Will the Fiscal Crisis Break Italy’s Military?

by Riccardo Cursi

Most foreign observers understand the prime imperative of the Italian government of Mario Monti to be turning the course of the Italian fiscal ship—and rightfully so. The future of the Euro still seems to hang in the balance, contingent on decisions made in southern Europe. But this “moment of truth” extends beyond economic questions: Italy’s military, after years of tight budgets and overseas deployments, is approaching a breaking point. If the Monti government, with its new minister of defense, does not commit itself to resourcing properly its armed forces, Italy risks resigning itself to a marginal role in world affairs.

At the center of the storm stands new Italian Minister of Defense Admiral Giampaolo Di Paola, a former Chairman of NATO’s Military Committee. Economic and fiscal clouds aside, there is some reason for hope. Leaders matter, and the new Italian Minister of Defense has a track record that suggests he can think strategically and represent Italy’s men and women in uniform effectively. Having had planning and command responsibility for the participation of the Italian armed forces in operations conducted in Afghanistan, Iraq, the Balkans, the Mediterranean, Pakistan, and Lebanon, the new Minister has a considerable knowledge of what Italian troops need to uphold their country’s international commitments. Di Paola also oversaw the 2005 Defense Strategic Concept as Chief of Defense Staff at the Italian Ministry of Defense, a forward-leaning document that called for a diverse set of skills, flexibility in their use and the capability to exploit emerging technologies.

Still, Di Paola faces significant structural challenges, namely in the level and disbursement of defense budgets. Italian defense spending, already proportionally lower in historical terms than those of its European allies, has been dropping even further in the last few years because of the budget constraints imposed by the economic crisis. The budget of the Ministry for fiscal year 2011, which covers expenditures  for the Army, the Navy, and the Air Force (“Defense Function”) as well as those of the Carabinieri, Italy’s gendarmerie force (“Territorial Security Function”), was approximately €20.5 billion ($27.8 billion), or 1.283% of Italian GDP. This is an amount that threatens Italy’s ability to maintain the current level of commitment to NATO, EU and UN missions and puts at stake its most ambitious procurement projects.

Secondly, the distribution of the funds allocated to defense purposes in the Ministry of Defense’s budget is increasingly unbalanced. The share of personnel costs rose from 46.4% in 2001 to 65.9% in 2011. To the contrary, investments—i.e. procurement and acquisitions—decreased from 25.5% to 24% in the same period, with a nadir of 12.5% in 2006. Costs for training, operations and maintenance were the most penalized during the decade, plummeting from 28.1% to 10%. These numbers confirm that budget reductions have been concentrated by Italian policy-makers on future programs and on the readiness of Italian armed forces, while larger cuts in personnel spending have been avoided as a matter of domestic politics. Recently adopted austerity budgets will produce a further cut of €1.45 billion ($1.89 billion) in 2012. As reported by Defense News, if this cut is concentrated in investments as past experience suggests it may be, it would result in a 28% drop of this part of the budget and necessitate a serious review of all procurement programs.

Indications are that Di Paola hopes to avoid this deep cut to investment spending. During his first hearing at the Joint Defense Commissions of the Italian Chamber of Deputies and Senate on 1 December, Admiral Di Paola stated his intention to tackle the issue of the Italian armed forces’ personnel. The current structure, he pointed out, is no longer financially sustainable and he is open to a downsizing of it. Although in the 2005 Strategic Concept he had established the objective of a professional force of 190,000, a further reduction seems necessary if the Italian military is to maintain necessary levels of material quality and overall effectiveness—down to about 140,000/150,000 troops, according to press speculations. However, such a decision will result in challenging and politically difficult trade-offs. On the one hand, the reduction of volunteers—in 2012 only 9,000 will be enlisted, down from a previous estimate of 12,000—will likely rise the average age of deployed troops. On the other hand, a cut of high- and medium-rank officers would be costly in political terms.

In short, for Di Paola, the Italian bureaucracy and the economic winds sweeping Europe may be tougher opponents than even the ones he faced in the Balkans or in the Middle East.

(photo courtesy of Ministero della Difesa)