by Chris Becker
Talk of Grexit seems to be turning into reality as the days and hours go on towards the June 30 deadline. One of the major reforms enacted by Athens was to turn the large deficit into a surplus (admittedly, a surplus sans interest payments), but interestingly one area not touched in the austerity measures was military spending.
Furthermore, as I mentioned yesterday, EU President Junckers had a plan to allow Greece to defer a 400 million euro pension cut by reducing military spending of the same amount, but that was junked by the IMF.
More from Forexlive:
In Greece, they’ve cut everything but the military budget is still high. The most-recent numbers I can find show Greece spent 2.5% of GDP on the military in 2014 and that ratio has likely risen since. In comparison, Germany spends just 1.3%, Italy 1.5% and even nuclear power France only 2.2%.
German newspaper Frankfurter Allgemeine Sonntagszeitung reported yesterday that the EU’s Juncker put forward a proposal that would have allowed Greece to defer 400 million euros in pension cuts if it cut the same amount from military spending.
What happened? The IMF vetoed it.
Evidently, the EU hasn’t given up on the idea and a report from MNI, citing unnamed sources, says the Juncker proposal is still on the table and that Greece can still submit counter proposals to get a deal, including ones that increase cuts in military spending.
So what’s going on here? Is Sryriza trying to keep the military on side, or shall we say, quiet while the Troika is confused at its actual role within Greek politics? Or at least innocent to what could happen if chaos was to reign in a post-Euro exit Greece?
Aside from a battalion of autocrats losing face, the greatest threat to the EU experiment is not a breakdown of the union itself, with member States leaving and/or returning to their pre-Euro currencies, but rather the return of nationalism and far right militarism. And not just in the southern States either…
Greece was ruled by a military junta in the late 60’s and early 70’s as a result of a coup, something that still sticks in the minds of those at the Troika and Athens alike. One must also remember that the neo-Nazi Golden Dawn party returned 7% of the popular vote in recent elections and the far-right has a big influence within Greece.
Perhaps pushing hard on the austerity string may unleash the tigers within, so it will interesting to see what deals actually land on the table in the coming days. Less tanks and more roads or other civil spending may not go down well.