SLOVENIA: MOD TO GET LESS MONEY THAN PLANNED FOR

S E C R E T LJUBLJANA 000553

SIPDIS

SIPDIS

DEPT FOR EUR/NCE, EUR/RPM, PM/RSAT FOR KDOWLEY

E.O. 12958: DECL: 08/23/2016
TAGS: NATO PGOV PINR SI
SUBJECT: SLOVENIA: MOD TO GET LESS MONEY THAN PLANNED FOR
2007 AND 2008


Classified By: COM Thomas B. Robertson for reason 1.4 (b) and (d)


1. (U) This is an action request, please see Action Request
in paragraph 7.


2. (U) SUMMARY. The GoS's most recent budget plans for 2007
and 2008 include a defense budget of 1.65% of Gross Domestic
Product (GDP) for 2007 and 1.81% of GDP for 2008, instead of
the nearly 2% of GDP that was planned. While the MoD budget
will continue to increase, this move will likely delay the
MoD from hitting the NATO 2% of GDP target until 2010, and
calls into question the government's commitment to reaching
the 2% target as soon as possible. END SUMMARY.


3. (U) On July 21 the GoS adopted a plan for supplemental
expenditures for the budget years 2007 and 2008 (federal
budgets in Slovenia are adopted for two years in advance and
later supplemented) that include defense budgets of 1.65% of
GDP for 2007 (653 million USD) and 1.81% of GDP for 2008 (765
million USD),instead of the nearly 2% of GDP that was
planned (722 million USD for 2007 and 802 million USD for
2008). The defense budget could be further supplemented by a
proposed law, likely to be passed this year, which would
allow the MoD to take out special loans for weapons purchases
in amounts of 107 million USD, up to 963 million USD. The
government's budget plan calls for an overall budget of 10.5
billion USD in 2007 and 11 billion USD in 2008.


4. (U) The GoS (through the Prague Capabilities Commitment)
long ago promised and has repeatedly reaffirmed its
commitment to increasing the defense budget to 2% of GDP by
2008, with some plans proposing to reach the target by 2007.
However, the budget proposal put forward by Finance Minister
Andrej Bajuk was accepted with the understanding that the MoD
could fulfill its goals and obligations (including those to
NATO) with the proposed budget amount. Defense Minister Karl
Erjavec has been cited in the media as saying that less
funding does not mean that their goals will not be reached.
The media speculates that maintenance and low priority weapon
purchases would be the areas to suffer as a result of the
reduced increases to the MoD budget.


5. (S) In response to questions about the issue, MoD Desk
Officer Lovro Peterlin commented that "our minister was
probably just a bad negotiator" but now that the government
has approved the plan it is unlikely to change. Zorica
Bukinac Cimpersek from the NATO Section of the MFA's Security
Policy Department said that the MFA was "caught completely
offguard" by the news, that the operational level staff at
MFA were not aware of the course of debate within the
government and the Ministry of Finance, and that their office
only learned of the issue when it appeared in the newspaper
this week. She said that the Head of the Security Policy
Department was currently following up on the issue with the
MoD.


6. (C) COMMENT. While the 2% of GDP spending target has been
repeatedly committed to by the GoS, FinMin Bajuk seems to
have convinced the government that it can put this obligation
off for the time being without great notice externally (and
without a major difference in operations at the MoD). Post
is concerned funding issues could make it difficult for
Slovenia to reach its NATO Force Goals and transformation
objectives. END COMMENT.


7. (C) Action Request. COM will be meeting next week with
Slovenian Ambassador to NATO Sinkovec before he returns to
Brussels and will raise USG concerns about meeting the 2%
target. We will also raise these concerns with the MFA, MoD,
Ministry of Finance, and the Prime Minister's Office. Post
recommends Washington also consider sending a strong message
to the GoS through our mission at USNATO to impress upon the
GoS that backpedaling on its defense funding commitment has
not gone unnoticed and should be reconsidered.
ROBERTSON