Projects that may be hit by European defence cuts

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With governments across Europe planning to slash tens of billions of euros from their defence budgets, major projects are under scrutiny for possible cancellations or cuts.

Following are some of the military projects that could be affected, defence analysts say:

BRITAIN

The Ministry of Defence says all hardware programmes are under review as part of an effort to reduce its 36.9 billion pound ($56.7 billion) budget by what analysts say could be up to 15 percent,reports Reuters. Programmes under scrutiny include:
— Eurofighter Typhoon combat jets, made by Britain’s BAE Systems together with Italy’s Finmeccanica and European aerospace group EADS.

Britain has ordered 160 of the 70-million-pound planes, but analysts say it may scrap plans to buy an additional 48.
— Britain has already cut its order for the delayed and over-budget EADS-built A400M transport plane to 22 from an original 25. The project will be part of its defence review, but most analysts believe the bulk of orders will be maintained as Britain urgently needs to update its costly and ageing transport fleet to support overseas operations.
— Orders for Lockheed Martin Corp’s F-35 Joint Strike Fighter could be vulnerable. British firms involved in its development include BAE and Rolls Royce.
— Britain could opt to have just one new aircraft carrier, instead of the planned two, in a project involving BAE, Babcock International and Thales. However, contracts have already been placed for 40 percent of the cost of the equipment and materials needed for the ships.

Another option would be to reduce the number of Joint Strike Fighters for the carriers.

Some analysts say that in a radical shift, Britain might opt to buy cheaper French Rafale fighters built by Dassault, perhaps as part of a deal with France on a British air-to-air refueling project. However, the Rafale competes fiercely with Eurofighter. Another alternative to the JSF would be an upgrade of Britain’s Harrier fleet.

Analysts say the Netherlands, Italy and Norway will also look at trimming Joint Strike Fighter orders.
— The British government could opt to reduce its nuclear-armed Trident submarine fleet to three from four, or to extend the life of the current fleet.
— Britain will also have to decide whether to order more armoured vehicles from General Dynamics, after signing a 500-million-pound contract for an initial tranche.

GERMANY

The German Defence Ministry is looking to save up to 9.3 billion euros ($11.9 billion) on procurement projects when it finalises defence cuts this autumn.
— A preliminary report has recommended big cuts in orders for the NH90 transport helicopter and the Tiger combat helicopter manufactured by EADS. Germany has complained about delays and performance problems with both helicopters.
— Germany may also abandon the purchase of the last partial tranche of 37 Eurofighters or resell the planes, and abandon the purchase of the Franco-German-Spanish Talarion EADS drone.

The military is considering reducing its order of 60 A400M planes to 53, negotiators say. However, this and the British cut to 22 planes are designed as mechanisms to fund an agreed price increase in the seven-country plane without putting up new money, and neither move would result in actual cash savings.

Germany may go along with recommendations to stick to plans to buy the MEADS missile defence system as a successor to its Patriot system. Consortium members are Lockheed Martin and EADS, BAE Systems and Finmeccanica.

FRANCE, ITALY

The two countries have decided to buy fewer Fremm Multipurpose Frigates designed by DCNS/Armaris and Fincantieri.

Builders are French state-controlled shipyard DCNS, which is one-quarter owned by defence electronics group Thales and in Italy by Orizzonte Sistemi Navali, a joint venture of shipbuilder Fincantieri and Finmeccanica.

According to a source close to the issue, France plans 3.5 billion euros of savings on its defence budget in 2011-2013. However, the source said the cuts would not affect large contracts or those involving Rafale planes, Fremm frigates, VBCI armoured vehicles, Barracuda submarines, Felin infantry combat systems or France’s programme for the A400M.

NATO

Doubts have been raised about the future of NATO’s biggest joint procurement scheme, the 1.3-billion-euro Alliance Ground Surveillance drone project, after Denmark became the latest of several countries to pull out.



U.S. firm Northrop Grumman ISS International (NOC.N) is the main contractor for the 14-nation project, with the German arm of EADS, Italy’s Galileo Avionica — a unit of Finmeccanica — and the Canadian arm of General Dynamics also involved.