Will Gripen-NG Project Bring More Defense Cuts for Sweden?

Fears are growing in Sweden that the government’s plan to develop a next-generation (NG) “super” Gripen will further drain a largely static defense budget and force the Swedish armed forces into more cuts to core operations.

The government has put the total cost of acquisition for the planned 60 to 80 aircraft, including development costs, at $13.5 billion. The Swedish Air Force is expected to take delivery of the first JAS Gripen E/F aircraft in 2023.

The decision to develop a Gripen-NG E/F has split Prime Minister Fredrik Reinfeldts’ center-right coalition of Moderate, Liberal, Christian Democrat and Center parties.

The Moderates and Christian Democrats support the plan, but the issue has divided Center Party members. The Liberals oppose the project, which they fear will divert funding from core defense areas.

The government remains defiant. Foreign Minister Carl Bildt, a Moderate, on Aug. 29 described the ”super Gripen” project, which is tied to the sale of 22 aircraft to Switzerland, as an important step toward generating large-scale exports beyond the Swiss deal.

Under the agreement between the governments, signed Aug. 24, Switzerland will pay $3.25 billion for 22 JAS Gripen E/Fs. Sweden hopes to finalize contracts in 2013 and start first deliveries in 2018.

“This decision will make the JAS Gripen easier to sell globally,” Bildt said. “We will achieve the development and production of an advanced E/F version and hopefully find new buyers. This is a step in the right direction.”

The scale of the project, and the absence of a final cost, raises serious questions about how the program will affect core military spending and Sweden’s ability to protect and build on its present defense capability, said Allan Widman, the Liberal Party’s defense spokesman.

“The deal to sell 22 Gripens to Switzerland was agreed at a fixed price. This is a good deal for Switzerland, but leaves Sweden to carry the can for any budget overruns in development or production,” Widman said.

The Gripen upgrade report delivered by defense chief Gen. Sverker Göranson to the Ministry of Defense in March contained a project cost estimate, Widman said.

“This segment of that report remains classified. Not even the Parliamentary Defense Committee has seen it,” Widman said. “We still do not know what this program will cost, or if funding to finance it will come from the core defense budget.”

Reinfeldt defended the decision, saying the fighter sale and cost-sharing partnership with Switzerland forms part of a broader vision to grow Sweden’s reputation as a producer of high-end combat aircraft.

“The decision is necessary for our defense capability, but it is also positive for Swedish industry, job creation, exports, and research and development,” he said. “The defense industry employs over 100,000 people in Sweden. The fighter’s development leads to continuous technology creation and innovation.”

The Swiss alliance will enable Sweden to procure a high-capability fighter at a lower cost than if it funded the project alone, he said.

However, the government’s planned defense budget increase will be modest. Under the proposal, $45 million will be added to the defense budgets for 2013 and 2014 to cover JAS Gripen-NG related development costs. An additional $30 million will be included in defense budgets after 2014, Reinfeldt said.

The MoD has estimated development costs for the JAS Gripen-NG program at $5 billion.

The real cost may be higher, said Siemon Wezeman, a defense analyst with the Stockholm International Peace Research Institute.

“We don’t know what the final cost will be,” he said. “The big problem with programs like this is that it is very difficult to know at the outset what the final cost will be.”

Technical hurdles, exchange rate fluctuations, problems with sourcing parts from foreign suppliers, and problems in the development and testing stages could all add to costs, Wezeman said.

“The Gripen E/F will be an almost completely rebuilt and unproven version,” he said. “This is not just an upgrade of the existing Gripen; it is a complete redesign, and essentially a new aircraft. Because of the small number to be built, the R&D costs per unit are likely to be very high.”

The upgraded Gripen would grow in length from 14.1 to 14.9 meters, it would have a slightly wider wingspan, and its maximum takeoff weight would increase from 14 to 16.5 tons. The number of onboard weapon stations would rise from eight to 10, engine power would increase by 22 percent, and range would expand from 3,500 to 4,075 kilometers.

Sweden’s agreement with Switzerland comprises three parts: the acquisition of the upgraded Gripen; cooperation in maintaining and upgrading the Gripen during its lifecycle, up to 2042; and a linked agreement that will see the Swiss Air Force lease Gripen C/D version fighters between 2016-2021.

The military has found itself in a difficult position, said Peter Rådberg, a Green Party member of the Parliamentary Defense Committee.

“The military wants this Gripen-NG upgrade program,” Rådberg said. “They see it as improving Sweden’s overall defense capability while raising the country’s ability to better protect the skies in the High North and the Baltic Sea area. The jury is still out on what this will mean for funding in the core branches of defense which are already underfunded.”

The military’s March report noted that personnel will cost an additional $180 million annually by 2019, and an extra $300 million a year will be needed beginning in 2015 to cover projected equipment procurement needs.

Speaking to the Almedalsveckan Politics and Society conference in Gotland on July 1, Göranson said the military may be forced to mothball parts of the Navy, Air Force and Land Forces if forced to absorb funding for the Gripen-NG program.

All existing concerns over the adequacy of defense spending will be discussed with opposition parties in coming months, Defense Minister Karin Enström said.

“There will be enough money in future budgets for defense,” she said. “The details can be worked out later.”