High inflation and the strong dollar are making planned defense purchases more expensive. The German government is therefore and is also responding to criticism from the Court of Auditors.
The number of units for the targeted second batch of the Puma is reducing virtually weekly.
Berlin
The German government is making massive cuts to its planned equipment offensive for the Bundeswehr. Many projects, especially for the naval and air forces, would have to be canceled, Handelsblatt learned from industry and political circles.
The reason for this is the rapid rise in inflation, which is making planned purchases more expensive. In addition, the Federal Court of Auditors had criticized that the projects listed in the economic plan for the special fund exceeded the set financial framework of 100 billion euros.
“Since many projects run over five to seven years, inflation in dimension creates a serious financial problem,” said a person familiar with the proceedings. Among the projects on the back burner, he said, are a third tranche of the K130 corvette, new Eurofighters for electronic warfare, new frigates and new self-propelled howitzers that were to be ordered to replace systems delivered to Ukraine. He said there were talks between politicians and industry about these projects.
Air defense: Germany launches project for new European umbrella
Guest commentary by Oliver Burkhard:
The special assets for the Bundeswehr have changed the defense industry
The 100 Billion Euro Problem: Finance Minister Criticizes Bundeswehr Procurement System
The acquisition of the F-35 fighter jet and the Chinook heavy transport helicopter are considered to be set. There is no turning back on the F-35, as the aircraft is indispensable for Germany’s nuclear participation, it was said. In addition, talks with the U.S. government on the acquisition of the aircraft from the manufacturer Lockheed Martin had progressed.
However, the planned number of 35 F-35s is apparently up for discussion. One reason is that the German government had calculated the purchase price at a dollar exchange rate of 1.1 to the euro, said a member of the governing coalition. The strong dollar makes imports from the U.S. more expensive.
The number of units of the second batch of the Puma infantry fighting vehicle, for which 304 million euros have been budgeted this year, is also decreasing weekly, the coalition politician added. In addition to the inflation-related increase in acquisition prices, there is also the growing interest expenditure for the loan-financed special assets. Here, the calculation is seven billion euros instead of three.
Representatives from the defense industry complained that the budget of 100 billion euros is high, but not enough. “To fulfill the wishes of the Bundeswehr, 200 billion euros are needed,” said a manager from the defense industry. In its report on the draft economic plan, the Federal Court of Auditors had also criticized the fact that the planned total expenditure exceeded the financial framework of 100 billion euros.
He said this was “inadmissible” because there was a risk that the Federal Ministry of Defense would not be able to fully service obligations entered into from the special assets at a later date. “Additional burdens for the federal budget would be the result,” the report, obtained by Handelsblatt, says.
The guardians of a sound budgetary policy also criticize the fact that planned expenditures for the F-35 fighter jet or the heavy transport helicopter, for example, are not budgeted individually in the economic plan, but are combined with other projects in the collective title “Dimension Air”. In this way, there is a risk that funds will be used for other projects and that the financing of the F-35 or the helicopter will not be secured in the end.
In its statement to the Court of Auditors, the Federal Ministry of Defense writes that it is still revising the draft economic plan together with the Federal Ministry of Finance with a view to the final budget discussions. There is as yet no mention of cancellations of individual projects.
Due to record high inflation.
🤦
Why can’t Germany make their own military industrial complex? And why does EU need to buy F-35s when Airbus could also be making fighters.
America is good and reliable under Biden and democratic leadership, but if that orange clown and his nutcase followers return to power, then america can not be relied upon. EU needs its own military industry that can be used us a detterence, and aid in democratic lend-leases.
As I understand it, the core problem is what the court of auditors says violates financial regulations for the federal budget. The ministry of defence is free to budget the 100 billion euros but if they exceed that amount, it has to be accounted for in their normal budget. Which it is not, because the ministry is planning with a assumed budget increase in the future.
Basically the court of auditors is saying that you cannot budget with funds you do not have, from a budget plan that is not even made yet.
Inflation has now magnified this problem.
Defense contractors want 200 billion € ?!
Over my dead body.
I hate how they make the entire system so flexible that you can‘t be sure whether they buy planes, tanks or ship, or spend it on pensions or officials.
7 comments
Translated by deepl:
High inflation and the strong dollar are making planned defense purchases more expensive. The German government is therefore and is also responding to criticism from the Court of Auditors.
The number of units for the targeted second batch of the Puma is reducing virtually weekly.
Berlin
The German government is making massive cuts to its planned equipment offensive for the Bundeswehr. Many projects, especially for the naval and air forces, would have to be canceled, Handelsblatt learned from industry and political circles.
The reason for this is the rapid rise in inflation, which is making planned purchases more expensive. In addition, the Federal Court of Auditors had criticized that the projects listed in the economic plan for the special fund exceeded the set financial framework of 100 billion euros.
“Since many projects run over five to seven years, inflation in dimension creates a serious financial problem,” said a person familiar with the proceedings. Among the projects on the back burner, he said, are a third tranche of the K130 corvette, new Eurofighters for electronic warfare, new frigates and new self-propelled howitzers that were to be ordered to replace systems delivered to Ukraine. He said there were talks between politicians and industry about these projects.
Air defense: Germany launches project for new European umbrella
Guest commentary by Oliver Burkhard:
The special assets for the Bundeswehr have changed the defense industry
The 100 Billion Euro Problem: Finance Minister Criticizes Bundeswehr Procurement System
The acquisition of the F-35 fighter jet and the Chinook heavy transport helicopter are considered to be set. There is no turning back on the F-35, as the aircraft is indispensable for Germany’s nuclear participation, it was said. In addition, talks with the U.S. government on the acquisition of the aircraft from the manufacturer Lockheed Martin had progressed.
However, the planned number of 35 F-35s is apparently up for discussion. One reason is that the German government had calculated the purchase price at a dollar exchange rate of 1.1 to the euro, said a member of the governing coalition. The strong dollar makes imports from the U.S. more expensive.
The number of units of the second batch of the Puma infantry fighting vehicle, for which 304 million euros have been budgeted this year, is also decreasing weekly, the coalition politician added. In addition to the inflation-related increase in acquisition prices, there is also the growing interest expenditure for the loan-financed special assets. Here, the calculation is seven billion euros instead of three.
Representatives from the defense industry complained that the budget of 100 billion euros is high, but not enough. “To fulfill the wishes of the Bundeswehr, 200 billion euros are needed,” said a manager from the defense industry. In its report on the draft economic plan, the Federal Court of Auditors had also criticized the fact that the planned total expenditure exceeded the financial framework of 100 billion euros.
He said this was “inadmissible” because there was a risk that the Federal Ministry of Defense would not be able to fully service obligations entered into from the special assets at a later date. “Additional burdens for the federal budget would be the result,” the report, obtained by Handelsblatt, says.
The guardians of a sound budgetary policy also criticize the fact that planned expenditures for the F-35 fighter jet or the heavy transport helicopter, for example, are not budgeted individually in the economic plan, but are combined with other projects in the collective title “Dimension Air”. In this way, there is a risk that funds will be used for other projects and that the financing of the F-35 or the helicopter will not be secured in the end.
In its statement to the Court of Auditors, the Federal Ministry of Defense writes that it is still revising the draft economic plan together with the Federal Ministry of Finance with a view to the final budget discussions. There is as yet no mention of cancellations of individual projects.
Due to record high inflation.
🤦
Why can’t Germany make their own military industrial complex? And why does EU need to buy F-35s when Airbus could also be making fighters.
America is good and reliable under Biden and democratic leadership, but if that orange clown and his nutcase followers return to power, then america can not be relied upon. EU needs its own military industry that can be used us a detterence, and aid in democratic lend-leases.
As I understand it, the core problem is what the court of auditors says violates financial regulations for the federal budget. The ministry of defence is free to budget the 100 billion euros but if they exceed that amount, it has to be accounted for in their normal budget. Which it is not, because the ministry is planning with a assumed budget increase in the future.
Basically the court of auditors is saying that you cannot budget with funds you do not have, from a budget plan that is not even made yet.
Inflation has now magnified this problem.
Defense contractors want 200 billion € ?!
Over my dead body.
I hate how they make the entire system so flexible that you can‘t be sure whether they buy planes, tanks or ship, or spend it on pensions or officials.
I love Germany, truly european leader! :3