Greece Defence and Security Report Q1 2012

The Greek government has announced another round of spending cuts, with the axe falling heavily on defence spending once again. On top of the EUR1.2bn-worth of cuts which had already been announced earlier in 2011 during a previous crisis over Greek solvency, the latest crisis in August and September 2011 has seen the Greek government promise an extra EUR500mn in cuts. This second emergency austerity package will see the closure of a number of army, air force and naval bases across the country.
Additionally, one army corps, five divisions, a number of regiments and some 80 miscellaneous units will be disbanded. The number of basic training centres operated by the Greek military will also be cut from the current 35 locations to 12, saving EUR34mn. However, analysts and markets are increasingly sceptical that anything can be done to avoid a Greek debt default, making it likely that further cuts – either as part of increasingly desperate austerity measures or due to default – will be inflicted on Greek defence spending over the latter part of 2011 and into 2012.
As a result, the Greek defence minister, Panos Beglitis, has warned that defence companies in the country will not be able to rely on purchases from the government in the future. The domestic defence industry will be required to either find foreign customers or face bankruptcy, as the government was no longer willing to spend money and risk European Commission disapproval for protecting the domestic defence industry. This comes as a major blow to the industry, particularly Greek shipyards which had relied upon Greek defence contracts to stay afloat. It also comes as planned procurement budgets are being slashed – despite the likelihood that even in their truncated form they will never be implemented. The Defence Ministry has cut the planned budget for frigate procurement from EUR2.6bn to EUR2.1bn. This has not been approved by the country’s parliament, however, and the recent intensification of the crisis and austerity programme has led to speculation that it may be deferred indefinitely. Purchases of defence materiel from abroad are also noticeably small. The only major acquisitions involving aircraft currently ongoing are of medium-lift helicopters, with expected procurements of multi-role combat aircraft, and medium-lift fixed-wing freighters postponed for the near future.
There have been some positives for the Greek defence industry. Domestic defence company Intracom has won a US$30.1mn contract from US defence giant Raytheon. According to Intracom, the firm has won an international tender to provide ‘antenna mast groups’ (AMB) for the PATRIOT systems manufactured by Raytheon. The order will be completed by 2014 and Intracom has said that it will farm out significant portions of the order to other Greek companies in order to maintain capabilities within the country’s defence industry during tough times.

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Executive Summary 5
SWOT Analysis 6
Greece Defence Industry SWOT 6
Greece Political SWOT 6
Greece Economic SWOT 7
Greece Business Environment SWOT 7
Global Political Outlook 8
Landmark Political Events Looming In 2012 8
Global Flashpoints: Eurozone, Syria, Iran, Afghanistan, Korean Peninsula 9
Table: Election Timetable, 2012 13
United States 18
Russia 19
China 20
Wild Cards To Watch 21
Europe Security Overview 24
Europe’s Key Security Issues Over The Coming Decade 24
The Role Of NATO 31
Security Risk Analysis 34
BMI’s Security Ratings 34
Table: Europe Security Risk Ratings 34
Table: Europe State Terrorism Vulnerability To Terrorism Index 36
City Terrorism Rating 37
Table: BMI’s Western Europe City Terrorism Index 38
Political Overview 39
Security Overview 41
Internal Security Situation 41
Table: Insurgent Groups In Greece 41
Domestic Terrorism 42
Corruption 44
Organised Crime 44
Timeline: Internal Threats 44
External Security Situation 47
International Terrorism 49
Timeline: External Threats 50
Armed Forces And Government Spending 53
Armed Forces 53
Defence Reforms 53
International Deployments 57
Table: Foreign Deployments 57
Coordination And Joint Operations 59
Market Overview 60
Latest Developments 60
Greece Defence & Security Report Q1 2012
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Arms Trade Overview 61
Industry Trends And Developments 62
Table: Key Players In The Greek Defence Industry 62
Defence Industry Timeline 64
Industry Forecast Scenario 67
Armed Forces 67
Table: Greece’s Armed Forces, 2001-2008 (‘000 personnel, unless otherwise stated) 67
Table: Greece’s Manpower Available For Military Service, 2009-2016 (aged 16-49, unless otherwise stated) 68
Government Defence Expenditure 68
Table: Defence Expenditure, 2009-2016 69
Table: Greece’s Government Defence Expenditure Scenarios – Changing % Of GDP, 2009-2016 (US$mn) 69
Defence Trade 71
Table: Greece’s Defence Exports, 2009-2016 (US$mn) 71
Table: Greece’s Defence Imports, 2008-2015 (US$mn) 71
Table: Greece’s Defence Trade Balance, 2008-2015 (US$mn) 71
Macroeconomic Outlook 72
Macroeconomic Outlook 72
Table: Greece – Economic Activity, 2011-2016 74
Company Profiles 75
Hellenic Defence Systems 75
Intracom Defense Electronics 77
BMI Methodology 79
How We Generate Our Industry Forecasts 79
Defence Industry 79
City Terrorism Rating 80
Table: City Terrorism Rating Methodology 82
Sources 83
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