Countdown to the complete overthrow of the to date not only state budgets of the countries – members of the EU (along of course Greek) but also their priorities – with the cuts of cuts to health and pension – the expected decision of the summit. NATO (24 – 26 June 2025) to increase the limit of defense spending at 5% of GDP (compared to 2% to date).
It is recalled that as it has long been proposed by NATO Secretary -General Mark Rutte, there must be an increase in defense spending to 3.5% and spending (defense) infrastructure to 1.5% (ie 5% of each country of GDP), and 20% of each country), EU re -equipment, Rearmeurope has a horizon in 2030).
Yesterday Monday (9.6.2025), however, speaking at a London Chatham House event. The Secretary General of Rutte went one more step further, moving on to specific Fiscal recommendations on how NATO members could achieve the 5% goal.
Here’s what Rutte said (going beyond the narrow boundaries of his defensive responsibilities as head of NATO and not of the EU!), Answering a journalist’s question about how European governments will save the funds to achieve 5%: “It is not up to me to decide, of course, how countries pay the bill. What I know is that if we want to keep our societies safe, and look, if you don’t, if you don’t go to 5%, including 3.5% of basic defense spending, you could still have the national health system, or in other countries, their health systems, the pension system, etc. That is, this is consistency. “
In other words, the NATO Secretary -General makes it clear that Europe’s populations will either have a defensive security against Russia (through the ejecting costs), or they will have health and pensions at the existing level or otherwise, otherwise, Rutte implies that the costs of health and pensions should be cut to finance the increase in defense spending!
What would defensive costs mean to Greece at 5% of GDP? According to the latest relevant statements by Finance Minister Kyriakos Pierrakakis, Greece’s defense spending will reach 2.3% of GDP in 2025.
If the Route proposal is adopted in the late month for 5%, Greece should more than double its defense spending by 2030 or at the best of 2032, that is, within the next 5 or 7 years.
However, The 25 billion -euro equipment program announced by the government will run by 2037, ie the next 12 years.
In other words, the Rutte line (if passed on to the session) It would impose thick – thick in Greece to increase at least 25 billion euros in defense and infrastructure spending over 2025 – 2030 (and not in 2025 – 2037), spending an average of an additional € 5 billion on defense each year (instead of € 2 billion per year each average in 2025 – 2037). Only in this way could the goal of 5% be achieved by 2030…
And let’s not … rush to say that increased defense costs will also lead to such an increase in GDP, which will “push” in addition to national income (business and employees) and state tax revenue so that the equipment program will continue to run … Bureually 1/5 of these costs will “remain Greece”, that is, it will be directed to defense industry companies that will operate here. The remaining 4/5 will go to countries such as Germany, France and the US. It would commonly have a positive one for their own GDP and not Greece.
This means that most of the additional € 3 billion (additional € 5 billion – at least – due to a line line minus the 2 billion euros which is already projected to spend on the basis of existing equipment program) that Greece must spend (if the Rutte line passes) should be found by other resources Apart from those already announced and budgeted by the government (eg tax evasion, spending review, etc.).
This will now be the central economic question that the present, as well as the next government of Greece, which will emerge in the 2027 elections (or whenever they do), should answer.
Will it proceed with additional public borrowing? The messages received by Germany when the package of unlimited increase in defense spending was announced, was anything but … encouraging, both for the bonds of a country with excellent credit rating (such as Germany) and for other European, together with Greek.
New borrowing in conditions of possible borrowing costs would mean increase of public debt and let no one forget that Greek public debt, despite premature repayments, does not cease to be The highest in the EU and over 153% of GDP…
The other “recommendations” of Rutte
In addition to his indirect “shot” against health and pension expenditure, the NATO secretary also said: “I mean, when I was in politics, you had three sources to do that. One is taxation, the other is savings elsewhere, and the third is a higher deficit. “
What would it mean for Greece, each of the above options?
– Could the government proceed with tax increase?
This would mean a radical change strategy from the one that the government continues to want to reduce taxes. On the other hand, of course, it could increase tax revenue, suddenly from fighting tax evasion from rents from rents and increasing revenue from overdue insurance debts (through the mobilization of private companies), etc.
– Could the deficit increase?
The escape clause activated by the EU for the sake of increasing defense spending “covers” a deviation of up to 1.5% from the spending threshold rather than up to 2.5% of GDP, in which the NATO Secretary -General demands to increase defense spending.
Therefore, there is a ‘uncovered’ of 1% of GDP, ie over € 2 billion. In order to “cover” this difference, without impact on the cost limit provided for by the new stability pact, either the possibility of divergence through the escape clause should be expanded (eg including infrastructure costs), or save resources elsewhere, eg health or pension system.
– Could he better use savings?
This idea did not come from the … sky! The European Investment Bank itself proposes to mobilize savings (households, pension funds, etc.) in favor of defense investment. In Greece, private deposits are extremely weak. However, the same is not the case for insurance funds deposits, which reach € 40 billion.
EUR 20 billion is the reserves of EFKA and other bodies and another 20 billion euros are the reserves of the “piggy bank” of Solidarity Solidarity Insurance (AKAGE). Of these, only 15% of EFKA reserves are invested (although the law enables investment up to 23%), while not invested in AKAGE reserves. Newsit.gr reports that the government does not intend to touch AKAGE’s reserves.
As for EFKA reserves, the percentage of those invested (23%) may increase, and alternative investments are planned.