HELSINKI — The significant spending increase sought by Finland's Armed Forces Command (AFC) is unlikely to happen in 2016 as the newly elected center-right government grapples with how to reduce a hefty budget deficit and re-energize a recession-hit economy
Although government parties the Center, National Coalition and the Finns favor raising defense spending against a backdrop of growing aggression by Russia in the region, the fiscal priority is focused on using new austerity -driven measures to cut the projected US$6 billion budget deficit in 2016.
"The budget for 2016 is unsurprisingly tight, and savings will be looked for in all core areas of spending," Finance Minister Alexander Stubb said. Finland's overall debt burden is forecast to increase to $121 billion in 2016. The government is aggressively pursuing public spending cuts of $1 billion to $1.5 billion.
The armed forces Finnish Armed Forces (FAF) has seen a steady decline, in real terms, in its annual budgets since 2006. The military budget accounted for 1.4 percent of GDP in 2006, dropping to 1.34 percent in 2014 and . The budget fell to 1.28 percent of GDP in 2015 when total defense budget spending slumped by about 2 percent to $2.9 billion.
For 2016, the government will ask the military FAF to proceed with further cost-savings measures to free up capital that can be channeled into core operating areas while bolstering procurement spending capacity.
The government is expected to require the armed forces FAF to find $80 million to $100 million in savings on military staff and administration functions alone in 2016. Additional capital savings are to be transferred from non-core functions to operating units, materiel procurement, and conscript and reservist training.
"Transferring monies from one area to another is counterproductive. Bolstering materiel investments while cutting back on operations is also foolish," Mika Oranen, chairman of the Finnish Non-Commissioned Officers Union, said. (FNCOU / Aliupseeriliitto).
The armed forces made its case for a substantial real increase in the 2016 budget on the grounds that apart from force modernization, readiness capability and training costs, its the organization’s economic situation needed to improve ahead of future big-ticket expenditures to replace on the replacement of the Air Force’s 60 F/A-18 Hornet jets and the Navy’s core surface fleet.
Defence Minister Jussi Niinistö has offered assurances the FAF the assurance that the existing level of spending on conscript and reservist training will be maintained.
However, the cutbacks could restrict negatively impact on force training and exercise budgets, reducing the active role of high cost use equipment costly to use, such as F/A-18 Hornet multi-role fighters and NH-90 tactical troop transport helicopters, in future operations and exercises.
"Training of Finnish conscripts and reservists will not suffer. Next year's budget ensures 2.5 training staff for every conscript unit. Additionally, we intend to maintain our reservist training levels at 18,000 participants every year," Niinistö said.
Notwithstanding, Niinistö has yet to outline whether the savings cuts sought will be limited to 2016 or will extend over the period of the present government’s four-year term in office, which ends in 2019.
If this is the case, then the military FAF is facing static annual budget levels and added pressure to reduce its operating-base cost levels up to 2020.
The projected level of funding in 2016 and up to 2020 will also fall short of a recommendation to government by the Parliamentary Defence Committee (PDC), which supports a program of spending focused on modern equipment and bolstering the armed forces' FAF’s war-time strength from 230,000 closer to its previous level of 350,000 trained soldiers.
"Finland needs to maintain a credible defense capability. We cannot afford to make more cuts to the training and exercise budgets or leave the armed forces without the modern equipment they need to do their job properly," Mika Kari, (Social Democratic Party), the PDC’s deputy chairman, said.
The project to replace the Air Force’s 60 Hornet fighter jets, which are due to be retired replaced during the period 2025 to 2030, is set to begin by the end of 2015. The formal procurement phase is set to commence in 2020. The Navy’s new fleet is expected to be in service in 2025.
The total cost of these two programs is expected to exceed run to more than $8 billion, with the fighter program costing an estimated $6 billion.
The proposed cost-savings drive could also hurt the military's FAF’s ability to fill vacant posts across the Army, Navy and Air Force, which remain empty unfilled due to a lack of funds. This could exacerbate the military's FAF’s ability to contract officers and NCOs to train conscripts.
The development of the FAF’s cyber defense unit (CDU) will also be largely funded through cost-savings and related capital transfers. The armed forces is expected to invest around $100 million into the CDU project in 2016-2017.
The planned savings push will not affect on the military's FAF’s international force commitments, such as peacekeeping and crisis management contributions to the United Nations. (UN). These are generally funded out of the Foreign Ministry’s budget.
In September, Finland has pledged over 200 soldiers, mainly special forces, to strengthen the UN’s Blue Helmets’ peacekeeping capacity to 40,000 troops and law enforcement officers.