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The fall in defense spending attested by the figures

(BRUSSELS2, 2011 report) The downward trend in defense budgets is not an illusion. According to the latest data, produced by the European Defense Agency (Defence Data 2010), expenditure is decreasing regularly: 209 billion in 2006, 206 in 2007, 203 in 2008, 198 in 2009 and 194 in 2010. A drop of approximately 2% each year (between 1,4% and 2,5%). This while GDP has increased (except in 2009, falling by 4,2%) and public spending (all sectors combined) has also increased regularly (especially in 2008 and 2009, the years of the start of the crisis). And this decline should not stop in 2011 and 2012.

Defense represents an expenditure of 390 euros per inhabitant in 2010 (for an average income of 24.280 euros). However, it should be noted that this decline, rather than a clear disinterest of Europeans in defense, is also the translation of a (slow) transformation of European armies: fewer men, rather better paid and more equipped. This transformation is, however, very slow, and relatively late, to reverse European delay. Also notable: we still note a low propensity for spending on research, or even a decrease. Which is rather worrying.

Almost 20% fewer staff in 5 years

If we examine the distribution of these expenses (excluding inflation this time), we can see that this drop is largely attributable to staff: expenses have fallen by more than 10% in 5 years: from 110 billion in 2006 to 98,65 billion in 2010, in two-year increments (106 and 107 billion in 2007 and 2008; 98 billion in 2009 and 2010). Personnel therefore represent only 51% of military expenditure compared to 55% five years earlier.

If we look at the figures for the armies, this drop is even more significant: while they employed nearly 2,5 million people in the EU in 2006 (2,425 exactly, including 1,94 million military personnel), this figure had fallen barely 2 million in 2010 (including 1,62 million military personnel). Or 17% drop. If we look at the share of civilians and military personnel, we see that the ratio remains approximately the same between 2006 (20% civilians) and 2010 (19,4%): there is always 1 civilian for every 4 military personnel.

This almost double difference between the drop in military spending and the drop in personnel can be explained, in our opinion, by professionalization, the revaluation of certain salaries as well as departure bonuses. The expenditure per soldier thus tends to increase: from 101.622 euros per year per soldier in 2006 to 119.455 euros per year in 2010. To this must be added a share of equipment which increases from approximately 20.000 euros in 2006 to approximately 26.500 euros in 2010. , or a third increase.

Commitment to research still weak

Investment spending (equipment, R&D) tends to increase, but very slowly: from 38 billion in 2006 to nearly 42 billion in 2010. They represent 22% of spending today, growing by around 1 point each year. (except in 2009). This figure should not be misleading, however. It is mainly equipment expenditure which is increasing, while research & development expenditure tends to decrease: from 9,67 billion euros in 2006 to 8,56 billion in 2010. Which is too low to catch up with the technological gap.

Operations and maintenance expenses, after experiencing a peak in 2007 (+4 billion to 47 billion) are relatively stable, around 44 billion euros. They represent 23% of expenses. Other expenses represent 4%.

Outsourcing is progressing slowly.

Outsourcing has increased by one point in five years, and now accounts for almost 8% of spending compared to 7% of spending five years earlier. In volume terms, this represents 2010 billion euros in 15,4 compared to 14,1 billion in 2006.

Equipment purchases remain essentially national.

National purchases still concern more than 3/4 quarter of the budget: 76,6% in 2010 compared to 77,1% in 2006. Defense contracts awarded jointly at European level increased slightly, from 6 billion euros in 2006 to 7,5 billion in 2010, or 22% of equipment expenditure compared to 20% five years earlier. It is the non-European joint contracts which are rather decreasing. After experiencing an increase in 2008 and 2009 (to 1 billion euros), they fell to less than 0,5 billion in 2010 (compared to 0,59 billion in 2006), or 1,4% of investment expenditure ( compared to 2% five years earlier and 3% during the 2008-2009 peak). It is still too early to assess the impact of the European “public procurement” directive; but it should undoubtedly accelerate a trend which still remains in the minority.

(*) Based on figures adjusted for inflation.

Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).

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