Romania - NATO

Defence Investment Pledge

The global economic crisis has constantly affected budgetary defence allocations since 2008, aggravating the downward trend in most NATO countries, despite appeals from NATO officials on the dramatic impact on Allied defence capabilities. In 2010, 16 allies already had low defence budgets compared to 2008, in 2011, their number increased to 18, and in 2014 a number of 21 member states were in this situation. After this period of budget cuts, starting in 2015, the trend has reversed, so in 2016, a number of 22 Allies have seen increases in the defence sector. However, in 2016, only five allies fulfilled the commitment to allocate at least 2% of the Gross Domestic Product/GDP to defence, but there was progress in decreasing the number of those who allocated below 1%. In 2017, the upward trend in budget allocations continued, although only four allies exceeded the threshold recommended by the Defence Investment Pledge. In 2018, six states reached this threshold, while in 2019, according to national plans and commitments, a number of nine allies would allocate at least 2% of GDP for defence.

Regarding the purchase of major equipment and research and development activities, the situation is as follows: in 2016, nine states allocated, according to the commitment, over 20% of the defence budget; in 2017, 11 allies have exceeded this threshold; in 2018, their number rises to 14; and in 2019, 16 allies are expected to honor this commitment.

In order to ensure the Alliance's capacity to effectively respond to the challenges posed by the new strategic security environment, The Wales Summit Pledge on Defence Investment (DIP) was agreed at the Wales Summit, which targets member states' commitment to reach the 2% of GDP assigned to defence spending over 10 years (by 2024), with the differences between each group of allies (those who already have this level of funding will maintain it, the others will halt the declining budgets on defence and gradually increase defence spending). In addition, the commitment indicates allocating at least 20% of the defence budget for the acquisition of major equipments and related R&D activities, as well as improving individual results on the level of deployability and sustainability of troops in theaters of operations.  

The engagement has a special significance for demonstrating credibility, unity and allied solidarity in the current geostrategic context, reaffirmed by the Member States at the Warsaw Summit in 2016, as well as at the Brussels Summits in May 2017 and July 2018. In this respect, the Heads of State and Government adopted the report of the North Atlantic Council on burden sharing whereby the Allies agreed to develop / update national plans indicating the intention to implement the commitments on defense expenditure under the DIP and report annually on the following three specific elements: defense expenditure; implementing capabilities targets; contribution to missions, operations and other relevant engagements.

In order to guarantee a national political consensus on financing the defense sector, on January 13, 2015, the parliamentary parties in Romania signed an Agreement on the allocation of a minimum threshold of 2% of GDP for the budget of the Ministry of National Defence starting with 2017 and the maintenance of this level for the next 10 years. The agreement is important, both in terms of ensuring the predictability of the Romanian Armed Forces' procurement policy with modern fighting technique, as well as for developing cooperation projects between the national defence industry and other companies in other countries, as well as for medium and long-term defence planning. The Agreement is a guarantee that Romania will honor its commitments assumed at allied level, regardless of the political party in the government.

On the basis of this political agreement, the Ministry of National Defence developed the Program on the transformation and modernization of the Romanian Armed Forces until 2026 and beyond. The resources planned for the implementation of this program are aimed at developing priority acquisitions programs for the reference period, which contribute directly to increasing the operational capacity of the Romanian Armed Forces.

Against this background, the upward trend in budget allocations was sustained as early as 2016, so the budget execution for 2016 accounted for 1.4% of GDP and the funds earmarked for the acquisition of major equipments and related R&D activities accounted for 20,43% of the total budget (over 20% of the budget provided by the commitment).

In 2017, Romania complied with the commitment to increase defence spending and allocated to the defence budget, in accordance with the provisions of Law no. 6/2017, the Law of the State Budget for 2017, a percentage of 2% of GDP. According to the budget execution for 2017, the defence expenses represented 1.72% of the GDP, and the funds allocated for the acquisition of major equipment and research and development activities represented 33.34% of the total defence budget (over 20% of the budget provided by the commitment).

According to the provisions of Law no. 2/2018, the Law of the State Budget for 2018, for the defence budget in 2018, was allocated, according to the commitment, a percentage of 2% of GDP. The budget execution for 2018 represented 1.82% of GDP, and the funds allocated for major equipment purchases and research and development activities represented 33.48% of the total budget (over 20% of the budget provided by the commitment).

The financial commitment was also respected in 2019, when according to Law no. 50/2019, the Law of the State Budget for the year 2019, a percentage of 2% of GDP was allocated for defence. Thus, after the approval of the second budgetary rectification this year (on 28.11.2019) and the previous modifications of the MoND budget, the defence expenses represent a percentage of about 2.03% of GDP (compared to the value of this indicator at the moment of the approval of the law of the state budget), while the expenditures for major equipment purchases and research and development activities represent 26.25% of the total defence budget.

The draft budget for 2020, including the estimates for the coming years, will also be based on the commitment to allocate 2% of GDP for defence.

December 2019

 

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