveness of the domestic defence industry will be maintained and will actually be improved, according to the minister. The demand for military products with high added value could give a technological boost to the industry. “These programmes will enable the domestic industries to prepare the right production planning, which will contribute to their modernisation and reconstruction and strengthen their competitiveness in the new conditions of the European and international market,” says Mr Spiliotopoulos.

Demand for more high-tech products could give domestic industry a boost

The government aims for a continuous increase in the share of the domestic industry in the armaments budget, while supporting exports and encouraging diversification towards the production of non-defence products.
Tassos Philippakos (INTERVIEW), Chief Executive Officer of Hellenic Aerospace Industry (HAI), one of the major state-owned defence companies in Greece, says the company will be stepping up its efforts to acquire business from abroad.
“It is obvious that the part of the business coming from the Ministry of Defence will probably be under pressure, so it is also obvious that what we have to do is turn to business outside of Greece,” he says.

HAI has established a reputation in the global market both as a supplier and as a partner to leading manufacturers, including Lockheed Martin, Pratt & Whitney and Rolls-Royce.

At present non-Greek projects account for around 20 percent of HAI’s total business. The company recently announced a deal with Lockheed Martin by which HAI becomes the single source supplier of three major parts of the F-16 fighter aircraft.

HAI has been making savings by cutting unnecessary expenses but will be spending on growth programmes. “We will spend on R&D and we will position the company for the new technologies of the future,” says Mr Philippakos. New strategic areas the company wants to focus on are civil aerospace, satellite communications and composites.

Ioannis Patsiogiannis (INTERVIEW), Chairman of the state-owned manufacturing group of companies Hellenic Defence Systems, says: “For many years, Greece has been spreading a significant proportion of defence and security costs to the international community. And, although recently expenditures have been reduced, the market remains strong.”

He concludes, “Nor should we forget the important role the domestic defence industry plays in the export of arms to the Middle East and other areas.”