Italy Delays Vehicle, Helicopter Buys

ROME — Italy’s newly released Defense Ministry budget for 2012 reveals that a number of key procurement programs are to be slowed as spending cuts announced last year begin to bite.

After deciding last year to slash 28 percent off procurement spending, Italy has reduced its F-35 Joint Strike Fighter order, announced a fire sale of Navy ships and hatched plans to cut 30,000 troops.

But Rome had not, until now, gone public with a full breakdown on its truncated spending plan for 2012. Due for publication last November, Italy’s 2012 budget had been delayed as generals divided up scarce funds for ongoing programs.

Released to the parliament at the end of June and seen by Defense News, the spending document describes a “reduction, remodulation, slow down and reorienting” of procurement in 2012.

The completion of Italy’s purchase of 249 VBM Freccia armored vehicles, built by Iveco and Oto Melara, slips from this year to 2016, while the full buy of Italy’s second pair of U 212 submarines is pushed back from 2016 to 2017.

The upgrading of Italian mine-sweepers is moved back from 2014 to 2018, while the full delivery of Army and Navy NH90 helicopters is pushed from 2018 to 2021. New combat search-and-rescue AW101 helicopters for the Air Force will be fully delivered by 2017, not 2014.

Deliveries of the new Vulcano munition for Army and Navy guns, and small-diameter bombs and a new direct infrared countermeasure system for the Air Force are all put back by at least two years.

“There has been a tendency for a number of years to delay big decisions about a large rebalancing of the budget,” said Roberto Menotti, an analyst at think tank Aspen Institute Italia. “It is a cautious way to proceed that makes sense when the future is uncertain, but you want to be at the table in Europe on major programs.”

The upshot, he added, is that producers such as Italy’s Finmeccanica defense and aerospace group are being driven “to find innovative ways into new markets as their traditional sources of income reduce.”

Total Defense Ministry spending this year stands at 13.61 billion euros ($16.75 billion), down 5.2 percent from 2011, and equal to 0.84 percent of Italy’s gross domestic product.

After years of taking the brunt of cuts, Italy’s maintenance and operations spending receives a 5.4 percent top-up to reach 1.52 billion euros, but the spending document warns that funding is still “insufficient,” and that if the situation does not improve, Italy could find it hard to meet overseas deployment commitments.

Personnel spending also is stable at 9.6 billion euros, leaving procurement to suffer the entire burden of the cut, which was decided last year as Italy scrambled to reduce its budget deficit. Spending on procurement stands at 2.48 billion euros, down by 28.2 percent.

The regular top-up from Italy’s Ministry of Industry amounts to 1.3 billion euros this year, with another 375 million euros starting to be freed for procurement from funds officially earmarked for military missions.

But the total still falls far short of 2011 spending. Defense Minister Giampaolo di Paola has said that combining all funding, Italy’s defense spending this year reaches 0.92 percent of GDP, well below the European average.

Finmeccanica also has reported that the Italian government has released no research-and-development funds under its Law 808 provision this year, after releasing 400 million euros last year.

The spending document reveals some programs have been accelerated. The upgrade of Mangusta attack helicopters — with new sighting systems to facilitate the adoption of Spike missiles — is moved forward from 2017 to 2014.

Other programs appear for the first time, including 40 explosive and roadside bomb disposal vehicles at a cost of 120 million euros. Built by Italy’s Iveco with Germany’s Krauss-Maffei Wegmann, these are part of the Multi-Purpose Vehicle family the companies are developing, which have been likened to U.S. mine-resistant, ambush-protected vehicle.

Italy has signed on to deliver an ambulance version to its Army.

The new program meets a stated aim in the spending document of prioritizing force protection in theater. The document also lists the purchase of 60 gun turrets to be mounted on Italy’s new Iveco VTLM 1A armored vehicles.

A 16 million euro program to buy 81mm mortars makes it into the spending column for the first time. Also listed is the acquisition of an unnamed Navy tactical UAV. The UAV, the document states, will be used for surveillance and flown from vessels during anti-pirate missions.

The document also lists the launch of the development of “onboard systems to equip the MC-27J destined to support Special Forces.” The MC-27J is the gunship version of the C-27J airlifter, planned by maker Alenia Aermacchi, a unit of Finmeccanica.

“At the moment, we are trying to keep up procurement and be flexible on running costs. But something has been adjusted on procurement, like the F-35 cuts,” said the Air Force chief, Gen. Giuseppe Bernardis.

“My personal view is that we cannot afford to cut too much, because we still have a strong industrial base, and we think that base has to be supported,” he said.

“We want to keep investment levels as much as possible,” Bernardis said. “In the case of the JSF, we accepted a reduction of numbers as long as we could keep up capabilities. To have enough to still be effective.”