This analysis is based on a detailed study of seven articles on this topic. Its aim is to provide a broader perspective by combining research on the Aegean conflict between Greece and Turkey, military expenditures, and defense policies in these two countries. The diverse perceptions and findings offer a detailed understanding of the causes of regional tensions and potential solutions.
The Greek-Turkish conflict fundamentally involves competing claims regarding territorial divisions, specifically the Aegean Sea. Such conflicts play a crucial role in determining the defense policies and military spending of both parties involved. The core issues at stake relate to territorial waters, the continental shelf, airspace, and disarmament of certain islands. The various interpretations of international law, especially regarding the United Nations Convention on the Law of the Sea, have long exacerbated tensions. Greece calls for addressing these disputes through existing international legal frameworks, while Turkey prefers negotiations on a bilateral basis. Both countries consider these disputes existential threats, impacting their defense strategies in response.
This has led both Greece and Turkey to spend a significant portion of their Gross Domestic Product on military expenditures, often exceeding the ratio recommended by NATO. In the case of Turkey, external threats include threats from Greece, and there is also the issue of border security. Greece is increasing its military spending to balance the accumulated increase in military reinforcements in Turkey. However, studies show that defense budgets do not lead to economic gains in both countries; rather, military spending ultimately becomes tied to the economy when security factors are the main driver.
The possibility of an arms race between Greece and Turkey remains. Some studies have indicated that the defense budgets of the two countries are positively correlated, suggesting that there is a symmetric relationship between them. However, some other studies found no evidence supporting this relationship, claiming that military spending is more likely determined by broader geopolitical factors rather than direct competition.
The budgets of Greece and Turkey include more than the amounts reported in the budgets of these two countries, according to the time series provided by the Stockholm International Peace Research Institute (SIPRI). These discrepancies further complicate defense spending and illustrate the need for financial transparency in this specific area.
The relations between Greece and Turkey are characterized by a web of interactions among historical, legal, and geopolitical conflicts. The issues concerning the Aegean Sea lie at the heart of the disagreement that pits both countries against each other: territorial waters, airspace, disarmament of islands, strategic priorities, defense spending, and military modernization programs in both countries. This article reviews views from various academic circles with the aim of examining the disputes in the Aegean Sea and defense spending trends that have broader implications for economic development and regional stability. Understanding the complex interactions between military, legal, and economic elements requires in-depth analysis that provides a comprehensive view of the intricate relationship between these elements.
The disputes over the territorial waters of the Aegean Sea, the continental shelf issue, air corridor disagreements, and sovereignty over some uninhabited small islands are part of the issues that underpin the tensions between Greece and Turkey. The claims made by each side are fundamentally based on conflicting interpretations of international law, particularly the United Nations Convention on the Law of the Sea (UNCLOS), which Greece has signed but Turkey has not.
According to the book "Aegean Sea Conflicts between Turkey and Greece: Turkish and Greek Claims and Motivations within the Legal and Political Perspective,” Greece claims that each island in the Aegean Sea automatically generates its continental shelf, thereby extending its sovereignty rights. However, for Turkey, none of these islands generate such rights as it would "unfairly" limit Turkey’s rights off its coasts.
Complicating the dispute further is Greece's assertion that it will extend its territorial waters from 6 to 12 nautical miles, which is permitted by the United Nations Convention on the Law of the Sea. Turkey views such a move as a direct threat to its sovereignty, even stating it would be a "cause for war." However, the chronic problem under this large number of islands, islets, and rocks is the question of who owns what, as each side raises counterclaims based on historical treaties and legal interpretations.
Moreover, Greece claims a 10-mile airspace above 6 miles of territorial waters, which Turkey does not recognize, and also insists that the flight altitude should be the same as that allowed in territorial waters. The complexities are further increased due to the status of the East Aegean islands as demilitarized zones under international agreements such as the Treaty of Lausanne (1923) and the Paris Peace Treaty (1947). Turkey insists that Greece is violating these treaties by militarizing the islands, while Greece repeatedly asserts its right to defend these islands against perceived threats from Turkey.
Issues in the Aegean remain unresolved due to deep-rooted nationalism, distrust, and conflicting interpretations of international law, despite numerous negotiations and treaties such as the 1976 Bern Agreement.
In turn, Greece and Turkey have consistently allocated a significant portion of their Gross Domestic Product to defense spending, reflecting the security concerns stemming from their unresolved conflict. Their military expenditures often exceed NATO’s recommendations, indicating the importance both countries place on maintaining military strength in response to perceived threats. This high level of defense spending has significant implications for their economies, diverting resources away from important areas like education, health, and infrastructure development in countries with growing populations.
Another significant contribution is a research paper titled "Defense Spending and Growth in Turkey 1954-1993: Causal Analysis" by Christos Koulias. His work offers valuable insight into the causal relationship that may exist between military spending and economic growth in Turkey. Using Granger causality tests, the study found no causal relationship between military spending and economic growth during the period 1954-1993. External challenges remain a strong driver of Turkey’s defense responsibilities, which have constantly exceeded NATO averages. These challenges include unresolved issues with Greece; strained relations with its neighbors, especially Iran, Iraq, and Syria; and internal conflicts, particularly with the Kurdistan Workers' Party (PKK). The lack of direct economic benefits indicates that Turkish military spending is a product of strategic necessities rather than economic reasons. This means that security concerns are more significant in determining military policies than economic development.
In this context, a study conducted by Dritsakis and Adamopoulos (2004) titled "Defense Spending and Economic Growth: An Empirical Study of Greece and Turkey" asserts that both countries consider defense vital to their national security; and while it may not directly contribute to economic growth, defense spending resembles a necessary evil. The long-term integration between defense spending and economic growth is not evident in either Greece or Turkey. This paper identifies a one-way causal relationship from economic growth to defense spending, showing in both cases that military budgets have been adjusted according to economic performance but in both countries, the main driver of defense spending is external security considerations, while the trend towards mutual reinforcement supports the arms race theory.
The military strategies of Greece and Turkey are shaped not only by their bilateral disputes but also by their roles in NATO and broader regional security dynamics. Both countries occupy strategic positions in NATO's southeastern flank, and their military postures are influenced by their desire to protect their national interests while contributing to the alliance’s security objectives.
Greece and Turkey have consistently dedicated large portions of their GDP to military spending, reflecting security concerns arising from their rivalry. Their military expenditures often exceed NATO guidelines, underscoring the importance each country places on maintaining military readiness in the face of perceived threats. This high level of defense spending has significant implications for their economies, diverting resources from other critical sectors such as education, healthcare, and infrastructure development.
In his work "The Military Balance between Greece and Turkey: Tactical and Strategic Objectives," Andre Gerolymatos examines how past conflicts—particularly Turkey’s invasion of Cyprus in 1974—have influenced the defense policy of both countries. To date, both Greece and Turkey have implemented extensive military modernization programs primarily focused on developments in aviation, naval, and missile systems. These increasing pressures are based on the urgent need to balance military advancements and dominance over the Aegean and eastern Mediterranean.
Both countries have invested heavily in advanced military equipment, from fighter jets to submarines and missile defense systems. Their dispute over the Aegean has perpetuated ongoing rivalry, but it has also been exacerbated by the discovery of hydrocarbon deposits in the eastern Mediterranean, further escalating their competition. While Turkey follows a defense policy based on self-reliance, grounded in national arms production and modernization, Greece relies more on NATO and the European Union for developing its defenses.
The aforementioned efforts have shown that these costs increase instability in the region rather than alleviate long-standing disputes. The military balance remains highly unstable in the area, as all nations enter into a "vicious cycle" of military armament that burdens their economies without addressing the political factors behind their disputes.
The issue of an arms race between Greece and Turkey has been one of the most contentious issues in academic literature. Several studies have attempted to determine the precise extent to which military spending of one country is actually dependent on that of its neighbor. Results have varied.
In the study conducted by Koulas and Spiliopoulos, "Greek-Turkish Rivalry: A Bayesian VAR Approach" (2016), a Bayesian Vector Autoregressive model was applied in an attempt to find whether there is a reciprocal arms race between Greece and Turkey. What they came to ultimately rejected traditional concepts of arms race, which state that an increase in military spending of one state will automatically trigger responses from the other state. This implies that the fiscal commitments of both countries are not entirely reactive but result from a broader set of strategic motivations: alliances, geopolitical risks, and internal security concerns.
However, other studies have supported the arms race hypothesis, focusing on the bilateral causal relationship between defense spending in Greece and Turkey, particularly by Dritsakis and Adamopoulos in 2004. This is further supported by other studies that actually indicate that military spending in Greece and Turkey is interconnected, as both countries attempt to respond to perceived threats from each other.
However, even if the evidence of an arms race is mixed, in the context of long-standing geopolitical rivalries—which may complicate military expenditures—some may contain elements of interconnected spending; where other factors such as economic constraints, internal security threats, and external alliances become significant underlying forces shaping the evolution of defense policy.
The research paper titled "Some Exercises Using Alpha Data on Military Spending from the Stockholm International Peace Research Institute: Is It the Same Story for Greece and Turkey?" prepared by Gunluk-Sincin (2016), addresses the consistency of reports in military spending data released by the Stockholm International Peace Research Institute. In other words, the off-budget military activities of SIPRI were reviewed against national defense budget figures from its Alpha dataset for both Turkey and Greece.
This report compares SIPRI's estimates with national budget statistics. Thus, the initial estimates are considered to provide a broader perspective on the actual magnitude of military spending. There still remain significant discrepancies in the case of Turkey; off-budget military expenditures, which include arms purchases and paramilitary forces, have not been fully covered in national budget estimates. The revised figures from SIPRI put things in better perspective, reinforcing the final conclusion that there is a need for greater transparency in defense economics in both countries.
Gunluk-Sincin's work also raises serious questions about the economic feasibility of such high defense spending by both Greece and Turkey. As long as national security takes precedence, high levels of defense funding may limit the countries' potential to free resources for other key areas of economic development, namely education, health, and infrastructure.
The relationship between Greece and Turkey is based on a complex mix of legal disputes, strategic interests, and military rivalry. The issue of the Aegean Sea remains another fundamental issue where known positions from both sides exist and is unlikely to reach a settlement unless serious diplomatic efforts are made. At the same time, defense spending has become one of the main dimensions of their enmity, driven by external security threats and internal strategic factors.
Military spending may be high, but the situation is completely different if there is a real arms race between Greece and Turkey. General geopolitical factors and financial constraints strongly impact defense policy. High defense budgets impose a considerable burden on the economies of both countries, making their military positions a sustainability issue.
Legal and diplomatic efforts alone have not been sufficient to overcome such tensions, as each state has deep-rooted economic and security reasons for military spending.
Things could truly move toward a more stable and peaceful future in the Aegean and eastern Mediterranean with more cooperation, transparency, and dialogue about how things should proceed. But this presupposes that Greece and Turkey must ultimately put aside historical grievances and look toward a shared vision for regional stability together.
This is an AI-generated English translation. The original text is in العربية
PhD Researcher in Defense Contracting and Cooperation Policies
