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GREECE SET TO SCRAP EUROFIGHTER DEAL

23 Nov 04. The FT reported that Greece is preparing to scrap a planned €10bn deal to buy 60 Eurofighter Typhoon combat jets for the Greek air force under a cost-cutting drive by the centre-right government which took office last March.

If approved by the Greek cabinet, the cancellation would deal a big blow to the four-nation Eurofighter consortium, comprising Germany, Italy, Spain and the UK, wiping out almost all its export order backlog.

Greek officials have signalled the expected decision to the consortium and said the country will launch a new tender at some point.

That would open the way for rival bids from Dassault of France, which already supplies the Greece with Mirage fighters, Lockheed Martin of the US which supplies the air force’s F-16s, the Anglo-Swedish Saab-BAE Systems Gripen joint venture and Russia’s Sukhoi.

“The government’s intention is to reduce defence spending during its current term,” a government spokesman said yesterday. Greece’s economic programme calls for spending of just €6bn on defence over the next four years – compared with more than €10bn between 2000 and 2004.

Greece completed the receipt of 60 F-16 jets last year which leaves
the air force well enough equipped to meet current needs, defence analysts said.

Greece previously spent heavily on defence to offset a perceived threat from neighbouring Turkey over sovereignty in the Aegean. But a gradual rapprochement, reinforced by Greek backing for Turkey’s bid for EU membership, has allowed Athens to cut military expenditure.

The former Socialist government took a political decision in 2000 to buy Eurofighters for delivery after 2010. The decision, which came when Greece was a candidate for the eurozone, was defered until after the Athens Olympic Games this year because of budget constraints.

The Greek air force has traditionally bought US and French military jets. The expected move by Athens will darken the mood in the Eurofighter camp, which is still hoping for confirmation before the end of the year that the four nations building the aircraft would commit to a second batch of 236 aircraft. That order will lift the overall firm orders from Germany, Italy, Spain and the UK to 384 aircraft out of a total planned programme of 620 jets.

Although Eurofighter currently counts the export orders as additional business, it is widely believed that none of the four partners will take up their full commitment in the third batch in 2007. Instead, most of the export orders were widely expected to be fullfilled from the numbers envisaged under the original programme.

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