Too good to be true

On 15 March 2018 the NATO Secretary-General Jens Stoltenberg presented his fourth annual report. The report contains also detailed information about the defence budget of Bulgaria for 2017

The report presents the achievements of NATO during the last year regarding the development of its capabilities for dealing with risks and threats of today’s complex and changing security environment. During the year the Alliance continued its adaptation in the political, the military and the institutional sphere. The document presents the progress achieved during 2017 in strengthening of the collective defence and deterrence potential of the Alliance, including the capabilities of countering the hybrid threats and cyberattacks.

As regards the challenges stemming from the policy of Vladimir Putin’s Russia the Alliance confirms its two-track approach of building a strong collective defence and deterrence on the one hand, and readiness to maintain the dialogue with Russia, on the other.

The report puts a strong and detailed focus and consideration on the defense spending in 2017, which is an important issue from the point of view of the need for a more equitable burden sharing distribution of responsibilities between the United States and the rest of the 28 allies, including Bulgaria.

Regarding Bulgaria, however, it is not difficult to notice that the financial data presented as executed defence budget is not realistic.

The report shows the foreseen Bulgarian defence spending figures, which are certainly inflated and not real. Probably the NATO experts who wrote the report, based it on what the Bulgarian government declared intentions were at the beginning of 2017. At that time it was foreseen that the defence budget for 2017 of BGN 1 106 003 000 as approved by the Parliament, would be augmented by another BGN 402 million for launching the modernization projects for the Air Force and the Navy. So the budget for Defense was planned to grow from around 1.1% from GDP to over 1.5% of GDP, thus to demonstrate that Bulgaria responsibly fulfils its commitmentс from the 2014 Wales Summit to increase its defense spending to reach 2% of GDP. However, unfortunately it turned out too good to be true. And it was not for the first time.

Тhe data for Bulgaria that the NATO report presents, suggests that the defence budget for 2017 should be BGN 1.508 billion or 1.53% of GDP. If this were true, it would have been a remarkable growth of over 26% in real terms, and that Bulgaria would have ranked prominently second and only after Romania, among the 29 NATO members. On average for NATO this indicator is 3.21% for 2017, the strongest year for the Alliance, as it relates to the increase in defense spending, especially of the European Allies. If the data for Bulgaria were true, then Bulgaria would have been one of the top performers in this positive trend.

No less rosy seems the data for Bulgaria as applies to capital expenditures. According to the report, apparently based on most optimistic government projections from the beginning of 2017, Bulgaria should have spent in 2017 for acquisition of weapon platforms and equipment the enviable even for the best performing allies, 29.54% of its defence budget.

If that were true, it would have been a remarkable leap compared to 2016 with its 9.15% for investment, not to mention the 1.03% in 2014.

If that were true, for 2017 Bulgaria would have been the fifth best in NATO for spending on armaments and equipment as a proportion of its defence budget.

There’s only yet one more small, but important detail: while for the advanced NATO allies the capital expenditure means to purchase new weapons, platforms and equipment, here at home our government includes also the maintenance and repair of the old. Thus, the already verified and otherwise fairly good sounding data from 2016, of 9.15% for investment, does not look so optimistic any more. We remember that for 2016 more than BGN 70 million were additionally reported under this budget line, spent for the repair of our MiG-29 fleet, and this very well changed the picture.

The Secretary-General’s report makes Bulgaria a top performer in relation to the defence budget, thanks to the “high arithmetic” of wishful budget values from a year ago.

It’s time to get back to reality.

But why the figures for Bulgaria in the report of the Secretary-General are not correct?

We remember that yet at the end of 2016, when the government approved the three-year budget forecast for 2017- 2019, it promised an extra BGN 402 million for 2017 to be provided from the central state budget, to allow critically important modernization projects to start. This money were conditional on the government having signed contracts for the acquisition of a new fighter aircraft and new ships for the NAVY. Yes, but it did not happen, therefore these funds were not released. We also clearly recall that by the end of December, after it became clear that the modernization policy of the Government failed, the cabinet released nearly BGN 53 million for vaguely defined “urgent requirement costs”, a practice that is well known and widely used around Christmas. But that’s a different hot potato.

We are looking forward to the data from the official “Annual report on the status of defence and the armed forces” for 2017, which by law is due by the end of March. Then the defence budget will become clear. And most certainly it will show that the NATO report data is mostly wishful. It will certainly be corrected for the next year’s report. The point here is to avoid yet another overestimation of Bulgaria, for if repeated it would have made our country notorious. This year, an extra BGN 397 million are appropriated in the central state budget for launching the major modernization projects. If the story from 2017 repeats, we would see the same development yet again.

And even adding those around BGN 53 million to the 2017 defence budget, it cannot exceed 1.5% of GDP, and would be no more than 1.18% – 1.19%. Even if the government succeeds to incur some other, unexpected costs in the defence budget, which will become known with the publication of the abovementioned annual report, the ACB experts estimate that the 2017 defence budget will hardly exceed 1.28% to 1.30% of GDP. Which is far from the really too-good-to-be-true 1.53%, as the NATO report claims. Whatever the situation, as regards the capital expenditure, however, it is certain that 29.54% is not simply wrong, but the reality is at least 3 times smaller.

The main conclusion is that in Bulgaria empty promises still continue to stain our image as an ally.

And it is high time for that to be firmly corrected.

Atlantic Council of Bulgaria

Categorised in: Analyses, National and international security