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Ukraine Crisis Revives Spending From Nordics to E. Europe

Jun. 14, 2014 - 03:45AM   |  
Joint Operations: Soldiers ride in vehicles during the multinational military exercise for Lithuanian, Polish and Ukrainian troops near Vilnius, Lithuania. Joint operations and procurement may increase among Nordic, Baltic and Eastern European nations. (PETRAS MALUKAS/AFP)
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HELSINKI AND WARSAW — The Russia-fueled crisis in Ukraine has altered the political and security landscape from the Nordic and Baltic-rim region through Eastern Europe, pushing Poland and the Czech Republic to accelerate procurement, rekindling speculation that Finland and Sweden could join neighbors Denmark and Norway in NATO, and boosting planned defense spending.

Anti-tank weapons, multiple-rocket launch systems, armored fighting vehicles, 155mm self-propelled howitzers, mine warfare systems, in addition to air and naval upgrades, are all receiving increased funding or are seeing procurements accelerated as tensions sharply increased in recent months following Russia’s actions in Ukraine.

Meanwhile, US President Barack Obama last week in meetings with Polish and Eastern European leaders unveiled a $1 billion plan to bolster security for NATO allies.

Called the “European Re-Assurance Initiative” by Obama’s aides, the package was intended to underscore the US commitment to NATO, Obama said after meeting with Polish President Bronislaw Komorowski.

Under the $1 billion plan, parts of which must be approved by Congress, more US troops would be rotated through Europe and there would be more land, sea and air military exercises and training missions throughout the continent. Assistance would also be available for non-NATO nations on Russia’s border, including Ukraine, Georgia and Moldova.

In recent US congressional hearings, experts and legislators also have called for shoulder-fired missiles and anti-tank weapons to be supplied directly to the Ukrainian military in case Russia attempts to extend its aggression farther into the country, and for heavy packages of tanks, infantry fighting vehicles and self-propelled artillery to be deployed in Eastern Europe front-line NATO states.

In late May, the Polish Defense Ministry announced it would speed up the acquisition of helicopters and Homar multi-rocket launcher system, which have a range of up to 300 kilometers, to improve deterrence.

This follows a March 5 announcement by Polish Prime Minister Donald Tusk, who said the Ukrainian crisis has triggered a reassessment of priorities in Poland’s strategy to modernize its military by 2022 under a 130 billion zloty (US $42.7 billion) program.

Following Tusk’s announcement, in late April the Defense Ministry said Poland would acquire new UAVs in 2016, accelerating the procurement. The Polish ministry plans to purchase several hundred drones in various variants under a 3 billion zloty program.

“We aim to significantly reduce the time frame for acquiring the missile launchers. The Homar program is a priority,” Polish Deputy Defense Minister Czeslaw Mroczek said. “In the second half of this year, we will start the procurement procedure to acquire the Homars. We aim to sign a deal on the turn of 2014 and 2015.”

Under another key program, Poland is aiming to buy 70 new helicopters this year for its armed forces in a deal estimated to be worth about 9 billion zloty. The country’s land forces are to acquire 48 transport helos, and the Air Force and Navy will receive 10 and six search-and-rescue helos, respectively, with a further six anti-submarine helicopters to be provided to the Navy.

Three consortiums were preselected to compete in the tender, including Sikorsky’s local plant PZL Mielec, with the Black Hawk; AgustaWestland’s PZL Swidnik, with its AW149; and a consortium led by Airbus Helicopters, with the EC-725

Meanwhile, funds earmarked by the government for military procurements could be further increased to speed purchase of drones by the Defense Ministry, as suggested by Komorowski, according to Stanislaw Koziej, head of the National Security Bureau (BBN).

“The president has been making efforts to ensure that the current 1.95 percent of GDP [Poland’s gross domestic product] which is allocated to the military is increased by a further 0.05 percent … to finance a national drone program,” Koziej said at the New Technologies For National and Border Security conference in Warsaw.

Czechs Eye Spending Boost

In early May, Czech President Milos Zeman and Prime Minister Bohuslav Sobotka announced they had agreed to increase the Czech Republic’s defense budget for 2015 as a response to regional security concerns, and boost weapon systems for troops.

Sobotka said military expenditures must be higher to ensure compliance with its NATO commitments, and also in relation to the ongoing crisis in Ukraine.

The prime minister said the Czech military budget has been gradually decreasing in the recent years, reaching the level of 1 percent of gross domestic product. Under the new plan, that figure would increase to 1.4 percent in the medium term, according to Sobotka, and reach a level of about 4 billion krona, Czech Defense Minister Martin Stropnicky told local news agency CTK May 29.

In addition, the Czech Republic is planning to pool defense resources with neighboring Slovakia under a plan announced by senior defense officials from the two countries in April. The first joint procurements are to include radars and personal weapons for Czech and Slovak troops.

Most Nordic and Baltic governments had, with the exception of Norway, planned to scale back military spending before the crisis in Ukraine escalated in the first quarter of 2014.

The uncertainty and regional instability generated by the Russian intervention has radically changed spending intentions to the point where all Nordic and Baltic armed forces will see budget increases to boost capabilities over the next four to six years, including armored vehicles, howitzers and anti-tank weapons, in addition to air and naval upgrades.

The crisis in Ukraine not only concentrated political minds on the need to beef up defense spending, it also provided the catalyst for enhanced investment in readiness and capability.

This can be seen in Sweden, where the government is expected to raise the annual defense budget from the current US $6.2 billion to $7.2 billion by 2020 to cover a series of costly acquisitions, including long-range missile acquisition programs.

Ukraine is also driving Nordic efforts to develop a more cohesive, ambitious style of Nordic defense cooperation, including bilateral defense-building arrangements geared to enhancing common capability and cost sharing on big ticket weapon systems.

To this end, the Finnish-Swedish defense pact approved in May will set out to identify potential NATO-compatible joint materiel acquisitions between these two non-aligned Nordic states.

“It is something of a paradox that Russia’s actions in Ukraine are moving Finland and Sweden closer to NATO membership than ever before. I doubt that was ever Russia’s intention,” said Carl Haglund, Finland’s defense minister.

Several major acquisition programs will be run between neighboring Nordic states. Sweden is partnering with Norway in a $2.7 billion long-range joint investment to purchase 2,000 multirole military vehicles from German supplier Rheinmetall. Deliveries are slated to begin in 2015 and end in 2026.

The first batch of 335 vehicles, costing $272 million, are set to be delivered by 2017.

The crisis in Ukraine is also having a direct impact on the defense spending plans of the NATO-aligned Baltic states. With funding for these minnow economies always an issue, it is likely that cost sharing on major acquisition programs will be achieved through common procurement projects run with neighboring Nordic partner states.

Motivated by national security concerns, Estonia’s Parliament has approved a plan to raise defense spending from $524 million in 2014 to $665 million in 2018. Estonia is the only one of the three Baltic states to meet NATO’s benchmark spending ratio of 2 percent of gross domestic product.

Priority acquisition programs will cover anti-tank missile systems, armored fighting vehicles, 155mm self-propelled howitzers, mine warfare systems, and twin projects to integrate its Air Force with NATO’s air and missile defense system and to provide uninterrupted surveillance information for Estonia and all of NATO.

Like Estonia, Latvia plans to fast-track measures to bolster its defense budget.

“What is happening in Ukraine concerns all Baltic states greatly. In the case of Latvia, we are working to raise military spending from 0.9 percent to 1.1 percent of GDP in 2015,” said Raimonds Vejonis, Latvia’s defense minister.

Latvia has set a course to reach the NATO benchmark of 2 percent of GDP by 2020, a level that would raise the annual defense budget to an all-time high of about $500 million. Priority weapons and materiel needs include anti-tank missiles, radar systems and an upgraded air-defense capability.

The crisis in Ukraine has caused budget-strapped Lithuania to push through legislation to increase defense spending after 2015 well above the 2014 allocation of $365 million, equivalent to around 0.8 percent of GDP.

The core of available money for procurement will focus on the acquisition of field communications systems for the Army, airspace surveillance systems, and anti-tank weapons and armored fighting vehicles for primary brigade level rapid response maneuver units.

Finland’s Defense Ministry still has to negotiate how much to increase future defense budgets. A sum of $3.67 billion was allocated for the 2014 defense budget, a figure that includes supplementary spending of $451 million.

However modest, the projected higher spending must be sufficient to cover planned projects including the procurement of armored vehicles and naval and air modernization efforts.

Projects connected to strengthening High North defenses are at the core of the $1.83 billion allocated to the Norwegian defense force’s procurement budget for 2014, up from $1.46 billion in 2013.

Denmark’s future needs will dictate that its land, naval and air forces develop a stronger, more effective ability to operate in extreme climates as that country scales-up the policing of its vast Arctic territories, which stretch beyond Greenland. This will require the annual defense budget to grow above its present $4.2 billion after 2016.

Denmark’s procurement budget will expand to cover a number of essential, costly programs, including the possible acquisition of a satellite system to provide a broad monitoring and coverage capacity for remote Arctic areas, and a heightened expenditure on all-climate medium- to long-range drones. ■


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