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Poland's Defense Budget Rises, With Emphasis on Modernization

Sep. 20, 2010 - 03:45AM   |  
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WARSAW - After last year's tight defense budget, austerity measures seem to be over for Poland's Army. In 2011, the country's military spending will grow 7.1 percent from a year ago to 27.25 billion zlotys ($8.79 billion), Defense Minister Bogdan Klich said.

The budget proposal has yet to be approved by the Polish parliament.

"Last year's downturn has hindered the process of technological modernization of our Army," Klich said, adding, "the budget for the next year will ensure its necessary development."

In the upcoming year, the Ministry of Defense will spend approximately 4.8 billion zlotys ($1.55 billion) on new procurements, he said, according to the Polish news agency PAP. Recent statements by ministry officials indicate that the plan is to proceed with the key modernization programs but spend less on upgrading the existing equipment, according to the public finance watchdog Najwyzsta Izba Kontroli.

As Poland begins pulling its contingent out of Afghanistan by 2012, the Ministry of Defense will redirect resources to homeland security, in particular procurement of an air defense missile system for approximately $5 billion.

Anticipating the tender announcement, all likely bidders presented their offers from Sept. 6 to 9 at the International Defense Industry Exhibition MSPO in Kielce, as reported by the publication Raport-wto.

These included a proposal based on the short-range VL Mica and medium-range Aster-30 missiles from European missile maker MBDA integrated with radars and Grom missiles from Poland's Bumar Group; Norway's Kongsberg and Raytheon's joint bid comprising Patriot and NASAMS II systems; and Israeli Rafael and Raytheon with the Spider and Stunner interceptors.

Raytheon's competing proposals could have an edge because of Poland's military cooperation with the U.S., which resulted in a Status of Forces Agreement between the two countries Dec. 10, said an industry analyst. Since May 23, six MIM-104 Patriot missile launchers have been stationing in rotation at the military base of Morag in northern Poland. The missiles are to be deployed permanently beginning in early 2012.

French Political Support

The MBDA-Bumar bid was championed by French President Nicolas Sarkozy during Polish Prime Minister Donald Tusk's visit last year to Paris. Bumar also says the French are open to technology transfers, which could increase their chances of securing the contract.

Slawomir Kulikowski, head of the Polish Chamber of National Defense Manufacturers, said that while political backing is vital, Poland's budget shortcomings will play an equally important role in determining the winning bid. Providing a steady stream of funding for the air defense program might take some time, he added.

"The manner in which the contract will be funded is crucial for its future, because the Ministry of Defense is not capable of financing this deal on its own," Kulikowski said. "In the past, funding for major armament programs, such as the purchase of the F-16 aircraft, had to be secured directly from the national budget. If the government is willing to launch this [program], it should pass a financing bill in the parliament as soon as possible."

Poland also wants to replace its helicopter fleet by 2018, listed as one of 14 Army modernization programs. The Ministry of Defense is planning to order 26 helicopters, reported by the daily newspaper Rzeczpospolita. The choice will probably be made between Sikorsky's S-70i Black Hawk, assembled at the company's PZL Mielec plant in Poland, and the NH90 built by NH Industries, according to Rzeczpospolita, citing ministry sources.

Other planned procurements include flight and vehicle simulators, C4ISR systems, Spike anti-tank guided missile launchers and Rosomak armored modular vehicles, built by Poland's WZM Siemianowice under a license from Finland's Patria.

The Ministry of Defense has purchased 50 such vehicles this year and in 2011, it will order a further 73 vehicles that will carry additional armor for combat, and also medical evacuation variants.

New Procurement Agency Jan. 1

Future purchases are to be managed by the ministry's new procurement agency, the Armament Inspectorate, which is set to begin operating Jan. 1. The new institution will take over roles from different ministry departments, define procurement requirements and carry out all tenders.

Another priority is to overhaul the ministry's spending structure. Of last year's 25.45 billion zloty budget, some 12.67 billion zlotys were allocated for personnel expenses while only 12.52 billion zlotys went for capital expenses, including procurement. The ministry next year wants to reverse that ratio and shift toward a budget tailored for the needs of a fully professionalized Army.

Yet one recent proposal could jeopardize the current growth of military spending in Poland. According to various media reports, the government has been considering modifying a bill that obliges it to earmark 1.95 percent of gross domestic product (GDP) for military spending. Under the revised bill, defense spending would average 1.95 percent of GDP over a period of four or six years, meaning it could be lower in a given fiscal year.

"Presently, there are no plans of changing the ratio," Deputy Minister of Finance Hanna Majszczyk said Sept. 2 at a meeting of the Parliament's Defense Committee.

Moreover, should the government intend to scrap the fixed-ratio military spending, it could possibly face interparty opposition from President Bronislaw Komorowski. The spending mechanism was introduced under Komorowski's tenure as Poland's minister of defense in the years 2000-01, and some observers say he would be likely to veto any unfavorable changes to the current bill.

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