April 27, 2018 / 5:18 PM / 23 days ago

German defense ministry says military budget plan 'unsatisfactory'

BERLIN (Reuters) - The German defense ministry is unhappy with what it views as an unsatisfactory military budget, and will have to postpone at least one major international weapons program unless more funds are added for 2019, ministry sources said on Friday.

The ministry negotiated a better-than-expected increase in military spending in 2019, but more funding would still be needed to plug continuing shortages in German military equipment after 25 years of declining spending, the sources said.

The new proposed budget would add 2.5 billion euros more than previously planned to the 2019 budget, and the budget would rise steadily from 39 billion euros this year to 42.2 billion euros in 2022, but that was not enough, the sources said.

“That represents a significant increase, but is unsatisfactory when measured against the enormous pent-up needs for modernization,” said one source.

“We achieved a lot for the Bundeswehr (German military) after difficult negotiations, but not everything. The Bundeswehr wants to and must rapidly close the gaps that exist after 25 years of underfunding in procurement,” the official said.

Germany sharply curtailed military spending after the end of the Cold War, but began boosting spending again after Russia’s annexation of the Crimea region of Ukraine in 2014.

Reports by the ministry and parliament this year raised concerns that missing spare parts and quality defects had curtailed the readiness of Germany’s submarines, warplanes and some other key weapons.

The ministry said the minister had ordered that funds should be prioritized to pay for digitalization and personal equipment for soldiers, but that meant that at least one planned major international weapons program would have to be postponed unless additional funds were added to the 2019 budget.

No additional details were immediately available. Chancellor Angela Merkel’s cabinet is due to debate the budget plans at a cabinet meeting next Wednesday.

Defense Minister Ursula von der Leyen and French Defense Minister Florence Parly on Thursday signed documents to move forward on joint development and procurement of a new combat jet and other programs.

Germany is also due to kick off several major procurement programs for new heavy-lift helicopters and warships.

The defense ministry said the finance ministry would cover some 875 million euros in added costs triggered by a recent wage agreement for soldiers and other public sector workers, but gaps remained in the modernization budget.

A government source said defense spending as a percentage of economic output would rise to 1.3 percent in 2019 but fall after that as long as budget agreements remain the same and current economic forecasts prove true.

That means it will be well below the 2 percent quota demanded by the military alliance and could add another layer of complication to talks between Chancellor Angela Merkel and Trump on Friday in Washington.

Ministry sources said the new budget plan would result in a reduction of development spending as a percentage of GDP from 0.5 percent to 0.47 percent, despite a firm commitment in the coalition agreement between conservatives and Social Democrats to boost development spending to 0.7 percent of GDP, in line with commitments made to the United Nations.

“The Development Ministry and the Defense Ministry expect that this gap will be closed in line with the contract as part of further budgetary processes,” the source said.

The coalition agreement also calls for any additional funds made available for development to be matched equally for the defense budget, the source added.

Reporting by Andrea Shalal; Additional reporting by Sabine Siebold; Editing by Peter Graff

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