German Defense Budget Rises, Largely Thanks to Pension, Retirement Costs

[Lex]

German Defense Budget Rises, Largely Thanks to Pension, Retirement Costs

By SEBASTIAN SCHULTE, BONN
Posted 12/01/06 13:27
DEFENSE NEWS

The first budget of German Chancellor Angela Merkel's new coalition government — with 28.4 billion euros ($37.5 billion) for defense — reflects the increase sought by the previous government in its five-year defense to cover personnel and procurement costs.
"We're happy that the increase in the defense budget, as envisaged by former Defense Minister Peter Struck, has materialized," said Johannes Kahrs, defense rapporteur in the Bundestag's budget committee and a Social Democrat. "This allows for a much needed increase in procurement investment and facility maintenance."
The 2007 spending plan, passed by the parliament on Nov. 24, shows an increase for defense of 4.5 billion euros over the the 2006 budget of 23.9 billion euros. However, the bulk of the increase comes from moving costs from another portion of the federal budget to the defense budget. The pension and retirement costs for soldiers and civil personnel — at some 4 billion euros — until now had been a separate budget item, but now makes up the bulk of the defense budget's increase. The Defense Ministry has about 172 million euros more to spend on equipment and operations than it had in 2006.
On the procurement side, the Defense Ministry expects on Dec. 13 to submit to parliament for consideration and action its proposal for the purchase of 272 Boxer multirole armored vehicles, on the heels of the Dutch parliament's approval for a procurement of 200 vehicles; and the upgrade of Germany's Patriot missiles.

Programs postponed to 2007 include:
• The Euro Hawk high-altitude long-endurance unmanned aerial vehicle program.
• The RAM-3 missile upgrade.
• Eurofighter Typhoon role adaptation for air-to-ground operations.
• The Type F-125 frigate.

Whether the budget can accommodate key programs expected to peak between 2008 and 2012 is another matter. Waiting in the wings are a third batch of Typhoons; the A400M transport aircraft; the U-212A submarines; and various helicopter programs, including the Tiger attack helicopter, NH90 transport helicopter and MH90 naval helicopter.
"The federal budget has been calculated too optimistically by the government," said Elke Hoff, a Liberal member of the parliamentary defense committee. "The budget is charged for several years with the expensive Eurofighters and Tiger UH attack helicopters, whose high maintenance actually has not been regarded in the budget calculation. I don't doubt the need for those procurements, but I do doubt that the numbers we're acquiring are really needed."
Regarding the procurement and program status of the Tiger attack helicopter, NH90 transport helicopter and Airbus A400M transport aircraft, the Defense Ministry said in its budget briefing document to parliament: "Delivery of the Tiger and NH90 systems has been delayed; the delivery of 3 NH90 systems by 2006 is expected. The delivery of six Tiger systems by 2006 will not commence, due to technical deficiencies. This does not create any extra costs."
The briefing document, which Defense News has seen, did not elaborate on the Tiger's technical deficiencies.
While some lawmakers voiced concern about whether the A400M project was still on track, the ministry dismissed these concerns: Despite the restructuring of Airbus and the leadership troubles of its parent company, EADS, this year, "the development of the A400M proceeds unchanged and according to plan," the briefing document stated.