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As Europe attempts to wean itself off the US in terms of defense, a relatively small community of Greek businesses are mobilizing to take advantage of the opportunities that are opening up for themselves and for the country. These are approximately 250 mostly small businesses. Among them are the state-owned defense industries Hellenic Defense Systems and Hellenic Aerospace Industries, which are unable to overcome chronic pathologies to become reliable partners of large European groups. Hellenic Federation of Enterprises (SEV) President Spyros Theodoropoulos called a meeting of the 50 member-companies of the association active in the sector.<\/p>\n<\/p><\/div>\n
In normal circumstances, the usual objections to the idea of joint borrowing in the European Union and the issuance of a European bond hinder the further integration of the bloc, but they have a certain logic. But what happens in extraordinary circumstances? In the case of the Covid-19 pandemic, the objections were overcome, and the EU Recovery Fund was created, with money that the European Commission borrowed from the markets and distributed to the member-states, mainly in the form of free grants. By analogy, to address a major, new external threat, common borrowing would be the appropriate way to strengthen European defense. Well, no\u2026<\/p>\n
The Commission\u2019s proposal provides that the strengthening of (common) defense will be done with new (individual) borrowing by the states, perhaps also by transferring funds from cohesion to defense. Member-states will get part of the loans \u2013 150 billion euros \u2013 at a low interest rate from the special fund that will be created. For the other 650 billion euros, member-states will have to resort to the markets. In order to make it easier for the countries to borrow, an \u201cescape clause\u201d will be introduced: The Commission will not count these loans when determining the budget deficit. What does this mean?<\/p>\n
First, for cohesion: Cohesion spending has, in practice, been limited to addressing regional disparities only, while what is needed is an expanded policy that will combat social inequalities and foster in Europeans the feeling that they are members of a large community with common problems and a common future. To achieve this, cohesion spending must be increased \u2013 not reduced. Second, for loans: Whether the Commission counts them or not, it is certain that the markets will take them into account when determining the interest rate.\u00a0<\/p>\n
What would be an alternative for the European Union? To neutralize the direct impact of the increase in military spending on social spending, the bloc could proceed with joint borrowing for defense, as it did during the pandemic. If the increase in military spending is at the expense of cohesion policies, placing an extreme burden on overindebted states, exhausting European societies and creating conditions for the further advance of the far-right, Europe will not really be shielding itself.<\/p>\n
And, in this big picture, where does Greece stand? It would be in our interest to issue a Eurobond for defense. Instead of pursuing this seriously, the Greek government paradoxically claims the authorship of the \u201cescape clause.\u201d But since Greece already has high defense spending without losing control of its deficit (thanks to the insistence of Finance Minister Kostis Hatzidakis), why is the government so militantly seeking to have military spending not counted in? I suspect that this is done to continue what has been happening for the last six years of New Democracy\u2019s rule, to continue to distribute money according to clientelistic criteria. If the \u201cescape clause\u201d applies to all states, the government will immediately be able to distribute 1 billion euros this year \u2013 approximately the cost of the first Belharra frigate. And let\u2019s not forget that elections are also coming up\u2026<\/p>\n<\/p><\/div>\n