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, 22 allies have seen increases in the defence sector. However, in 2016 only five allies met the commitment to allocate at least 2% of the Gross Domestic Product/GDP to defence, but there has been a downward trend in the number of those who have allocated less than 1%. In 2017, the upward trend in budget allocations continued, although only four allies exceeded the threshold recommended by the Defence Investment Pledge, while in 2018, according to national plans and commitments, eight countries would reach this threshold. In terms of spending on major equipment and related R&D activities, in 2016, as well as in 2017, nine states have committed more than 20% of the defence budget, while for 2018 the number is expected to rise to 15.

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 third revised form of the Program was approved by the Supreme Council of National Defence in 2017. 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 1.41% 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 the 20% of the commitment).

In 2017 Romania has respected the commitment to increase defense spending and allocated to the defence budget, in accordance with the provisions of Law no. 6/2017, the State Budget Law 2017, 2% of GDP. According to the budget execution for 2017 and based on the latest GDP prognoses from European Commission (DG-ECFIN), defence expenditures accounted for 1.72% of GDP, and the funds allocated for major equipment acquisitions and R&D activities accounted for 33.20% of the total defence budget (over the 20% of the commitment).

In accordance with the provisions of Law no. 2/2018, the State Budget Law 2018, for the defence budget in 2018 was allocated, according to the assumed commitment, 2% of GDP. The 2019 budget projection and estimates for the coming years are also based on the commitment to allocate 2% of GDP for defence. In 2018, spending on major equipment acquisitions and R&D activities accounts for about 35% of the total defence budget.

January 2019

 

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