A priority for the Ministry of Defense is the defense industry because, through it and its development, there are more options and opportunities to strengthen the National Guard and, at the same time, “we are adding yet another industry to boost the local economy,” Defense Minister Vasilis Palmas emphasized on Friday while speaking before the Parliamentary Committee on Finance, which was reviewing the Ministry’s budget for 2027.
“The benefit is twofold. An industry is being developed that contributes to the local economy, and at the same time, we have at our disposal an industry through which we can order products that will technologically enhance the National Guard,”, Mr. Palmas emphasized.
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He noted that the defense industry produces certain technology programs that “are very important and can contribute to the National Guard’s equipment programs.”
Furthermore, the Minister of Defense said that “guided by our mission, which is to safeguard the territorial integrity and sovereign rights of the Republic of Cyprus, the Ministry of Defense has set specific objectives for the utilization of available resources, based on three main Pillars of Action.”
According to Mr. Palma, the first pillar concerns strengthening the deterrent power and military capabilities of the National Guard, the second concerns the planning and implementation of actions related to the protection of the natural environment and the enhancement of the National Guard’s operational resilience against the impacts of climate , and the third concerns the digital transformation and digital transition of the Ministry of Defense, with the aim of leveraging new technologies.
Regarding total expenditures relative to GDP, the Ministry’s Deputy Director General, Stelios Kountouris, said that for 2027 they amount to around 2.2% and 2.11% for 2028, including SAFE.
He also noted that for the defense sector alone, the percentage of GDP stands at 1.06% for 2027 and approximately 1% for 2028, while for 2026 it is 0.73%.
Regarding the 2027 budget, Mr. Palmas said that total budgeted expenditures amount to €894.7 million and are €266.6 million, as it includes the contracts signed under the SAFE plan.
Regarding the four budget chapters, Mr. Palmas stated that the “Ministry of Defense” chapter amounts to €13,578,726, the “Cyprus Army” chapter at €203,130,187, the “National Guard” chapter at €247,817,151, and the “Defense Infrastructure” chapter at €430,150,000.
Regarding the percentage of defense spending relative to GDP, the Minister of Defense stated that the country’s GDP has “skyrocketed to €34–38 billion per year, and inevitably, the percentage allocated to defense, no matter how much it has increased, may appear smaller,” compared to when GDP was €12 billion.
Responding to a question about whether defense spending includes funds from the European SAFE instrument, Mr. Palmas said that “it doesn’t matter where the money comes from, as long as it’s ours and we’re entitled to use it in the way we believe is best.”
The increase in defense spending may be around €250 to €260 million, and while this money comes from SAFE, but these funds have been approved by the European Commission, and we are required to use them up by 2030, he added.
He also noted that the Ministry is conducting desk-based exercises to secure additional funds beyond the annual budget.
Regarding the capacity to absorb the funds and the needs of the National Defense Force, the Ministry’s Deputy Director said that “We estimate that with a budget increase of €100 million, in addition to the 2026 allocation, ‘we will be able to cover the needs to a large extent.’”
Responding to a question about how to leverage the defense industry, the Minister of Defense said that Cypriot defense industries are already participating through the SAFE program with bilateral contracts in European programs and, at the same time, are collaborating directly with the Ministry; furthermore, as he noted, “we are entrusting certain companies with the task of managing and implementing specific programs.”
Mr. Palmas said that Turkey’s prolonged illegal occupation of a large portion of the territory of the Republic of Cyprus constitutes not only a violation of international law, but also a constant challenge to stability, security, and cooperation in the region.
“In this context, and guided by our mission—which is to safeguard the territorial integrity and sovereign rights of the Republic of Cyprus— we at the Ministry of Defense have set specific goals for the effective use of available resources,” he emphasized.
Noting that this policy is based on three main pillars of action, Mr. Palmas said that the first pillar concerns the strengthening of the deterrent power and military capabilities of the National Guard, adding that “to strengthen our deterrent capability, we are continuing to implement our Defense Planning and Programming, both within the framework of our procurement program and under the SAFE Regulation, with the aim of enhancing the operational capability and combat readiness of the National Guard.”
He also noted that the Ministry of Defense continues to promote an outward-looking defense policy and that, at this stage, Bilateral Defense Cooperation Programs are in effect with 20 countries.
“A prime example is our ever-strengthening cooperation with Greece, the U.S., France, and other countries in the region and internationally,” he noted, adding that search and rescue operations are also part of our outreach efforts and the maintenance of the good-neighborly relations we have built.
The Minister said that the Search and Rescue Coordination Center (KSED) has become one of the most recognized, state-of-the-art centers, not only in the Eastern Mediterranean region but also in Europe more broadly.
Regarding the effort to transform the National Guard into a modern and flexible force, Mr. Palbas said that “while recognizing the long-standing contribution of the National Guard’s personnel, we have also taken substantive measures to upgrade our workforce.”
In this context, he continued, at the initiative of the government of Nikos Christodoulides and in consultation with the Ministry of Finance, as well as with the House Defense Committee, we have moved forward with a series of decisions affecting all categories of National Guard personnel.
Specifically, he noted that for officers, “we have expanded opportunities for rank advancement by providing additional promotion slots with the aim of alleviating congestion in the ranks,” while “for non-commissioned officers and contract non-commissioned officers, we have significantly increased the number of available promotion slots, broadening their career prospects.”
He further noted that, to strengthen the SYOP system, we have implemented pay raises for personnel, increased existing allowances, extended the age limits for hiring and service, and expanded opportunities for professional development.
In this context, as he noted, the process of transitioning from SYOP to SYP has already been completed, and as of November 1, 2026, a total of 400 SYOPs have been transferred to the SYP cadre, enhancing their career prospects and ensuring their continued service in the ranks of the National Guard.
Regarding the students at Greece’s military academies, Mr. Palmas stated that their allowance has been restored to its previous level, doubling the reduced amount that had been in effect since 2013.
He also noted that through an intergovernmental agreement with the State of Israel, the Ministry of Defense has procured individual body armor—protective gear—for both active-duty personnel and the reserves.
“This equipment constitutes a comprehensive system, with the primary goal of ensuring the soldier’s survivability and the interoperability of the various components,” he added.
Regarding the second pillar, which concerns the planning and implementation of actions falling within the scope of protecting the natural environment and strengthening the National Guard’s operational resilience against the effects of climate change, the Minister of National Defense stated that, among other things, funding in the amount of 19 million euros has been secured from the European Union’s structural funds, for the installation of photovoltaic systems at National Guard camps, adding that the Cyprus Electricity Authority (AHK) has undertaken the installation, which is expected to be completed by the end of 2027.
Regarding the third pillar, which concerns the digital transformation and digital transition of the Ministry of Defense, “with the aim of leveraging new technologies and adapting to the modern technological environment,” Mr. Palmas said that the Ministry, in cooperation with the relevant authorities, is promoting measures to strengthen the security of its unclassified information systems, as well as initiatives to develop and upgrade digital services.
He added that these services are intended to simplify and expedite administrative procedures, reduce bureaucracy, and improve service to citizens.
Specifically, regarding the reserve forces and the National Guard, Mr. Palmas said that “without them, we’re nowhere if anything happens,” while regarding the defense industry, he noted that “we have partnerships with companies that produce finished products, and we are striving to make the most of these partnerships to the greatest extent possible.”
The Deputy Chief of the National Guard, Lieutenant General Neophytos Pachoulides, said that “we are not satisfied” with the level of training for the reserves, particularly given the recent reduction in the duration of reserve duty that took place a few years ago, and added that “we are working on two proposals with the aim of recommending to the Ministry a more dedicated core of the reserve force, either through volunteer service or by paying certain reservists.”
Regarding the Kalo Chorio firing range, he noted that “we have significantly reduced the number of firing exercises there,” but there is no alternative.
Finally, the Minister thanked the Finance and Defense Committees for their excellent cooperation, as well as for their “positive and substantial contribution to shaping policies that strengthen the security and deterrent power of our country.”
He also expressed his appreciation to the parliamentary parties, noting that through the constructive dialogue we have, as he said, “they remain steadfast allies in our joint effort to strengthen our security and our defensive capabilities.”
“On the sensitive issues of defense and security, solidarity, unity, and cooperation are critical factors in achieving our strategic goals,” he concluded.
In remarks following the session, Mr. Palmas said that the budget has increased by 250 to 260 million euros and added that it is a fact that, with the annual growth in GDP, the percentage allocated to defense inevitably decreases.
The government’s commitment is that by 2028, we should reach 2% for matters related to defense capabilities, he added.
Responding to a question about the National Guard reserve, Mr. Palmas said that “we are developing a program to improve conditions and upgrade the level of training, which will be announced in due course.”
The Vice Chair of the Finance Committee, Chrysis Pantelidis, who was standing in for the Committee Chair, Christiana Erotokritou, expressed his satisfaction with the “significant increase in defense spending, which is primarily linked to our participation in the EU’s SAFE program” and added that the DIKO party’s position is “to further increase defense spending, and particularly defense procurement spending, so that we can meet the goals set by President Christodoulides prior to the election.”
He also referred to achievements by the leadership of the Ministry of Defense related to the National Guard’s personnel and “the fact that long-standing problems related either to female non-commissioned officers or to other personnel issues—including the conversion of SYOPs into SYPs—have been addressed,” as well as a number of other issues, as he said, that enhance both the National Guard’s personnel’s prospects for a secure and stable career and the National Guard’s ability to attract new officers.”
The Chairman of the Defense Committee, ELAM MP Evgenios Hamboullas, said that they had reviewed the budget for the Ministry of Defense, which pertains to administrative matters, and that a meeting of the Defense Committee on defense capabilities would follow on November 26.
He noted that there had been a “very detailed and truthful briefing” from the leadership of the Ministry of Defense and its officials, and added that the budgets, compared to previous years, have “increased significantly, a fact that allows the Ministry of Defense to carry out its work, which is of great importance to our country.”
Mr. Hamboulas stated that his position is that “an important aspect of our defense—and one we must all work on—is morale,” adding that “Morale among those serving in the defense forces must always be at its highest.”
“For this reason, I proposed during the session that the name of the Ministry of Defense be changed to the Ministry of Defense and Liberation, because the reason we fight and work for is none other than liberation,” he concluded.
DISY MP Charalambos Petridis said that after three budgets in which appropriations for defense spending remained roughly at the same levels, the budget allocation for 2027 is increasing from 177 to 430 million euros, with the contribution of the European SAFE instrument.
“As DISY, we welcome this increase and support this effort. We have consistently supported the defense capabilities of our country, as some of the National Guard’s most important equipment programs were advanced during DISY’s time in government,” he added.
He also noted that DISY supports the current effort because “it continues the process of strengthening our defense.”
He further stated that, together with DISY MP Giorgos Karoullas, they submitted a bill calling for a five-year plan and a national target of defense spending of at least 2% of GDP in the medium-term as a national defense strategy.
“We support strengthening defense and will insist on clear timelines,” he said, adding that “strengthening our country’s defense capabilities is inextricably linked to the upgrading of our human resources, and for this reason, it is important to plan for the professional advancement of officers, as well as establishing the organizational structure of the National Guard.”
He noted, that the 2027 budget makes it possible to proceed with the investments needed by the National Guard, and added that as long as the Turkish occupation continues and until the Cyprus problem is definitively resolved, we have a duty and an obligation to strengthen the deterrent capability of the Republic of Cyprus.
AKEL MP Valentinos Fakontis said that “until the time of a solution and the reunification of our land and our people, the National Guard must remain a combat-ready and operationally capable deterrent force against foreign aggression and hostile actions, as well as a capable force for the protection of citizens.”
He stated that, when it comes to matters of defense and national security, AKEL leaves no room for petty politics or other expediencies, and added that “our goal is to contribute positively to every effort to improve the institutional framework and further [note: handwritten correction to “modernization”] meritocracy in the National Guard.”
During the budget review, we highlighted long-standing, unresolved issues for which the necessary solutions—which would positively contribute to the National Guard’s operations—have not yet been implemented, he added.
Mr. Fakontis said that strengthening the defense of the Republic of Cyprus with increased funding requires specific planning, transparency, and strict oversight. Our priorities remain the safety of National Guard personnel, the well-being of conscripts serving their term of service, and the smooth operation of the National Guard and its cooperation with the local community.
The President and Member of Parliament for Almat – Citizens for Cyprus, Odysseas Michaelides, said that the President of the Republic had promised in his campaign platform that defense spending on equipment programs would amount to at least 2% for this year and added that, with the significant boost from the SAFE program, defense spending stands at around 1.2%. “This is yet another area where the President of the Republic has fallen short and failed to meet the standard he himself set during his 2023 election campaign,” he added.
Yiannis Laouris, a member of parliament for Direct Democracy, Yiannis Laouris, said that the defense budget is “very low, especially when one considers that we are living in difficult times with many wars on a global scale”.
He also noted that since 1974, Cypriot taxpayers have contributed over 10 billion to the defense fund, which “may, to a large extent, have ended up in the state budget” and added that “we may be talking about yet another scandal, similar to the Social Insurance scandal, where many millions are taken from the pockets of Cypriot citizens and do not go toward the purpose for which they were collected.”
Mr. Laouris also said that he would like to see more investment in artificial intelligence, drones, cybersecurity, cyber warfare, and in training the people serving in these fields—generally in acquiring skills and competencies that will help them throughout the rest of their lives once they complete their service.”
He also said that the level of support for both local industry and small Cypriot companies is very low.
Source: CNA
