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Greece’s defense industry to fire up

The long-term costs of upgrading armed forces, with a focus on the navy and air force, are a great opportunity to attract foreign investors to the defense industry and its renaissance.

With a strong push from Greece’s new arms program, in an environment of increased tensions with Turkey, but with also upgraded defense relations with the US, France, and Israel, the government is launching a plan to revive the national defense industry, which was facing enormous difficulties after a 15-year reduction in weapons spending and having a very poor track record of management by Greek governments.

The long-term costs of upgrading armed forces, with a focus on the navy and air force, are a great opportunity to attract foreign investors to the defense industry and its renaissance, as made clear by Prime Minister Kyriakos Mitsotakis over the weekend in Thessaloniki.

In fact, the government is pursuing multilateral armaments diplomacy, maintaining open channels of cooperation with the defense industries of the United States, France, and Israel. The goal is twofold: on the one hand, to make political use of armaments, to strengthen the country's diplomatic position and consolidate strong alliances, on the other hand, for the Greek defense industry to undertake high-level construction projects along with international giants to maximize the benefits of spending in the sector. The new armaments program leaves room for significant new projects for Greek companies.

For example, the upgrade of the four MEKO type frigates, which is expected to take place at the Scaramanga Shipyards after their privatization, will have a budget of 400 million euros, while the production of new frigates by the Elefsina Shipyards will have a much larger budget, which is under the control of ONEX with a significant investment of capital by the American development bank DFC. It is noted that the proposal submitted by the American giant Lockheed in August is considered to be the favorite for the new frigates.
As far as HAI is concerned, in addition to the upgrade of the F-16s in cooperation with Lockheed, which is already in progress but with problems, there are open possibilities for new projects in the future. The upgrade of older F-16s is being discussed. If Greece proceeds in the future and supplies the "invisible" F-35, HAI should join the international production scheme.

In indicative remarks over the weekend, Mitsotakis said: “We are activating our defense industry. Already, in the Elefsina Shipyards, American funds are investing in its modernization. A strategic investor will soon enter the Scaramanga Shipyards, keeping jobs. The tender process has been completed and in the immediate future the completion of the privatization of ELVO is imminent, while HAI is being reorganized, to be transformed into an aircraft maintenance center for the wider area ".

Moreover, answering a relevant question yesterday, during the press conference, Mitsotakis stated, among other things:

• I want to emphasize that the decision for the privatization of ELVO was completed two days ago. We have a bidder with a very ambitious investment plan. Significant consolidation has taken place in the Elefsina shipyards and they are building our rockets. There is still one that needs to be delivered and there are possibilities for other things to happen in the future. The privatization of the Scaramanga shipyards is progressing.

• And most importantly, the flagship project for me, which concerns HAI. The Greek Defense Industry has huge comparative advantages and a significant backlog. It does not lack customers, it has customers. It had, unfortunately, fallen victim to indifference and an inability to deal with the contracts that needed to be executed. And I want to remind you that HAI is also executing the flagship contract for the upgrade of the F-16 to "Viper", together with Lockheed Martin.
Developments in the defense industry are moving at a fast pace:

For ELVO, as stated by the Prime Minister, the sale to the consortium of Israeli companies SK Group - Plasan was finalized, which submitted the only bid in the tender conducted by the liquidator of ELVO and is characterized as very ambitious, as reported by BusinessDaily in June. Important for the future of ELVO under its new owner will be the supply of 10,000 military vehicles, while it will have a construction object in the field of special vehicles, but also in civilian vehicles.

• As far as the Scaramanga Shipyards are concerned, the privatization process is expected to proceed in the immediate future, as a few days ago, on September 8, the last extension of the special management expired. The fact that the shipyards have secured a significant construction object (frigate upgrades, construction of two new submarines) is expected to attract serious investment interest in the tender, while the government's goal is to maintain existing jobs.

• For Elefsina Shipyards, the developments towards the consolidation by ONEX with the model that has been successfully followed in Neorio are fast. The last major move was the transfer of shares of the Tavoularis side to the new buyers, which was completed last week. At the same time, the financial and legal control is proceeding, which is a basic condition for the approval of the capital investment by the American development bank DFC.

• As far as HAI is concerned, there are problems that make it difficult to execute the contracts with Lockheed, while the company remains unprofitable. The government is reorganizing the company and exploring the possibilities of attracting a strategic investor, without raising, at least at this stage, the issue of full privatization.



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