Budget measures of the Ministry of Defence to counter the pandemic – Venoms and Vipers as unnecessary luxury

Budget measures of the Ministry of Defence to counter the pandemic – Venoms and Vipers as unnecessary luxury
26 / 03 / 2020, 10:00

On Tuesday, the Chamber of Deputies approved the first draft amendment to the State Budget Act for 2020, which now expects a deficit of CZK 200 billion (up from CZK 40 billion). Ministry of Defence needs to reduce its spending by nearly three billion crowns. This slows the already slow increase in expenditure in relation to GDP. Thus, to current GDP - its expected decline can paradoxically help to reach the 2% commitment of defence spending. Which expenditures do the reductions relate to, which should they relate to and which they cannot relate to?

The budget of the Ministry of Defence for this year was increased by almost CZK 9 billion to a total of 75.5 billion crowns, and the current planned reduction brings it down to 73.6 billion, which is still more than in 2019.

According to the Minister of Defence Lubomír Metnar, reductions must not affect key armaments projects. Acquisitions for which a contract has already been signed cannot be affected. Among others, there is this year's spending of 266 million for the RBS-70 NG anti-aircraft system, 863 million for light armored vehicles for the 31st Regiment of Radiological, Chemical and Biological Protection and artillery reconnaissance, or the TITUS armored vehicles. It is also planned to purchase a new artillery fire control system - its postponement would have serious consequences for the future acquisition of artillery armament.

See also: Czech Prime Minister: "We do not need the IFV's immediately." MoD must come up with an effective solution

On Tuesday evening, the Ministry of Defence issued a press release announcing what areas will be affected (let's repeat that this is only the first of a possible series of austerity measures):

"The savings in the amount of CZK 2 billion are related to the planned investment expenditures. This mainly concerns the release of funds planned for 2020 for the purchase of a small transport aircraft (CZK 831 million), the postponement of the advance payment for two new CASA aircraft and exchange rate savings for this year's payments for Jas-39 Gripen aircraft (CZK 254 million). The rest of the amount consists of internal reserves, which were intended for possible year-on-year price increase for investment projects in real estate and movable assets."

In extreme cases, the Army will limit the recruitment of new soldiers.

This is an unpleasant situation, but we are all in an unpleasant situation today. The Ministry of Defence maybe is in a more delicate situation due to the fact that it has signed the order for 12 H-1 system helicopters back in December.

See also: The Military Technical Institute will deliver seven new LOV-Pz artillery reconnaissance vehicles

In this year's budget, this acquisition reaches CZK 2.156 billion, which is more than two-thirds of the amount that the ministry has to (as yet) save as a result of the COVID-19 pandemic. Already at the turn of the year, due to the Venom and Viper helicopters acquisition, the budget of the Air Force Capability Development Program had to be increased by a third, ie 12 billion crowns.

This was because the purchase price of new helicopters was well above the long-term framework, in which Leonardo was able to offer its AW139M on the other hand. If the Army had opted for the Italian solution, the defence budget would now be in an easier situation.

See also: Czech Venoms and Vipers: the Czech Republic should duly justify why it used the exception from public procurement rules, expert says

The saving of 2.9 billion postpones the repeatedly canceled tender for a small transport aircraft, which was supposed to replace the Yak-40 and the rest is postponement of advance payments for CASA airplanes and exchange rate savings on payments for the Swedish fighters at the growing exchange rate of the Czech crown against the Euro. Meanwhile, projects that have recently been challenged and under review are still included in the budget: 121 million for the modernization of the T-72 main battle tanks, which, according to experts, should not be started at all. And other items like extra high advance payments for the VERA NG (DPET) systems or STRAKOM jammers.

The expensive US helicopters become a luxury these days; savings are necessary and it is more than possible that further cuts will have to be made.

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