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Italian Budget Avoids More Substantial Cuts

Nov. 7, 2012 - 08:28AM   |  
By TOM KINGTON   |   Comments
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ROME — Italy’s provisional defense budget for 2013 will rise 5.8 percent over 2012 spending, suggesting the huge cuts made this year will not be repeated despite a continuing recession in Italy.

The budget document for next year, presented in Parliament on Oct. 23 and seen by Defense News, puts total spending at 14.4 billion euros ($18.7 billion), up from 13.6 billion euros this year and slightly above the 14.36 billion euros allotted in 2011.

This year, thanks to austerity measures initiated in September 2011 by the government of then-Prime Minister Silvio Berlusconi, Italian procurement spending has plunged by 28 percent to 2.48 billion euros. Next year it will rise to 3.4 billion, on par with 2011.

The figures for 2013 are not finalized, but they do take into account further cuts made this year to military spending through 2015, which are contained in a spending review carried out by Prime Minister Mario Monti’s government, which was appointed to steer Italy out of its financial slowdown.

The recommendations of the review are contained in a national budget law proceeding through Parliament.

The budget document assumes the cuts will become reality and states that procurement spending will drop to 3.25 billion euros in 2014 and 3.1 billion euros in 2015 — a drop-off from next year, but not as steep as the 2012 fall.

The 2013 budget document was signed off on by the defense commission of the lower house on Oct. 24.

This year’s defense budget proposal was approved in July after months of delay as generals sought to spread the impact of cuts designed to help Italy combat its budget deficit and stave off the economic crisis wreaking havoc in Europe.

The new round of cuts dished out by the Monti government falls squarely on procurement spending, denting what would have been a more substantial recovery.

Given that the final budget numbers hinge on the passing of the new national budget, the authors of the document opted against giving a breakdown on spending per program. Those numbers will likely be published early next year.

However, the document does list a number of programs that will not receive any funding in 2013, including an on-off plan for a new landing helicopter dock ship for the Italian Navy.

Acquisition of new amphibious vehicles for the Navy was also put off.

Italy’s construction of FREMM frigates, which has been supported by the Defense Ministry budget, will receive 321 million euros in 2013, 261 million in 2014 and 268 million in 2015, said Pier Fausto Recchia, the defense commission member who presented the budget.

Addressing the commission, Recchia added that the government’s funding of aerospace research in Italy — based on a 1996 law — would be renewed next year, with 1.8 billion euros set aside to cover the period 2013-2029.

Programs covered by the funding include the Alenia M346 trainer jet.

Although procurement spending is back up to 2011 levels, it is down from 2008, when 3.64 billion was spent, while prices for programs are rising, including the F-35 Joint Strike Fighter, which will cost Italy $127.3 million apiece when it orders planes in 2013, up from the $80 million mooted by officials earlier this year.

While procurement is inching up for 2013, spending on maintenance and operations will drop again, this time by 8 percent, reaching 1.33 billion euros — a 50 percent drop from 2008.

Generals have long bemoaned the damage that the cuts are having on readiness and equipment maintenance.

The budget document warns that within one or two years, “the possibility of deploying further assets to current missions as well as emergencies will be at risk.”

The cuts, Recchia added, were “completely insufficient to guarantee the full functioning of the military in terms of training as well as maintenance and efficiency of assets.”

Personnel spending remains steady, but the document states things could change if a law reforming the armed forces is passed.

Launched this year, the bill envisions cutting back personnel, and the 2013 budget document states that headcount is expected to drop by 2,970 next year to 177,300.

Warrant officers, who have been massively overrepresented in the military in recent years, will drop by 1,373 next year.

“These numbers are further proof of the inevitability of the process of change set down in the law,” Defense Undersecretary Gianluigi Magri told Parliament.

Magri said the government will also free up 75 million euros over the next three years to reduce pollution at the military test range at Salto di Quirra in Sardinia, where magistrates have been investigating evidence of increased rates of illness among locals.

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