Boston, MA -- (SBWIRE) -- 06/02/2012 -- The Greek defence budget is expected to experience a serious reduction of around 16% compared to 2011 figures as austerity measures begin to bite.

Savings are expected to be found in the reduction of salary, operations, procurement and overseas deployment costs. The decrease in spending on overseas operations will herald a significant reduction in national deployments to Afghanistan, the Balkans and the Indian Ocean. Greece has historically both met and exceeded NATO's established 2% of GDP guidelines for national defence spending. It remains unlikely whether Athens can sustain such a figure in the near future. The extent to which the defence budget has been ring-fenced from other national austerity measures has been brought sharply into focus by accusations that France and Germany had pressured Greece not to reduce its defence procurement budget, lest this affect purchases of equipment from these two countries.

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At the strategic level, although tensions between Greece and Turkey have lessened in recent years, disputes between Athens and Ankara over the future of Cyprus, and the demarcation of airspace between the two countries, continues. There is a rough strategic balance that exists between the two nations' air forces at present, although this could be upset over the long term should Turkey move ahead and purchase new Multi-Role Combat Aircraft (MRCA). Greece will need to perform a similar acquisition of new MRCAs in the future if it is to preserve the air power balance between the two countries. However, one Greek MRCA purchase has already been cancelled, and a renewed bid to acquire new combat aircraft in the future seems unlikely given the health of Greek finances.

Along with the requirement for new MRCAs, the Hellenic navy will eventually need to purchase new maritime patrol aircraft, although this is expected to be postponed until the country's financial crisis begins to ebb. However, Greece may take advantage of an American offer to acquire a large number of main battle tanks for free from ex-US Department of Defense stocks.

While the purchase of new MRCAs maybe all but impossible for Athens in the foreseeable future, the country's air force has been keen to maintain its skills, and is deepening its relationship with Israel to this end. Greece is likely to continue to take advantage of Tel Aviv's deteriorating relationship with its erstwhile ally Turkey. The next 12 months will see one of the most challenging periods for Greek defence spending. The forecast reductions to the country's defence budget are likely to be difficult to achieve without a corresponding adjustment to the country's defence posture.

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