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Thursday, June 11, 2015

The Wealth Of Greece's Armed Forces

A couple of weeks ago, I came across a surprising story about the wealth of Greece's Armed Forces. Expecting that there would be quite a bit of media backlash about it, I waited before commenting on it. If there was any media backlash, I didn't see it.

Defense Minister Panos Kammenos informed the public that the Greek Armed Forces' wealth exceeds 32 BEUR in real estate property. In the back of my mind I calculated that this was equivalent to about 32 Hellenikon's. Quite a substantial amount of wealth! The real estate properties include large pieces of land, airports, airstrips, as well as many vacant buildings and army camps. Many of them are prime locations in islands and can be used for tourism purposes, while others can be farmed or used as renewable energy sources. Airports and airstrips can be used as commercial airports, private training facilities or for car races.

My first thought was how smart it was to brag about 32 BEUR of prime public real estate wealth at a time when one is telling creditors that one is bankrupt. On second thought, I wondered how many humanitarian crises one could solve by selling only 10% of that real estate.

Fortunately, Kammenos seems to be an astute businessman. The above property is currently generating 1,1 MEUR annual revenues. Kammenos has a plan how to increase revenues to 1,5 BEUR through leasing (property sales are ruled out). That would be roughly a 1.500% increase. If Kammenos worked for an investment bank, he would get a good bonus.

On reflection, I wondered whether the business of tanks & fighter jets is not quite a bit different from the business of real estate development. Should indeed a Ministry do its own real estate development or might it be better to house all public real estate in one company and manage it from there?

But now comes the final punch: "Talking to the press, the Defense Minister said that the revenues will be used for the benefit of the Greek Armed Forces staff."

If I am not mistaken, properties which are owned by the central government's ministries or divisions are owned in trust on behalf of the Republic; i. e. on behalf of all Greeks. Now here is a Minister who announces publicly that he will use revenues generated by property of the Republic for the benefit of his own staff? Well, I guess that's exactly what he did!

13 comments:

  1. Thanks for making this more public. It adds just another scandal to the many that were already known, but in this moment it should really make other euro area countries think twice before they give even more money to this government.

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  2. I didn't expect anything better from Kammenos. He really is in the corrupt tradition of Greek clientelistic politics.

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  3. Thank for bringing this up Mr. Kastner,

    It needs more breakdown though.

    Firstly, many of the realestate or bases or buildings of old bases are in shambles. How they value these shambles is one question. These relic bulding are nothing worth more than the land they sit on.

    On the other hand many of these old buildings are being used to house the refugees that are not immediately released. They are being used for a purpose. So who is paying the military for the use of these buildings? Well eu funding for the refugee issue. Hence the eu pays Greek central governement to pay the military to house these refugees. If the eu wants to stop paying for this then they should also agree to take on some refugees in there countries.

    Secondly, the military and defense issue in Greece is a "touchy" subject. We have one of the strongest military forces in europe comparitive to even France and Great Britain in many aspects. All this to defend our borders. Being in NATO and the EU has provided no assurance of protection from a possible hostile Turkey. I am not aware where you live in Thessaloniki but here in Attika, i work next to an airforce base. Every 60 minutes F-16's are being dispatched to intercept Turkish squadrons who violate Greek FAA (mainly spring/summer). Therefore there is a need for military relaestate and strength. My home island (Andros) even last week a turkish frigate was ordered outside of the main port to drop anchor which disrupted commercial passenger lines and cargo sea lanes. The greek navy was sent to chase them out of the Greek waters. All this on a daily basis which cost our country money. Costs the central government the tax payer and hence the EU taxpayer.

    Do you have a comprension of how much 1 F-16 costs to fly one mission? Fuel, ground crews and maintenance? Roughly 8,000euro. Now multiple that by an average of 5 flights per day. This is just the actions of the F-16's alone. Then figure how many times our frigates, destroyers and subs need to go out and intercept. All this costs.

    I assume you are an advocate that businesses should be self sufficient. Public or private. If the military has income to self support itself or reduce the costs of the cental government allocated to defense, then what is wrong with that? In the meantime as a politician (as Xenos mentions) supports clientistic politics. So be it. It also keeps our minds at rest that our military is prepared for anything. Is it stupid or wrong to think like this? Well remember Cyprus.

    Help us slove our border dispute with Turkey so we allocate less to the military and their incomes can be recycled back to the central government.
    This won't happen though. Because it is not good business for the weapons manufacturers for a dispute to end because who will buy the new euro fighter. Who? Portugal? Holland? etc.

    Anonymous 9:15. Befor you blurt out generalizations try to do some research before coming to a conclusion.

    Sincerely,

    V

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    Replies
    1. Dear Anonymous 10:05,
      you may have noticed that Klaus Kastner talked about the possibility, as an example, to sell just 10 per cent of the land owned by the Greek armed forces. In the present financial situation of the country, that does not seem an unreasonable idea to me. In fact it must be difficult
      to explain to the creditor countries why such possibilities have not been put on the table by Greece. Does the military really need all this land?
      As far as the assumed Turkish threat is concerned, it is difficult to form an opinion when you do not live in the area. But even from what you say I do not get the impression that a Turkish invasion is imminent. After all, Greece and Turkey are both members of NATO and should be able to settle minor border questions in a friendly way. Both countries have more important issues to attend to these days.

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    2. All excellent points, V. I had not realised that the housing of asylum-seekers and refugees is in military buildings: thank you for this important info.

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    3. The interesting question is whether the income will be deducted from the defence budget or not. If not it's apparently back to Greek business as usual, i.e., perks for the insiders on the expense of the taxpayers.

      And Greece's spending on weapons is nothing but pathetic. For several years during the 2000s they were the third biggest importers of arms behind China and India. Only that those two countries have a population of more than 100 times that of Greece. A country with such huge appetite for weapons at least ought to try to build up there own arms industry.

      /Stockholm observer

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    4. @Stockholm observer. You appear to be completely unaware that Germany, France and the UK (to name only three) are countries with massive corruption associated with weapons dealing and production. Schaueble is well known in Germany for his personal involvement in arms deals, and the financial benefits acrrued therefrom.

      If you want to condemn the arms trade, you could start with the producers -- including their blackmailing of countries like Greece to buy from them. Things are not as simple as you seem to think, and Greek corruption is probably no worse than German corruption. The big difference is that Greece is now politically and economically weak, and everyone thinks it great fun to kick the person who's down.

      My advice to you is to start with the real corruption, which is indicated by the motto "follow the money". You will see where it leads to, quite easily.

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    5. It is easier to buy the weapons on credit and then default on your debt.

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    6. @Gust(xenos)

      You make it sound like Greece is just like any other country when it comes to arms deals. But if you look at per capita spending on weapon imports there are two countries that stand out, Greece and UAE.

      Below are the top ten importers in US$ for the first decade of the 2000s.

      01. China 25422
      02. India 18061
      03. South Korea 11194
      04. Greece 10122
      05. UAE 8970
      06. Turkey 6832
      07. Australia 6697
      08. United States 6404
      09. Egypt 6327
      10. Pakistan 5930

      And the top ten exporters (and Greece) in US$ for the same time period.

      01. United States 66349
      02. Russia 54431
      03. Germany 19310
      04. France 17785
      05. United Kingdom 11164
      06. China 5544
      07. Netherlands 5110
      08. Israel 5034
      09. Italy 4472
      10. Sweden 4441
      .
      .
      48. Greece 68

      The above data can be found at http://armstrade.sipri.org/armstrade/page/values.php

      My point was that Greece ought to have built up there own arms industry. Greece has been one of the biggest arms importers for the last 50 years, so one would expect at least a few sizeable domestic manufacturers. For example, Israel also spends a relatively large portion of their GDP on arms, but they managed to build an impressive arms industry from scratch over the last 40 years.

      /Stockholm observer

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    7. I did not mean to imply that Greece has low military expenditure. But there are several important issues, which you omit. The first is that Greece has always felt (and often been) threatened by Turkey, with the last great military aggression in 1974. Even now, in a period of relatively good relations with Turkey, the stability of the Turkish regime is not clear, and Greece does not have the luxury of dropping its defence. Turkey's membership of NATO is irrelevant for two reasons: one, NATO has no role to play if there is conflict between two members; two, the 1967 Greek dictatorship was carried out by means of NATO procedures (generally thought to have been US-instigated).

      The second major issue is that Greece's trading partners have always pressured for sales, usually with corruption as a clear element of it. I recall one instance, in 1991, when the Albanian border opened: in the minutes of the EU intergovernmental meeting on the "security crisis", the UK laid specific demands that Greece should purchase immediately a set number of helicopters, night-time vision cameras, etc etc -- all from the UK. I understand that the Germans and French have done the same in more recent times, and with very large sums of money.

      The third issue is that all arms producers do so for export, as well as domestic demand. Apart from the missing knowhow in Greece to manufacture such goods, my supposition is that the rest of the EU would block such a development. Of course, that would not be legal -- but they would find a way. They always do.

      You see, this whole debacle is not about economics. It has always been about political power, and who controls Europe. Germany is determined that peripheral small countries like Greece should do as they are told, and keep in line. This is the entire story in a nutshell: economic data are mere details.

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    8. To All,

      Firstly I understand exactly Mr. Kastners point. Yes theoretically the military can sell off some lands including islands which the military owes. But can they? By law it is manditory as to perform military excersies to have an X area to perform tank shellign drills, naval shellign drills, arial bombing drills. It is not that simple.

      As for the point of Greece not maintaining its own Military industry. They did. Troika closed it because it wasn't performing. Why wasn't it performing, because deals by the greeks government were not making suffucient purchases to it for its own use as to satisfy the appetite and "political" appreciation of the big nations. Frigates from France, Tanks, subs and small vehicles from germany, airplanes from the usa, small arms from everyone. Instead of praising us to take on debt to supoort your industries we are flogged.

      We should be blamed. Because in the 2000's our politicains pocketed back payments where only one politician was indited and we will never see that money returned. Those foreign industries especially germany are "allowed" to make pay offs. It is general practice. They did good for themselves. Good for them.

      Greece did nothing good from this. we have an on going border dispute which will never end. And i will not get into details. Turkey simply does not want to accept what the international law states for distance from specific lands especially islands. Meanwhile they purposely do not acknowledge specific islands as greek, as they use this a purpose or platform to invade our waters and FAA. In the meantime, NATO and Eu do nothing because it serves their interests to sell weapons to two countries who have strong insecure desires to have a strong defense. Characteristic fears and insecurities stemming from past modern history wars.

      I have many engineering collegues who worked for the Greek military industry. The have design and patented tanks, small arms and APC's. They have also developed many naval units which are taylored to greeces defensive needs. These were all scrapped because it would not serve the interests of the our fellow friends industries.

      Greece was always alone and will always be alone. All countries will always be alone, it is just that many other countries have common interests and come into agreements from time to time.

      As for Mr. Kastners point. As always it makes sense. yes some things of the military could benefit our current economical problem but to only a minor extent.

      Sincerely,
      V

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  4. Mr. Kastner,

    Do you not believe that there is geopolitical game going on right now regarding Greece?

    Sincerely,

    V

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  5. Brussel seems to have a similar stand. To qoute Juncker from ekathemerini:
    "Juncker, who has lately criticised Prime Minister Alexis Tsipras after making strenuous efforts to befriend the novice left-wing premier, said that the Commission was not in favour of raising value-added tax on medicines and electricity and had suggested other ways to improve the Greek budget, including by making a "modest cut" in defence spending." and
    "I am blaming the Greeks (for telling) things to the Greek public which are not consistent with what I’ve told the Greek prime minister."
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_16/06/2015_551119

    So he say: "Dont lie and spend less on defense." Both sounds fair for me.

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