The Weekly Wire: For Your Situational Awareness 1/10/20

 In Weekly Wire

The US Navy’s Hard Fiscal Choices to Bring Budget Showdown

Hamilton Cook, Research Associate

As the release of the FY2021 US Presidential Budget Request approaches, one of the largest budget debates will see Congress, the Office of Management and Budget (OMB), and the Department of the Navy face off around the future structure and composition of the Navy itself. A recent OMB memo to the Navy detailed the service’s plans for significant cuts to the force structure and ship procurement in order to address readiness shortfalls, despite the National Defense Authorization Act’s previous requirement that the Navy plan for a battle fleet of 355 vessels.

From the Navy’s perspective, these cuts address a readiness crisis that has been highlighted by the accidents of the USS McCain and USS Fitzgerald, whose crews were understaffed and undertrained, in addition to ongoing maintenance problems with the vessels. Without necessary defense budget growth to address serious maintenance issues, the Navy chose to free up additional budget by cutting the production of five Arleigh Burke class destroyers; slowing the procurement of the Virginia class submarines and the new Future Frigate dubbed FFG(X); cancelling some of the service life extensions for the Ticonderoga class cruisers; and retiring four Ticonderogas, four Littoral Combat Ships (LCS), and three dock landing ships.

The list of proposed early retirements is not surprising. The four LCS (Freedom, Independence, Ft. Worth, and Coronado) had already been downgraded to non-deployable test ships in the wake of extensive propulsion issues. Meanwhile, the potential early retirement of Ticonderoga-class cruisers in the 2020s has been a topic of debate for several years, as Congress and the Navy have attempted to devise a strategy that balances keeping some of the Ticonderogas in service, largely because of the 122 vertical launch systems the Ticonderogas possess, while potentially retiring others to be used as spares. The Navy’s concerns about the survivability of older amphibious ships in high-intensity conflicts is driving the early retirement of the dock landing ships, likely several of the Whidbey Island-class.
The proposed cuts to the Arleigh Burke class destroyers came as a surprise, given that the destroyers are generally seen as the backbone of the US battle fleet. The reduction of a single Block V Virginia class submarine is likely driven by changes in the Block V contract that was signed in November 2019, which only included the purchase of nine Block Vs (along with an option for one more) instead of the planned 11. Finally, the slowing the initial purchases of FFG(X) in 2021 and 2022, from two to one per year, may be a case of realism on behalf of Navy planners after recent program ramp struggles impacted the Arleigh Burke class restart, and continues to plague the Virginia class submarines.

Overall, this plan will meet stiff resistance from the White House but will face even more debate from several key congressional delegations. The reinforcement of the US military has been one of the signature policies of the Trump Administration, with the 355-ship battle force being the outlined goal for the service. The Trump Administration will likely be concerned about the perceived economic impacts such cuts may have. This will be particularly true for the Maine delegation given the significant exposure of Bath Iron Works to the cuts in Arleigh Burke class production, but will also include the Virginia and Mississippi delegations due to the impact on Huntington Ingalls.

It will be interesting to see what will emerge from Congressional hearings during this year’s budget cycle. When the Navy attempted a similar tactic last year centered on cuts to the amphibious fleet, Congress chose to overrule the service’s recommendations in order to fund a new Amphibious Assault Ship, Landing Platform Dock, and Expeditionary Fast Transport. Despite the outcome, one thing is certain: The Navy is increasingly concerned about its ability to fund operations in the 2020s.


On January 7, the Atlantic Council held a town hall conversation with Prime Minister Kyriakos Mitsotakis of Greece, discussing the last six months of his tenure and what the prime minister hopes to achieve during his time in Washington. During the conversation, Prime Minister Mitsotakis gave an optimistic outlook on Greece’s economy for 2020, anticipating a growth rate of 3 percent with the goal of increasing the growth rate to 4 percent by 2023. Additionally, the prime minister is pushing for investment into Greece to reach EUR 100 billion by 2023, reassuring the US in particular that Greece has finally reached economic stability and is open for business. A key item on his agenda this week is renegotiating Greece’s fiscal target of 3.5 percent of GDP surplus set forth by the International Monetary Fund as a result of the austerity measures implemented during the country’s financial crisis. Prime Minister Mitsotakis touched briefly on defense, calling out the country’s F-16 upgrade program to the F-16V variant which is expected to conclude by 2027. The prime minister also emphasized Greece’s interest in joining the F-35 program, claiming it was a top priority for him. Several news sources during 2019 reported on the Hellenic Armed Forces’ interest in procuring up to 30 F-35s to eventually replace its F-16 fleet, but costly F-16 upgrades, in addition to other purchases and a lackluster defense budget, make an F-35 purchase very unlikely in the near term. As for regional concerns, Turkey remains the biggest priority for the Greek government. Prime Minister Mitsotakis remarked that as both are NATO allies, Turkey’s provocations toward Greece are “unacceptable,” and its aggressive behavior in the region should be addressed.


The Indonesian Navy appears to be moving forward with plans to locally build new frigates and offshore patrol vessels (OPV), following a statement by Deputy Defense Minister Sakti Wahyu Trenggono. Trengono’s statement called for two frigates and two OPVs. New frigates for the Indonesian Navy (TNI AL) to replace the aging Ahmad Yani-class frigates have been expected for years. The Ahmad Yani-class vessels in service today were first launched in the late 1960s. The OPVs will represent a somewhat new capability for the Navy. Most of the Navy’s patrol boats are small and under 1,000 tons in displacement. This generally means less endurance and operations that hug the coastline. The Indonesian Maritime Security Agency has actually been ahead of the Navy in OPV procurement, with four undergoing sea trials last year. The need for more patrol vessels was brought into focus after a Chinese Coast Guard vessel entered Indonesia’s exclusive economic zone (EEZ) in late December, leading to Indonesia summoning the Chinese ambassador in Jakarta. Chinese fishing fleets have repeatedly fished in Indonesia’s EEZ, often accompanied by Chinese Coast Guard vessels. Indonesia has been in a difficult position to respond due to extensive economic ties with China, as well as insufficient maritime patrol assets that have been stretched too thin among the Navy, Maritime Security Agency, and the Coast Guard.


On January 7, the Israeli Ministry of Defense awarded Elbit Systems a contract for initial production of the Iron Fist Light Decoupled active protection system. The Iron Fist Light Decoupled system uses radar and infrared sensors to detect incoming threats and provides coverage in both urban and open environments. The contract itself is for new Iron Fist systems to protect Israel’s Eitan armored fighting vehicles and is valued at approximately $31 million.

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