Greece is one of NATO's top defense spenders. Here's why

Sun-soaked Greece may not immediately come to mind as a top defense spender — but only four NATO allies spent a bigger slice of their GDP on security than the Mediterranean country last year.

In addition to the U.S., NATO estimates show that tally includes Poland, Latvia and Estonia, which ramped up their defense expenditures in response to Russian aggression in recent years.

Greece has meanwhile consistently been a big defense spender, spending around 3.1% of its GDP on defense in 2024.

At the core of Athens' defense spending motivations is its tense and fractious relationship with fellow NATO ally Turkey.

Greece and Turkey have "a lot of historical baggage," Jacob Kirkegaard, a senior fellow at Bruegel, told CNBC.

Tensions between the two nations date back several hundred years and include war, the displacement of over 1 million people, clashes over controlling Cyprus, and a strong geographical element due to Greece's many islands, he said.

"You have this very large number of Greek islands quite close to the Turkish coast that, in principle, the Turks could invade relatively easily," Kirkegaard said. "Greece has traditionally maintained a ... non-trivial military presence on virtually all these islands, and that is quite expensive because it means you have to have... a lot of garrisons."

Concerns about the "Turkish threat" are still relevant today, George Tzogopoulos, senior fellow at ELIAMEP, told CNBC.

"Greece spends a lot on defence to protect its sovereignty and sovereign rights," he said.

Instability in nearby countries and regions including the Middle East, and especially Turkey's "muscular policy" across the Mediterranean, have made it is crucial for Greece to continue with its strong defense spending, Tzogopoulos explained.

"Greece has no alternative but be prepared for all scenarios," he added.

Greece's military strength has cracks despite the country's large defense budget, experts say.

For example, Greece has increasingly been focusing on investing in sophisticated weapons systems, especially since the Russia-Ukraine war, Wolfango Piccoli, co-president of political risk advisory at Teneo, told CNBC.

But, he noted, "much of that spending has been directed abroad."

"The country still lacks a strong domestic defense industry and a key priority moving forward is to build and sustain an indigenous industrial base that can reduce dependence on foreign arms suppliers," Piccoli said.

Greece's military capabilities is also plagued by practical problems, Kirkegaard added. Many of the Greek army's numerous tanks are relatively old, and personnel is not trained to use these vehicles in large formations. Equipment is also often very spread out across the country's islands.

"So it would be a mistake, therefore, in the case of Greece, to equate spending with sort of flat out military capabilities," Kirkegaard said.

As NATO officials gather this week, Greece's defense spending levels should also strengthen the country's voice among the coalition's 32 members.

The expenditures have already boosted Greece's relationship with major powers like the U.S. and France, Piccoli said, partly because these nations supply military equipment to Athens.

"Defense spending in Greece also functions as a tool of geopolitical leverage, enhancing its standing and security guarantees in a complex regional environment," Piccoli added.

Top of agenda at the NATO summit will be defense spending, with Reuters reporting that coalition members have agreed in principle to hike their target for such expenditures to 5% of their GDP. This includes 3.5% on traditional defense issues and 1.5% on related elements like infrastructure and cybersecurity.

The jump to a 5% target will be much smaller for Greece compared to many other nations, but even Athens might not quite make it, Kirkegaard suggested.

"Do I therefore think that Greece is is one of the countries that's going to be particularly responsive to these new NATO targets? No, I think the answer is no, because the broader shift in NATO expenditure levels is driven by Russian aggression, which is not, you know, Greece's principal military challenge," he said.