In recent months there has
been considerable controversy surrounding military
spending figures in Spain. This subject is especially relevant taking in
account the new loan from the Government of Spain for €877
million to continue covering the costs of the arms industry. Based on the 12th report from the Centre d'Estudis per a la Pau JM Delàs
(Peace Research Centre) by Pere Ortega and Camino Simarro
I will make a brief description of what military spending means for the Spanish
economy.
The Spanish military industry is a creation of General Franco through the now extinct INI (Instituto Nacional de Industria) in the early 1940s. It was a way to create a Spanish defence industry. But it has led to something different, very burdensome for the Spanish economy and very beneficial for a few private pockets (and closely related to the people who were in power when Franco created the invention). First we have to understand how the Spanish military industry is structured. It is an oligopoly (4 companies have everything under control). They are:
- EADS (formerly CASA), dedicated to aircraft and helicopters
- Navantia (formerly Empresa Nacional Bazán) devoted to warships
- General Dynamics GDSB (formerly Empresa Nacional Santa Barbara), dedicated to vehicles, armour and land-based weaponry
- Indra, brought into the oligopoly in order to develop the modernization and automation of the three armies' weapons systems
Other companies in the arms industry work for any of these four. And Indra for the other three.
Upon Jose Maria Aznar's arrival in government in 1996, a Special Weapons Programme was launched. They consisted of strong support for the expansion of the Spanish arms industry, almost always borne by the State Budget. But make no mistake. The left-wing governments of PM J. L. Rodríguez Zapatero, did nothing to change this situation. The idea of imperial Spain is well established among the elite that rules Spain.
But the economic performance of this industry is absolutely disastrous. Between 2000 and 2009 EADS earnings were €137.54 million (if we deduct subsidies it would be another story: only in 2008-2010 subsidies totalling €391m were extended). In the period 2000-2009 General Dynamics lost directly €58.26m. But the prize goes to Navantia, with direct losses of no less than €3.371bn in the period 2000-2009. Indra is the healthiest, with profits of €1.089bn in the period 2010-2009.
The Spanish defence budget stands, officially, at somewhere between €7bn and € 8bn. But some tricks are employed to hide true military expenditure. One is to assign military R&D to the Ministry of Industry and not to Defence as military spending. That would be about €1.5bn per year, on average. This way, the truth is that the "official" Defence budget is closer to €8bn-€9bn per year. There's more, like not considering the costs of "peacekeeping missions" and others. Unofficial estimates put the actual military spending in Spain around €16bn per year, i.e. €50 million daily. It's tough seeing people suffer cuts in their lives, with the onslaught of the economic situation, and then see how the money is spent this way. The "official" €8bn to €9bn already means something in the order of €25 million daily in military spending. Clearly an excess, at least for a country like Spain.
But the worst news in this article is yet to come. Because these figures are almost nothing compared to the €33bn plus the Spanish state has pledged in military spending through to 2025. Made even worse by the huge extras beyond the initial figure of €21.66bn, i.e. a 53% budget overrun. Nothing new for Brand Spain. Let's look at each industry:
Company Initial Cost FinalCost
EADS 12,973 22,125
Navantia 4,369 6,044
GDSB 3,502 4,236
Other 811 858
The Spanish military industry is a creation of General Franco through the now extinct INI (Instituto Nacional de Industria) in the early 1940s. It was a way to create a Spanish defence industry. But it has led to something different, very burdensome for the Spanish economy and very beneficial for a few private pockets (and closely related to the people who were in power when Franco created the invention). First we have to understand how the Spanish military industry is structured. It is an oligopoly (4 companies have everything under control). They are:
- EADS (formerly CASA), dedicated to aircraft and helicopters
- Navantia (formerly Empresa Nacional Bazán) devoted to warships
- General Dynamics GDSB (formerly Empresa Nacional Santa Barbara), dedicated to vehicles, armour and land-based weaponry
- Indra, brought into the oligopoly in order to develop the modernization and automation of the three armies' weapons systems
Other companies in the arms industry work for any of these four. And Indra for the other three.
Upon Jose Maria Aznar's arrival in government in 1996, a Special Weapons Programme was launched. They consisted of strong support for the expansion of the Spanish arms industry, almost always borne by the State Budget. But make no mistake. The left-wing governments of PM J. L. Rodríguez Zapatero, did nothing to change this situation. The idea of imperial Spain is well established among the elite that rules Spain.
But the economic performance of this industry is absolutely disastrous. Between 2000 and 2009 EADS earnings were €137.54 million (if we deduct subsidies it would be another story: only in 2008-2010 subsidies totalling €391m were extended). In the period 2000-2009 General Dynamics lost directly €58.26m. But the prize goes to Navantia, with direct losses of no less than €3.371bn in the period 2000-2009. Indra is the healthiest, with profits of €1.089bn in the period 2010-2009.
The Spanish defence budget stands, officially, at somewhere between €7bn and € 8bn. But some tricks are employed to hide true military expenditure. One is to assign military R&D to the Ministry of Industry and not to Defence as military spending. That would be about €1.5bn per year, on average. This way, the truth is that the "official" Defence budget is closer to €8bn-€9bn per year. There's more, like not considering the costs of "peacekeeping missions" and others. Unofficial estimates put the actual military spending in Spain around €16bn per year, i.e. €50 million daily. It's tough seeing people suffer cuts in their lives, with the onslaught of the economic situation, and then see how the money is spent this way. The "official" €8bn to €9bn already means something in the order of €25 million daily in military spending. Clearly an excess, at least for a country like Spain.
But the worst news in this article is yet to come. Because these figures are almost nothing compared to the €33bn plus the Spanish state has pledged in military spending through to 2025. Made even worse by the huge extras beyond the initial figure of €21.66bn, i.e. a 53% budget overrun. Nothing new for Brand Spain. Let's look at each industry:
Company Initial Cost FinalCost
EADS 12,973 22,125
Navantia 4,369 6,044
GDSB 3,502 4,236
Other 811 858
Main
Military programs 1996-2025
(figures in million €) |
|||
Units
|
Program
|
Unit
Cost
|
Total
Cost
|
87
|
Aircraft EF-2000
|
134,7
|
11.718
|
27
|
Aircraft A-400M
|
203,4
|
5.493
|
45
|
Helicopter NH-90
|
54,7
|
2.463
|
239
|
Tank Leopard
|
10,0
|
2.399
|
4
|
Submarine S-80
|
553,0
|
2.212
|
4
|
Warship F-100
|
452,5
|
1.810
|
24
|
Helicopter Tiger
|
65,8
|
1.580
|
212
|
Armoured vehiclePizarro
|
4,0
|
845
|
1
|
Warship F-105
|
834,0
|
834
|
4
|
Warship BAM
|
122,0
|
488
|
1
|
Warship BPE
|
462,0
|
462
|
Satellite system
|
377
|
||
2600
|
Missile antitank Skipe
|
0,1
|
355
|
770
|
Missile Iris T
|
0,4
|
291
|
4
|
B BAC
|
59,5
|
238
|
13
|
Aircraft C-295
|
15,8
|
205
|
70
|
Mortar155 mm
|
2,9
|
200
|
Maintenance
Aircraft EF-2000
|
150
|
||
5
|
Aircraft
AV-8B
|
29,6
|
148
|
220
|
Armoured vehicle LMV Lince
|
0,7
|
143
|
84
|
Armoured vehicleCentauro
|
1,6
|
135
|
5
|
Aircraft P-3 Orion
|
21,6
|
108
|
232
|
Missile Meteor
|
0,4
|
104
|
Helicopter UME
|
80
|
||
40
|
Torpedoes
|
1,9
|
76
|
4
|
Radar systems
|
17,3
|
69
|
21
|
Armoured vehicle Piraña
III
|
3,2
|
68
|
Nodes CIS (communic)
|
61
|
||
43
|
Missile Taurus
|
1,4
|
60
|
120
|
Missile Sparrow
|
0,4
|
51
|
1
|
Hydroplane UME
|
40,0
|
40
|
An absolute excess. An A-400M Aircraft costs
€203m.
Two aircraft like these would cover the annual budget of the Caritas charity
organisation in Spain, and how many people does Caritas help every year? Tens
of thousands! And what about the submarine S-80, at a cost of €553m
each. How many hospitals, schools and welfare services could be run with that
money! And on top there is a design flaw and the submarines are not able to
float, so they have to spend even more money on redesigning them! The culture
of shoddy Spanish workmanship? Is Spain figuring on starting World War III all
on its own?
In terms of employment figures in Catalonia, these are laughable. Of the nearly 29,000 estimated jobs in the Spanish military industry in 2009, 300 persons are estimated to work in Catalonia. A ridiculous 1.05% of the total.
If we look at the turnover of the Spanish defence industry (€6.53bn in 2009), Catalonia's share is another paltry figure: 0.43% (€28.43m). Clearly the Spanish arms business does not have Catalonia as a priority (for generation of wealth, because on the other hand the Spanish Tax Authority has not ceased collecting the taxes that bear these costs). Considering the industrial power of Catalonia, it is very hard to understand this meagreness. Valencia or the Balearic Islands do not fare any better. An industry built and based on ethnic and territorial criteria (Madrid, Andalusia, Galicia and Murcia are the main poles).
This military expenditure thus represents:
* 1.1% of industrial employment in Spain
* 1.24% of Spanish industrial production
* arms exports account for 0.6% of total Spanish exports
Such a poor result cannot justify such a substantial cost borne by the Spanish economy in Defence spending, especially in these times of severe financial difficulties and debt (90% of GDP). It is noteworthy that in many cases there isn't even enough to go round for the maintenance on all this newly acquired equipment. So it's all money squandered, down the drain.
The Secretary of State for Defence, Constantino Mendez, was very eloquent (especially coming from a person in his position) in his speech to the Spanish Congress on October 6, 2011: "We should not have acquired defence systems that we will not use, for war and confrontation scenarios that do not exist, with money that we didn't have before and we don't have now "
How long will Spain continue putting taxpayers' money to waste on outdated imperial projects? The Catalans have a clear view on that. So we want to decide our future and get away from this kind of irrational public resource management.
In terms of employment figures in Catalonia, these are laughable. Of the nearly 29,000 estimated jobs in the Spanish military industry in 2009, 300 persons are estimated to work in Catalonia. A ridiculous 1.05% of the total.
If we look at the turnover of the Spanish defence industry (€6.53bn in 2009), Catalonia's share is another paltry figure: 0.43% (€28.43m). Clearly the Spanish arms business does not have Catalonia as a priority (for generation of wealth, because on the other hand the Spanish Tax Authority has not ceased collecting the taxes that bear these costs). Considering the industrial power of Catalonia, it is very hard to understand this meagreness. Valencia or the Balearic Islands do not fare any better. An industry built and based on ethnic and territorial criteria (Madrid, Andalusia, Galicia and Murcia are the main poles).
This military expenditure thus represents:
* 1.1% of industrial employment in Spain
* 1.24% of Spanish industrial production
* arms exports account for 0.6% of total Spanish exports
Such a poor result cannot justify such a substantial cost borne by the Spanish economy in Defence spending, especially in these times of severe financial difficulties and debt (90% of GDP). It is noteworthy that in many cases there isn't even enough to go round for the maintenance on all this newly acquired equipment. So it's all money squandered, down the drain.
The Secretary of State for Defence, Constantino Mendez, was very eloquent (especially coming from a person in his position) in his speech to the Spanish Congress on October 6, 2011: "We should not have acquired defence systems that we will not use, for war and confrontation scenarios that do not exist, with money that we didn't have before and we don't have now "
How long will Spain continue putting taxpayers' money to waste on outdated imperial projects? The Catalans have a clear view on that. So we want to decide our future and get away from this kind of irrational public resource management.
Alex Furest
Economist
0 comentaris:
Publica un comentari a l'entrada