UKRAINE. 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.

Defence allocations

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 made.

                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 billion.

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.

Future plans

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 programs.

                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.

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