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Italian Hard Power - Ambitions and Fiscal Realities

Italian Hard Power - Ambitions and Fiscal Realities

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   N  a  t   i  o  n  a   l   S  e  c  u  r   i  t  y   O  u  t   l  o  o   k
1150 Seventeenth Street, N.W., Washington, D.C. 20036202.862.5800www.aei.org
Although recent headlines have highlighted Italy’sdire fiscal situation, its defense capabilities havebeen in decline since well before the latest eco-nomic crisis. For Americans who grew up readingabout the sometimes poor performance of Italianforces in World War II or watching movies set inRome in which the theme is
la dolce vita
, perhapsthis comes as no surprise.However, Italy remains one of the world’s leadingeconomies; it had the eighth-largest gross domesticproduct (GDP) in 2011.
2
And, indeed, in terms of the size of its economy and population, the twonations Italy most resembles are France and theUnited Kingdom. But, in terms of willingness toturn these attributes into hard military power, Romefalls short of benchmarks set by Paris and London.As figure 1 elucidates, Italy’s defense burden(measured as a percentage of GDP), while neverhigh in the past, has declined even more in recentyears.
3
As a percentage of GDP, Italy’s defense bur-den has dropped substantially from what it was just
Italian Hard Power: Ambitions and FiscalRealities
By Gary J. Schmitt
This is the second
 National Security Outlook
in a series about the defense capabilities of America’s alliesand security partners.
1
In 2011, Italy had the eighth-largest gross domestic product in the world. Yet, when it comes to converting Italy’sassets into military hard power, the country falls short of the standard set by countries of similar size. A decade ago,Italy’s stated goal was to reverse this trend and, in turn, allow Rome to play a more substantial military role in theMediterranean Basin, the Middle East, and the Horn of Africa. While Italy has been an active participant in anumber of UN- and NATO-sanctioned international operations, it has never increased its defense spending to thelevel required to create an all-professional, fully equipped force on par with allied states such as the United Kingdomand France. Compounding this problem is Italy’s current fiscal crisis, which has led to significant reductions in invest-ment and operations accounts. With no sign of budget increases for the Italian military in sight, the defense ministryis now calling for a leaner, more modernized Italian military and the procurement of fewer, albeit newer, military platforms. Can Italy execute these plans without an increase in defense spending, and will the regional and globalambitions Italy once set for its military diminish as forces contract?
Gary J. Schmitt (GSchmitt@aei.org) is codirector of the Marilyn Ware Center for Security Studies.
No. 3 • November 2012
Key points in this
Outlook 
:
Although Italy has the eighth-largest economyin the world, its military capabilities fall shortof key allied countries of similar size and eco-nomic strength because of the government’slong-term failure to increase its defense budget.Facing severe fiscal constraints, the Italiangovernment has issued a new round ofdefense spending cuts that has substantiallylowered overall force structure, but which thegovernment hopes will still allow for contin-ued modernization of its forces.The question going forward is whether theregional and global ambitions Rome once hadfor its military will diminish as its forces contract.
 
a decade ago—and well below the 2 percentminimum that the North Atlantic TreatyOrganization (NATO) allies agreed to tryto obtain at the alliance summit in Praguein 2002.And, although both France and theUnited Kingdom have also seen defensespending decline, Italy’s per-capita expendi-ture on defense, according to the Italiandefense ministry, lags significantly behindthat of its NATO allies (see figure 2). Onthe face of it, Italy is punching well belowits weight (see figure 3). Nor is Italy’s defense budget pictureimproving. According to the Italian defenseministry, its base defense budget [
FunzioneDifesa (FD)
]—never large to begin with—will fall to
13.6 billion this year (see fig-ure 4).
4
Compared to the FD average of the pre-vious four years (2008–11), this amounts toa cut of some 7 percent. Significantly, the“investment” (procurement) portion of thebudget for 2012 has been shorn by 25 per-cent from the previous four years and hasseen a drop of nearly 30 percent from 2011to 2012 alone.Also important is the reduction in fundsallotted to Italy’s Ministry of EconomicDevelopment, which subsidizes Italiandefense research and development and pro-curement programs, as well as a 30 percentreduction in funds for military operationsabroad. Under new austerity measures, Italywill reduce its defense budget by
3 billionover the next three years.
5
Italy’s Strategic Vision
Any analysis of Italian grand strategy facesone overriding difficulty: there is no sys-tematic production by the government of national-level strategy papers. To the extentthat strategic documents have been issued, more oftenthan not, they have been at the initiative of individualministers rather than an established policy-planning process.That said, there have been various government papersissued over the past decade that allow one to tease outItaly’s strategic ambitions, and the military—the governmentbelieves—is required to obtain them. The most relevantdocuments of this sort have been the 2001 defense min-istry’s
 New Forces for a New Century
; the post–9/11
Defense White Paper
, issued by the ministry in 2002; the2005
Defense Chief of Staff’s Strategic Concept
paper; thedefense staff’s 2005
Investing in Security: The Armed
- 2-
1.01.21.41.61.82.02.2
        1        9        8        9        1        9        9        0        1        9        9        1        1        9        9        2        1        9        9        3        1        9        9        4        1        9        9       5        1        9        9        6        1        9        9       7        1        9        9        8        1        9        9        9        2        0        0        0        2        0        0        1        2        0        0        2        2        0        0        3        2        0        0        4        2        0        0       5        2        0        0        6        2        0        0       7        2        0        0        8        2        0        0        9        2        0        1        0
F
IGURE
1
I
TALY
S
D
EFENSE
E
XPENDITURE AS A
P
ERCENTAGE OF
GDP
Source: Data derived from “Nota Aggiuntiva allo Stato di Previsione per la Difesa”(2003–2011/2012). Data expressed in current prices.
01002003004005006007008002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011ItalyFranceUnited Kingdom
F
IGURE
2
D
EFENSE
S
PENDING PER
C
APITA
(
)
Source: Data derived from “Nota Aggiuntiva allo Stato di Previsione per la Difesa”(2003–2011/2012). Data expressed in current prices.
 
Forces, An Evolving Tool
; and the defenseministry’s annual
 Addendum to the DefenseBudget
, which attempts to give strategic andpolitical context to the approved budget, aswell as provide details on specific accountswithin the budget.The 2001 document was the first formalpaper of its kind produced by the Italiandefense ministry since the end of the ColdWar—indeed, it was the first since themid–1980s.
6
The paper notes the obviousbut important point that Italy will not befacing a conventional military threat to itshomeland anytime soon. But it couples thatfact with the assertion that Italy’s interestsare “quite broad,” ranging from Southeast-ern Europe to the Caucasus, from the Hornof Africa to the Maghreb, and that Italy’smilitary contribution to collective securityand stabilization efforts in recent years hasranged far, wide, and outside the areasdirectly affecting Italy’s own strategicnational interest.
7
 New Forces
offers up a relatively ambitiousstrategic outlook, including Italy potentiallyhaving the capability to take the lead in mil-itary operations. To meet those ambitions,the paper notes that Italy will need toprogress in creating an all-professional mili-tary, work with allied countries to developand produce a plethora of new weaponssystems, and increase its defense expendi-tures from 1.5 to 2.0 percent of GDP. Thepost–Cold War “peace dividend” had to endif Italy’s military was going to be able tohandle the expected increased involvementin multilateral (NATO- and EuropeanUnion-led) military operations, and do so asa capable allied force.The 2002 white paper was published inthe wake of the 9/11 attacks on the UnitedStates and the subsequent removal of theTaliban-led government from power inAfghanistan. Not surprisingly, the paper paysparticular attention to the then-emergingthreat of Islamist terrorism and, similar tothe previous year’s document, emphasizesthe military’s need to operate abroad in con-cert with allies or under the auspices of the
- 3-
05,00010,00015,00020,00025,00030,00035,00040,00045,0002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011ItalyFrance United Kingdom
F
IGURE
3
B
ASE
D
EFENSE
B
UDGET
(
MILLIONS
)
Source: Data derived from International Institute for Strategic Studies,
The Military Balance
,1991–2012 (London: Arundel House).
14,448.815,408.314,339.514,29514,360.213,613.314,930.613,798.313,552.113,347.112,465.911,00011,50012,00012,50013,00013,50014,00014,50015,00015,50016,0002007 2008 2009 2010 2011 2012At current pricesAt constant prices, 2007
F
IGURE
4
I
TALIAN
B
ASE
D
EFENSE
B
UDGET
(
MILLIONS
)
Source: “Nota Aggiuntiva allo Stato di Previsione per la Difesa per l’Anno 2012,” 140.

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