Netherlands Military Budget

The Netherlands decided in 2014 to reverse its decline in defense spending, spurred on by unrest in the Ukraine and the Middle East and the shooting down of Malaysian Airlines flight MH17, with the loss of 196 Dutch citizens. Officials were initially increasing the budget by €300 million ($385 million) until 2017 and then by €100 million after that. The decision reversed a long-term decline in Dutch defense spending. Dutch defense spending as a percentage of GDP had declined for over twelve years, and in 2011 sat at 1.4%, well below the NATO target of 2%.

The most powerful statement was made by the leader of the Dutch liberal party VVD: "the Americans paid for our security, while we were building up our welfare state". Or just to put it in other words, the Netherlands were free riding with the US department of defense. The Netherlands had maintained a military spending to GDP ratio of around two percent for a long period of time. Dutch defense spending had a total budget allocation of $9.8bn in 2012, representing a compound annual rate of change (CARC) of -2.4% between 2008 and 2012. Personnel numbers declined with a CARC of -2.3% between 2008 and 2012, to reach a total of 42,874 in 2012. Defense spending covers capital items, military personnel, government defense agencies, and related expenditure on defense and peacekeeping. The defense market is segmented to include expenditure on: personnel; equipment; infrastructure; and other expenditure (which represents all other spending). Volume is measured as the active serving personnel in the national army, air force, navy (including marines and coast guard) and other elements of the service, such as Joint Staff. Defense budgets declined dramatically in the Netherlands even before the Depression. In 1918 the government spent over 442 million guilders on defense. Total outlays decreased to 127 million guilders in 1920, 93 million in 1924, and 81 million in 1929, the year the Depression began. The Depression affected the Netherlands more deeply than most other European countries due to its devastating impact on world trade. Defense spending even increased to 88 million guilders in 1931 but dropped to 77 million in 1933 and bottomed out at 75 million guilders the following year. In 1923 the government +ormed the Welter-Idenburg Commission to recommend cuts in government spending. By 1932 the decreased expenditures in the military budget were expected to result in personnel losses in the Army, which were to be absorbed in part by early retirement for officers in the rank of major and below. By 1937, however, the czuntry was sufficiently alarmed to allocate 93 million guilders for defense, and in 1938 that figure increased to 152 million guilders.

Defence expenditure for 2004 amounted to 7.7 billion euros. Defense cutbacks were announced 14 April 2011 by Minister Hans Hillen. The measures are the result of the worldwide financial crisis. The government is having to reduce spending by € 18 billion, € 635 million of which must be saved by the Ministry of Defence. In addition, the Defence organisation must cut back €175 million, and another € 150 million in the longer term, in order for the Defence budget to become financially sound again.

• The Royal Netherlands Navy will reduce the number of minehunters from 10 to 6. Two of its four new ocean-going patrol vessels will not be taken into service. One of the two supply ships will be phased out. HNLMS Zuiderkruis will be taken out of service at the end of 2011, after the planned deployment as part of the EU operation Atalanta. HNLMS Amsterdam will remain in service until 2014 and will be replaced by the Joint Supply Ship.
• Two tank battalions of the Royal Netherlands Army will be disbanded. In addition, a reduced number of self-propelled howitzers will be brought together with the 120mm mortars under a single field artillery battalion, and the construction engineers capability and the armoured engineers capability will be reduced, as will air defence capabilities and the number of Medium-Range Antitank systems on Fennek vehicles. The maintenance capability will also be decreased. Personnel reductions at the headquarters of the German-Netherlands Corps will be agreed with Germany.
• The Royal Netherlands Air Force will reduce its number of F-16s from 87 to 68. The Cougar transport helicopters will be phased out and the third DC-10 will not be taken into service. The air force will also disband two Ground Installation Defence platoons and one of the four Patriot batteries will be taken out of service.
• The Royal Netherlands Marechaussee will cancel the purchase of the vessel intended for use in the Zeeland waters. As a result of the reduction of the armed forces, the RNLM police tasks for the armed forces will also be reduced.

As of 2012 the Defence budget is € 7.8 billion. That amounts to approximately 1.4 percent of the gross domestic product. Further cuts in the Defence budget will amount to "cutting off limbs", according to Minister Hans Hillen. The Minister wants to get the message home that cutting back more on Defence would be irresponsible. “Further cuts will cripple the armed forces”, he said in various media 13-08-2012. “We have already been bled dry as it is.” Hillen’s concern for the armed forces is increasing now that some political parties’ manifestoes state that after the elections they will slash the Defence budget again, despite his appeals not to make further reductions. The Minister is of the opinion that the Netherlands must be given a clear warning that security is at stake. He points out that the last round of cutbacks, amounting to € 1 billion, is still in the process of being implemented. A process that was meant to take 4 years to complete. “A number of political parties are suggesting that we can now take another blow, but we can’t”, says Hillen, who already thought the current cutbacks were “far too much”.