September 26, 2010: The financial crises in Greece has claimed another victim, the four German Type 214 subs the Greek Navy bought, but was unable to pay for. One of the boats was built in Germany, the other three in a Greek shipyard. But the Greeks owed the German manufacturer, and the Greek shipyard, nearly $800 million. The Greek government has now admitted that the cash is not available, and is not likely to be for some time. So the 214s will be auctioned off to the highest bidder.

Late payment has not been the only problem with these subs. For the last four years, Greece and German submarine builder ThyssenKrupp have been arguing over the quality of German work on the Type 214 boats. Six months ago, the Greeks finally agreed to the original deal, and declared the quality issues resolved. It was about time. Four years ago, the first Type 214 arrived from Germany. But the Greeks quickly declared that the boat suffered from 400 defects. Meanwhile, the other three 214s were being built in Greece, and the first one of those was about ready for launch.

When the Germans first heard of the complaints, they thought it was politics. A new Greek government had just been installed, and it was common for the new officials to try and make the previous gang look bad. The Germans also expected that the Greeks were using this defect list to renegotiate the contract, and pay less than they had agreed to. The Germans eventually concluded that nearly all the 400 defects were bogus.

Finding that that all the claims were false or exaggerated, the Germans sued for breach of contract. The Greeks responded by refusing to accept the sub, which remained tied up in Germany. Then the Germans threatened to withdraw technical help for the Greek shipyard that was building the other three boats, and go to court to prevent the Greeks from using any of the German technology. Meanwhile, the three boats constructed in the Greek shipyard are largely finished, but not complete. Two years ago, the Greeks offered to settle the dispute, but they didn't have the cash to make the required payments.

The new deal had the Greeks accepting the first sub, and then selling it. The Greeks still wouldn't admit that their defect list was a fraud. The Germans agreed to resume assisting the Greek shipyard, and withdraw its lawsuits. Greece promised to make required payments, which was not done. It's believed that Greece's current financial problems (spending more than they promised the European Union that they would) was a major factor in this settlement. This debt problem has forced the government to cut way back on spending. That, plus the German threat to, in effect, shut down the Greek shipyard, and throw 1,400 people out of work, forced the government to back down on the crises it had created. But the cash was simply not there to pay for the subs, so now the deal goes back to the courts, and the 214s head for the auction block.

Meanwhile, Greece has eight German Type 209 subs. These 1,100 ton boats entered service in the 1970s and are being kept in service via regular upgrades and refurbishment. The 214s (ultimately eight of them) were to replace the 209s. Since that deal has finally died, the Greek submarine force will just fade away over the next decade or so. Archrival Turkey has bought six Type 214s, with the first arriving in five years.