Armed forces lose budget battle
Spain's military cannot be sustained with its current of level funding and debt Chiefs fight to maintain vital capacities but international missions being cut back
The Príncipe de Asturias aircraft carrier, the only one in the Spanish navy's possession, is on its way to the junkyard after only 25 years in use because there is no money to keep it operative, let alone to upgrade it. The combat supply ship Cantabria has been loaned for a year, crew included, to Australia, which will cover expenses during that time and hopefully commission an identical vessel from Spanish shipyards after that. Meanwhile, the army has parked away half of its armored vehicles, while a third of the air force's pilots are currently twiddling their thumbs because there is no money to pay for them all to fly.
"Of the three Ps, we have the first two: plans and programs, but we lack the third: presupuesto (budget). Without mid-to-long term budget stability, our planning lacks a solid foundation," admitted Admiral Fernando García Sánchez, the government's appointed chief of defense, on June 6.
A year ago, this same military leader handed Defense Minister Pedro Morenés a report called Vision 2025 , in which he envisioned the future of Spain's armed forces a decade from now. But after EL PAÍS revealed its main guidelines, which included reducing military personnel by 15,000 individuals and civilian workers by 5,000, there was such a wave of protest that Morenés played down the document's importance, describing it as no more than a personal opinion. He said the government would issue its own report, and that it would try to reach a consensus with the opposition. No mention has ever been made of this other report since then.
Meanwhile, Spain's armed forces have just completed their planning cycle, which includes their Military Capability Objective and Operative Plans. But contrary to common practice, these are "short-term" plans, in the admiral's own words, and subject to review after the summer, when the next budget becomes known. In other words, nobody dares makes too many plans without first knowing how much cash is going to be available.
Spain's only aircraft carrier is on its way to the junkyard after just 25 years
"Together with Luxembourg, we are the country that spends the least money on defense," Morenés said on June 1 in an interview with the daily El Mundo . Luxembourg earmarks 0.5 percent of its GDP for military spending, and defense sources here said that Spain spends 0.6 percent, or around six billion euros, which is as much as is apportioned in the national budget. Yet the tax agency's report on budget execution reveals that in 2012, Defense had 9.066 billion euros at its disposal, or 50 percent more than initially forecast. That is equal to 0.9 percent of GDP, and it will probably rise to one percent when military pensions are taken into account, as NATO does when it draws up its own statistics.
It is still not much of a military budget, since Spain continues to trail other Allied countries. But it is twice as much as Luxembourg and six times more than the Foreign Affairs or Justice ministries get to spend.
The real problem is that 1.8 billion euros were used to pay back outstanding debt left over from major armament programs, launched when Spain thought of itself as wealthier than it actually was, and often adopted to cover not so much the needs of the armed forces themselves, but of a military industry in the process of privatization.
The defense state secretary, Pedro Argüelles, was in Congress on May 25 to announce a plan to "reroute" all the major programs and try to digest a nearly 30-billion-euro bill that is mortgaging the military budget until the year 2030. Defense has cut back on some programs and reduced the number of units in others (where it was possible, not necessarily where it was most convenient).
The helicopters were ordered, but not the equipment needed for them to become operational
The army has already received 235 Leopard battle tanks, although their priority status is highly debatable; the first 100, ceded by Germany, are sitting idle in Zaragoza while a new buyer is found for them. At the same time, the Spanish army will have 73 fewer Pizarro infantry combat vehicles. This means that two Leopard regiments will be left without their Pizarro battalion. "Operatively, it is an unbalanced solution to say the least," admits one lieutenant general in the reserve.
Budget managers have taken an ax to the NH-90 transport helicopters, which went down from 45 to 22. Yet these aircraft are in high demand during international missions. Why, then, has their number been reduced? "Because we could; because it is not so easy to revise programs that are already completed [Leopard] or subject to international commitments
[like the EF-2000 fighter or the A400M transport aircraft]," explains an expert. The Defense Ministry adds that when the helicopters were ordered, the equipment that is indispensable to get them operative was not commissioned simultaneously, so that they could not fly. That is why the 22 fully equipped NH-90s will in fact turn out to be more expensive than the original 45, by as much as 190 million euros.
"It was done this way, not with the army in mind, but with the idea of setting up a helicopter factory in Albacete," concludes this same source.
The pilots have to take turns in order not to lose their flying skills"
Besides these major programs, personnel costs take up 75 percent of the regular budget. Since 2010, the armed forces have lost 7,500 soldiers and sailors. Last year, no new positions were advertised, while 1,500 new recruits are expected this year. Since an estimated 3,500 people leave the forces every year and the new arrivals will not take up their posts until a few months from now, Spain will have a total of around 75,000 troops by the end of the year, 5,000 fewer than established by law.
Spain doesn't have fewer soldiers because Defense decided it should be so. Rather, it is because the tax agency makes hiring difficult. As a result, troop numbers have gone down over 10 percent in the last three years, while higher ranks (officers and non-commissioned officers) have only had their numbers reduced by 3.7 percent. According to cuts recently approved by the Popular Party (PP) Cabinet, by 2017 the number of generals should go down to 200 and colonels to 1,050.
Bogged down by personnel costs and debt repayment as they are, the greatest problems for the armed forces right now, nevertheless, are enlisting new recruits and having units ready for deployment whenever necessary, which means having enough equipment and personnel, and above all, properly trained troops. This year, however, there has been a 15-percent cut to food, ammunition and fuel costs, and 25 percent to maintenance.
The army has slashed its annual exercises by half (650 compared to 1,400) and the air force has only programmed 60,000 flying hours (rather than the necessary 85,000). "The pilots have to take turns in order not to lose their flying skills," laments a former high-ranking air force official. As for the navy, the average time each ship spends out at sea is only 25 percent of the pre-crisis figure.
"The armed forces run the risk of becoming a fragile, hollow institution. If the budget adjustment becomes sharper, we could lose essential capabilities. Recovering some of the units would be unfeasible," warns Admiral García Sánchez.
Until now, the lack of training has been made up for with international missions. Units undergo an intense training program and receive the necessary equipment. No expenses are spared here, because Defense has a credit line that stood at 753 million euros last year. But the formula has its drawbacks: the efforts are focused on just a few units, and only on risks they might deal with. No artillery or anti-aircraft defense is deployed. But it is still better than nothing.
Yet the military fears that even this lifeline, which has enabled them to purchase RG-31 and Lince tanks, among other equipment, is coming to an end, too. Defense is pulling back from its international missions, reducing the Lebanon contingent from 1,100 to 558 troops. In 2014 there will only be between 200 and 300 troops in Afghanistan, compared with 1,200 a year ago. Without the international missions, Spanish units will barely be able to leave the barracks.
The Chief of Staff's Office is working on a rapid response "nucleus" that will be highly versatile and efficient, as well as other special units for cyberdefense, maritime defense and air defense. The point, says one high-ranking official, is to "safeguard critical capabilities" in order to prevent an irreversible deterioration, while the armies sit out the crisis. What is clear to everyone is that on the current budget, Spain's armed forces are unsustainable.
Sinking finances
There are many reasons why Spain is not Germany. One of them is the political scandal caused by the Euro Hawk fiasco - an unmanned aircraft that the Defense Ministry decided to cancel after investing 500 million euros in it and failing to obtain a license in its own country.
Meanwhile, in Spain nobody took the slightest responsibility for the case of the S-80 submarine, the largest military project in the country, budgeted at over 2.13 billion euros. It later emerged that the submarine is too heavy by 75 metric tons, which means there is no guarantee that it will surface again after submerging.
Despite attempts to minimize the mistake by talking about the typical problems of any prototype, the details that are emerging about the case provide indications about its real scope. The builder, a shipyard called Navantia, has announced that the first of the four subs will be launched at least two years behind schedule, forcing the navy to extend the useful life of the Tramontana (S-74), which it was planning to scrap. Instead, upgrading it will cost around 30 million euros.
Besides that, the navy has hired US firm Electric Boat to explain how the overweight submarine might be slimmed down. The technical advice will cost an additional 14 million, to be paid for by the navy, not the shipyard. The reason for that, said Defense sources, is that for reasons of urgency the study will be financed through official US credits, which means that the client has to be the navy.
"This does not mean that in the end, the cost will not be passed on to Navantia," ministry sources add.
But that's doubtful. Defense will have enough of a job fighting over the cost of the repairs. The first submarine is 70-percent completed, and the second one is halfway done, which makes repairs at this stage very costly. Although the conclusions of the technical study are expected this summer, the navy is already expecting additional expenses of around 800 million euros, a 35-percent increase over the original budget.
Navantia is a public corporation, so in one way or another, the mistake will be paid for by taxpayers. What makes Spain different from Germany, among other things, is that no investigation or audit has been announced; parliament has demanded no explanations; and nobody has resigned or been removed from their post in connection with the case.
In his address to Congress on May 23 to explain the "rerouting" of all the major armament programs, Defense State Secretary Pedro Argüelles glossed over the S-80 issue, alleging there has been "a series of technical glitches" and adding that "in view of the analysis currently being conducted, we will need to reassess available options." What Argüelles did unveil is that Defense will present the Cabinet with a new spending ceiling for these programs (including the Leopard battle tank and the EF-2000 fighter), which have already set the armed forces back 29.5 billion euros, a debt that is payable to 2030.
Although the figure sounds colossal (representing nearly three percent of Spain's GDP), Defense alleges that in recent years it has already paid over six billion, leaving "just" 23.417 billion left. But Defense subtracts 15.260 billion euros from that, which the Industry Ministry lent arms makers, reducing the debt problem to a mere 8.157 billion. In order to foot this bill, the ministry is asking for 800 million to one billion euros a year on top of its regular budget.
It might all sound confusing, but there is a simple explanation. In order to make military spending go by unnoticed, in the late 1990s the government decided to finance armament projects through Industry loans. They were zero-interest credit lines that companies had to return when they delivered their products and got paid by Defense. This means that the 15 billion euros advanced by Industry should show up in the Defense budget at some point. But this would necessitate a spectacular increase in the money laid aside for Defense, which is not an option at the present moment. So the formula being used is "balancing" the money that companies owe Industry with the amounts that Defense owes the companies. In the end, the funds that Defense uses to pay the companies that will repay Industry come from the same place and end up in the same place: the Treasury.
