Defence`s Feeds

Cubic Global Defense has secured a five-year contract, worth approximately $80m, from the US Navy to provide operations and maintenance support for the F/A-18 and EA-18G aircraft training simulators.

The UK Royal Navy’s Bay-class auxiliary landing ship dock, RFA Mounts Bay, has assisted a Danish-led maritime operation to remove the last chemical resources stored in Libya.

The Royal Australian Navy (RAN) has conducted first-of-class flight trials of the ScanEagle unmanned aerial vehicle aboard the Adelaide-class guided-missile frigate, HMAS Newcastle.

Indonesia’s defence expenditure is anticipated to grow at a compound annual growth rate of 11.13% during 2016-2021, to reach $11.94bn by 2021, according to a report by Strategic Defence Intelligence (SDI).

will take place on Monday 5 September, 15:00-18:30 in room Paul-Henri Spaak 5B001 in Brussels. Please note that item 4 and 6 have been swapped (item 4: draft report by Mr Pascu on the implementation of the CSDP, item 6: draft report by Mr Paet on the European Defence Union.)

Organisations or interest groups who wish to apply foraccess to the European Parliament will find the relevant information below.

Further information
watch the meeting live
Access rights for interest group representatives
Source : © European Union, 2016 - EP

The NATO Summit in Warsaw was a watershed moment for the Alliance. Yet, deeds, not words, are what really count. Dominik Jankowski argues that on its road from the Summit in Warsaw to the Summit in Brussels in 2017 NATO should embrace five strategic issues.

The post The Alliance on its road from Warsaw to Brussels appeared first on European Geostrategy.

The Afghan government has continued to increase the amount it collects in revenue – by 22 per cent last year and 33 per cent in the first six months of this year. This revenue growth well exceeded expectations and projections. Thirty-seven per cent of the total revenue increase in the first half of 2016 was due to the greater revenue mobilisation efforts of the government and new or higher tax rates imposed in the latter half of last year, as opposed to one-off windfalls or currency depreciation – indicating robust underlying revenue growth estimated at 12.4 per cent. The continuing high revenue growth, however, is not due to any significant improvement in the economy, raising significant issues for the future. AAN Guest authors Bill Byrd and M Khalid Payenda* take a look at the figures and explain what they mean for Afghanistan ahead of the Brussels conference where new pledges of aid to the country are expected.

Afghanistan’s turnaround in revenue in 2015 was impressive and has continued into 2016. In the first half of 2016, revenue rose to nearly Afs 70 billion (just over US $1 billion), an extraordinary 33 per cent increase in nominal local currency terms compared to the same period of last year. (1) Nevertheless, revenue still comprises well under half of total budget expenditure—the lion’s share of spending continues to be financed by aid.

Twenty-six per cent of the revenue increase reflects the estimated impact of the 18 per cent depreciation of the Afghan currency: customs duties on imports and other revenues levied on foreign exchange flows have had their Afghani value increase artificially due to the weakening Afghani. (2) Another 24 per cent consisted of one-time revenue injections from public enterprises (including Afs 2.14 billion in recoveries of lost or stolen Kabul Bank funds and transfers of about Afs 1 billion each from public enterprises under the Ministry of Urban Development and Ministry of Agriculture, Irrigation, and Livestock), which do not represent regular revenue and are not necessarily sustainable. Finally, although they are genuine revenues, the large increases in proceeds from the sale of state-owned land and buildings and from passport fees, accounting for 13 per cent of the total revenue increase, are also unlikely to be sustainable. Indeed, the latter may be a concerning sign of economic weakness and prospective human flight.

The remaining 37 per cent of the total revenue increase can be reasonably attributed to a combination of strong revenue mobilisation efforts and the impact of new taxes and higher rates implemented in the latter part of 2015. Their full impact is being felt this year. These new taxes and rates include, in particular, a doubling of the main rate of the Business Receipts Tax (BRT) from two to four per cent, a new 10 per cent levy on mobile phone top-ups, an increase in overflight charges for using Afghan airspace and new levies (road toll fees) on imported oil and natural gas. In sum, after excluding all of the factors discussed in the previous paragraph, the estimated underlying revenue growth in the first half of the current fiscal year was a robust 12.4 per cent.

Available preliminary data for the first eight months of this fiscal year show continuing rapid revenue growth, with total revenue up by 32.9 per cent, compared to 33.3 per cent in the first six months alone. (3) Revenue growth for the full 2016 fiscal year appears to be on-track to reach well into double digits for the second year in a row.

Revenue collection and the state of the economy

How was this continuing high revenue growth in the first half of 2016 achieved? Not, unfortunately, due to any substantial improvement in the economy; of this, there is no significant sign in the revenue data nor in the macroeconomic indicators. Also worrying, and in contrast to its strong performance in 2015, collection of customs duties has been weak this year, showing virtual stagnation in nominal Afghani terms compared to the first half of 2015. Excluding the impact of currency depreciation, there was an estimated decline of 15.6 per cent in customs duties receipts. The extent to which this is due to lower imports or worsening collection is not yet clear, but preliminary data indicate that the deterioration in customs duties collections has continued in recent months. This is a problem area in an otherwise generally good picture, and needs to be both monitored and addressed in the coming months.

Revenue buoyancy has been most prominently reflected in the categories where new taxes/fees or increased rates were introduced last year. As mentioned earlier, these include, most notably, the doubling of the main Business Receipts Tax (BRT) rate levied on imports, sales, contracts, etc from two to four per cent (with BRT levied on imports comprising the lion’s share of the increased receipts), as well as the new 10 per cent telecommunications service fee, higher overflight charges (raised from $400 to $500 per flight), new road toll fees for imported fuel and natural gas (3 Afghanis per litre of fuel or kilogramme of gas). Taken together, these new or increased revenues accounted for over 40 per cent of the total revenue increase, or more than all of the 12.4 per cent underlying revenue growth in the first half of 2016, ie after the impact of depreciation and other one-time/unsustainable factors was excluded. The strong growth in revenue from these categories more than offset declines in some other categories, such as customs duties.

Income tax collections also increased, primarily due to 16.5 per cent growth in receipts of withholding tax taken from employees’ wages. Receipts from the 10 per cent BRT on selected services also rose by 26 per cent, without any rate increase in this case. In the absence of significant growth in the economy, revenue increases in these two categories most probably reflect intensified collection efforts.

The strong revenue growth in the first half of this year coincided with some other markers of progress, including among others, Afghanistan’s official accession to the World Trade Organization (on 29 July 2016), successful completion of the IMF Staff-Monitored Program (on 13 May 2016), the agreement on and approval of a new three-year IMF program (on 20 July 2016), and achievement of many of the performance benchmarks under the Afghanistan Reconstruction Trust Fund Incentive Program and USAID’s New Development Partnership. In addition, the Afghan government has focused on improving governance, including inter alia the centralisation of major procurement under the new National Procurement Committee and submission of declarations of their assets by 95 per cent of top government officials as called for under Afghanistan’s Constitution.

These developments are setting the stage for the upcoming Brussels international conference on Afghanistan (to be held on 5 October 2016), at which donor countries and international organisations are expected to reaffirm their continuing commitment to support Afghanistan and pledge or indicate civilian aid funding for the country over the next four years. Brussels follows the NATO summit in Warsaw on 9 July 2016, at which a total of around $4.5 billion per year was pledged by donors to support the Afghan national security forces (ANSF) through to 2020.

Despite these achievements, the Afghan economy remains weak, which is not surprising in view of ongoing war and political uncertainty in the country. Real GDP growth in 2015 is currently estimated to have been only 0.8 per cent – significantly lower than earlier estimates. In 2016, economic growth is projected at only two per cent. That is well below the rate of population growth, estimated at around 3 per cent per year, meaning that average per-capita income is continuing to decline. (For economic growth estimates and projections, as well as other macroeconomic data, see the most recent IMF Staff Report) Another sign of economic weakness is the low levels of business investment and new firm registrations, as reported by the Afghanistan Investment Support Agency (AISA). In this regard, there may be a risk that continuing aggressive revenue mobilisation vis-à-vis the relatively small formal sector of the Afghan economy, combined with a tight expenditure policy, could become a drag on economic revival and further weaken incentives for private sector investment. Creative approaches to stimulating at least a modest economic revival are called for.

Civilian versus military aid

Turning to aid prospects, the Warsaw NATO summit was financially successful in mobilising support for the ANSF, but there is a risk that civilian expenditure requirements will be underfunded, at the cost of Afghanistan’s development progress in areas such as infrastructure, education, and health. This would, in particular, be the outcome if the level of total annual civilian aid that has been discussed in some circles – around $3 billion per year – is what materialises in the end. This would be considerably less than the international community committed to at Warsaw in support of the ANSF ($4.5 billion per year), and also well below the international community’s civilian aid pledge at the Tokyo Conference on Afghanistan in 2012 ($4 billion per year). Moreover, it is substantially below current levels of civilian aid disbursements (which have been over $4 billion annually in the past several years). Depending in part on the composition of the aid, $3 billion per year would appear to be insufficient to close Afghanistan’s large structural fiscal gap. If civilian aid pledges turn out to be more than that and reach $4 billion per year, Afghanistan’s economy, development prospects, fiscal picture, and civil-military balance would all benefit.

How aid is channelled and delivered is also very important. Assistance channelled through the Afghan government budget, especially aid that can be flexibly deployed by the government as opposed to aid earmarked for specific projects, in support of effective development programmes and with sound fiduciary controls (which are in place and can be further improved), will achieve more ‘bang for the buck’, in terms of results, as well as in benefiting the Afghan economy, while helping maintain fiscal balance.

From a medium to longer-term perspective, it is clear that Afghanistan will remain heavily aid-dependent for many years to come. Feasible increases in government revenue will not change this picture, though higher revenues will ease fiscal management and avoid fiscal crunches like that seen in late 2014. One factor would turn the economy around like no other. An end to the Taleban insurgency would yield a ‘peace dividend’ for Afghanistan. Even then, aid requirements would not decline rapidly, though the composition of aid could then shift away from security sector expenditures in favour of demobilisation, disarmament, and reintegration of combatants (DDR), reconstruction, and development.

Overall, continuing impressive revenue growth represents a significant achievement, especially in the challenging context of Afghanistan. A key policy issue is how, over time, to expand the tax base in Afghanistan – which currently consists primarily of imports and the very small formal sector – so that revenue would be more buoyant if and when economic growth revives, however modestly. There are concerns over the weak collections of customs duties, the heavy reliance on new levies and rate increases, as opposed to broadening the base of tax collection, and above all, the very weak economy which, among other adverse effects, harms revenue prospects. In any case, it is doubtful that this kind of revenue growth can be sustained over the next five years or decade (which would make a real difference in terms of reducing aid requirements), unless there are major improvements in the overall situation, of the kind that would be brought about by a peace agreement or, at least, a sharp reduction in the level of conflict, as well as greater political stability.

Bill Byrd is a senior expert at the US Institute of Peace. His last publication with AAN was the paper, Economic Management in Afghanistan: What worked, what didn’t, and why? (26 August 2015) M Khalid Payenda is senior adviser to Afghanistan’s Minister of Finance and leads the Macro-Fiscal Performance Department in the Ministry of Finance. The views expressed in this dispatch are the authors’ own.

 

(1) Afghanistan’s fiscal year is approximately 21 December-20 December. The first half of the current 1395 fiscal year ran from 21 December 2015 to 20 June 2016. The figure of nearly Afs 70 billion for total revenue of the first six months excludes a very sizable Afs 10.26 billion transfer from the Central Bank (Da Afghanistan Bank – DAB) to the budget, since this was the result of an increase in the local currency value of foreign exchange inflows due to depreciation and should not be considered revenue (it will be used not to finance expenditures, but rather to shrink the fiscal ‘hole’ resulting from the failure of Kabul Bank).

(2) The average exchange rate depreciated from 58.27 Afs per US dollar in the first half of the previous fiscal year to 68.67 in the first half of the current fiscal year. Import duties and other taxes levied on imports are collected in Afghanis, but since they are calculated as a percentage of the foreign exchange value of the imports concerned, the Afghani value of the customs duties and other taxes levied on imports increases proportionally to the extent of depreciation. In addition, overflight fees for use of Afghan airspace are levied in US dollars.

(3) Both of these figures exclude the Central Bank transfer referred to in footnote 1, so they are comparable.

Americas

• The US Army is planning to make the Joint Light Tactical Vehicle (JLTV) its new Light Reconnaissance Vehicle platform and arm it with a variant of the M230 chain gun found on the AH-64 attack helicopter. Manufacturer Oshkosh won a $6.7 billion contract last fall to build the first 17,000 production models of the JLTV. In total, the Army and Marine Corps plan to buy a total of nearly 55,000 of the combat vehicles, including 49,100 for the Army and 5,500 for the Corps, to replace about a third of the Humvee fleets.

• US lawmakers have called for a freeze on a $1.15 billion arms deal to Saudi Arabia citing concerns regarding the kingdom’s ongoing war against Houthi rebels in Yemen. Signed by 64 members of Congress, a letter was addressed to the Obama Administration asking them to walk back the August 8 approval of the sale, which would include replacing tanks destroyed in the Yemen campaign. The conflict has resulted in the deaths of 3,704 civilians and claims of war crimes have resulted in several Western governments having their Saudi weapons sales scrutinized.

• General Dynamics – Ordnance and Tactical Systems has been awarded a $39 million modification to a foreign military sales contract for various bomb bodies. The deal would see the production of 162 MK82-1 bomb bodies; 7,245 MK82-6 bomb bodies; and 9,664 MK84-10 bomb bodies for the governments of Saudi Arabia, United Arab Emirates, France, and Iraq. Completion is expected for December 2017.

Europe

• General Atomic has lodged a protest with the German government over their plan to lease armed Heron UAVs for surveillance missions. The lawsuit is expected to result in significant delays to the UAV’s delivery. GA’s complaint has stemmed from Berlin’s decision to drop their MQ-1 Predator B drones in favor of the Heron lease to service the country’s surveillance needs until the development of a collaborative EU drone, due for 2025.

• Ukroboronprom has confirmed that the indigenous Horlytsia unmanned aircraft system is ready for delivery to the Ukrainian armed forces in 2018 pending funding allocations from the government. The company’s deputy director Yuriy Paschenko told Interfax that “Works are being carried out within six months. As of today, the creation of the airframe has been completed. Before the end of 2016, we must complete the creation of the development type, complete all the research and development under the project in 2017, as well as the state tests, resulting in the adoption of the weapons.”

• A Swiss F/A-18C pilot missing since Monday has been found dead. The crash occurred in the Alps during a routine training exercise. Authorities are still investigating the cause of the crash, the third by a Swiss Air Force F/A 18 in the past three years.

Asia Pacific

• Raytheon and Lockheed Martin’s Javelin Joint Venture team has inked a letter of intent with India’s Tata Power Company to explore development of the Javelin missile under the Make in India initiative. The venture would see the collaboration also create a strategy to co-develop and produce the Javelin system while integrating platform mounts to meet Indian requirements. Fielded by the US Army and the US Marine Corps, the missile system has been approved for 15 foreign military sales customers.

• Following their failure to secure a $40 billion contract to sell submarines to Australia, Mitsubishi Heavy Industries (MHI) is discussing the possibility of developing an armored vehicle with an undisclosed US company. If given the go ahead, it will mark the first time a Japanese firm builds arms for a foreign customer. While new territory for the company, potential foreign partners could be attracted by their armored vehicle technology, notably heavy-duty tank engines, gear technology, and water jet propulsion systems that could be used to drive amphibious vehicles.

Today’s Video

60 Years of the KC-135 Stratotanker:

Raytheon and the US Naval Undersea Warfare Center (NUWC) - Division Newport have successfully upgraded the US Navy’s AN/AQS-20A mine-hunting sonar to better identify and classify mines.

The US Navy’s Independence-class littoral combat ship USS Coronado (LCS-4) is returning to Pearl Harbor after encountering an 'engineering casualty' during an independent deployment to the Western Pacific.

Cubic Global Defense has been contracted by the US Naval Air Warfare Centre (NAWC) to support aviation training for the US Navy and the US Marine Corps (USMC).

More than 1,000 personnel from 21 countries and organisations as well as non-European observers participated in the multinational Counter Improvised Explosive Devices (C-IED) exercise Bison Counter 2016 (BC16). The exercise was hosted by the Swedish Armed Forces and the Swedish Göta Engineers Regiment from 15 to 27 August 2016. It was the first time the EDA’s Joint Deployable Exploitation and Analysis Laboratory (JDEAL) was successfully integrated into a multinational exercise. A Visitors Day with the participation of high-level guests from participating countries and organisations was organised on 26 August. 

The main aim of the exercise was to evaluate the full C-IED concept from the first responders’ perspective until delivery of C-IED related intelligence production, so as to tackle all C-IED work strands. A large number of different C-IED enablers ranging from Military Search, Military Working Dogs, Explosives Ordnance Disposal (EOD) and Improvised Explosive Devices Disposal (IEDD), EOD divers, Chemical Biological Radiological Nuclear and explosives (CBRNe) experts, Military Engineers and Weapon Intelligence Teams (WIT) from land, maritime and air domains took part in the exercise. 

One of the key elements of the exercise was to practice the hand over process of responsibilities and duties in C-IED operations such as route clearance to EOD operators to WIT teams and the transfer of collected samples to the JDEAL. The exercise scenario foresaw training such processes in high threat environments and between multinational units. 

The inclusion of the Joint Deployable Exploitation and Analysis Laboratory (JDEAL) marks the first time the laboratory deployed in its full operational mode. It was successfully integrated in the exercise chain of command. The laboratory was manned by around 30 JDEAL permanent staff, non-permanent staff, observers and trainees leading to the processing and exploitation of more than 50 cases which ranged from car bomb exploitation to cell phones and electronic media data recovery. 

The results of the exercise will now be thoroughly analysed however initial feedback from participants was very positive, highlighting especially the benefits obtained on a tactical and operational level. 

The first Bison Counter exercise took place in The Netherlands in 2013. Building on this experience, the EDA’s C-IED Project Team decided to institutionalise Bison Counter as a bi-annual C-IED dedicated activity under the umbrella of the EDA. The next exercise is scheduled for 2018. 

Copyright picture: Jimmy Croona/Swedish Armed Forces

More information:

• Bison Counter 2016 information on the website of the Swedish Armed Forces
• C-IED project page
• JDEAL project page

The Katanpää Class mine countermeasure vessels (MVMVs) are built by the Italian shipyard, Intermarine, for the Finnish Navy.

Following approval by the EU Member States in July, 14 military projects on SESAR deployment will receive a total of € 53.5 million in EU funding under the 2015’s call for proposals of the Connecting Europe Facility (CEF) published by the Innovation and Networks Executive Agency (INEA-call). This represents around 10% of total funds awarded to the related SESAR clusters. In its role of military coordinator for SESAR deployment, the European Defence Agency (EDA) had supported Member States to identify and prepare bids for this call.

In preparation of the INEA-call, around 100 projects were identified in close cooperation with Member States, NATO and Eurocontrol. Early 2016 over 20 key military projects were submitted to INEA through the EDA ranging from ground systems, to air platforms and also specific studies. This is the first time, the military benefits of financial instruments previously not at reach.

The next stage for the funded stakeholders, including the military, will be the formalisation of this award decision, turning it into the Specific Grant Agreements required under the SESAR Framework Partnership Agreement in order to have the projects coordinated by the SESAR Deployment Manager (SDM) and to receive the awarded funding through SDM.

Building on the lessons learned from the 2015 call and the priorities identified in the Deployment Programme 2016, EDA is already working with Member States and other stakeholders, to encourage and facilitate increased participation in the 2016 CEF Transport INEA Call on the basis of high quality military projects. Early identification of relevant candidate projects is essential in this perspective.

 

More information: 

• Single European Sky project page

Spanish CETME Model L Assault Rifle

Americas

• The Government Accountability Office (GAO), Congress’ watchdog, has stated that it wants more oversight into the Army’s Patriot upgrade. With $1.8 billion in funding allocated for the next five years, the GAO stated that the service’s plan, which is expected to remain in operation until at least 2050, lacks oversight mechanisms as the Army carries out its strategy in the coming years. Congress has consistently taken issue with what it sees as the Army’s inability to estimate the cost of the system in future years, and has regularly withheld funds to upgrade portions of the system, demanding the Army provide more clarity to its plans before shelling out all of the requested cash to fund it.

Middle East North Africa

• Israeli firm Rada Electonic Industries are to provide radars as part of the US Army’s Iron Curtain close-in active protection system (APS). The US DoD gave approval to Virginia-based defense solutions company Artis for the use of two Israeli Compact Hemispheric Radar-based RPS-10 radars “to support Artis’ active protection against rocket-propelled grenades (RPG) and other shoulder-launched threats.” Optimized to detect fire from RPGs and anti-tank guided missiles, the compact, multi-mission Rada radar has been validated dozens of times in live-fire tests of another hard kill system, the Israeli-developed Iron Fist by state-owned IMI Systems.

Europe

• Heckler & Koch are to provide a $14 million shipment of G-36 rifles and 40mm under-barrel grenade launchers to the Lithuanian Army in the Baltic nation’s latest round of defense procurements. The company was dropped as Germany’s main rifle supplier last year following criticisms that the G-36 was unable to shoot straight in hot conditions. But with winter fast approaching and relations between Russia and its former-Soviet neighbors continuing to frost, it doesn’t seem to be too much of a concern for Vilnius (Lithuania).

• Russia’s VPK has announced the introduction of their own life-size remote control 4×4 based on their armored Tigr vehicle. Fitted with a a combat module and a 30-mm automatic gun, the unmanned Tigr can move and fire via an operator’s commands and can also identify and track targets on its own. Since its introduction in 2006, the Tigr has been spotted in Syria and has even gained attention from King Abdullah II of Jordan.

• A Swiss Air Force jet has gone missing, according to military officials. The F/A-18C, disappeared on Monday afternoon during a routine training mission. According to Defense Ministry sources, the suspected accident site in the mountainous Alpine region was difficult to access, with bad weather and darkness hampering the search efforts.

Asia Pacific

• In response to THAAD coming to South Korea, Chinese Communist Party mouthpiece the People’s Daily reports on Beijing’s plans to boost their missile defense capabilities. A PLAAF spokesperson made the announcement Monday, indicating that such an increase would be a solid step in increasing national security. Monday also saw the US Missile Defense Agency (MDA) award Lockheed Martin a $19 million contract modification for the production of two additional Lot 8 interceptors for THAAD. The modification to the previously awarded contract increases the total value to $916 million.

• Datron World Communications has been awarded a $495 million contract to provide the government of Afghanistan with radios and support equipment. The US Army deal is expected to be completed by August 2021. Datron provides an array of HF and VHF military voice and data radio products, rapidly deployable IP networking solutions and vertical take-off and landing drone systems with customers in over 80 countries.

• Three Taiwanese Naval officers have been indicted in relation to last month’s accidental firing of an HF-3 supersonic anti-ship missile. The mishap resulted in the destruction of a fishing vessel and the death of its captain. Petty Officer Second Class Kao Chia-chun was charged with negligence and causing the captain’s death while Kao’s supervisor, Chief Petty Officer Chen Ming-hsiu, and the ship’s weapon systems officer Lt. Hsu Po-wei were indicted for neglecting their duties.

Today’s Video

Remote control Tigr firing tests:

Raytheon has been contracted to supply anti-submarine warfare (ASW) weapon MK 54 lightweight torpedo common parts kits to the US Navy and Thailand.

Navantia has signed an agreement with the Commonwealth of Australia for the risk reduction and design study (RRDS) phase of the Royal Australian Navy’s (RAN) SEA 5000 Future Frigate programme.

Skylark C autonomous mini unmanned aircraft system (UAS) was unveiled in August 2016. It is the latest variant of the Skylark family of UAS and is developed by Elbit Systems, an Israeli-based provider of defence and electronics-related products.

The US Navy has taken delivery of the 13th Virginia-class submarine, Pre-Commissioning Unit (PCU) Illinois (SSN 786), ahead of the initial contract schedule.