Military Procurement International Vol. 19, No. 9, May 1, 2009
Copyright DAPSS S.A., 2009, Switzerland. It is unlawful to reproduce any of this publication without written permission from the publisher.
Click here to go to the previous page
The dramatic downturn in the global economic situation has left its mark on all
aspects of government spending here. The defence sector has been particularly
badly affected, with several key modernisation and restructuring plans now being
forced onto the backburner.
With its sensitive geographic location
bordering Russia, maintaining a strong military posture has been seen as a vital
element of the government's long-term defence strategy. It has been looking
towards NATO for closer ties, while keeping a watchful eye on the predictable
negative Russian reactions.
Defence Minister Yuri
Ekhanurov has warned that the massive shortfalls in defence funding being
proposed will make it very difficult for the armed forces to meet all its
national and international obligations in an effective manner. He noted that he
had not seen such "depressing funding figures" for defence since the
country gained its independence in 1991.
The Ministry of Defence (MoD) has been
told that its allocations for Fiscal Year 2009 will amount to
Hryvna (UAH) 11.65 billion (approximately US$1.45 billion). This total
represents just under 0.9 per cent of the country's predicted gross domestic
product for FY2009.
Analysts note, however, that
the FY2009 budget is actually more than was finally provided in FY2008 to this
sector. For comparison purposes, the FY2008 total was around UAH 9.9 billion,
but this amount represented nearly 1.1 per cent of the GDP for that year.
Ekhanurov had originally put in a
request for a defence spending plan totalling some UAH 32.4 billion (around
US$4.1 billion) for FY2009. With only around one-third of this amount now being
offered to the MoD, some ruthless cuts in the spending plans will need to be
It is understood that the
MoD expects to collect around UAH 3.65 billion from the sale of surplus military
equipment and real estate. Analysts point out that this actually means that only
UAH 8 billion will, in fact, be provided directly from the government's coffers.
In FY2008, such sales brought in approximately UAH 2.5 billion, while the
government officially provided the balance of around UAH 7.4 billion.
Although the government has
normally placed some importance on military cooperation with other countries,
funding for this function has been reduced by two-thirds. The MoD had originally
requested around UAH 3.8 billion for this but was allocated only some UAH 1.3
It is thus possible that some military
cooperation programs may now have to be postponed or cancelled. In spite of the
funding constraints, however, defence
officials have been quick to stress that all currently planned deployments of
Ukrainian peacekeeping forces abroad will be maintained.
Upon being informed of his reduced
defence budget, Ekhanurov strongly voiced his concern about the future of the
armed forces. Since nearly two-thirds of his original funding request appears to
have been rejected, he warned that the MoD will need to shed a significant
number of jobs, with personnel both at headquarters and in the field having to
be let go.
It is clear that both the
strength and the effectiveness of the armed forces are going to be affected by
the funding shortfall. According to the MoD, the immediate consequences of the
diminished budget will become apparent as operational units are deployed
overseas as part of multinational missions.
It is anticipated that the
number of combat ready units will gradually be reduced by half. Moreover, their
combat effectiveness will start coming into question as the level of technical
capabilities decrease as a result of a slowdown in modernisation and upgrade
With limited resources, the
introduction of high-tech equipment into the forces will now be undertaken in a
highly selective and priority-based manner. With a forced reduction in manpower,
a new problem likely to be faced will be a shortage of qualified personnel to
operate new state-of-the-art equipment.
The inventories of all three services need to be modernised. Much of the hardware dates back to the Soviet era and either must be scrapped, refurbished and upgraded, or replaced by newer and more advanced variants.
Click here to go to the previous page