Italy government coalition averts split over F-35 jet purchase

ROME Wed Jun 26, 2013 1:39pm EDT

ROME (Reuters) - Italy's ruling coalition averted a split over a motion to scrap its purchase of 90 Lockheed Martin F-35 fighter jets on Wednesday by agreeing to seek parliament's approval before going ahead with further spending on the program.

The awkward right-left governing bloc, formed two months ago to end a political stalemate that followed February's deadlocked national election, risked fragmenting over a vote to pull out of the fighter program first agreed more than a decade ago.

The lower-house motion, presented last month and supported by opposition groups and some members of Prime Minister Enrico Letta's center-left Democratic Party (PD), was gathering further support in the PD even as late as Tuesday, the eve of the vote.

The PD said it would cut spending on the program before the election but its coalition partner, the center-right People of Freedom party (PDL), supports the purchase.

After a two-hour meeting on Wednesday, the ruling parties came up with a new motion that the government then supported.

The new motion called on the government to push for further integration of European Union defense projects to reduce costs, and says it should seek the support of parliament before advancing to further stages of the fighter purchase.

The government-backed motion passed 381 to 149, while the opposition motion in favor of abandoning the F-35 was defeated. Both motions were non-binding.

The F-35 is a delicate issue for Letta's coalition, which is struggling to manage a huge public debt and limit its budget deficit to a forecast 2.9 percent of gross domestic product this year, a fraction below the European Union's 3 percent ceiling.

Before Wednesday's vote, Defense Minister Mario Mauro again defended the F-35 purchase, saying the new fighters would replace an ageing fleet of obsolete aircraft.

Italy plans to spend 11.8 billion euros ($15.43 billion) on the jets over 45 years, starting in 2015, Mauro said on Tuesday.

The deal includes maintenance contracts for state-controlled defense group Finmeccanica, as Italy's aerospace industry is a development partner in the F-35 project and Italy has already invested about 2 billion euros in it.

Last year, Italy cut its F-35 order to 90 warplanes from the 131 it had originally agreed to buy, a move it said would save 5 billion euros as it sought to reduce defense spending to shore up its accounts during the economic slump.

(Additional reporting by Massimiliano Di Giorgio; Editing by Alison Williams)

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Comments (1)
Cheeseplease wrote:
The total procurement cost alone for 90 F-35 jets (all F-35A?) should be around $14.5B. That would include the usual ‘initial spare parts’.

If any of the 90 jets are the STOVL ‘B’ variant, the total price would then be more of course.

Then there are the Block upgrades to fund which will not be cheap (assuming Italy wants to upgrade to more credible Block IV and eventually the next-gen Block V variants).

Next, will need to add Military Construction necessary for inducting the F-35, infrastructure, training, and operational costs + maintenance as noted. Somewhere in there they’ll probably wish to buy the actual weapons – if there’s any money left.

Given that the majority of the guesstimated ‘Total Procurement’ cost of $14.5B or so would be front-loaded, it might have a tough time getting the nod from Parliament. Considering of course, that the uphill battle going forward will be for Govt to be able to remain within tight budget deficit spending to GDP ratios.

I’d contemplate reducing the order size further. Perhaps opt out of all STOVL F-35B variants altogether and shoot for a more realistic 40 F-35A units total. Take first delivery in 2018 and at least 20 of the squadron-slated jets could be made up of more mature Block IV models, delivered in 2022-2023?

Perhaps too, Italy could Lease the initial block III LRIP for around 10-12 years – jets which would be used at reduced-risk of ownership and used for training and conversion unit. They could be returned and replaced with new-build Block V and/or even Block VI… to be procured around 2025?

Jun 26, 2013 7:22pm EDT  --  Report as abuse
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