BMI's Executive Summary

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With the New Democracy (ND) government of Prime Minister Costas Karamanlis re-elected in September 2007, albeit with a smaller majority, BMI's newly released Q108 Greece Defence and Security Report confirms that prospects continue to be good for the Hellenic nation. Domestically, the government will enter a more difficult stage in its reform process, but its good economic record should allow greater expenditure in its defence industry. Despite some continuing tensions, Greece's relationship with neighbouring Turkey has improved substantially and Karamanlis is expected to visit the neighbouring country in early 2008 – the first visit of its kind by a Greek Prime Minister in four decades.

The Greek defence industry's good relationship with the US, plus NATO and EU membership should ensure that it continues to benefit from a significant number of subcontracts and plays an important role in the exporting of arms to the Middle East and emerging European countries. There appear to be no immediate threats on the positive path that Greece, a long-term member of Europe, is steering. Government reforms are boosting consumer and business confidence, and the economy is expected to continue growing in 2008.

In early December 2007, Greece agreed to buy 415 BMP-3 fighting vehicles from Russia, worth an estimated EUR1.7bn (US$2.5bn). The deal was due to be confirmed by the State Defence Procurement Council (KYSEA). Defence spending in Greece runs at around 3% of GDP, one of the highest levels in the EU, partly because of a policy to keep an arms balance with Turkey. Greece has a 10-year defence procurement plan worth a total of EUR27bn in 2006-2015, including the purchase of fighter planes. Russian-built Sukhoi SU35s are being considered among other models to meet the country's need for 30 fourth-generation fighter jets in a contract worth EUR4bn expected to be awarded during 2008. Greece's relations with Russia have improved in recent years, with a joint oil pipeline project launched in 2007. Russian President Vladimir Putin visited Greece three times in 2006-07.

Greece's military expenditure has remained at a steady level over recent years, but decreased over 2005. Growth will be limited by Greece's ongoing EU obligation to bring its budget deficit down to under the 3% GDP limit applied to eurozone countries. The Greek defence industry continues to be involved in the manufacture and export of ammunition of all classes. Its imports, although slow over the last year or two, are expected to recover over the next couple of years. However, the arms trade continues to be affected by cuts to the defence budget.

Contents

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Chapter 1 - Executive Summary

SWOT Analysis

Greece Political SWOT

Greek Security SWOT

Greek Defence Industry SWOT

Greece Economic SWOT

Domestic Political Outlook

Government To Press Ahead With Reforms

External Political Outlook

Strengthening Sino-Hellenic Relations

Labour Market Will Open To Workers From New EU States

Greek-Turkish Rapprochement Continues

Chapter 2 - Security Risk Analysis

BMI’s Security Ratings

Risk Ratings

Table: Greece Regional Risk Ratings

Table: Greece State Terrorism Vulnerability Index

Regional Security: Europe

Overview

Internal Terrorism

International Terrorism

Criminal Activities

Greece Security Risk Ratings

Greece Conflict Risk

Greece Terrorism Risk

Greece Physical Safety Risk

Chapter 3 - Security Overview

Internal Security Situation

Domestic Terrorism

Corruption

Organised Crime

External Security Situation

International Terrorism

Relations With Turkey

Armed Forces

Conscription And Conscientious Objectors (COs)

International Deployments

Co-ordination And Joint Operations

Chapter 4 - Market Overview

Arms Trade Overview

Exports

Industry Trends & Developments

Procurement Trends & Developments

Chapter 5 - Industry Forecast Scenario

Army Enlargements

Government Expenditure On Defence Industry

Chapter 6 - Macroeconomic Forecast

Consumer Demand To Strengthen In 2007

State's Contribution To Activity Weakens

Investment Outlook Brightens On Tax Cuts

Trade Performance Worsens But Likely to Improve

Table: Economic Growth

Real Income Convergence To Continue

Chapter 7 - Company Profiles

Greek Powder & Cartridge Co, SA (PYRKAL)

INTRACOM SA – Hellenic Telecommunications & Electronics Industry

Chapter 8 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Chapter 9 - Appendix A: Risk Ratings Methodology

Conflict Risk Methodology

Terrorism Risk Methodology

Physical Safety Risk Methodology

Overall Risk Rating

State Vulnerability Index

Competitive Landscape for European Defence & Security: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

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BMI's European Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: