Austria - Military Spending

War has returned to Europe. Neutrality has been the foundation of Austria’s security and defense policy for many decades. In view of the changed geopolitical circumstances, to include armed conflicts in Ukraine and in the Gaza Strip, Austria was led to rethink its security and defense strategy. As part of that, investments of 4.02 billion Euros by the Austrian Armed Forces were planned in 2024, with the goal of an annual budget of 6 billion by the year 2027. The Austrian Armed Forces require a substantial increase in quality and quantity of land and air equipment and in the information environment. Budget increases had been allocated as measures of the long-term military renewal plan titled ÖBH2032+.

It was originally planned to provide the Federal Army with budget funds of around 16 billion euros over the next four years. Now this figure is to rise to 18.1 billion euros by 2027, as Defense Minister Klaudia Tanner and Brigadier Dietmar Schinner, Head of the Budget Department in the Defense Ministry, announced 19 October 2023. Defense Minister Klaudia Tanner wants to use the money to continue the investment path as part of the "Reconstruction Plan 2032+." Wheeled tanks, helicopters, aircraft, as well as antiaircraft missiles, drones and drone defense are listed among required military equipment.

The current strategic framework and guidelines of the Federal Government are defined by the armed forces profile "Our Army" and the National Defense Financing Act as well as the basic documents of the European Union (EU) and the United Nations (UN). The Federal Army is now putting its focus back on military national defense and must use the time to restore the ability to fight. Over the past 30 years, the Austrian Armed Forces have undergone a process of steadily reducing their size and reducing their combat capabilities. This has led to a significant decline in the country's military defense capabilities in key areas. This has resulted in a comprehensive backlog in almost all areas of the Austrian Armed Forces' capabilities.

• 10.3 million Euros for automotive vehicles
• 306.2 million Euros for armored vehicles
• 249.1 million Euros for weapons systems
• 195 million Euros for aviation (whereof
• 121,1 million for AW169 Leonardo helicopters and
• 35 million for the replacement of C-130 Hercules air transport
• increase of material expenses by 8.8%
• ammunition
• clothing and gear

The army announced several major investments, including the expansion of the AW169 helicopter fleet from the originally planned 18 to 36, the replacement of the Hercules transport aircraft with new C-390M transporters from Embraer , the planned arrival of a second Black Hawk squadron and the "Mech package" worth around 560 million euros to modernize and extend the service life of the Ulan infantry fighting vehicles and Leopard 2 battle tanks.

During the period from the unification of Germany in 1990 to 2015, Austria’s defense policy was characterized by a constant decrease in the military budget from the initial 0.99% of GDP to 0.55% in 2016, or 2 billion euros less than the costs of any of the comparable countries. H. Doscocil, who joined the country's defense and sport minister in early 2016, demanded a review of national security issues. The Armed Forces of Austria initiated a course for reorganization. The transition to the new organization took place from October 2016 to January 1, 2017.

The goal of reforming the Austrian armed forces is to increase their preparedness to respond to emerging crises at home or abroad. For this, the former infantry and mechanized units of the SV received specialization in accordance with the newly defined tasks. The reorganization of the military administration and the redeployment of subordinate units on the territory of the country. The combat readiness of the troops and the rapid use of forces is guaranteed by reliance on contract servicemen.

The course for the development of the Armed Forces, initiated by the Austrian Minister of Defense H. Docococil, was supported by the Chancellor and parliamentary parties. As a result, the country's defense budget in 2016 received an additional € 246 million in addition to the planned € 2.318 billion. By 2020, additional financing of defense expenditures may amount to 1.305-1.7 billion euros.

Since the beginning of the reforms, the Austrian Armed Forces have already felt their results. At the beginning of 2017, for the first time in many years, all the main parts of the Austrian Armed Forces were equipped. At the end of 2016, about 3.8 thousand military personnel entered the service on a contract basis, and about 1.4 thousand posts previously released due to the retirement of military personnel were filled. The Austrian Armed Forces Command expressed confidence in the possibility of attracting about 300 contract servicemen annually.

Austria's 2014 defense budget would spend 0.5% of the country's GDP - putting it in the league of countries like Luxembourg, Ireland and Papua New Guinea. Austria will close down military barracks and schools, and cut back on personnel and recruitment as the country's defense budget faced $101 million in cuts in 2015. The Austrian Federal Army will also retire or sell much of its equipment, including tanks and armored vehicles. Austria would be heavily dependent on its nearest EU allies in the event of a military situation, due to the unexpected costs and budget restriction of current capabilities.

Austria was projected in 2013 to spend US$13.3 billion on its armed forces during the period 2013-18. Defense expenditure registered a CAGR of -1.33% during the review period, primarily due to the European debt crisis which led to a slowdown of the economic activities in emerging markets, including Austria. Austrian defense capital expenditure was expected to be US$3.5 billion during the 2013-18 period.

In 1980, the Austrian Defense Budget (ADB) accounted for 1.24 percent of the Gross Domestic Product (GDP); 1.05 percent in 1990, 0.8 percent in 2000 and 0.74 percent of the GDP in 2005. The maximum of 1.38 percent of the GDP was obtained in 1985. It is worth noting that Austria had deployed fewer troops abroad in the 1980s than in the 1990s.

Austrians have been traditionally reluctant to allocate significant sums for improving the nation's defense. This attitude, combined with a sluggish economy and uncertainties over the shape of the armed forces in the post-Cold War era, have forced the military to postpone equipment acquisitions and to accept compromises in performance levels, operational readiness, and maintenance standards.

Security assistance played a decisive role in reestablishing the Bundesheer in 1955. Departing American occupation troops left in place a considerable amount of World War II-era equipment for use by the organizing Austrian Army. Grant aid continued, under the Military Assistance Program (MAP), until 1963. Equipment worth $96 million was delivered to Austria during this period. Loans through the U.S. Import-Export Bank provided Austria a means of easing the transition from MAP, and by, 1969, Austria had “graduated” to being a cash Foreign Military Sales (FMS) customer.

Austria made more than $250 million of cash FMS purchases over the Cold War years. Training programs followed a similar progression: first, a surge of officers and NCOs requiring training in basic skills, followed by a need for more technical courses. By 1991 more than 500 Austrians had received training through the lntemational Military Education and Training (HVIET) program and its predecessor programs; the current Army Commander and a number of other high-ranking officers have received IMET-funded training.

Set at S18.3 billion in 1992, and climbing to S19.0 billion in 1993, the budget was higher than in 1989 (S17.2 billion) and 1990 (S17.5 billion) but was roughly the same in terms of real growth. Having reached a peak in 1986, the defence budget declined between 1987 and 1989 to level off at approximately the 1982 spending rate in real terms.

The government expected to maintain a relatively constant defense budget during the remainder of the 1990s. However, anticipated lower expenditures on personnel will permit some expansion in equipment procurement and improvement of facilities and infrastructure. In 1986 personnel costs absorbed 51 percent of the budget; operations, 32 percent; and investment, 17 percent. A downward trend in the investment budget has since been reversed. In 1992 new procurements were expected to reach S6.5 billion, or more than one-third of the entire budget. Part of these funds were to be allocated to renovating housing and barracks, much of which dates from the occupation period after World War II. Some S1.3 billion was earmarked for SAMs and airto -air missiles.

Austria's defense spending as a proportion of the gross national product (GNP) was the lowest in Europe, except for Luxembourg. During the 1981-91 decade, annual defense outlays were in the range of 1.0 to 1.3 percent of GNP, with the lowest percentage occurring recorded in 1991. Sweden and Switzerland, neutral countries often compared with Austria, had defense spending in 1991 that amounted to 2.8 and 1.9 percent of GNP, respectively. The Austrian defense budget in 1991 was 2.9 percent of total central government expenditure. The corresponding levels for Sweden and Switzerland were 6.4 and 19.4 percent, respectively.

Austria allocated insignificant financial resources for the development of the armed forces. By 1986 the Ministry of Defense's yearly budget overstepped the 3.5 per cent limit of the general government expenditures. The absolute measure of the expenditures for military purposes (based entirely on the ministry of defense entry) grew from 4.0 billion shillings in 1970, to 18.8billion in 1986 (which was 0.1 and 1.2 percent of the gross national product, respectively.

Military expenditures per capita amounted to US$213 in Austria in 1991, compared with US$751 in Sweden and US$667 in Switzerland in the same year. In defending the level of defense spending, an Austrian defense minister asserted that although it was not generous, it was sufficient to achieve high standards for the ground forces, although air defense remained inadequate. He rejected the comparison with Switzerland, because the Swiss have adopted the more ambitious goal of the absolute capability of defending their country against attack from any source.

By 2008 the most difficult challenge facing the Defense Ministry was to acquire the resources and restructure the military to support an outward-oriented, lighter, and more professional military. The planned reduction in Austrian forces to 55,000 would free up major financial resources, but even a smaller force, if equipped, trained, and deployed as envisages, would require more resources. The top-heavy structure of the Austrian military, especially in the NCO corps, was a problem that will take more than a decade to resolve. The Ministry was starting re-training courses to try and encourage long-serving NCOs to move into civilian life, but was not optimistic given that the salary and security of an army job make civilian life relatively unattractive.

Austrian Defense Minister Norbert Darabos was the first Defense Minister not to have served in the military (he performed civilian service rather than serve as a conscript soldier. Despite his personal biography, was also strongly committed to maintaining the conscription system. Furthermore, Austrian law required all troops serving outside the country to be non-conscript volunteers -- boosting the personnel costs of foreign deployments considerably. To reduce costs, the Ministry intended to seek a change in the law that would oblige all members of the armed services to serve at last one overseas tour. This too will be a political challenge inside and outside the Ministry.

Efforts to reshape Austrian military forces for a more active, overseas role faltered due to resource constraints. The 23 November 2008 coalition agreement between Austria's Social Democrats and Conservatives pledged support for the reform program (Bundesheer 2010), but made no concrete commitments about budget levels and the paragraphs on future procurement were particularly vague. The partners planned to establish an evaluation council, including outside experts, which was to examine, by the end of 2009, "the transformation of reform steps in the view of priorities, quality and the adherence to schedules in the light of real developments." "Real developments" is doubtless a reference to the fact that, because of underfunding, the reform process was lagging badly.