ROME — As politicians and finance ministers work to keep crisis-hit Greece within the Euro-zone, analysts have warned of far-reaching consequences for security in the Mediterranean if the country is cut loose.
After months of wrangling with creditors, the debt-saddled country appeared close to tumbling out of the euro zone last week after Greeks voted to refuse a package of cuts and tax hikes proposed by the European Union.
In return for the cuts, the EU was offering a new bailout to keep Greece from defaulting on its debt.
But as the week wore on, and as European politicians refused to budge, Greek Prime Minister Alexis Tsipras appeared to buckle under pressure and come back to the negotiating table, offering to make cuts to public spending.
The deal, which was due to be discussed by European leaders July 12, on Sunday, involves a €100 million (US $110.5 million) euro cut in defense spending this year and a €200 million cut in 2016, less than the €400 million proposed by the EU.
Ahead of the announcement, European Commission President Jean-Claude Juncker said defense cuts were feasible.
"I proposed to them [Greece] to replace the VAT [value added tax] measures by other means, and by other instruments, one of these being a modest cut in the Greek defense budget. This could be easily done," he said.
New cuts will present a challenge to a military that has already seen spending drop by 46 percent since 2010. This year, Greece had planned to spend €3.25 billion on defense, including €700 million on procurement.
If the cuts go through, it could delay planned upgrades to Greece's P-3 aircraft.
"The P-3 midlife upgrade was approved some months ago, but the funds have not been released yet," said Periklis Zorzovilis, the president of the Institute for Security & Defence Analysis in Athens.
Thanos Dokos, head of the Hellenic Foundation for European and Foreign Policy, added that the cost of the program — around €500 million — had already been criticized by Greece's governing party.
The EU's current enthusiasm for Greek defense cuts seems to allegedly contrast with 2008, when Greece was first in line for bailouts.
Former European member of parliament Daniel Cohn-Bendit has said France and Germany put pressured on Greece at that time to maintain orders of German attack submarines and French helicopters.
Today, Zorzovilis said the military was not considering any new orders.
"The fuel situation is under control because the armed forces put in an annual order and there is enough at the moment," he said.
He was dubious that a planned upgrade for Greece's F-16s, including e-scan radar, would proceed, get under way, despite plans by rival Turkey to procure the F-35.
"The program is the top priority as these aircraft are the backbone of the Air Force fleet but the cost would run to €1.2 to €2 billion," he said. "Therefore it depends directly on the country's fiscal status."
Dokos pointed to Greece's frigate fleet, which is nearing retirement.
"There will have to be soon a decision about extensive modernization or replacement of some ships," he said.
But if defense cuts can keep Greece from slipping out of the euro-zone, analysts argued they may be worth it if it keeps Greece on board as a European team player, thus heading off a security headache in the Mediterranean.
The first danger of the EU expelling Greece from its ranks would be closer Greek-Russian ties, said Paul Schwartz, a nonresident senior associate who focuses on Russia with the Center for Strategic and International Studies.
"I think [Russian President Vladimir] Putin would like to use this as an opportunity to improve relations with Greece," Schwartz said. "In his ideal world, he would like to split Greece further away from the EU and NATO. But I don't think he'll be that successful."
Schwartz argued Greece has shown no real desire to move away from NATO, and remains militarily integrated with the Western nations.
"Ultimately, even if Greece were to exit the Eurozone, they are so highly integrated with the West that it is unlikely to remove them from the West's orbit," he said.
Richard Aboulafia, an analyst with the Teal Group, agreed that while Putin may look to cause "mischief" with the Greek situation, it is unlikely to drive a wedge between that country and NATO.
"Greece has been for many, many years a highly valued and staunch ally within the NATO alliance," said NATO Secretary General Jens Stoltenberg.
"Greece is today meeting the guideline of spending 2 percent of GDP on defense. I support all efforts to reach an agreement between the European Union and Greece, but of course it's up to Greece and the European Union to find out how to do that. I support the efforts, and I hope that they will find an agreement. I think that's important for the EU, for Greece, and all of us."
But one Italian analyst was less confident in Greece's ties to Western Europe.
"If there is a break, it would weaken the EU and cause problems for NATO," said Stefano Silvestri, head of the Istituto Affari Internazionali, a Rome think tank.
"This comes at a time when we have problems with Turkey, and while Russia is carrying out naval maneuvers in the Mediterranean and China, which in turn is investing in the Greek port of Pireus. China is currently docking naval ships in Djibouti, but could move them," he said.
"Problems in Greece could also reopen the Pandora's box, which is the Balkans," he said. "Greece could try to accelerate the break-up of Macedonia, which would in turn restart Albanian ideas of a greater Albania, in turn setting off other disputes," he said.
Aaron Mehta, Pierre Tran and Martin Banks contributed to this report.
Tom Kington is the Italy correspondent for Defense News.
