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The purchase of two frigates in France for the Greek navy appears to be bursting. According to French media reports, even top-level interventions have not given the deal a boost.

It is primarily about the acquisition of two frigates of the Belh @ rra class (export designation of the design by Naval Group, referred to in France as "FDI" - Frégate de Défense et d'Intervention) with armament (here MdCN - Missile de Croisière) Naval, cruise missile, from MBDA). The business is expected to amount to 2.5 to three billion euros. A letter of intent is said to have been drawn in October 2019 (Defense News). Greece is now questioning this.

Paris had been working on a structured and long-term partnership with the Greek maritime industry for some time. It was launched earlier this year. A center of excellence for innovations in naval warfare was to be created in Greece with French support. "We want Greece to be at the center of European naval innovation," said Hervé Guillou, the then long-serving CEO of the Naval Group. A cooperation plan presented by Naval Group at the French Embassy in Athens on February 13, 2020 (ES & T reported) provided for cooperation with a number of Greek companies. There were talks of over twenty companies in Greece with which Naval Group, Thales and MBDA wanted to enter into commitments. On the scientific side, partnerships have been entered into with three universities - the Technical University of Athens (energy, composite materials), the University of Patras ((flight) drones) and the University of Crete (robotics, manufacturing 4.0). An intergovernmental agreement should finalize the collaboration later this year.

 

Paris and Washington vie for Athens

The success achieved back then was questionable for a long time. Transatlantic offers were launched to convince Athens to buy a warship in the United States. During his visit on October 5 and 6, 2019, US Secretary of State Mike Pompeo signed an additional protocol to the Mutual Defense Cooperation Agreement, which had been in place since 1990, and which will give American armed forces wider and easier access to Greek bases. The usual practice so far that this agreement has to be renewed annually has been abandoned. Pompeo's visit broke the standard pattern of visits by senior US diplomats in recent years who visited both Athens and Ankara to achieve "balance". Observers see this as a new security policy positioning for Washington, which is moving away from Ankara.

For its part, the USA wanted to engage in compensation transactions in Greece. In addition to the establishment of a helicopter training center in Central Greece (Volos) and the provision of drones, helicopters and a connection to the American F-35 program - after the exclusion of Turkey - are said to have been up for discussion, the latter (partially) financed by US funds Foreign Military Sales Program (FMS), which enables the sale of weapons, armaments and military services (e.g. training) to foreign governments. At that time, experts said that Lockheed Martin should have lured with four units of the Littoral Combat Ship. The offer included the delivery of four ships for the price of two - at least two billion euros. A connection with the four Littoral Combat Ship, whose retirement date (March 2021) the US Navy has just made public, is not unreasonable - but it has not been confirmed either.

In addition, Washington went the way of industrial ties in the maritime sector. American investment (lead: United States International Development Finance Corporation - an independent agency of the United States government that finances privately organized development projects) is expected to revive the Greek shipbuilding industry. The New York private equity firm Onex has already managed two Greek shipyards out of the economic crisis: Nerion and Elefsina.

 

Despite field advantages - Parisian handicaps

Also in view of the transatlantic advances, Athens initially maintained its intentions to cooperate with France. They work together in various European programs (including PESCO). Greece supports France in Emasoh and has promised at least a personal participation. Paris is opposed to Ankara on maritime law issues, such as Turkish exploration efforts in the Cypriot economic zone and Turkish territorial claims in the Mediterranean. In the EU, France bears a lion's share of Greece's debt in the forecast total of 338.55 billion euros in 2024 (data from statista.com), or - according to French media - 40-50 billion euros.

According to reports by the French “La Tribune”, there are serious doubts as to whether both deals - the governmental agreement on in-depth cooperation and the purchase of frigates - will come about at all. By the end of summer, the parties had originally planned to contractually deliver the first frigates in 2024 - that meant a construction period of around 40 weeks - and in 2026 for the second unit.

Greek Finance Minister Christos Staïkouras is said to have postponed the project by ten years. A meeting between French President Emmanuel Macron and Greek Prime Minister Kyriákos Mitsotákis on the sidelines of the EU summit on the EU budget and the Corona-related economic stimulus program (July 24-27) could not have given impetus to the planned armaments cooperation.

According to the French reading, given the budgetary constraints of Athens, the price tag is the obstacle. The Greeks, it is rumored, find the price for the two frigates too high, criticized contractual terms and financing clauses. An Athens newspaper reports that Greece can only bear annual payments of 300 million euros. Another source puts the Greek offer, with reference to French sources, at 1.4 billion euros.

Alternative scenarios are already being discussed in the Greek media. This involves the modernization of the four Meko frigates of the Hellenic Navy (a type of warship from thyssenkrupp Marine Systems). Another option would be four new multi-purpose frigates from the U.S. that could be delivered by 2025. Both projects could be implemented in Greece - an immense advantage over the French variant.

In June, an agreement to build seven corvettes based on designs by Israel Shipyards (Haifa) was announced at Onex shipyard Elefsina. According to Greek press releases, the 72-meter-long and approx. 800-tonne displacing Themistocles corvettes are intended to unite the know-how of Greek, Israeli and American industry. Onex and Israel Shipyards intend to appear internationally with the design. A strategic industrial partnership agreement was signed on June 16.

The three-thousand-ton corvette, the European Patrol Corvette (EPC), presented by Naviris, the joint venture between Naval Group and Fincantieri, is also said to play a role in Greek considerations. Greece is one of four EU member states participating in this PESCO project, the aim of which is to develop a prototype for a new class of warships in order to fulfill a large number of tasks and missions with a modular and flexible approach.

The alternatives have the common advantage that a high proportion of the added value could take place in Greece. The extent to which this, along with the financing, will be decisive for the decision will soon become clear.

For France, which stood up for Greece, the failure of the agreed cooperation meant a setback. To avoid this supposed "defeat" (La Tribune), Paris has launched a charm offensive. Florence Parly, the French Defense Minister, and Foreign Minister Jean-Yves Le Drian would now try to get their Greek counterparts back to the negotiating table, La Tribune said.

Outside of the EU, Greece maintains close political and economic ties with the United States and China. China holds 51 percent of the shares in the port of Piraeus through the state shipping company COSCO. The Bank of China opened a branch in Athens in November 2019. Since April 2019, Greece has been a 17th EU member of the Chinese initiative "Cooperation between China and Central and Eastern European Countries", which deepened relations between the two countries. This makes it clear that the Greek considerations could have a completely different background, which should draw the attention of the EU states.

Hans Uwe Mergener