Room for New Italian Defense Programs Despite Spending Dip in 2016

[Zarvan]

Italy’s defense procurement spending in 2016 is set to drop 3 percent to €4.72 billion, new budget documents reveal, although cash was found to launch a new jet trainer program and partner with France on a new missile program.

The dip, due to belt tightening as Italy struggles to escape recession, may alarm military officials, given the instability currently seen in North Africa and the renewed threat from Russia.

The spending trend, which looks set to continue for the next two years, runs contrary to a Europe-wide hike in defense spending currently underway.

Procurement funding for this year combines €2.18 billion from the Defense Ministry and a €2.54 billion top-up from the Industry Ministry, a decline on the €4.87 billion total made available last year, although the Defense Ministry funding is above the €1.95 billion initially forecast for 2016 in a provisional budget document released in December.

The latestl document, which was sent to the Italian Parliament and seen by Defense News, is a three year budget covering 2016-2018, as is customary, which indicates that Defense Ministry procurement funding is expected to drop to €1.93 billion next year and in 2018.

But there is good news for Italy’s Leonardo-Finmeccanica as €9 million is freed up this year to launch development funding for the firm’s new M-345 trainer, which was conceived in conjunction with the Italian Air Force to replace Italy’s MB339 trainer and act as a lead-in to the M-346 jet trainer, which the air force is now flying.

This year’s budget includes €235 million in additional funding to tackle terrorism following the Islamic State group attacks in Paris last November.

Eight million euros of that cash will go to beefing up sensors on Italy’s fleet of Predator UAVs, which are now allowed to patrol the skies over Italy in law enforcement operations. Although Italy was given permission to also arm its US-built UAVs by the US, no armaments have been acquired as the Italian Parliament has yet to vote on the matter.

Elsewhere in the budget, Italy’s decision to partner with France on the upgrading of the Aster 30 missile through the Aster Block 1 New Technology program is backed with €15 million in funding.

The upgrade program for the multi-national missile, which France launched in December, will extend its range for intercepting ballistic missiles. The funding document puts Italy's eventual contribution to the program at €237.4 million.

Another new, albeit small program involves kitting out Italy’s 767 tankers for medical evacuation missions, at a cost of €4.6 million.

As revealed by a source to Defense News last month, Italy’s plan to build a second brigade around newly purchased Freccia armored vehicles looks set to be a slow process after only €21 million out of €2.65 billion required was provided this year.

Other funds listed for the program are needed to cover payments for the first brigade, said a source knowledgeable of the program. “At this rate it could take 20 years to complete the second brigade,” he said.

Funding for a new Centauro II wheeled tank stands at €9.4 million, well short of the €160 million predicted last month, although the source said it was the first tranche in a multi-year funding stream that should reach €160 million.

Overall Ministry of Defense funding, including procurement, maintenance and operations and personnel, runs to €13.36 billion this year, up from €13.19 billion last year thanks to a hike in M&O funding.

But the document said that rise was due to extra anti-terrorism patrols by soldiers on Italian streets.

Apart from the new programs, big ticket items like new multi-mission vessels, U-212 submarines, Eurofighters, early warning Gulfstream aircraft and new AW101 helicopters for the air force all continue to receive funding.

Italy’s ongoing purchase of F-35s is funded to the tune of €630 million. Following parliamentary votes in 2014 demanding a reduction in spending on the program, the document claims that €1 billion will be trimmed off spending between 2016 and 2019, and that spending last year was cut from €583 million to €370 million.

No explanation of where the cuts are being made is given, so it is not clear if the savings are related to Italy’s provisional decision to cut its F-35 order from 131 to 90 aircraft.

The document features a list of programs that are being put on ice due to lack of funds, including the long planned purchase of a new Signals Intelligence aircraft to replace fazed out G222s.

That means Italy is without a SIGINT capability after its lease on a Gulfstream SIGINT platform, rented from Lockheed Martin, ran out earlier this year.

The decision to let the lease lapse, reportedly due to lack of funds, comes as Western special forces take on ISIS in Libya, and contrasts with Italy’s announcement in a new White Paper, issued this year, that it wants to take a central role in Mediterranean military affairs.

Email: tkington@defensenews.com

Twitter: @tomkington

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