Defense budget to be squeezed

Greece could save in excess of 1 billion euros by reducing its defense spending next year, according to cuts announced by Prime Minister Costas Karamanlis in Parliament yesterday, as it was confirmed that the eurozone had slipped into recession. Speaking after the news that the economic crisis has officially taken grip of Greece as well as the other eurozone members, Karamanlis said that he would cut the defense budget for 2009 by 15 percent in a bid to save money. Although exact figures are not available, estimates put Greece’s defense budget between 6 and 10 million euros or 3-4 percent of GDP per year. The premier said that the reduced spending would not have any effect on the armed forces as the government had already employed some «good housekeeping» that would allow them to keep up their existing role. Karamanlis rebuffed a suggestion from the Coalition of the Radical Left (SYRIZA) deputy Alekos Alavanos that defense spending should be cut by 50 percent. The premier suggested that as long as Greece faces a potential threat from Turkey, it would be unable to cut back that far. «We all want our homeland to be a factor of stability and growth in the whole region,» he said. «We do not choose confrontation. We do not choose to get involved in mock aerial dogfights. But we cannot abandon our alertness in the face of practices that result in our sovereignty and sole rights being questioned. This must be clear.» Karamanlis’s move to announce reductions in defense expenditure comes as concern grows about the impact of the global crisis on Greece’s real economy. This worry was reflected in yesterday’s debate in Parliament, when Karamanlis was forced to guarantee pension funds reserves. «The wealth of the pension funds is guaranteed by the Greek state,» he said. «No pensioner and no insured person should worry. Speaking a day after a Public Issue poll showed New Democracy drifting 3.5 percent behind PASOK, Karamanlis was keen to show his government can handle the crisis. He will take this message to the countryside over the weekend when he tours Kozani in northern Greece in a bid to revive the conservatives’ flagging popularity.