The Italian air force is being forced to borrow L1,000 billion ($598 million) from its research and development budget for the next 15 years to top up funds to buy the Eurofighter 2000.
The funding mechanism has come to light in the 1999 defence budget released by the Italian Government. The Eurofighter money will be loaned from the treasury and repaid from the service's research and development budget over the next 15 years.
The Italian air force is due to receive a total of 121 Eurofighters. The first batch of 29 aircraft is already on order.
Overall, the Italian Government has allocated L30.834 billion for 1999 - a 2%reduction after inflation from the 1998 figure of L30.987 billion. The defence ministry had requested L32.1 billion, of which the air force was allocated L5.735 billion - compared with L6.528 billion in 1998.
Only L4,630 billion has been set aside for procurement - 21.6% of total defence spending.
With limited scope for the ministry to cut air force pay and pensions or reduce training and operations budgets, the focus is on procurement and research to achieve the savings.
Part of the government's answer to the problem is to pull together a "loan" to the ministry of defence, which will pay back the initial capital and interest over 15 years - a total of almost L1,500 billion.
Despite the continuing squeeze on defence spending, some aviation programmes have received funds for 1999. Principle among these are:a Panavia Tornado strike aircraft upgrade costing L262 billion;
funding of L325 billion for the purchase of Lockheed Martin C-130Js and the upgrade of C-130Hs;
L274 billion towards procurement of 16 EH-101 helicopters for the Italian navy;
provision of L106 billion towards the launch of the SICRAL communications satellite next year.
The air force is now undergoing a major reorganisation, including personnel and squadron cutbacks and a new command structure. Air defence will be cut from eight to five squadrons, tactical forces will be reduced with the disbanding of one Tornado squadron and one AMX squadron, and the long-term target for the transport fleet is to have just two large units.
In addition, the number of maritime patrol aircraft is set to fall to 12-14 from the 18 Dassault Breuget Atlantic 1s now operated.
The 1999 budget also includes L4 billion towards a study for a replacement for the Atlantics. The air force has 64,000 personnel, but is expected to lose 4,000 people by the year 2001.
Source: Flight International