Food for Thought: Optimising Defence Spending

The 2008-09 economic downturn has certainly affected the defence plans of many countries. It seems the whole world is trying to somehow get more out of the money they spend on defence. Some interesting reports about cost cutting measures undertaken by leading Western and other countries deserve a deeper look.

The UK Defence Green Review is said to have highlighted the cash crunch and uneconomical and delayed acquisition programmes of the UK Ministry of Defence.

The US Air Force is now looking for a multi-year contract to buy the Boeing FA-18 E/F Super Hornet to bridge the fighter gap that is looming large due to major cost overruns and the delayed induction of the F-35 Joint Strike Fighter (JSF). The Boeing Super Hornet line was scheduled to be closed in 2014 and if current plans fructify it would remain open for another year until 2015.1

Chile, which already operates 10 new F-16C/D Block 50 and 18 second-hand F-16A/B MLU, is purchasing an additional batch of 18 second hand F-16 Mid-life Update (MLU) fighters from the Netherlands. This US $270 million deal is said to include substantial stocks of weapons and spares.

Israel is also revising its plans for the purchase of 25 F-35 Lightning II JSF fighters due to the likely delays in their delivery schedule.2 It may instead purchase a squadron of F-15 or F-16 fighters3

The future of the European EADS A-400M transport is again uncertain due to cost escalation. There have been some reports about Boeing offering an option of a shared pool of C-17A Globemaster III to some Latin American countries, obviously due to its high costs that forbid any one country to maintain a fleet of this heavy lift aircraft. During the recent earthquakes in Chile and Haiti the heavy transport is reported to have performed admirably. Ten NATO member countries plus Finland and Sweden have already formed a Strategic Airlift Capability (SAC) under which three C-17 Globemaster III aircraft are operated from a Hungarian airbase and the cost of acquisition and maintenance shared by all members of the group.4

There are also reports of Western countries looking at light turbo-prop trainers such as the Super Tucano, T-6 Texan II and Beechcraft for Counter Insurgency Operations (COIN) to reduce costs and to avoid exposing expensive high speed fighter jets to small arms and MANPAD fire from insurgents in Afghanistan and other future battlefields.5

Yet another report says that both Bulgaria and Romania are in the process of purchasing some two dozen F-16 C/D fighters each, since the cost of new fighters is prohibitively high.

More interestingly, SAAB has offered Bulgaria a ‘reduced cost’ version of the JAS-39 C/D Gripen. Some 24 of these are said to cost only US $1.3 billion and the deal includes training, support and logistics.

Pakistan has already inducted a full squadron of JF-17 Thunder fighter from China and it reportedly took part in the ongoing Pakistan Army/Air Force Exercise Azm-i-Nau or New Resolve-3. The PAF gets these at a fraction of the cost that Indians will eventually pay for the MMRCA fighter. Egypt is also seeking a deal to purchase and if possible manufacture some 48 JF-17s on its soil but has ordered the F-16 to meet present requirements. This would be the first export order for the Sino-Pak jointly produced fighter.

Raytheon is planning to produce the Talon, a laser guided rocket, for use by the Boeing AH-64 Apache attack helicopter in the United Arab Emirates (UAE). This would in all probability reduce the unit cost of this missile. As is well known, the UAE Armed Forces have a large contingent of Pakistani military personnel running the show.

The Saudi Arabian Air Force is purchasing some 80 Eurofighter Typhoons from the United Kingdom, with the Royal Air Force (RAF) showing great enthusiasm to transfer the fighters that were actually manufactured for it in order to save some funds.

Finally, the RAF Long Range Maritime Patrol (LRMP) aircraft, the Nimrod MR.2 that has been in service since the 1970s, is due to retire soon. Its replacement, the new Nimrod MRA.4, would achieve Initial Operational Clearance (IOC) only in 2012. This means that the UK military would be without this vital component of its anti-submarine warfare capability for at least eighteen months.6

In contrast, India is set to purchase a whole host of ammunition, guns, assault rifles, Night Vision Devices (NVD), bullet-proof jackets, and many other low-tech defence equipment in addition to big ticket items such as aircraft, ships, submarines, tanks and artillery guns.

While such reports are not necessarily wholly authentic, the Indian Army’s equipment shortfall includes some 200,000 close-quarter battle carbines to replace the outdated 9 mm carbines currently in use, 15,000 general-purpose machine guns, 1,100 lightweight anti-material rifles, 225 mine-protected vehicles, and 64 snow scooters for use at high altitudes. There is also reportedly a paucity of around 390,000 ballistic helmets, more than 30,000 third-generation Night Vision devices, 180,000 light-weight bullet-proof jackets, new-generation grenades and around 50,000 rounds of 84 mm rocket launcher ammunition.7 It is indeed surprising that even these relatively low tech defence items have to be purchased from abroad.

As an example of its continued prowess in defence it is noteworthy that China’s AVIC Helicopter Co (Avicopter) is breaking away from Eurocopter, its partner, in the joint EC175/Z-15 medium helicopter programme, following a decision to re-engine the Chinese Z-15 variant with an indigenous power plant.8 The contrast with India is stark. The Indian Air Force does not have a basic trainer and has been forced to rely on the very few old Kiran Mk 1 jet trainers to train its pilot trainees with no signs of any improvement in the near future. The new AJT Hawk fleet is plagued with slow delivery and spares problems. HAL is reportedly suing BAE, its manufacturer, for these delays.

In light of these developments, it is perhaps time India reviewed its major acquisition plans to bring them in line with the current economic realities. While the latest defence budget has no doubt catered for a sizeable capital component, it may be prudent to reduce costs by switching to more affordable programmes. If, for example, SAAB can offer a ‘cheap’ JAS-39 Gripen to Bulgaria then it can do so to India as well.

Similarly, if second-hand F-16s are going abegging in Europe and if Pakistan can get these at reduced costs because it is a Non-NATO Ally entitled to their purchase under the Excess Defence Article (EDA) scheme from the United States, why should India even consider these as possible candidates in the MMRCA competition. It is also worth noting that Boeing is closing the FA-18 E/F Super Hornet production line by 2014 which means that only an Indian order for 126 fighters would keep it open. In such circumstances, India’s bargaining power should automatically improve and it may become possible to prevail upon the prospective supplier to open manufacturing facilities in India rather that simply insisting on the offset provisions.

It is evident that the costs of modern defence equipment of Western origin are skyrocketing. Unless India can quickly build and expand its defence manufacturing base it cannot hope to meet the future needs of its defence forces even with a sizeable annual increase in the defence budget. This would in turn depend upon the continued steady growth of the Indian economy.

• 1. Jane’s Defence Weekly, 31 March 2010, p. 4.
• 2. Jane’s Defence Weekly, 10 March 2010, p. 16.
• 3. Jane’s Defence Weekly, 31 March 2010, p. 19.
• 4. Jane’s Defence Weekly, 31 March 2010, p. 5.
• 5. Jane’s Defence Weekly, 3 March 2010, pp. 26-31.
• 6. Jane’s Defence Weekly, 31 March 2010, p. 34.
• 7. Jane’s Defence Weekly, 17 February 2010, p. 18.
• 8. Jane’s Defence Weekly, 17 February 2010, p. 8