Monday, 14 May 2012

Greek arms spending

Enlightened Economist Diane Coyle blogs about a surprising and little-reported area of Greek government spending: weapons.

Greek flag

She points out that by 2008 Greece was the 5th largest arms importer in the world, and the 2nd and 3rd largest customer for German and French arms exporters, respectively. France and Germany are Europe's biggest arms exporters. (The UK is 3rd)

Last year Greece spent 3.2% of its GDP on arms, the highest in Europe. Apart from big military spenders UK and France (2.6% and 2.3%) most European nations spend around 1.5% of GDP on arms. As it battles a 9% deficit, why isn't there any debate about the very large 3.2% share of national income being spent on the Greek military? 

It also underlines the circular nature of some of the bailouts: if Greece had no bailouts it may be forced to slash arms spending and contemplate defaulting on the loans (presumably from French and German banks) which funded previous purchases. In which case, the benefit is really falling on the French and German arms exporters and banks rather than the Greek people.

The popular narrative that strong, prudent nothern Europeans are being asked to ride to the rescue of feckless Greeks is simplistic. The financial and trade relationships are complex: the ultimate beneficiaries much less obvious than it first appears.

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