The Italian financial act for 2003, currently being prepared by the government, proposes slashing the defence budget by €500 million ($492 million), according to sources in Rome.

The plan reduces defence spending to €13.5 billion, or 1.05% of gross national product (GNP), down from 1.06% this year. Two months ago the government set a goal of fixing the defence budget at 1.5% GNP by 2006.

The defence investment requirement for next year stipulated by defence minister Antonio Martinois €3.45 billion, but the financial act is expected to provide only €2.95 billion, compared with this year's €3.16billion.

Martino has also asked for €300 million "special funding" to finance ongoing multi-year programmes, in particular the Eurofighter, which appears likely to be particularly hard-hit by the proposed cuts. Italy ordered 29 Eurofighters in the first production batch, deliveries of which are due to start this year. Any Italian cuts to the programme would have a negative impact on Alenia Aeronautica and FiatAvio, the Italian airframe and engine partners respectively, as national workshare is based on each country's production offtake.

Martino says the Italian government will be able to grant the funding shortfall in some way, possibly by plundering other departments' budgets. This method has been used previously, with around €300 million being provided this year to the Eurofighter programme.

Italy's difficulty in funding its portion of the Eurofighter programme raises doubts about the ability to progress with the research and development elements of the Tranche 2 and 3 fighters.

Source: Flight International