The Weekly Wire: For Your Situational Awareness 3.8.19

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Two Key Australian Ministry of Defense Officials Resign

Aaron Lin, Senior Market Analyst

In the middle of the Avalon 2019 Aerospace & Defense Exposition in Australia, two key Australian defense officials resigned. Minister for Defense Industry Steven Ciobo announced his resignation, and Minister of Defense Christopher Pyne announced that he would not contest his seat in Parliament in the upcoming May elections. The two ministers’ announcements were the latest in a string of Coalition MP resignations. Both Ciobo and Pyne are members of the governing Liberal-National Coalition, an alliance of three center-right political parties. Despite the ministers’ denials, most see these departures as driven by intensifying Coalition infighting and diminishing public support for the Coalition overall. This infighting culminated in the ousting of former Prime Minister Malcolm Turnbull by fellow Coalition MPs. His ouster, Scott Morrison, has not fared well with his administration becoming the first sitting government in nearly 90 years to lose a vote on its own substantive legislation. Australians go to the ballot boxes in a federal election this upcoming May where the opposition Labor Party appears to have an edge in the polls, and minor parties appear to be taking votes away from both Labor and the Coalition. Should the Labor Party win the May election, Australia will have its sixth Prime Minister in 10 years (seven if you count Kevin Rudd’s two non-consecutive terms).

For defense policy, the Labor Party may evoke memories of the large defense spending cuts in 2012 and 2013 under Julia Gillard. In that period, the defense budget was cut by over A$2 billion (USD $1.6 billion at 2019 rates). Former PM Turnbull famously said that those cuts had brought defense spending as a share of GDP to its lowest level since 1938, though some of that is explained better by changes in Australia’s GDP. But similar cuts are unlikely under a Labor government after the May elections. The political situation was different for Gillard, who had promised a balanced budget in 2012-13. Such promises are not being made this election. In fact, the Labor Party has committed to the goals laid out in the 2016 Defense White Paper, including raising defense spending to 2% of GDP by 2021. Bill Shorten, leader of the Labor Party, reiterated that commitment to defense, specifically noting the development of a domestic defense industry as a focus. Large defense spending projects such as LAND 400 Phase 2 and the Attack-class submarines are generating a significant amount of jobs and are catalysts for high-tech development. Australian states have viciously fought each other to bring defense jobs to their own territories. Despite the many differences between the parties, additional jobs will always have multi-partisan support.

In short, barring some catastrophic event, Australian defense spending will most likely continue to grow steadily, roughly along the lines set out by the 2016 Defense White Paper and Integrated Investment Program. This is regardless of who is in control of the Australian government after the May elections.

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US

In its upcoming 2020 budget request, the Pentagon will be requesting six fewer F-35s than the 84 projected in last year’s budget, and it will likely lead to significant debates in Congress during upcoming budget sessions. The most significant of these is the degree to which the US Air Force (USAF) procurement of F-35As has been affected by the $1.1 billion purchase of eight F-15X fighters from Boeing, a directive from the Office of the Secretary of Defense (OSD) ostensibly at the request of the Air National Guard. The request has come under scrutiny from many due to the acting Secretary of Defense Patrick Shanahan’s previous position as a Boeing executive. However, unnamed officials have stated that the Air Force “still plans to buy all 48 jets in fiscal 2020 that it had originally sought.” Whether this reflects budgeted USAF plans or its messaging strategy is uncertain.

Meanwhile, the potential reduction of six jets from the 36 F-35B and C variants ordered by the US Navy and Marine Corps would be symptomatic of what is becoming a notably clear budget strategy from the Navy in the 2020 budget. Under pressure from OSD and the White House to cut outyear expenses, the Navy has pursued a high-risk, high-reward strategy of cutting several high visibility programs in order to meet budgetary goals with the hope that Congress will make their request whole during the appropriations process. However, such a strategy, whether it is cuts to the LPD program or the cancellation of the refueling of the USS Truman carrier, are generally seen as a low-risk strategy due to their individual political and industrial base implications, and thus are an effective end-around strategy in a year where the budget plan will be wrought with political landmines.

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Poland

On March 1, the Polish Ministry of National Defense (MoND) announced its 2017-2026 Technical Modernization Plan, in which the government plans on spending PLN 185 billion (USD 48.6 billion) over ten years to modernize the armed forces. PLN 21.3 billion (USD 5.6 billion) was already spent during 2017 and 2018, leaving PLN 127.7 billion (USD 33.6 billion) remaining. For 2019, the MoND plans to spend PLN 11 billon (USD 2.8 billion) to modernize its army, eventually spending PLN 30.8 billion (USD 8 billion) by 2026. This funding will be largely focused on the acquisition of new platforms including 32 fifth-generation fighters under the Harpia program, Narew short-range air-defense program, and Kruk combat helicopter program to name a few. The announcement of this plan has been two years in the making, which is why the title of the modernization plan includes 2017. The two-year delay was largely due to the ousting of Defense Minister Antoni Macierewicz who was replaced by Mariusz Blaszczak. As an interim solution, the MoND released a Strategic Defense Review before the full Technical Modernization plan could be published. In addition to the weapons acquisition, the MoND will also invest PLN 3 billion (USD 788 million) into cyber capabilities which began at the end of December 2018.

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Germany

On February 28, the German Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support released a draft tender for a planned acquisition of 44-60 new heavy-lift helicopters. The purchase is expected to be worth $6.4 billion, with a final contract award being announced in 2021. Additionally, the new helicopters are expected to be fielded from 2023-2031. Germany needs to procure new heavy life helicopters in order to replace its aging fleet of CH-53G rotorcraft. At present, the top contenders for the contract are the CH-53K and the CH-47, but no final selection has been made yet.

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India

This week, India is expected to sign a $3 billion deal with Russia for a ten-year lease on a used nuclear-attack submarine. This would be the third Russian SSN—named the INS Chakra—operated by the Indian Navy. The original Chakra was operated on a three-year lease finalized in the late 1980s. The second Russian vessel, also the INS Chakra, was inducted in 2012, although it is currently undergoing repairs after a 2017 accident damaged the sonar dome and two hulls. Delivery for the third Chakra is planned for the mid-2020s. The deal, if it goes through, highlights the continued close defense ties between New Delhi and Moscow, despite India’s shift to Western defense firms in recent years.

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UK

On March 5, the UK announced that GBP 66 million ($87 million) will be spent on deploying robotic systems with British Army units deployed in Afghanistan, Iraq, and Estonia by the end of 2019. The funding will enable technology demonstrated during Exercise Autonomous Warrior in 2018 to be fielded. The three areas identified by the Ministry of Defence are the procurement of new mini-UAVs, remote control capabilities for armored fighting vehicles (AFV), and autonomous logistics vehicles able to provide resupply to the frontline.

It has been reported that the unmanned air surveillance system will be a UAV weighing less than 200g while being able to provide surveillance over a wide area. This suggests that the system will be larger than the Black Hornet Nano UAV, which is also being reintroduced to the British Army through a separate initiative. GBP 31 million ($41 million) is to be committed to the procurement of the unmanned air surveillance system, accounting for just under half of the figure announced.

Around 70 products were tested during the month-long Army Warfighting Experiment with over 45 companies taking part. While details of which technology will be procured have not been released, the fact that remote capabilities for AFVs was stated suggests that the Marionette remote control kit, supplied by Digital Concepts Engineering could be selected. The system was successfully demonstrated on the UK’s Warrior Infantry Fighting Vehicle. Examples of unmanned logistics capability tested during the exercise includes the Hippo-X Light Tactical Mobility Platform provided by Hippo Multi-power and the TITAN unmanned ground vehicle developed through a partnership between QinetiQ and Milrem. The announced GBP 66 million funding underlines the UK’s commitment to not only test, but to field innovative technology in an initiative driven by both the Defense Secretary Gavin Williamson and the Chief of the General Staff Sir Mark Carleton-Smith.

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