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HUGE FALL IN GERMAN DEFENCE SPENSING

6 Dec 02. The FT reported that Peter Struck, the German defence minister, confirmed on Thursday that Germany would reduce its order for Airbus A400M military transport aircraft, central to Europe’s efforts to develop a military rapid reaction force, to 60 units instead of 73.

Contrary to expectations, Mr Struck said Germany would proceed with plans to buy 180 Eurofighter Typhoon combat aircraft, ordered in two variants.

However, the minister reflected the need for savings on the €12bn ($12.1bn) Eurofighter programme – the most expensive project in German postwar military history – by announcing severe reductions in the aircraft’s armaments.

British concerns about the future of the medium range Meteor air-to-air missile were eased by Mr Struck’s green light for the UK-led scheme. But, rather than buying 1,488 units, the Luftwaffe will now be restricted to just 600.

Mr Struck announced similarly severe cuts in the shorter range Iris-T missile, the Eurofighter’s other main future air-to-air weapon. Germany will now purchase 1,250 units, compared with 1,812.

It is also believed that the Tiger helicopter requirement is being cut from 220 to 80 with only the escort variant being ordered.

The German cuts reflect the need for austerity in the face of sluggish economic growth and crumbling tax revenues. Government spending has been axed to reduce the budget deficit, due this year to breach the rules which underpin the euro, and meet the aim of Hans Eichel, the finance minister, to eliminate net new borrowing by 2006.

Mr Struck said the cuts reflected changes in Germany’s defence priorities. “The scenario that our country will be attacked from beyond its borders is no longer realistic,” he said.

British and French officials reacted with resignation to the A400M cuts, contrasting with the tensions earlier this year when speculation about a radical reduction strained relations with Berlin.

The altered mood reflected satisfaction that Germany was not lowering its order as much as once feared, and relief that the project would now proceed.
The impact of the German cuts on the A400M’s price remains unclear. Airbus Military, the manufacturer, had initially indicated the €17bn programme would only be viable based on 196 aircraft.

Germany’s decision, coupled with earlier indications that Portugal would cancel its order for three units, has reduced the total to 180. However, Mr Struck said that the unit cost might increase by only about 1 per cent.

The much delayed new aircraft, expected to enter service around 2009, will play a crucial role in improving heavy airlift capabilities for the force of up to 60,000 troops which the EU wants to create by next year for rapid deployment in crisis regions.

The German defence cuts, aimed at limiting military spending to €24.4bn a year, come against the background of increases in France and heavy US pressure on its European Nato partners to raise defence budgets.

Comment: Who pays the ferryman? Typhoon’s costs are expected to be above those of the F-22, an aircraft with far better capability. Will Germany (or indeed the UK) really continue with the 180 Typhoon order or is this a political move to save the percentage on production to save jobs? Some unconfirmed sources suggest that both countries Tranche 3 orders will soon be cancelled. Gordon Brown is looking at more costs for defence project for Meteor in particular which has already gobbled up many millions of UK taxpayers money for a project which is only suitable for Typhoon and not able to be engineered into JSF, with his budget going awary he will be looking at savings not increases. Where does this leave the European defence industry? at least 20 years behind the US in terms of R&D and technology and with this lack of funding unlikely to catch up.

Gordon Brown allocated £1bn for an Iraqi war which will just about cover the initial deployment. One factor not widely revealed, in the last conflict, was the co

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