This deal, considered the largest of its kind between the two nations, revolves around the creation of an International Flight Training Center for the Hellenic Air Force in Kalamata, in southern Greece. The agreement remains subject to scrutiny amid ongoing concerns about its structure and implications.
At the heart of the project is Israel’s Elbit Systems Ltd, a major defense contractor chosen to implement and manage the center under a 22-year contract valued at €1.85 billion (approximately $2 billion). Under the terms of the long-term lease and service agreement, Greece is committed to annual payments of approximately €45.8 million beginning in 2025, continuing through to 2042. These annual payments are subject to inflation adjustments of 2.65% per year, pushing the final cost even higher. Already, Greece has paid €550 million toward the project. Notably, the total does not include optional add-ons embedded in the contract, such as ejection seat systems, additional simulators, and other upgrades, which could add anywhere from €120,000 to €72.5 million more depending on activation.
This structure of optional costs and inflation-indexed payments reflects a broader issue: the contract’s flexibility comes with financial uncertainty. It includes provisions for “Over and Above Events,” essentially giving room for unplanned changes or cost adjustments during implementation. In theory, this allows the project to adapt to real-world needs, but in practice, it may open the door to budget overruns and lopsided commitments.
On the ground, Elbit Systems has partnered with “local subcontractors” in Greece to carry out portions of the work. However, some of these collaborations have faced payment “delays”. According to information, “back payments” from 2021 and 2022 are still pending—partly because the local subcontractors had requested that funds be routed through Cyprus or London. These kinds of administrative snags are part of the “intricate reality” of G to G deals, where state-level diplomacy meets the mechanics of international defense procurement.
Beyond its financial contours, the deal has drawn scrutiny for its operational framework. Although the Hellenic Air Force will use and maintain the aircraft and training systems—most notably the Italian-built M-346 jets and ground-based simulators—ownership of these assets remains with Elbit Systems. Greece will only acquire ownership by paying an additional fee at a future date, yet to be determined. This raises a paradox: while the Greek military is responsible for maintaining the fleet and bears the risk of damage or loss from the moment the equipment is delivered, it does not actually own any of it.
This unusual ownership arrangement introduces vulnerabilities. Should an accident occur or major repair be needed, the Greek Ministry of Defense would be liable despite having no legal title to the aircraft. This risk, combined with the long lease term and blurred lines of responsibility between the Greek and Israeli sides, creates a system dependent on constant cooperation. Elbit is responsible for logistical support, while the Greek side handles maintenance—a division that requires precise coordination to ensure operational readiness. If either side falters, the availability of the aircraft could be compromised.
Transparency has also emerged as a point of contention. Although the contract permits Elbit, through Israel’s Ministry of Defense, to involve third-party subcontractors, the process lacks strict safeguards against preferential treatment or price inflation. Allegations have already surfaced, claiming favoritism and overpricing in various phases of the project. These claims remain unverified and may reflect commercial rivalries among suppliers, but they highlight a broader concern: the absence of robust, independent oversight in such high-stakes deals.
Perhaps the most controversial aspect of the agreement lies in its dispute resolution mechanism. In the event of a conflict or disagreement, the contract stipulates that the matter must be resolved solely through direct negotiations between the two ministries of defense. This provision effectively blocks recourse to neutral international arbitration or legal bodies, a setup that some Greek observers have criticized since the contract’s signing in 2021. For Greece, this means that in the case of a serious divergence of interests, its legal and strategic options are severely limited.
