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GERMANY: RÜHE FINDS FUNDS FOR EUROFIGHTER
by Karl SchwarzThe new four-nation European fighter EF2000 has now cleared another hurdle after the German cabinet made its decision to earmark necessary funds in the 1998 defence budget. Still, it was a laborious birth: only after serious haggling and several "top level" talks did Defence Minister Volker Rühe and Finance Minister Theo Waigel agree on the financing of the Eurofighter. However, what was decided by the federal cabinet on July 11 is just half the solution. Negotiations concerning an early pay-back of Airbus launch aid from Dasa are not completed, and a full procurement paper for duscussion in the Bundestag is still missing.
As a result of the agreement, Rühe must now find the necessary (for 1998) DM850 million for EF2000 in his own defence budget, which is not overwhelmingly high anyway (DM 46,675 billion for 1998). Although the midterm finance planning shows an increase of this budget to 48,6 billion Marks by 2001, the funds needed to finance the fighter will increase as well: DM 1,18 billion are earmarked for 1999, DM 1,35 billion for 2000 and DM 1,59 billion for 2001.
The squeezing out of other vital defence programmes, as expected by many experts, seems to be inevitable. The outcry of Army and Navy officials will be accordingly. According to Rühe, the operational group transport vehicle of the Navy will be the first sacrifice, which will be delayed at least. But, the Air Force will have to live with cuts also. Wishes, such as the procurement of additional A310 transports, will drop way down on the list.
So it is not sure that this cabinet decision for the Euro fighter will generate an increased flow of funds for the German aerospace industry. Sill, Dasa and the German Aerospace Industry Association are acknowledging the cabinet decision, saying that "the decision of the government is the decisive signal not only for the German but, also for European aerospace and its future competitiveness." Indeed, the partners in Great Britain, Italy, and Spain will take the news with great relief.
Nevertheless, the industry does not see reason for overwhelming joy. Along with the above mentioned negotiations concerning the pay-back of Airbus funds, it is not clear how the 200 million Marks will be accounted for, which Dasa has already invested into the production-preparation in trust of a positive decision.
The program must take another big hurdle in the fall of this year. After the summer break, the parliament will talk about the Eurofighter. Defence Minister Rühe plans to have the procurement bill ready in time, which will include all relevant data, including numbers, prices and dates for the procurement of 180 aircraft, each costing approximately DM 125 million. It is not sure if the parliament will agree on this bill. Critics about the project are not only be heard from the opposition but also in the governing coalition.
However, a failure of the program to pass the parliamentary talks in the fall of this year would be fatal. Even if the other nations would continue the project, the schedule would be severely shaken. The timing for the first deliveries in 2001 is already tight. The new government contracts can be signed by the earliest in November of this year.
From page 55 of FLUG REVUE 9/97
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