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28 Oct 22. Northern Ireland to hold snap elections, elevating political instability and sectarian tensions. On 27 October, the National Assembly was dissolved and snap elections were scheduled in 12 weeks after Stormont was unable to elect a new speaker that would have ended the political deadlock that has disrupted the country’s executive since May. After coming second in the May elections, the Democratic Unionist party (DUP) has been boycotting Stormont, demanding the scrapping of the Northern Ireland Protocol by London. The exact date of the election has not been announced yet, but it is likely that it will take place either on 8 or 15 December. Government instability as well as political and sectarian tensions will likely remain elevated in the near term given that UK Prime Minister Sunak is expected to take a softer approach to the NIP and will aim to come to a negotiated agreement with the European Union instead of scrapping it entirely as demanded by the DUP. As such, the risk of domestic unrest and threats of trade disruption at ports in Northern Ireland will be elevated. (Source: Sibylline)
27 Oct 22. Berlin lags on defence purchases after 100bn euro pledge – sources. Germany is struggling to ramp up defence procurement or even just replace arms and munitions it has supplied to Kyiv, several sources told Reuters eight months after Chancellor Olaf Scholz pledged 100bn euros to bring the military up to speed.
“There is almost no movement at all,” a source involved in German defence procurement procedures said on Thursday, adding very few orders had been placed so far.
The source was echoed by managers in the defence industry who expressed disappointment at what they see as the government’s sluggishness in replenishing the Bundeswehr’s inventories, caused by slow procedures and a lack of decisions at the top level.
“We would have expected to see many more orders by now,” one defence industry manager, speaking on condition of anonymity, told Reuters.
“There is a war raging in Ukraine but procedures here are still running in peace-time mode, while inflation is eating up the money,” another defence manager said.
NATO allies have criticised Berlin strongly in the past for not reaching the alliance’s 2% military spending target and relying on the United States for its security while not sharing the financial burden.
In a major policy shift days after Russia’s invasion of Ukraine in February, Scholz announced a 100bn euro special fund to bring the Bundeswehr’s weapons and equipment back up to standard after decades of attrition following the end of the Cold War.
But the first source said defence procurement was not moving fast enough by far given the war in Ukraine and the deterioration of the security situation.
“Contracts for some ammunitions have been approved but that’s just a drop in the ocean compared to what we actually need,” the source noted.
Among other things, there has been no progress in efforts to replace 14 self-propelled howitzers and 13,500 rounds of artillery ammunition that Berlin supplied to Ukraine from Bundeswehr inventories, the person underscored.
“(Finance Minister Christian) Lindner hasn’t yet given the green light for the money to be spent,” the source said, pointing out that the replacement of equipment passed on to Kyiv was to be partially funded from the general budget, which is under Lindner’s control, rather than the defence budget.
The finance ministry did not immediately respond to a request for comment.
The problems do not only affect the replacement of military gear handed over to Kyiv, however. There is also a lack of progress in filling shortfalls that existed long before the war and which are seen as much more precarious now, the person said.
As examples, the source singled out the need for short-range air defence systems used to protect military convoys as well as for medium-range air defence systems such as IRIS-T SLM which Berlin has supplied to Kyiv but not yet ordered for its own forces.
These projects will have to be paid from the 100bn euro special fund which has only been tapped to a very small extent so far, the person said without giving exact figures.
One of the first major defence deals to be paid from the special fund will likely be the purchase of the U.S. fighter jet F-35 which is to be presented to parliament for approval before the end of the year, according to earlier information by the defence ministry. (Source: Reuters)
27 Oct 22. UK Defence spending faces real-term cuts for years.
Only ‘small increases’ predicted until 2026 although Treasury sources suggest budget will rise to hit 3pc of GDP by end of decade. The defence budget faces real-term cuts until 2026, the Telegraph understands, although Treasury sources have insisted it will hit 3 per cent of GDP by the end of the decade.
The target to increase defence spending to 3 per cent of GDP was made by Liz Truss. However, it had been assumed it would be dropped as Rishi Sunak looks to make savings in the upcoming fiscal statement.
However, Treasury sources said that while only “small increases” to the budget could be expected until 2026, this would then accelerate to hit 3 per cent by 2030.
It is understood that the increase has been backed by Jeremy Hunt. Before becoming Chancellor Mr Hunt wrote in The Telegraph in March that “other democratic powers, especially in Europe, must commit to matching US defence spending as a proportion of GDP”.
“The UK should lead the way by saying that defence, aid and soft power spend will rise to at least 4 per cent of GDP over the next decade,” he said.
The Prime Minister has previously described the 3 per cent target as “arbitrary” and is expected to stick to the previous spending review.
With regards to the promises of “small increases”, Defence experts have pointed out that under the 2020 spending review, a reduction in real terms was already expected owing to the rise in inflation.
No commitment to hit 3pc target
Prof Malcolm Chalmers, deputy director of the Royal United Services Institute, said: “Unless the Autumn Statement provides extra cash for the next two years then there will be real-term reductions in defence.”
The Prime Minister’s spokesman on Wednesday refused to commit to increasing defence spending to the 3 per cent target.
He said: “That is something that would need to be set out by the Chancellor at a future fiscal event.”
Prof Chalmers also cautioned that waiting to accelerate the increase in the defence budget until 2030 only made sense on the assumption that the main threat is a long-term one, likely from China.
“Yet the most dramatic change in the military threat to Europe over the last year has been the increased risk of war with Russia in the near term,” he said.
“Preparing for this needs to have a high priority. Focusing on more money in 2030, but providing nothing extra over the next two years, doesn’t address this short-term acute challenge.”
It comes after Estonia called on the UK to boost defence spending to 3 per cent.
When asked in a BBC interview if Nato countries should aim to spend 3 per cent, Urmas Reinsalu, the Estonian foreign minister, said: “Absolutely.”
Earlier this year it was revealed that hundreds of British soldiers are set to be pulled out of Estonia by Christmas, with no plans to replace the 700 strong battlegroup that has been in place since February.
Mr Reinsalu also addressed this, saying his country did not want the UK to cut troop numbers in Estonia. “We love UK soldiers,” he said, adding: “we want more”.
Earlier this week senior military figures said they feared that Liz Truss’s 3 per cent pledge was little more than a “mirage”.
Lord Dannatt, the former head of the Army, cautioned that “it looks as if defence is going to have to make do with 2 per cent”.
He said he felt that “2.5 per cent or 3 per cent was a mirage offered by Johnson and Truss”.
Lord Dannatt added that if last year’s Integrated Review is soon to be refreshed, “the same team will be doing the refreshing so I do not see much change”.
“The Indo-Pacific tilt will remain despite a land war in Europe,” he warned. “And it is the Army which will be starved of investment; however, further cuts in manpower and capability must not happen”.
(Source: https://www.telegraph.co.uk/)
27 Oct 22. Serbia: Policy uncertainty risks remain elevated following inauguration of new government. Serbia’s new government led by President Aleksandar Vucic’s nationalist Serbian Progressive Party (SNS) was inaugurated on 26 October after formally winning approval in parliament. For the past ten years, Vucic’s governments have cultivated closer ties with China and Russia while simultaneously pursuing EU membership. EU officials will increase pressure on Vucic’s government to alter its course and impose sanctions on Moscow over its invasion of Ukraine. High levels of pro-Russia sentiment in Serbia and a heavy reliance on Russian energy mean Belgrade is unlikely to impose sanctions. The government is therefore likely to continue balancing its strategic ties. This will further delay Serbia’s already distant prospects of joining the EU. This will in turn moderately elevate policy uncertainty risks, as it remains unclear how the government aims to achieve this balancing act. (Source: Sibylline)
26 Oct 22. EU urges members to coordinate arms purchases. The European Union urged the bloc’s defence ministers on Wednesday to coordinate purchases of weapons, to obtain better terms from suppliers as they seek to replenish supplies depleted by shipments to Ukraine.
Western countries have been rushing to restock weapons and ammunition after shipping huge quantities to Kyiv, requiring industry to ramp up to meet the surging demand.
“It is urgent to restore the readiness of our European armed forces and replenish depleted stocks,” Stijn Mols, the head of the EU diplomatic service’s security and defence division, told a European Parliament committee.
EU defence ministers next meet on Nov. 15, and Mols said he hoped they would present concrete proposals for coordinated arms purchases.
European countries need air and missile defence, anti-tank and artillery systems and drones, Mols said. Brussels hopes for around 5-7 “emblematic projects” to coordinate purchases by member countries in areas such as ammunition.
Defence purchases in the EU are rarely carried out jointly, with countries eager to support their domestic industries.
“It is now really the occasion for all of us to set aside these long-standing… national interests,” Mols said.
Timo Pesonen, the head of the European Commission’s Directorate General of Defence, Industry and Space, said EU countries had neglected defence investments for too long.
While EU investments had increased by 22% in 20 years, they had risen by 66% in the United States, nearly 300% in Russia and more than 600% in China, he said. (Source: Reuters)
25 Oct 22. Ben Wallace to remain defense secretary in new UK government.
British Defence Secretary Ben Wallace is to remain in the job as part of a Cabinet reshuffle announced by the country’s incoming Prime Minister Rishi Sunak on Tuesday.
Originally appointed to the post in July 2019 by the then-Prime Minister Boris Johnson, he is highly regarded in defense circles here for his robust support for the Ukraine and his overall leadership of the Ministry of Defence.
Wallace retained his position in the ill-fated government of Liz Truss, who had a short-lived tenure as prime minister after Johnson stepped down in July.
Wallace’s confirmation as defense chief ends speculation here that he might not make it into a Sunak Cabinet. Those considerations stemmed from the fact that Wallace and Sunak had been at loggerheads during the Johnson era over the size of the increases needed in defense spending.
The Johnson and Truss governments both committed to raising defense spending to the equivalent of 3% of GDP by 2030.
Estimates put the possible spending increase in defense at over £50bn ($57bn) by the start of the next decade.
Neither Sunak or new Chancellor Jeremy Hunt have so far committed to such high levels of spending at a time when Britain has a huge black hole in government finances.
Howard Wheeldon, a consultant at Wheeldon Strategic Advisory, said Wallace owes his continued role as defense secretary to the perception that he is a “safe pair of hands in defense and was quick to rise to the various challenges” presented by Russia’s invasion of Ukraine.
“Having supported the proposed raising of defense to 3% of GDP he will now have to find a way to backtrack,” Wheeldon added. “That will not be easy without losing the inner confidence of those around him in the MoD, military and the wider defense industry,” said Wheeldon.
Separately, the MoD has been conducting an update of the defense and security review introduced by the Johnson Government in 2021. The update, triggered by the changing strategic picture resulting from Russia’s invasion of the Ukraine, is expected to be completed around the end of the year – according to the previous government, that is. (Source: Defense News)
24 Oct 22. Rishi Sunak: Where does the next Prime Minister stand on defence? Rishi Sunak has won the race to be the new Prime Minister – here’s a look at his stance on defence matters. Rishi Sunak will be the next Prime Minister, succeeding Liz Truss who lasted just 44 days in office. The former chancellor won the support of Tory MPs on Monday and will enter Downing Street less than two months after he lost to Ms Truss in the race to replace Boris Johnson.
Mr Sunak will be the UK’s first Hindu prime minister, the first of Asian heritage, and the youngest for more than 200 years at the age of 42.
He saw off competition from Commons leader Penny Mordaunt, a Royal Navy reservist and former defence secretary, who pulled out of the race to become the next PM as she failed to get the 100 nominations from Tory MPs required by the 14:00 deadline, while Mr Johnson also ditched his own comeback bid.
So, where does the next PM stand on defence matters?
Spending
Well, in July when running to replace Mr Johnson, Mr Sunak vowed he would never “short-change” the Armed Forces if he became Prime Minister.
However, he described Ms Truss’ pledge to boost defence spending to 3% of GDP as “arbitrary”.
“Defence spending needs to increase, and I will never short-change our Armed Forces and my track record proves that with the largest increases in defence spending since the Cold War,” Mr Sunak said.
“Simply saying 3% [of GDP allocated to defence] isn’t a plan, it’s an arbitrary target. Rather, we need to provide our military with the resources it needs to do what it needs to do to keep us safe,” he added.
In 2019, the Conservatives committed to “exceed the NATO target of spending 2% of GDP on defence and increase the budget by at least 0.5% above inflation every year of the new Parliament”.
But with another new prime minister and expected spending cuts, it remains to be seen if that commitment will continue.
On the campaign trail in August, Mr Sunak said he viewed the NATO defence spending target of 2% of GDP as a “floor and not a ceiling” and noted that spending is set to rise to 2.5% “over time”, but refused to set “arbitrary” goals.
On Monday, European Research Group chairman and Tory MP Mark Francois told reporters in Parliament that after speaking to the two leadership hopefuls (Ms Mordaunt and Mr Sunak), Mr Sunak did not commit to the 3% target “but said he was determined if he were prime minister that he would spend whatever was necessary to keep the country safe”.
According to Mr Francois, Penny Mordaunt went “slightly further”.
“She said that her aim was to get to 3% on defence, but when economic conditions would allow,” Mr Francois said.
Mr Sunak’s commitment to balancing the books is well known and is what saw him hike the tax burden to its highest level for 70 years as chancellor despite his personal preference for lower taxes.
In his first leadership bid, Mr Sunak was already unenthusiastic about large-scale spending commitments.
Reports have also suggested Defence Secretary Ben Wallace would also quit if the spending pledge was scrapped.
Here’s a look at Mr Sunak’s voting records on defence matters, according to the parliamentary website ‘TheyWorkForYou’.
So-called Islamic State
The next PM has consistently voted for military action against Daesh (so-called Islamic State or IS) – two votes for, none against, in 2015.
Trident
He has voted consistently in favour of replacing Trident with a new nuclear weapons system.
Overseas combat operations
Mr Sunak has voted consistently for the use of UK military forces in combat operations overseas.
Iraq War
Mr Sunak has voted against investigations into the Iraq War.
Military Covenant
According to TheyWorkForYou, Mr Sunak has never voted on strengthening the Military Covenant (five absences, in 2020).
The Armed Forces Covenant is a promise by the nation to ensure that those who serve or who have served in the Armed Forces, and their families, are treated fairly. It covers education and family well-being, housing, careers, healthcare, financial issues and discount services. (Source: forces.net)
24 Oct 22. Rishi Sunak Becomes PM. Today, 24 October, Rishi Sunak was announced the leader of the Conservative party after having won the backing of the majority of Conservative MPs, rendering him the next prime minister of the United Kingdom following the resignation of Prime Minister Liz Truss on 20 October.
SIGNIFICANCE
• On 24 October, Penny Mordaunt, the only remaining challenger to Rishi Sunak, dropped out from the Conservative leadership race. Before the nomination deadline today at 1400 hours, around 200 Conservative MPs publicly endorsed Sunak, the former chancellor under Prime Minister Johnson. Sunak will likely be appointed by King Charles III to succeed Truss tomorrow, 25 October.
• Sunak will face significant domestic challenges on a variety of topics from across the political spectrum. Some of these include the cost-of-living crisis, soaring energy prices, double-digit inflation, the looming recession, and the unresolved dispute over the Northern Ireland Protocol with the European Union.
• On expectations that Sunak will pursue a prudent fiscal agenda markets have reacted favourably as Penny Mordaunt and Boris Johnson pulled out of the leadership race, with the pound strengthening against the dollar and gilt markets improving. In the leadership contest against Truss, Sunak had advocated the expansion of cash support for those most in need, cuts to VAT on energy bills (5 percent), stronger incentives for investments, more funding for technical colleges to improve skills, and the deregulation of financial services. Sunak will likely keep Jeremy Hunt in his position as Chancellor of the Exchequer who is expected to announce his fiscal agenda on 31 October.
• Sunak is already facing questions about his government’s legitimacy. Opposition leader Sir Keir Starmer is calling for an early election, claiming that a third Conservative government since Prime Minister Boris Johnson’s election in 2019 lacks the mandate to govern the country. Nevertheless, with Sunak becoming the new prime minister, early elections are unlikely to take place in the near term, as despite divides within the Conservative Party, the need for market stability and continuity will likely encourage greater unity within the government.
FORECAST
The appointment of Sunak as prime minister will likely reduce government instability and policy risks in the short term. As a fiscally conservative politician, he has over the past few weeks and months promoted increased taxes to cut public debt, which will likely improve market confidence despite potential higher taxes for businesses. Sunak will also likely review the current energy support package after next spring and introduce new targeted measures to ensure that it is mostly low-income households benefitting from the support measures next year, aiming to reduce energy demand in the longer term. While many supporters of Boris Johnson believe he undermined the former prime minister, Conservatives will likely unite behind Sunak to avoid a snap general election in which the Labour party is highly likely to win, given its significant lead in the polls, improving government stability.
(Source: Sibylline)
21 Oct 22. MoD takes mothballed tanks out of storage to train in Europe.
Around 60 Challenger 2 vehicles are being readied by British troops for exercises and operations in Europe at a Nato Forward Holding Base in Sennelager, Germany. A further 400 armoured vehicles move between exercises in Estonia and Poland.
The Telegraph was granted exclusive access to one of the regional land hubs where the military has moved ammunition and supplies in case Nato is called upon to intervene in eastern Europe.
The troops are “holding equipment at high readiness” by exercising the vehicles to ensure they work effectively.
A Defence source told The Telegraph: “We are investing in our site in Germany which shows we are credible and serious about investing in European security because we aim to be a leader in Nato.”
The number of troops and other nations using the base to train and deploy forward for operations has increased in the wake of Russian aggression.
Army ‘very serious’ about sustaining war stock in Europe
It comes after Ben Wallace pledged in November last year to keep a brigade’s worth of armoured vehicles in Germany.
At the time, the Defence Secretary said: “Our army will operate across the globe, equipped with the capabilities to face down a myriad of threats from cyber warfare through to battlefield conflict.”
Colonel Tim Hill, who runs the base, told The Telegraph: “We are all about training and holding equipment on the continent of Europe.
“The aim is to project in very rapid order UK military capability from the UK home base into here either by air or by rail or by ferry. The British Army is very serious about storing and sustaining war stocks on the continent of Europe.”
Colonel Hill said the base was strategically located in Germany because “any further east that’s where we could be fighting, being based here in Germany is key to that central location”.
“This also demonstrates the UK’s absolute commitment to the Nato alliance,” he added. (Source: https://www.telegraph.co.uk/)
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