The Netherlands Goes Long on the F-35

As the cost estimates for the stealthy F-35 Joint Strike Fighter rise, so too does the fitfulness of its customers. A political battle over the purchase of the airplane is dominating Canada’s electoral scene following a report citing the per-unit cost for each F-35 reaching $163 million per aircraft. Once seen as a lock to purchase the F-35 Denmark has pushed back a decision on its future fighter until 2012, thus allowing other competitors for the contract time to concoct better industrial offset packages to present to Copenhagen. Squeezed by the cost of numerous high-tech defense programs intended to tackle its diverse array of security threats Israel is considering postponing its F-35 purchase until greater clarity regarding production/delivery schedules and price becomes available.

And then there is the Netherlands, where the right-leaning coalition government under Prime Minister Mark Rutte is eager to put the country on a fiscal diet. Part of that diet will come at the expense of the Dutch armed forces – but not at the risk of severing Dutch involvement in the F-35 program.

Faced with having to trim EUR1 billion ($1.45 billion) from the budget by 2014, Dutch Defense Minister Hans Hillen announced a major military restructuring on April 8. As a result the armed forces will see their entire fleet of Leopard 2A6 tanks retired along with 17 Cougar utility helicopters, a DC-10 transport aircraft, 19 F-16 fighter jets and at least two patrol boats. Some 12,000 defense ministry posts will be axed and the general staff will shrink by 30 percent.

What will emerge from this process will be a smaller Dutch military no longer capable of tackling multiple oversees deployments whether under a U.N., European Union or NATO banner. Traditionally one of the strongest European contributors to foreign missions, the impact of these cuts will also leave the Netherlands with diminished NATO influence as some 100 Dutch posts within the Alliance command structure will vanish post-restructuring.

Yet as the budget scalpel does its work on defense the Dutch government has decided to push forward on the EUR100 million ($144 million) purchase of a second F-35 test aircraft. The purchase does not reflect a final decision regarding the replacement selection for the Royal Netherlands Air Force’ fleet of F-16s – that decision will not be made prior to 2014. Instead it indicates a desire by the Dutch to remain within the program as a means of retaining industrial workshare in the airplanes development and production.

The government’s decision to forge ahead with the purchase of a second test aircraft is indicative of the current defense environment among the advanced military nations in the West. As armed forces try to keep abreast of rapid technological advances the cost of weapons platforms escalates higher and higher squeezing already limited budgets and forcing defense ministries to mothball unique capabilities in favor of modern systems. The result is a smaller military with fewer planes, ships, tanks and personnel to crew them.

The counter argument to this is that advanced jet fighters such as the F-35 or Eurofighter Typhoon are more effective fighting tools and a capable substitute for losses in fighter numbers.

True or not, the cost of acquiring F-35s or other new-generation jet fighters brings pressure to bear on defense budgets that have been a favored source of savings in European capitals since the end of the Cold War. Such pricey choices can come at the expense of air-to-air refueling, search-and-rescue, surveillance, targeting and electronic warfare capabilities crucial to carrying out missions such as the one currently conducted by the NATO-led coalition in Libya. Thus while France, Britain, Denmark, Sweden, Norway and others commit combat aircraft it is largely left to the U.S. to carry out these other tasks in the Libyan theater.

With Europe confronting fiscal imbalances and growing debt obligations hard choices loom for many of its countries. Such choices are made more difficult for the 21 European nations who as dual EU-NATO members confront distinct requirements pulling their treasuries in diverging directions.

As members of the NATO Alliance these countries are tasked with committing 2 percent of annual GDP towards defense, while under EU Stability and Growth Pact guidelines each member must keep their budget deficit below 3 percent and their national debt below 60 percent of GDP. Juggling the two (albeit toothless) requirements has proven difficult for virtually every dual EU-NATO member in the best of times; coming off a banking crisis, an economic recession and government stimulus measures such a task is rendered that much more difficult.

A dual EU-NATO member itself the Netherlands is placed in a similar position. The cost of bailing out its banks following the global financial crisis set the state back over EUR20 billion ($28 billion). As a result the national debt jumped 33 percent in 2008 and now represents nearly 70 percent of GDP. Inheriting a budget deficit of 5.2 percent from the previous government the Rutte-led coalition intends to trim EUR18 billion ($26 billion) in expenditures and bring the budget deficit down below 3 percent by next year. Defense spending – only 1.4 percent of GDP in 2010 – will naturally be part of the equation.

The Dutch armed forces that emerge from this restructuring process will struggle to preserve their expeditionary capabilities at a time European nations are engaged in military operations in Afghanistan and Libya, anti-piracy operations off Somalia and peacekeeping mission in multiple locales. The Rutte government is placing a priority on fiscal responsibility and debt alleviation – not an altogether unwise choice. But by applying a paring knife to the armed forces it is limiting its foreign policy options in the future. The true cost will be felt the next time an ally asks the Netherlands to support military/stabilization operations abroad and is met with an abashed expression and a shaking of the head.

Yet in spite of this the Netherlands is opting to remain in the JSF program and will in all likelihood select the fighter as its preferred F-16 replacement. But because of the programs inflationary spike the initial rosy unit cost projections have long been left in the dust.

In the end the Dutch will have to settle for fewer aircraft than originally planned. The initial Royal Netherlands Air Force target figure was for 114 F-35s; this was dropped to 85 fighters by the fall of 2006. After having budgeted EUR6.2 billion ($8.7 billion) towards an 85-unit F-35 purchase revised estimates have shown a 22 percent jump in cost to EUR7.6 billion ($10.7 billion). Once a contract is finally inked the unit order will likely have shrunk further to between 50-60 aircraft.

In times of austerity tough choices have to be made and the Netherlands is choosing to sacrifice quantity for quality. Time will tell if the decision was the right one. But in an era of mushrooming security missions and irregular warfare numbers often outweigh firepower. After all, one splashy new F-35 cannot be deployed into two different theaters simultaneously.

Photo by Rennett Stowe.

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