Turkey would help Greece

Fear of Turkey’s army led Greece to become the European Union’s biggest military spender as a share of the economy in the past decade. Now, détente between the neighbors offers Prime Minister George Papandreou a route to squeeze extra savings from his country’s army.

Turkish Prime Minister Recep Tayyip Erdo?an, who may also want to cut military spending, went to Athens on Friday. Matching cuts from the strategic rival, Turkey would help Greece make the reduction in military expenditures it pledged in return for $139 billion of International Monetary Fund and European Union loans to stave off a debt default.

Greece has spent 50 billion euros ($63 billion) on the military in the past decade, with the budget rising each year since 2003 as the army has added fighter jets, submarines and tanks. They are mostly for defense against Turkey. The two NATO members came close to war over territorial rights in the Aegean in 1996, and though ties have improved, their pilots regularly engage in mock dogfights above its waters.

Turkey and Greece “are allies, not competitors,” and “we might together decide to reduce the defense allocation of our respective budgets,” said Egemen Ba???, Turkey’s minister for EU membership negotiations, in an interview in Istanbul late Thursday before departing for Athens. He declined saying whether the two premiers would agree on such cuts on Friday.

Erdo?an told Greece’s state-run NET television Thursday night that both countries have “very high defense spending.”

Proposed first step ;“We can reduce this spending and divert this money away from the weapons industry to other areas,” he said. As an initial step toward disarmament, Erdo?an proposed that fighter planes from both countries flying over the Aegean should take off unarmed.

Papandreou has to slash the budget deficit to 3 percent of gross domestic product by 2014, from last year’s 13.6 percent to meet its commitments to the IMF and the EU. Concern that he won’t be able to meet that target sent yields on 10-year Greek debt to 12.4 percent last week before European central banks started buying the bonds of indebted EU nations after agreeing to a $1 trillion bailout.

“It’s inevitable to try to find a way with Turkey to limit defense equipment expenditures on both sides of the Aegean,” said Yannos Papantoniou, Greece’s finance minister from 1994 until 2001 and defense minister for the next two years. One way is for Erdo?an and Papandreou to build “a better political understanding,” he said. Greek military spending was 3.6 percent of gross domestic product in 2008, the EU’s highest, and the country with a population of 11 million was the world’s fifth-biggest weapons importer between 2005 and 2009, according to the Stockholm International Peace Research Institute, or SIPRI.

Beneficiaries of the spending include Duesseldorf-based steel maker and shipbuilder ThyssenKrupp, which is supplying submarines for the Greek navy under a contract worth more than 2.5 billion euros ($3.2 billion). Greece fell behind on payments to the company last year.

Turkey’s Finance Ministry says defense spending will be about $10 billion this year, or 1.5 percent of GDP. SIPRI, whose estimates are typically higher than government figures, says it was 2.1 percent of GDP in 2007.

“The conflict with Turkey has been overwhelmingly the thing that’s been keeping Greek military spending as a share of GDP and the arms purchases high” since the Cold War ended, said Sam Perlo-Freeman, head of SIPRI’s military expenditure project. “In the rest of Europe it’s been for the most part completely flat or declining over the last 10 years.”

Greek defense savings ;

Papandreou has announced defense savings of about 500 million euros this year. The cuts were visible on March 25, Greek Independence Day, when celebrations lacked the usual tank parades and air displays. For Erdo?an, cutting military spending may help curb the political influence of Turkey’s army, which has ousted four governments since 1960. Throughout a seven-year premiership, Erdo?an has clashed with generals who view his Justice and Development Party, or AKP, as a threat to Turkey’s secular system.

“If they can strike some kind of deal with the Greeks, it would help Erdo?an increase leverage over the military,” said Wolfango Piccoli, an analyst at the New York-based Eurasia Group, which measures political risk. It will take time because “with military spending, the cutting needs to be gradual – it can’t be done overnight.”

“There is more or less a consensus in this country that there is a challenge, a threat from Turkey,” making some areas of the military budget hard to cut, said Thanos Dokos, the director of the Hellenic Foundation for European and Foreign Policy in Athens. Still, “the Greek armed forces were in need of an overhaul in spite of the crisis,” Dokos said. “The crisis will be an opportunity to trim them down.

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