Romania - Military Spending

NATO member Romania will spend 2 percent of its gross domestic product on defense until 2026, according to a procurement plan. That would make it only the sixth of NATO's 28 members meeting the target. Romania planned to spend a total of 9.8 billion euros ($11.3 billion) on upgrading its military until 2026, the eastern European NATO member's top defense body agreed on 01 August 2017.

The figure locked Romania's military spending at 2 percent of GDP over the next decade, meeting a key commitment of NATO members. Romania met the target for the first time in 2017, making it only the sixth NATO member alongside the United States, the United Kingdom, Greece, Estonia and Poland to hit the benchmark.

Only by the end of the 1990s and the beginning of 2000, did Romania's economic recovery allow an increase of investments in the transformation of its defense forces. The defense budget allocates funds to four critical areas: personnel, operations and maintenance, infrastructure, and acquisitions. Due to social protection measures for discharged personnel, the defense budget allocated about 55 percent to 70 percent towards personnel expenditures, from 1997 to 2002.

By 2005, force reduction and base closures were almost completed and personnel expenditures decreased and stabilized to around 50 percent of the defense budget making more funds available for acquisition and operations. This level would be similar to countries like Denmark and Spain. While the percentage of GDP allocated to defense expenditures remained approximately constant, the defense budget increased at a rate of 5 to 10 percent a year due to a growing GDP. Even though the GDP percentage allocated to defense expenditures is comparable to other NATO members due to economic difficulties, the defense budget is smaller compared to other countries having similar or less armed forces.

The Ceausescu regime pursued a policy designed to ensure that the armed forces would not become an unacceptable burden on the economy. In fact, the armed forces during the 1970s and 1980s made important economic contributions, providing cheap labor and managerial cadres. As economic problems mounted in the mid-1980s, the government curtailed military spending and broadened the use of the armed forces in the civilian economy. At the same time, the arms industry earned badly needed hard currency through weapons and matériel exports.

After five years of sustained military budget increases in the early 1980s, the Ceausescu regime reduced military expenditures by 4.8 percent in the 1986 state budget. At his instruction, the GNA passed an additional 5 percent cut in military spending and the size of the armed forces. It also adopted a change in the 1965 Constitution to hold a national referendum to confirm or to reject this reduction. Young Romanians aged fourteen to eighteen, who were likely to favor any cut that might decrease their chances of induction into military service, were allowed to vote on the referendum. On November 23, 1986, in balloting typical of that during Ceausescu's rule, a reported 99.9 percent of all eligible citizens turned out and voted unanimously in favor of the 5 percent reduction. This electoral ploy may have enabled Ceausescu to overcome more easily the apparent opposition to the plan among the professional military.

Implementing the decision made in the November 1986 referendum, Romania cut its 1987 military expenditures by US$156 million to US$1.171 billion, an actual reduction of more than 11 percent. Active units discharged 10,000 soldiers and mothballed 250 tanks and armored vehicles, 150 artillery pieces, and 25 aircraft. Deteriorating economic conditions and a chronic labor shortage in the mid-1980s probably necessitated the cut in military spending and the force reductions that accompanied it. Nevertheless, a genuine commitment to disarmament--and its attendant potential for enhancing Romania's security--and desire to demonstrate this commitment could not be entirely discounted as a factor behind the unilateral reductions.

Minister of national defense, Teodor Atanasiu, declared in a press conference held on 29 June 2005, that Romanian Armed Forces will give up conscription and only volunteers will join the military as of January 1, 2007. The minister presented a draft law in this respect, according to which, the last recruiting will take place in October 2006. The Navy gave up conscription already in 2004, while the Air Forces did so by the end of 2005. According to the draft law of the Ministry of National Defense, as of January 1, 2007, citizens will be able to join the military voluntarily. Among the advantages of the law, the minister mentioned complete professionalization, a higher stability of the military organization and lower training costs. "Enforcing this law does not involve costs higher than the annual defense budget", stated the minister further. The draft law was submmitted to the Government's approval and may be adopted in the Parliament by the end of 2005.

The implementation of the requirements for the restructuring of armed forces and their supply with quipment, imposes a real increase of funds from about 710 mil $, starting with the year 2000, to 1,190 mil $ in 2007 to which the foreign debts for procurement expenses and the money necessary for education and health, should be added.

According to the 2006 Military Strategy of Romania "This is the best option for Romania and, at the same time, a realistic element of stability for the planning process. Under these circumstances, the strategy of resources allocation will aim at two fundamental simultaneous aspects. First, the funds will be allocated to the programs, which provide the achievement of Project Force - 2005 and are cost effective, by eliminating rapidly the means and programs, which are no longer necessary. Second, priority will be given to the balancing of our budget for the allocation of resources. In the year 2000, our budget will allocate 57% for personnel, 33% for operation and maintenance, 28% for the procurement of combat equipment, and 13% for administration. We estimate that in the year 2006 we shall meet the Alliance standards (40% for personnel, 35 - 40% for procurement, 25 - 20% for operation and maintenance)."

The resources allocation will be closely related to the budget envisaged for the multi-annual planning process. This process includes two phases. The first phase (2000 - 2003) will focus on orientating resources towards the restructuring of operational forces at the minimum requirements for a credible and interoperable defense. The second phase (2004 - 2007) will focus especially on the modernization of combat equipment. The phases of this process are interrelated, and their deadlines may be changed according to the allocation of additional funds.

RMoD acquisitions programs: Multi-role aircraft; GBDA - SHORAD - V/SHORAD; Frigates - step 2, Corvettes; SCOMAR; MTV - Military Transport Vehicles.

RMoD 2006 strategic plan: Multi-Role Fighters Long-Range Air Defense Corvettes (4) Minesweepers (4) 8x8 Armored Personnel Carriers 4x4 tactical vehicles

As of 2008 Romania's strategic acquisition plan included six programs at a cost in excess of 17 billion Euros: Air Force--Multi-Role Fighters and Long-Range Air Defense; Army -- 8x8 Armored Personnel Carriers and 4x4 tactical vehicles; Navy--Corvettes (4) and Minesweepers (4). The Army programs involve domestic contractors, those of the Air Force do not, and the sourcing of the Navy programs is unclear. SCOMAR is an operative surveillance system, based on state of the art technologies that ensure early detection, tracing, recognition and identification of ships, which perform illegal traffic activities on the Black Sea.

While Romania's economy was growing on average at an impressive seven percent pace it could afford to dream big. The momentum obtained from joining NATO and the EU did render more sophisticated ambitions, including successfully hosting the 2007 Francophone Summit and the 2008 NATO Summit; modernizing its military procurements to better meet current operational requirements for NATO interoperability; sustaining or in some instances expanding its security commitments in Iraq, Afghanistan, or in the Western Balkans; having a more proactive diplomacy in the Middle East and Central Asia, to trying to build a Black Sea regional identity.

By 2009 that momentum was gone. The combination of Russian actions in Georgia and the global financial downturn has put most of Romania's international ambitions on hold for now. Unavoidable budget reductions and delay in meeting its strategic procurement schedule will negatively impact Romania's confidence in its ability to maintain its foreign and domestic commitments.