VZCZCXRO8995
PP RUEHIK RUEHYG
DE RUEHTH #2031/01 2150825
ZNR UUUUU ZZH
P 030825Z AUG 06
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHINGTON DC PRIORITY
INFO RUEHZG/NATO EU COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 4250
RUEHRL/AMEMBASSY BERLIN PRIORITY 1107
RUEHBM/AMEMBASSY BUCHAREST PRIORITY 0875
RUEHNC/AMEMBASSY NICOSIA PRIORITY 2610
RUEHNY/AMEMBASSY OSLO PRIORITY 0182
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0495
RUEHFR/AMEMBASSY PARIS PRIORITY 1146
RUEHRO/AMEMBASSY ROME PRIORITY 3549
RUEHSF/AMEMBASSY SOFIA PRIORITY 1443
RUEHSM/AMEMBASSY STOCKHOLM PRIORITY 0160
RUEHTV/AMEMBASSY TEL AVIV PRIORITY 0546
RUEHIK/AMCONSUL THESSALONIKI PRIORITY 0511
RUCPDOC/USDOC WASHDC PRIORITY
RUEHNO/USMISSION USNATO PRIORITY 0945
RUEKJCS/SECDEF WASHDC PRIORITY
RUFDNBS/CINCUSAREUR HEIDELBERG GE PRIORITY
RUEKDIA/DIA WASHDC PRIORITY
RUFBPYG/NAVSUPPACT SOUDA BAY GR PRIORITY
RHMFIUU/USNMR SHAPE BE//SA SACEUR// PRIORITY
RUEKJCS/JCS WASHDC//J-5 PRIORITY
RUFNPKD/USDOCOSOUTH NAPLES IT//INTAFF PRIORITY

UNCLAS SECTION 01 OF 02 ATHENS 002031 
 
SIPDIS 
 
SIPDIS 
 
USDOC FOR 534/BXA/SIES/JISBELL 
USDOC FOR 6320/TD/TAI/AKEMPER 
USDOC FOR 6310/TD/TAI/TLARGAY.RGREEN 
USDOC FOR 6610/TD/TACGI/JVANDERWOLF 
USDOC FOR 3133/USFCS/OIO/CFPOZA/PBUCHER 
USDOC FOR 4220/ITA/EUR/MAC/ACORRO 
DEPT FOR EUR/SE, EUR/RPM, PM/PPA, AND PM/RSAT 
SECDEF PASS OSD, ISA/EUR, AND USDP:DSCA 
SHAPE FOR MILAM 
MILITARY ADDRESSEES ALSO FOR POLADS 
 
E.O. 12958: N/A 
TAGS: MARR MCAP MASS NATO PREL PINR TU GR
SUBJECT: ARMS PROCUREMENT PLAN 2006-2010 APPROVED 
 
ATHENS 00002031  001.2 OF 002 
 
 
¶1.  (U) Summary: On July 25, the GoG announced plans to spend 
an estimated EUR 27 billion for arms procurement over the 
next decade.  The first five-year leg of the program does not 
include appropriations for a new fighter in an apparent 
effort by the Karamanlis administration to relieve political 
pressures to buy European aircraft and take some of the 
strain off the budget, at least temporarily.  Defense 
Minister Meimarakis claimed that this ten-year procurement 
plan streamlines defense spending and seeks to settle 
outstanding debt left behind by the previous PASOK 
governments.  Meimarakis also claimed that the government's 
handling of defense budget actually brings down defense 
spending to one percent of GDP as opposed to "more than two 
percent" under PASOK, a claim PASOK strenuously denied. End 
summary. 
 
¶2.  (U) The Karamanlis government has announced plans to 
spend an estimated EUR 27 billion for arms procurement over 
the next decade. According to press reports, the first 
five-year leg of the plan (2006-2010) will consume EUR 11.39 
billion and will not include appropriations for a new fighter 
aircraft.  Instead, the five-year program will concentrate on 
the building of six new frigates, the purchase of a new 
trainer aircraft and new armored personnel carriers, the 
acquisition of helicopters for heavy lift and 
search-and-rescue missions, and the procurement of modern 
communication and satellite-assisted surveillance systems. 
Part of the budget shows a shift from heavier forces toward 
lighter, more deployable forces that the NRF (NATO Response 
Force) can use, such as wheeled armored personnel carriers, 
troop transport helicopters, and long-range communications. 
The announcement came following a meeting of the Government 
Committee on Defense and Foreign Affairs (KYSEA) held on July 
25 and chaired by PM Karamanlis. 
 
¶3.  (U) Defense Minister Meimarakis, speaking to reporters 
after the meeting, said that EUR 8.5 billion out of the EUR 
11.39 billion for the first leg of the 10-year plan 
represents appropriations to pay outstanding debt left behind 
by the previous PASOK administration.  Another EUR 1.09 
billion will be further required after 2010 to complete 
payments of outstanding PASOK debts, Meimarakis maintained. 
Since these sums do not even include the amounts required for 
Value Added Tax (VAT), the Defense Minister added, the actual 
net defense procurement outlay for the next ten years is 
close to one percent of GDP.  This is a marked improvement 
over the "more than two percent (of GDP)" that the previous 
PASOK administration spent during the four years 1999-2003, 
and demonstrates that the government is honoring its election 
campaign promise to reduce defense spending in favor of 
social programs, Meimarakis claimed. 
 
¶4.  (U) PASOK reacted to the Defense Minister's claims with a 
statement from its foreign affairs section chair, Christos 
Papoutsis.  Papoutsis dismissed the Meimarakis figures as 
merely an attempt to present an "apportionment" of resources 
among the armed services in order to attempt to "rationalize" 
defense spending.  The government's handling of defense 
 
ATHENS 00002031  002.2 OF 002 
 
 
procurement, Papoutsis said, increases costs, "mortgages" the 
future of the welfare state, and pushes up the overall 
defense budget instead of economizing with the view of 
offering more funds for education, health care, and social 
security. 
 
¶5.  (U) Comment:  Although the EUR 27 billion came as no 
surprise, observers still underlined that this is an enormous 
amount for the Greek economy.  Some columnists also 
highlighted the fact that the Meimarakis payment plan, unlike 
its PASOK predecessors, does not include borrowing, but 
rather places the entire defense procurement burden on 
appropriations from the central government budget. 
Columnists also generally agreed that the absence of mention 
of a new fighter in the procurement announcement signals the 
postponement of any action on this item for at least three 
years -- and actually favors the US-built Joint Strike 
Fighter over the Eurofighter Typhoon.  MoD watchers suggested 
that the Karamanlis government, by postponing decisions on 
the new fighter, sought to diffuse politico-diplomatic 
"pressures" from competing manufacturing countries and, also, 
reduce the strain on the budget, at least temporarily.  End 
comment. 
RIES