As Europe ramps up military spending, Greece provides a valuable case study on what it’s like to live with an adversary next door. Despite spending billions to maintain robust armed forces, the country has struggled to develop a substantial domestic defense industry.
Greece has consistently exceeded NATO’s 2% GDP defense spending target—even at the height of the public debt crisis. In 2015, while battling creditors over harsh austerity measures, Greece still outspent all European nations on defense as a share of GDP.
Unlike many European countries, a strong military presence is deeply ingrained in the Greek mindset. Greece is one of the few EU nations with mandatory military service, and national security spending has long been a bipartisan priority.
“The structure of Greece’s defense policy is primarily built on deterring Turkey,” said Ino Afentouli, executive director at the Institute of International Relations in Athens and a former NATO official, in an interview with Bloomberg.
Geography compels Greece to remain in a constant state of readiness regarding defense expenditures and military equipment programs, says Spyros Blavoukos, a professor at the Athens University of Economics and Business.
Yet, while Greece consistently purchases military equipment, it produces very little of it. Unlike Turkey, which has developed a thriving domestic defense sector, Greece has allocated most of its defense budget to personnel and foreign arms procurement, with minimal investment in research and development.
Afentouli cautions that Europe should avoid repeating Greece’s defense approach as nations respond to growing uncertainty over U.S. security commitments under the Trump administration.
“If you have a ten-year defense strategy, you need to build a national industry based on what you have and what you’ll need in the future,” she said. “You could create an ecosystem that fosters domestic companies—not for heavy weaponry or aircraft, but perhaps for spare parts or defense software.”
The Greek government, led by Prime Minister Kyriakos Mitsotakis, is set to unveil its new defense strategy early next month, focusing on greater involvement of the country’s defense industry and boosting local startups, according to a government official.
Across Europe, governments face the challenge of increasing defense spending—potentially at the expense of social programs and higher taxes. The push to strengthen security under the EU’s “Europe ReArm” initiative, however, could present new opportunities for Greece.
Greece’s defense sector is primarily anchored by two key companies: Hellenic Defense Systems, which manufactures munitions, and Hellenic Aerospace Industry, which supports fighter jets and produces components for aircraft, including F-16s.
Located in Tanagra, adjacent to an airbase, Hellenic Aerospace Industry is currently developing its own drones and an anti-drone system, an early version of which has already been deployed on Greek warships participating in the EU’s Aspides naval operation in the Red Sea.
“Modern warfare has proven that having a domestic defense industry is essential for maintaining a reliable military over time,” said Alexandros Diakopoulos, the company’s president and CEO. “You need to be able to develop some systems independently so you can sustain them without relying on foreign suppliers.”
