Friday, September 30, 2011

Brazil MoD requests 63.7B Real for 2012


The Brazilian military has requested BRL63.7 billion (USD34.9 billion) for a 2012 defence budget that includes more than BRL8 billion (USD4.38 billion) in procurement funds, marking an 18 per cent increase in procurement on last year's budget.
The funding request must be approved by Congress, which traditionally changes or augments the budget.
In the 2012 budget Brazil's Ministry of Defence (MoD) would administer BRL900 million for its intra-service H-XBR medium-lift helicopter programme, which comprises local production of 50 EC 725s, as well as a new satellite communications system (SISCOMIS) valued at BRL7 million.
The Brazilian Air Force's (FAB's) request would fund the BRL544 million development of a multirole KC-390 tanker/transport, BRL309 million air surveillance and defence system (SISCEAB) and BRL716 million would pay for a number of comprehensive upgrade projects for its legacy aircraft fleets.
The FAB's budget request does not include any funding for the long-delayed F-X2 multirole fighter programme, which is an indication that a decision on the platform will likely be further postponed.
The Brazilian Navy's budget focuses mainly on its submarine infrastructure programme and includes BRL1.2 billion for a new submarine base. The navy is also seeking BRL930 million for continued work on its nuclear and conventional submarine fleets.
Other budget items include BRL73 million for the next phase of the NAPA-500 littoral patrol vessel and BRL65 million to begin the NAPA-1800 programme that is expected to see an existing offshore patrol vessel design selected in 2012. There is no mention of funding for the 11-ship Surface Warfare Programme.
Naval aviation would receive BRL222 million to fund comprehensive upgrades for 14 aircraft, including recently acquired C-1A Traders and long-serving AF-1 Skyhawks.
The army has requested BRL231 million for an initial 64 VBTP-MR Guarani 6x6 armoured personnel carriers, about BRL97 million for continued construction and equipment for its new border system (SISFRON), BRL55 million for light weapons and munitions and BRL90 million for the country's new cyber-defence centre.

France 2012 ups defense 1.6% to 31.7B Euro

PARIS - France increased its 2012 defense budget 1.6 percent to 31.7 billion euros ($43.1 billion) from 31.1 billion euros in 2011, helped by exceptional revenues of 1.1 billion euros from the sale of radio frequencies and property, the Defense Ministry said Sept. 29.
The headline equipment budget rose 3 percent to 16.5 billion euros from 16 billion euros, which includes maintenance and infrastructure. Some 10 billion euros have been earmarked for equipment procurement, said the financial affairs director for the secretary general.
The annual defense budget was 300 million euros short of the multiyear military budget law, but represented a "notable effort" given the financial difficulties, the official said.
Louis Gautier, international relations professor at Lyons University, said the budget was a notional one, a "trompe l'oeil," as presidential and parliamentary elections starting in May mean a new government will implement the budget. A government of right or left would likely "tighten the budgetary screws," he said.
A report on the 2011 defense budget by the French Senate finance committee, published October 2010, pointed to a likely funding gap of up to 36 billion euros by 2020, referring to missions in the 2008 defense white paper. An absence of exceptional revenues would cause the financial shortfall, the report said. The white paper is being updated, with the revised version to be published in 2012.

Thursday, September 22, 2011

Germany 2012 Defense Spend to rise to EUR 31.7B (+133M)

BERLIN - German defense spending would rise to 31.7 billion euros ($44.5 billion), up 133 million euros, under a 306 billion-euro 2012 federal budget presented to Parliament on Sept. 7.
Thomas de Maizière said during the parliamentary debate Sept. 7 that the budget would shrink to 30.4 billion euros by 2015.
Personnel costs in 2012 would account for about 10.3 billion euros, less than one-third of the total and down nearly 1.7 billion from this year.
The budget includes 200 million euros to help recruit service members into a military that suspended conscription in July, de Maizière said.
"Germany needs combat-ready and serviceable armed forces, which in quality of equipment and training match the international significance and weight of our country," he said.
The secretary said he has reviewed ongoing procurement programs and will talk to industry, potentially to renegotiate existing contracts.
The 2012 budget contains 1.08 billion euros for Germany's current nine operations abroad, up 30 percent from this year's.
Now the accordant committees of the parliament and the Bundesrat, the parliament's upper house, will discuss the 2012 budget and case final ballots in December.

Finland 2012 Defense Budget Cut $130M

HELSINKI - Finland's Armed Force's Command (AFC) has proposed making significant cuts in peacetime strength and wartime mobilization levels, with defense chief Gen. Ari Puheloinen warning that low defense spending has forced the AFC to abandon plans to establish a Home Guard.
Proposals include reducing the length of military service as a cost-saving measure, rotating reservists out of forces earmarked for frontline service at a younger age, and reducing military exercises, training and refresher courses for reservists.
"These cutbacks will be necessary if we are to adapt to the level of funding in the future, and protect our defense capability," Puheloinen said.
The proposals are intended to accommodate a likely $130 million cut in its budget for 2012. Spending on defense in 2011 will run to $4.2 billion.
The AFC's cost-savings proposal includes the closure of some military bases by 2013. This will be done as part of the ongoing National Defense Reform Program, which will also see the introduction of a more centralized leadership structure and the discontinuation of the existing four Provincial Command military districts.
These measures will also force the AFC to reduce the number of professional soldiers across all ranks and will also lead to the layoff of administrative civilian personnel in the military.

$6.82B for Sweden Defense in 2012

Sweden's Ministry of Defense (MoD) has told the military chiefs to pursue greater economic efficiencies within all core military areas while Defense Minister Sten Tolgfors also announced a defense budget increase next year of $37.4 million. The increase will be largely generated by reducing funding to defense support areas such as research-and-development programs.
"We are adding an important increase to the military's budget for core operating activities, while savings will be made by buying more combat-ready weapons from abroad," Tolgfors said. The 2012 budget plan includes a provision to spend $1.36 billion on equipment and facilities procurement, the minister said.
Under the 2012 budget plan, the Swedish armed forces will receive core funding of $6 billion. This includes the $37.4 million increase. Moreover, a further $835 million has been allocated to defense support functions and services, including military intelligence, the State Defense Export Agency and crisis management planning. This brings the total 2012 defense budget to $6.82 billion.
The 2012 budget will provide more funding for training and exercises with a focus on international missions and deployment, as well as additional monies to core military units under the ongoing Military Reform Program.
The goal is to create practical, available modular combat units, complete with air and naval support if necessary, that can be mobilized and deployed at short notice.
The budget increase happens against a backdrop where the Swedish government is forecasting the country's GDP will decline from 4.8 percent in the current year to 1.5 percent in 2012.
Furthermore, the surplus in Sweden's public finances will be wiped out next year because of a downturn in exports, the general global economy and capital investment. Defense is one of the few areas that will see an actual increase spending in 2012.

Thursday, July 21, 2011

Slovakia to get rid of tanks

BRATISLAVA - Slovakia's National Security Council has agreed to Ministry of Defense proposals for a new Strategic Defense Review (SDR) that calls on the armed forces to retire their remaining tank fleet. Under the outlines of the SDR, the Slovak armed forces will retain their fleet of MiG-29 jet fighters but suspend use of the T-72 main battle tank. The Slovak Army has 245 of these tanks in its inventory, which were manufactured between 1984 and 1989.
Three models have been proposed for the future Slovak armed forces under the SDR. One would see the defense budget stabilized at 1.5 percent of GDP in order to maintain the armed forces in their current 21,000-strong state. Another would lock the annual defense appropriation at the equivalent of 1.1 percent of GDP, with either the Air Force or Army sacrificing troops to bring the total size of the armed forces down to 16,000. The final proposal calls for continual decreases in defense spending - an untenable proposition for the armed forces, as they already spend 86 percent of their annual appropriation on personnel, leaving equipment to atrophy to the point of obsolescence.
The MoD proposals are to be submitted to the government Cabinet for approval. Slovakia's 2011 defense budget of EUR740 million ($1.04 billion) is roughly equal to 1.2 percent of GDP.

Czech Defense BUdget proposed at CZK 41.5B ($2.38B) - down 5.3%

NEWTOWN, Conn. - The Czech Republic faces further defense spending reductions as a sluggish economic recovery and the austerity measures of a center-right government combine to place pressure on the armed forces. Defense Minister Alexandr Vondra is warning that further cuts to defense imperil the armed forces, which have seen overall spending drop by CZK12 billion ($689 million), or 20 percent, over the past two years.
The Czech Finance Ministry continues to see defense as an area ripe for savings. It has proposed slicing some CZK2.3 billion ($132 million) from the defense budget in 2012, bringing it down to CZK41.5 billion ($2.38 billion). If such a proposal follows through, the level of Czech investment toward defense would plummet from the current 1.15 percent of GDP to below 1.0 percent. The center-right coalition government of Petr Necas seeks to halve the country's budget deficit by 2013; as part of its plan to do this, defense allocations were to be reduced to 1.03 percent of GDP by that year. The Finance Ministry - aware of the corruption inside the Defense Ministry in the past - seems eager to expedite the government's austerity push, which is intended to put the Czech Republic on a path toward accession into the euro-currency zone.
Defense, meanwhile, is fighting a rearguard action against further cuts, arguing that soldiers are leaving the ranks due to the lack of the most basic needs and the imposition of taxes on their retirement pensions and housing allowances. Defense Minister Vondra has pledged to maintain soldiers' salaries, sparing them from budgetary cutbacks. But by doing so, he merely increases the percentage of monies allocated toward personnel rather than equipment modernization programs. Due to the austerity measures, the military is already ceasing operation of 12 Mi-24/35 and four W-3A Sokol helicopters, as well as one Canadair Challenger 601 VIP aircraft. Also, missile troops are being stood down.
Despite having pledged to meet the NATO minimum standard level of investment - 2 percent of annual GDP allocated toward defense - upon its entry into the Alliance in 1999, the Czech Republic is falling farther and further away from its obligations. Like its former partner, Slovakia, the Czech Republic is in danger of becoming a net dependent upon the Alliance for security, rather than a contributor.
Rallying public support for the military is not an option as, in the case of many European nations, matters of defense generally stoke indifference in the population-at-large - unless related to wasteful spending practices. Government support for defense carries with it political implications, too. Scandals such as mafia involvement in unnecessary and costly construction projects for the Defense Ministry in the 1990s, followed by corrupt procurement practices by a lobby of armaments middlemen, have siphoned away any lingering trust in the competencies and practices inside the Defense Ministry. The overpriced purchase of 107 Pandur II 8x8 wheeled armored personnel carriers represents just the latest in a series of politicized controversial procurement efforts by the Czech Defense Ministry.
While still needing to replace much of its Soviet- and Warsaw Pact-legacy hardware, the Czech military continues to face cutbacks to personnel, bases, and procurement programs, all of which expose the Army of the Czech Republic's goal of achieving full operational capability by 2012 to delays. The military is expected to stop purchasing some spare parts and services, and to buy less ammunition and defense equipment. The withdrawal of the last remaining troops deployed to Kosovo and the gradual drawdown of forces in Afghanistan starting next year may help to alleviate some of the fiscal pressures on defense, but the reality is an atrophying military on life support.
Perhaps now would be the time for the Czech Republic and Slovakia to examine some of the cooperative practices undertaken by the Scandinavian nations under the Nordic Defense Cooperation concept. Shared production and procurement of ammunition and other munitions, joint officer training, pooled maintenance facilities - all of these offer potential areas of cooperation. For the respective defense ministries of the two countries, finding efficiencies during a time of austerity is the best bet for salvaging what remains of their withering armies.

Monday, July 11, 2011

Philippines Defense budget for 2012: $2.55B

Philippine President Benigno S. Aquino III has approved the proposed 1.82 trillion pesos (41.85 billion U.S. dollars) national budget for 2012, a senior government official said on Thursday.
The proposed budget is 10.4 percent higher than the current year's, which reflects his commitment to fulfill his "social contract" with Filipinos, according to Budget Secretary Florencio Abad.
"This is a budget that is focused on achieving results: that the dividends of good governance reach the poor in a direct, immediate and substantial way," he said.
The proposed budget is focused on the five key result areas of the Social Contract: anti-corruption and good governance, poverty reduction and the empowerment of the poor, inclusive economic growth, just and lasting peace and the rule of law and integrity of the environment.
Abad said over 30 percent of the proposed budget will go to social services -- basic education, public health and the conditional cash transfer program. About 25 percent of the proposed budget will be alloted to the economic services sector to finance infrastructure and other capital outlays for agriculture, tourism and industrial development.
The general public services sector will receive 17.7 percent of the 2012 proposed budget, while the defense sector will receive 6. 1 percent.
To sustain fiscal consolidation efforts, the share of the debt burden on the national budget will decrease to 20.2 percent. A fiscal deficit of 286 billion pesos (6.58 billion U.S. dollars) or 2.6 percent of gross domestic product (GDP) is targeted in 2012.
Aquino will submit the budget to Congress on July 26, a day after de delivers the State of the Nation Address.

S Korea: MND requests 6.6% budget increase, 33.5T Won for 2012

The defense ministry said on Thursday it has requested an increased budget for next year to ensure better combat readiness for the armed forces.

   In a news release, the ministry said it has called for an annual budget of 33.5 trillion won (US$29.1 billion) for 2012, a 6.6-percent increase from the 31.4 trillion won set for 2011.

   According to the ministry, spending on operating troops and maintaining battle capabilities account for most of the increase.

   "Our request was largely focused on building a military that's ready for battle and can win immediately," the ministry's statement said. "We will also try to improve the welfare of our troops and boost their morale, and to keep pushing for defense reform."

   Of the 33.5 trillion won requested, 4.3 trillion won has been earmarked for fortifying the western islands to better shield them from potential North Korean provocations by bringing in the latest weaponry and improving guard posts. Last month, the military launched a new defense command to protect the five frontline islands.

   Another 3.5 trillion has been set aside to improve the welfare of troops. The ministry said it plans to expand vaccination coverage for new trainees, to open new medical facilities and to improve medical equipment across units. Barracks for conscripted soldiers and off-base living quarters for officers will also be gradually improved.

   The ministry allocated 1.9 trillion won to help avoid a potential security void in 2015, when South Korea takes over wartime operational control of its troops from the U.S.

   "To prepare for the transfer of the wartime control, we will strengthen the command and control structure," the ministry said. "We will also help with the construction of the war game center."

   The U.S. has held wartime command of South Korean troops since the beginning of the 1950-53 Korean War, which ended in an armistice, not a peace treaty. Seoul regained peacetime control of its military in 1994.

   About 28,500 U.S. troops are stationed here as a deterrent against the North. When wartime operational control is handed over in 2015, the South's military will take charge with support from U.S. troops.

   The ministry said more than 3.4 trillion won has been allocated to aid policy decisions as part of defense reform. It said the moves will include opening up new commands or reorganizing existing ones, and increasing spending on defense research and development.

   A set of defense reform bills was approved by the Cabinet in May and was sent to the National Assembly for approval. The reform plans center on ensuring a more efficient command structure and giving the chairman of the Joint Chiefs of Staff more authority to control the Army, the Navy and the Air Force.

   President Lee Myung-bak has asked for the parliament's cooperation in approving the reform bills. Defense reform has been a top policy goal for Lee, especially after the military's botched response to North Korea's two deadly attacks last year.

Wednesday, June 15, 2011

Bulgaria budget up 300M leva in 2011

Bulgaria may team up with Turkey, Romania and Croatia in buyng modern jet fighters. “If the relevant authorities reach consensus we may share the new fighters and have common training bases for pilots and technical personnel,” PM Boyko Borisov commented. Yesterday, the PM arrived in the Black Sea city of Varna together with NATO Secretary General Anders Fogh Rasmussen where they will attend the conference of the Alliance. Before the discussions started the two statesmen had a tete-a-tete for over one hour. During the meeting the NATO top official extended his thanks to Sofia for the Bulgarian participation in the NATO missions in Afghanistan and Libya. According to Rasmussen the NATO potential should be used more efficiently and interoperability of the member countries should be enhanced. He gave as an example of good cooperation the purchase of three C-17 by NATO countries that will be used jointly. He recommended that similar projects should be implemented in other spheres, too.    
PM Boyko Borissov pointed out that in spite of the crisis last year the government has allotted 300M leva more for the defense budget. In his words currently Bulgaria is working with Romania, Croatia and Turkey on joint projects.
Regarding the anti-missile shield PM Borissov stated categorically his support for dislocating elements of the system in Bulgaria. “Our only requirement is the system to protect the entire territory of Bulgaria. From that point on – in which countries what part and what elements to be dislocated depends entirely on NATO technical and strategic decisions,” PM Borissov underlined. 
PM Borissov appealed to NATO saying it should carefully consider Bulgaria's position regarding the situation in Libya. As of next week Sofia will take part in a contact group which takes political decisions connected with the military operation in Libya.
"My request is that the stand of Bulgaria's Foreign Minister be carefully listened to by the members of the contact group as Bulgaria has had the possibility to hold negotiations with Libya and know well part of the opposition in Libya which is presently in Benghazi," PM Borissov stated on the last day of the sitting of the NATO Parliamentary Assembly held in the Black Sea city of Varna, northeastern Bulgaria.
PM Borissov expressed his regret that the actions against Gaddafi had come late pointing that Libya held Bulgarian medics as hostages for many years before the eyes of the international community.

Slovak Defense Minister Warns of Military Collapse Unless Funding Increases

Slovakia's defense minister, Lubomir Galko, recently warned that unless defense funding receives increased attention, the Slovak armed forces will begin to break down within a few years. Slovakia has underfunded its military for years, and with a year-old center-right government under Prime Minister Iveta Radicova implementing an austerity diet, the likelihood that an uptick in defense spending will be forthcoming is close to zero.
Successive Slovak governments have viewed defense funding as an afterthought, from the center-right Dzurinda government which promised to meet an annual level of 1.85 percent of GDP for defense under its Model 2015 (or Long-Term Development Plan 2015) defense modernization effort to the populist, leftist Fico government, which saw defense as an area to trim in favor of social welfare programs. The Model 2015 plan has since crawled to a standstill and the Slovak armed forces are now in a state of atrophy.
Defense Minister Galko informed the Slovak National Council (parliament) on March 24, 2011, that because of the limited level of funding they have received, the armed forces are now funded on an 86:14 personnel/modernization basis. That ratio, he warned, will widen to 90:10 in 2012 unless the slide of the defense budget is reversed.
Still, defense funding has slipped by nearly 10 percent in 2011, from EUR820 million last year to EUR740 million ($1.199 billion). Some 70 percent of the military equipment used by ground forces has reached the end of its operating life. If it is not modernized or replaced with new matériel, 90 percent of the ground forces' military equipment will be obsolescent by 2014. Moreover, in order to merely maintain the Slovak armed forces in the depleted shape they are in, Galko contends, the government would have to fund defense at a level of 1.56 percent of GDP - far below the 2 percent required of NATO Alliance members.

Friday, March 4, 2011

Ukraine cuts troop levels

NEWTOWN, Conn. - Following through with plans announced in July 2010, the Ukrainian Ministry of Defense reported on March 2 that the size of the armed forces will be reduced from 200,000 down to 192,000 by the end of 2011.
Plans call for the armed forces to be gradually reduced by 20 percent by 2015. The final goal is for a force of 150,000-160,000. The total personnel count of 200,000 comprises160,000 military personnel and 40,000 civilians. According to Ukrainian Defense Minister Mykhaylo Yezhel, of the 192,000 that will remain at the end of 2011, 144,000 will be military personnel.
The cuts are part of the military's reorganization strategy which also calls for defense spending to grow significantly in the coming years. In the short term, the MoD expects spending to increase by 15-20 percent by 2015, while long-term spending will to climb to $4.2 billion by 2023. Currently, the defense budget totals around $1.1 billion, with an additional $584 million available from a special fund.

Singapore Ups Defense Budget 5.4% for 2011

SINGAPORE - Singapore, which has one of Asia's best-equipped militaries, has raised its national defense budget by 5.4 percent this year, according to government data released Feb. 18.
The government plans to spend S$12.08 billion ($9.5 billion) on defense in the 2011 fiscal year, up from S$11.46 billion the year before.
Singapore's navy, army and air force will get S$11.53 billion to buy and maintain military equipment, for the upkeep of camps and for payment of salaries.
The city-state currently has a population of more than 5 million, a quarter of whom are foreigners.
Singapore's economy grew 14.5 percent in 2010, the fastest in Asia. The defense budget is about 5 percent of gross domestic product.

Tuesday, March 1, 2011

India 2011-12 Defense Budget up 8.4%

India has allocated $44.4 billion to defense for the fiscal year beginning April 1, up by 8.4% from the current fiscal year.
Of this, defense services will receive $35.74 billion, which includes capital procurement of $15 billion, an increase of 13.75% over this year.
India’s defense spending will represent about 2.72% of the country’s GDP ­— up from last year’s 2.41% — as figured in the budget announced Feb. 28. However, the budget falls short of reaching at least the 3% of the GDP that many were expecting. Investment in the sector also has lagged as a result of limited foreign direct investment in Indian defense ventures, which remains capped at 26%.
With an increased emphasis on homeland security following the Mumbai terrorist attacks of November 2008, budgets have steadily increased for police and paramilitary forces performing border and coastal surveillance. The allocation for homeland security is $10.17 billion, up from $8.75 billion this year. “There is no limit to the homeland security budget. Whatever is asked for, it is given,” an official said a few months ago.
“The total defense budget accounts for about 13.07% of the total central government expenditure,” says Nidhi Goyal, Deloitte’s director in India. “If the scope of national defense is enlarged to [include] national security, it would include expenses for civil defense, security aspects of the department of space, expenditurse of the ministry of home affairs, [and] research and development, which account for about 21.03% of [the] total government budget.”
Total defense services spending in India from 2001-11 has been increasing by a nominal compound average growth rate of 11.37% per year, Goyal adds.

Thursday, February 17, 2011

Brazil cuts 2011 budget 6.5%

Brazilian Defense Minister Nelson Jobim announced today (15/02) the probable size of the cut in the defense budget for 2011. In all, must contingence R 4.024 billion reals (approx. $2.41 billion), which corresponds to a decrease of 26.5% compared to the 15.165 billion reals earmarked for the defense portfolio in the Annual Budget Law (LOA).

The cut will occur in the discretionary portion of the Ministry’s budget, which includes operating expenditures and maintenance projects of the Armed Forces and other defense-related agencies. This was originally budgeted at 10.292 billion reals. The 4.873 billion difference between the discretionary balance and the Ministry’s total budget refers to the amount set in the budget law that cannot be reduced, such as spending on airspace control.

The announcement of the budget cut was made after Jobim’s meeting this afternoon with the Ministers of Finance, Guido Mantega, and Planning, Miriam Belchior. The minister did not specify which projects will be affected by the budget reduction, but said that the measure will impact the advancement of ongoing activities in most fields related to the Ministry portfolio, some of which may be frozen altogether.

Jobim avoided commenting on the size of the budget cut, which he attributed to the current situation of the economy. "It depends on the outcome of the economy, on economic conditions," he said.

In the coming days, the minister and his staff will review the consequences of the funding cut on the projects of the Armed Forces. The idea is to review the new budget, after the new cuts, to reconcile the needs of central government, of the Armed Forces Command and of defense related agencies such as the National Civil Aviation Agency (ANAC).

FX-2

Jobim said the budget cut will not necessarily impact the decision due this year on the FX-2 project, which calls for the purchase of new combat aircraft and a related technology package for the Air Force.

A report on the issue, which states the Defense Ministry’s position, has been delivered by Jobim to incoming President Dilma Roussef, who will take the final decision on the purchase after consulting the National Defense Council (NDC).

According to the minister, even if the President decides this year, the financial and budgetary effects of the aircraft purchase will only be felt in the budgets for 2012 or 2013. Jobim has reiterated that, after the selection of the winning competitor, negotiations on the purchase, including preparation of the related contracts, should last about a year, as happened with the submarines purchased under the navy’s Prosub project.

Jobim recalled that the decision of the President of the Republic will follow a legal process which includes the submission of the selected proposal to the NDC. It is only after the Council has evaluated on the proposal, and the subsequent decision by the President, that negotiations will begin between representatives of the Brazilian government and the company chosen by this process.

Monday, January 3, 2011

Large Hike in Russia defense spending for 2011

The Russian government confirmed a massive hike in defense spending in a bid to make its Cold War-era forces leaner and meaner. Russia will spend $63 billion, or roughly one-fifth of its overall budget, on national security and defense in 2011, Defensenews.com cited Russian Finance Minister Alexei Kudrin as saying at a meeting Monday with Prime Minister Vladimir Putin.
The figure is much higher than the previously announced $49 billion and a sharp increase from the $42 billion Russia is to spend on defense and security this year. Around $15 billion will go directly into arms purchases, Russia's Vedomosti newspaper reports.
Russia's Deputy Prime Minister Sergei Ivanov recently said that Russia plans to spend as much as $730 billion during the next decade to modernize the weaponry used by its armed forces and other armed government-paid forces.
Observers say much of the money will go into innovative military research and the structural reform of the armed forces, with Moscow planning to radically the cut the number of officers and overall troops to create a more modern and mobile force.
In a bid to allocate that money efficiently, Russian President Dmitry Medvedev reportedly wants to create an agency modeled after the U.S. Defense Advanced Research Projects Agency. A direct response to the launch of the Soviet Sputnik satellite, DARPA was launched in 1958 to coordinate and push technological modernization of the U.S. defense portfolio. It reports directly to senior Department of Defense management.
"I think our country also needs an effective organization to work on placing orders for breakthrough research and development in the interests of our defense and security, including promising new research that in some cases can be very risky," Medvedev was quoted as saying by the RBC Daily in September.
Eager to completely overhaul the Russian armed forces and to replace its Soviet-era equipment, the Kremlin has in the past voiced its frustration with the domestic industry. Arguing that some of the Russian-made products aren't up to date, Moscow has urged firms to step up their product portfolio and internal procedures to become more competitive.
Russian Defense Minister Anatoly Serdyukov said last month Russia might have to buy weapons abroad and could even purchase equipment from its former Cold War foe United States.
Russia is locked in negotiations with France over one or several Mistral class helicopter carriers with the price tag for one vessel reportedly at $380 million.
It has to be noted, however, that Russia still is one of the world's most successful arms exporters, with Russian-made tanks and helicopters among the best-sold products.
The costly overhaul of the Russian military comes as forces in Europe face severe budget cuts because of the recession.