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The National Army: Financing



4.5. The National Army: Financing

The financing of the National Army all along the years of its existence is characterised by a sharp deficit. Annually, the Ministry of Defence (MOD) receives 2.5-3 times less financial resources than is necessary according to the army’s objectives, the approved scheme and the numerical structure.

If in the first years material and technical resources remained from the Soviet Army allowed the National Army to perform most of the combat training actions and the majority of the necessary armament and military equipment preventative tests and repairs, by 1995-96 these possibilities were exhausted. Thus, emergency stocks were used, in order to compensate the lack of financial resources.

For instance, the POL stocks, established by the Minister of Defence’s or- ders, were reduced from 56 % to 1-2 % at present. The condition of the POL stocks is catastrophic at the moment. To address this issue strictly academically, effective combat potential score, shown earlier, should be even lower and come

close to zero. However, influence of the POL stocks’ shortfalls on effective com- bat potential was taken into account only to the extent they influence the advancing of troops on the terrain and the performance of combat actions during the first days of any war. Thus, it was considered in the calculation that, in case of war, the state would find the necessary quantity of POL for conducting the first and subsequent defence operations. The POL stocks in the republic are estimated to 90-300,000 tons, which is sufficient for conducting a defensive war for 2-3 months. However, a law on requisitions has not been drafted yet.

The influence the food-stock shortfalls have on combat capacities, even though less significant is, nevertheless, essential.. The stocks of cold food rations are 11% and hot food rations represent 59% of the established norms. However, similarly in this case, their influence was taken into account partially; it was necessary to depart from the assumption that, in case of war, it will be possible to obtain all necessary food items by using requisitions and state reserves.

Dynamics of the National Army required funds and actual financing for the last six years are shown on the diagram below (in million Moldovan Lei):

1994 1995 1996 1997 1998 1999

Fully Funded 85,3 186,8 219,8 174,6167,5 191,3 regiments

Actual spending 31,4 64,8 70,6 80,9 62,2 64,9

The insufficient financing has affected the character of the distribution of budgetary funds, which were hardly sufficient for personnel wages and benefits, current supply with food, uniforms, and equipment, and for partial payments for utilities. As a result, at the end of 2000 the National Army had a debt of 32 million lei. Thus, it is necessary to keep in mind that a significant part of the emergency reserves was spent for satisfying the army’s current needs.

The character of National Army’s financing also shows the attitude of leaders of the Ministry of Defence regarding the problems faced by the former. The leaders solve only current problems, which are on the surface – food, uniforms,

Dynamics of NA Financing 1994-1999

Fully Funded Regiments Actual Spending

1994 1995 1996 1997 1998 1999

0 50 100 150 200 250

Mln. le

equipment supply, payroll and benefits – issues that, unless solved, can lead to smouldering discontent or even mutiny within the Army,. The long-term problems

– keeping armaments and military equipment in an operational condition, material stocks, high personnel turnover, appropriate combat co-ordination and personnel training level – have not been solved, or are solved at the lowest level. The resolution of these problems is left to the future generation of the Ministry of Defence’s leaders. The distribution of funds done by the Ministry of Defence in 1998 proves that idea. The following parameters were provided for the basic expense items:

0 50 100 150 200

Cost Items Actual Fully Defense Funded Expenses Required Payroll & Benefits 19,2 24,4 Food and Compensation 16,1 23,8

for Food

Uniforms & Equipment 3,3 9,4

Current Repairs 2,64,6

Major Repairs 0,62,9

Medicine & Medicals 0,9 5,9 Housing Administration 11,3 13,8

POL Procurement 1,5 4,2

Technical Maintenance 0,5 12

Weapons Procurement 0,8 51

Other Expenditures 5,5 15,5

Total 62,3 167,5



0 50 100 150 200

The distribution of financial resources over the last few years has obviously a discriminatory character as far as the technical maintenance of armaments and military equipment, condition of the material resources stocks, and combat train- ing are concerned – precisely those parameters that bring the basic contribution to the National Army’s military potential. In 1998, only 5% of the defence ex- penses were directed for maintenance of battle readiness in an appropriate con- dition, necessary for the country defence. Unfortunately, there is a constant tendency to decrease the amount of these expenditures as follows: in 1999 -1.5%, in 2000- 2.2% (at first sight, in 2000 more money was spent in percentage terms;

however, it is necessary to take into account the rate of inflation).

The consequences of such policy implementation regarding financing are obvious: the lay-up of old armaments and military equipment, diminishment of different material stocks, decrease of the combat training level and, as a result, decrease of the National Army military potential and battle readiness.

In order to eliminate the negative consequences of the deficit of funding for costly items, which directly influences the National Army’s military potential, it is necessary to increase its amount. There are two possibilities: first, through a considerable increase of the Ministry of Defence budget, which in the next five to seven years is very unlikely, and second, by an internal redistribution of the budget.

The second solution is possible to be applied, but it requires a significant reduction of the numerical structure, selling of a part of the armaments and combat equipment, transition of most of the military units to reduced personnel structures (when only a small number of personnel, necessary to protect military property will remain in the military units) and changing the combat training ap- proach. In this study some ways of building the National Army are considered by taking into account the limited financial and material resources.