Greek defense expenditure to reach $8.8bn by 2026 amid rising tensions with Turkey, says GlobalData

Greece has placed defense spending at the forefront of its national agenda with the announcement of a ‘Modernization Plan’ for the Hellenic Armed Forces, under which the government will invest US$14bn into strengthening and upgrading the country’s military capabilities over the next five years. This is a significant move for the country and the prioritization of its security will witness a considerable upward trajectory through spending on defense in the forecast period, growing at a compound annual growth rate (CAGR) of 6.27% between 2022 and 2026 to reach a peak of US$8.8bn in 2026, according to GlobalData, a leading data and analytics company.

GlobalData’s report, ‘Greece Defense Market – Attractiveness, Competitive Landscape, and Forecasts to 2026’, notes that defense expenditure will see an increase from US$5bn to US$6.7bn in 2021, witnessing a year-on-year (Y-o-Y) growth of 34% from 2020.

Victoria Bosomworth, Associate Aerospace and Defense Analyst at GlobalData comments: “This significant uptick in defense spending as a result of the Greek Government’s ‘Modernization Plan’ will not only fund the addition of 15,000 personnel to its overall troop size, but will also finance a number of important procurements for the Hellenic Armed Forces. This is fuelled by an acquisition budget of US$3.1bn in 2021 comprising a share of 46.2% of the overall budget, which is forecast to reach US$4bn by 2026.”

One of the key drivers behind Greece’s modernization plan has been the rapidly growing tensions with Turkey over energy reserves and exploration rights in the Eastern Mediterranean Sea. Military exercises in the Mediterranean and Aegean Seas have seen the maritime dispute quickly escalate, even resulting in a minor collision between Greek and Turkish frigates in August 2020.

Bosomworth continues: “Greece’s deteriorating relationship with Turkey despite attempts at peace talks (including technical de-escalation talks led by NATO) has thus propelled and prioritized defense expenditure over the forecast period, in spite of the country’s previously struggling economy being negatively impacted by the COVID-19 pandemic and the associated damaging effects on Greece’s tourism sector. This illustrates the extent to which the country is seeking to prioritize the development of a sizeable and modern force to counter the growing Turkish threat.”

The two countries have subsequently focused on strengthening and augmenting their respective fleets, which has prompted several notable Greek procurements such as the acquisition of 18 Rafale multirole aircrafts, MH-60R maritime helicopters and 10 M346 training aircrafts. Greece has also opened up the bidding process for the purchase of four new frigates, receiving proposals from European and international companies such as France’s Naval Group, Spain’s Navantia and Lockheed Martin as of April 2021.

More Media