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The Romanian Armed Forces’ Endowment Efforts – Better Times on the Horizon?

The Romanian Armed Forces’ Endowment Efforts – Better Times on the Horizon?

No. 2, Nov.-Dec. 2016 » BUSINESSance

2016 brought a new stirring to the Romanian political establishment, at least at declarative levels, regarding what may finally become a coherent and sustained effort towards equipping the Romanian Army with modern weapon systems and equipment. This sudden push comes at the eleventh hour, after three years of lethargy and, also, three years of conflict in neighboring Ukraine.

A new hope

In 2015-2016, we witnessed a 130 million euro acquisition for Spike ER anti-tank rockets, one of the main priorities for our forces. We also noted the launch of an RfI [1] (a Request for Information, the prelude to any military acquisition) from METRA (The Military Equipment and Technologies Research Agency of the Romanian Ministry of Defense) for multiple types of weapon systems, among which were counted: long-range anti-air missile systems, helicopters, self-propelled artillery, long-range reactive artillery, tanks, armored transport vehicles, trucks, drones and so on.

We also have an ongoing procedure, which is on the cusp of finalization, for the modernization of Romania’s two Type 22 frigates (formerly of the Royal Navy), the purchase of fours SIGMA corvettes from Dutch shipbuilder Damen (also present in Romania), an initiative for a local armored personnel carrier AGILIS 8x8, to be built by a recently signed joint venture between Romanian Military Works Moreni and the German defense company Rheinmetall, and the acquisition of two multirole F 16 fighter squadrons.

During 2014-2016, the Romanian Army also bought a few terrestrial radars, a few all-terrain vehicles and some drones, but nothing significant or game changing for the Romanian Army’s fighting capacity. We can hope that in 2017 at least two or three major acquisition programs will materialize, however optimism must be measured, since important acquisitions have been repeatedly delayed since 2007.

Unmet obligations

The technical endowment of the Romanian Armed Forces and its renewal/upgrade are plagued by inconsistencies and inconstancies, stemming not from the Armed Forces themselves, but from the political decision makers.

It would behoove our country to set aside 2% of GDP for the budget of the Romanian Ministry of Defense (MApN) in 2017 (2.39% is the minimum that NATO requests, a level we agreed to during our accession to the Alliance). The acquisition mentioned above, alone, would be a very adequate change of pace for the modernization of our military, especially since they are so close to finalization that next year could see them entering the stage of contracts being signed and deliveries being prepared. However, the specter of the eternal “next year, we will get it done” hands over our heads like the sword of Damocles.

In reference strictly to the MApN’s budget, the presumptive 2% of GDP for defense is not entirely allocated to defense spending (acquisitions, maintenance, exercises etc.) as such. 0.4 percentage points of GDP must be shaved off, representing military pensions, leaving 1.6% of GDP, which is why our commitment during entry into NATO twelve years ago was for 2.38% of GDP.

Unfortunately, we are well aware that the technical endowment of the Romanian Armed Forces and its renewal/upgrade are plagued by inconsistencies and inconstancies, stemming not from the Armed Forces themselves, but from the political decision makers.

A very long shopping list

The decision makers must be trenchant in their pursuit of necessities and opportunities for endowing our Armed Forces. Even if the contracts and obligations assumed by the new government are a literal drop in the bucket, they are still an improvement over our worrying lag in all areas which was the result of the MApN’s budget for acquisitions over the past 12 years being, for all intents and purposes, basically close to zero. Even if our most optimistic but achievable acquisition plans were enacted in 2017 and followed through to the letter, we would need almost a decade to be back to where the plans first laid out in the year 2000 said we should be. Let us repeat ourselves:
“The state of the endowment of the Romanian Armed Forces is a source of considerable worries.”
We are almost totally lacking in current generation weapon systems and, on the level of some capabilities, we are lacking completely in any sort of usable weapon systems:
  • Our main battle tank is still the aging T 55, which was a good tank for the middle of the 1960s;
  • We still have type TAB-60 and TAB-71 armored personnel carriers from the Warsaw Pact era;
  • Our critical air defenses are derived from systems dating back to the 1960s and 1970s, meaning that they are mostly decorative;
  • We have insufficient military trucks;
  • We have no critical mass of 4x4 all-terrain armored vehicles;
  • Our Navy’s ships are insufficiently armed to make a difference in a crisis situation;
  • We have insufficient modern fighter jets;
  • We have no modern helicopters;
  • We have insufficient drones, which are an increasingly important element in battlefield awareness and reconnaissance;
  • We have no modern self-propelled artillery (we still used towed artillery);
  • We have no medium and long-range tactical missile systems;
  • And even the infantry equipment is not up to NATO standards.

Ultimately, we must change everything related to technical endowment in the Armed Forces, amounting to a complete and thorough “wardrobe change”, but this requires funding and funding requires political will.

To emphasize our drastic situation, imagine our likely performance had we fought in 1917 with armament exclusively from our War of Independence against the Ottomans in 1877 (no machine guns, planes, armored cars, observation balloons and other military innovations), or had we fought in 1944 with armament from the First World War era.

Ultimately, we must change everything related to technical endowment in the Armed Forces, amounting to a complete and thorough “wardrobe change”, but this requires funding and funding requires political will.

A marriage of economic and defense policies

Readers should not think that providing the Armed Forces with the necessary tools is a luxury or an indulgence. Nor should we dwell on some imagined opportunity cost equivalent to taking the food off someone’s plate or neglecting education, health and social spending. On the contrary:

“An intelligent defense spending policy, as many countries around the world have learned over the decades, could be a key contributor to economic growth, to the reindustrialization of Romania, to the modernization of its civilian industry capabilities and, ultimately, to creating jobs for a wide swathe of the Romanian population.”

The “secret” to defense spending which benefits both National Defense and Security, as well as the economy, lies in investing in local military research and manufacturing, as well as what is generically termed “offsetting” military acquisitions, which are compensatory investments in areas where we have no choice but to assimilate foreign products. As a rule of thumb, a proper endowment policy is done with an eye towards holistic industrial development for the country, through compensatory investments from our partners, through technology transfers (partial or total) and through the local production, maintenance and upgrade of the weapon system, the armored carrier or whatever else it may be.

The judicious use of offsets means that not only does a part of the funding for military acquisitions return to the national economy as taxes, wages, horizontal supply chain development, export-led growth and so on, but that we are catching up technologically to the rest of the world, with positive effects on the subsequent development of the civilian industries, as well.

Article 346 protects the right of every state to diverge from the competition framework in order to encourage its security and defense industries and plan acquisitions in accordance to their national interests.

One example of well designed and implemented policies is Poland, which spent 4.5 billion dollars to acquire new 48 multirole F 16 C/D Block 50/52 fighter planes, which resulted in American offset investment eventually worth 6 billion dollars. The application of new European rules regarding equitable and fair competition are interpreted by some to mean that offsetting investment is no longer an accepted practice, despite being an industry standard. However, Poland, Belgium, Denmark and most of the other EU countries continue find ways of obtaining compensatory investments in exchange for military acquisitions. Article 346 protects the right of every state to diverge from the competition framework in order to encourage its security and defense industries and plan acquisitions in accordance to their national interests. Romanian legislation mandates a minimum 80% offset for any acquisition worth more than 3 million euros, while Poland and Germany, for instance, pursue offsets of minimum 100% of the acquisition value.

In the medium and long term, the money spent today is multiplied through its effects on economic growth and lateral development, with the possibility of realizing gains, in 10 to 15 years, far in excess of what we have spent today. As mentioned before, every country in the world (especially the richest ones) count on the high investment multiplier of this sort of public spending and make offsets a primary criterion when choosing business partners.

The price of indolence

If we regard strictly the requirements of the Romanian Armed Forces, we need everything and we need it … yesterday. The chronic lack of financing in the last 12 years has precluded any sort of meaningful acquisitions and modernizations, with massive delays in our timetable for defense capacity growth. The ultimate costs of the proper endowment of Armed Forces of our size with our security requirements and with modern equipment that will remain relevant for longer, are well known and have been adequately publicized and discussed by the MApN and the Ministers at its head. The costs vary between 13 billion dollars (an absolute minimum) and 20 billion dollars, in accordance with our options and our choice between new and second hand systems. Let’s not delude ourselves – second hand equipment may be cheaper, but it comes with no offset and the maintenance and operation costs are higher than those of new equipment. A useful rule of thumb is that the operating costs over the lifetime of a product are double the initial acquisition cost. Even though the initial payments are smaller, all of the funding ends up lining the coffers of foreign parties, with no investment in the same Romanian GDP from which the defense spending of the Armed Forces is ultimately sourced. This amounts to a vicious cycle that acknowledges that military and economic policies are linked insolubly together. Poland is planning to spend about 34 billion Euros in the next 10 years on military equipments, and they are already far ahead into the modernization of their armed forces, compared to Romania. Let’s not delude ourselves – second hand equipment may be cheaper, but it comes with no offset and the maintenance and operation costs are higher than those of new equipment.

A well-equipped Army is the quintessence of National sovereignty and a political necessity as great as the payment of public sector salaries and pensions. We need a well-trained army as much as we require hospitals, schools and highways and, fortunately, there is no contradiction between meeting our military spending requirements and funding schools, hospitals and pensions, regardless of the rhetoric employed by some public figures in Romania. A well planned and executed military investment and acquisition program will lead to economic development, a budgetary surplus in the medium and long term, and appreciable numbers of new, well-paying and skilled jobs.

Silver linings

The benefits to our security under NATO are also accompanied by obligations towards meeting, to the best of our abilities, our own share of the Alliance’s defensive capabilities.

With regards to the acquisition programs tentatively begun in 2016, some of which we highlighted in the beginning of this article, the successful conclusion of all of them is a necessity. Since the Romanian Navy has no modern warship of adequate capabilities today, the four SIGMA corvettes are a necessity. Since we have no modern armored personnel carriers, the TBT 8x8 program (the AGILIS joint venture between UM Moreni and Rheinmetall) is also a necessity. And the finalization of the acquisition of two F 16 squadrons is merely the end of the beginning, not the end of our efforts to modernize our military air capabilities.

Therefore, a well-equipped army is not a childish indulgence or a useless bauble. Those who would claim that “we are under no military threat, so why would we require a powerful army?” are either deluded or manipulative. The benefits to our security under NATO are also accompanied by obligations towards meeting, to the best of our abilities, our own share of the Alliance’s defensive capabilities. The disparities in economic situations between us and some of the larger members are not an allowance to shirk our duty and, should every Member State of NATO decide to free ride on the military efforts of others, the Alliance would surely collapse!

In conclusion

What we need are a credible military force to discourage aggression against our country and a powerful and capable national defense industry. The choice is not one or the other, but both or neither. They go hand in hand.

What we need are a credible military force to discourage aggression against our country and a powerful and capable national defense industry. The choice is not one or the other, but both or neither. They go hand in hand. We can find the funding for our needs, and an intelligent program of offsets and technology transfers mindful of the national interest will serve to reindustrialize our economy, introduce the latest technologies with wide ranging economic effects, create thousands of well-paying jobs and be a fiscal positive in the medium and long term. As a NATO and EU border country, our only chance is to develop a solid economy with reasonable investment and research policies, which would maintain a powerful defensive apparatus. This is the example of South Korea or, if we want to take a look at the EU, the example of Poland!

And, lest we forget, the Armed Forces are not a toy, but a guarantor of our freedom, integrity and sovereignty.

NOTE
[1] http://www.acttm.ro/ro/proiecte-i-activiti/cereri-de-informatii
 
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