Sunday, April 30, 2017

Germany to Boost Naval Spending Under $4.3 Billion Warship Plan

A rendering of the MKS 180 multi-role vessel. Credit: Bundeswehr

By Birgit Jennen and Rainer Buergin

(Bloomberg) — Germany plans to spend an extra 525 million euros ($572 million) to boost the capabilities of a new class of combat ships that symbolize the country's readiness to take on greater global responsibility and defend shipping lanes.

The changes will improve weapons capabilities and crew protection of the planned MKS 180 multipurpose combat vessels, Deputy Defense Minister Markus Gruebel said in a letter to lawmakers on Tuesday obtained by Bloomberg News. Germany plans to order an initial four ships at a previously estimated price tag of 1 billion euros each, with delivery to begin in 2023.

The Defense Ministry ordered the upgrades in response to "current security policy developments," Gruebel said. Three bidding groups are expected to submit tender offers for the development and production of four ships by September, he said.

"The MKS 180 procurement project is the most important project for the navy and possibly also for the shipbuilding industry for years," the German naval headquarters said in its 2016 report on Germany's dependence on open sea lanes. "These ships are necessary for the performance and operational capability of the German navy and will be an important figurehead for the industry."

German long-term plans call for buying six MKS 180 ships, which will be capable of fighting targets above and below water, and support land operations. The three bidding groups are ThyssenKrupp Marine Systems together with Luerssen shipyards, Damen Shipyards Group together with Blohm+Voss, and German Naval Yards with BAE Systems.

Germany plans to spend about 37 billion euros on defense this year, an increase of 7.9 percent, with less than 5 billion euros earmarked for military procurement.

Defense spending accounts for 1.22 percent of the country's gross domestic product, well below the 2 percent target for member countries of the North Atlantic Treaty Organization alliance. With U.S. President Donald Trump's administration pressing European allies to spend more, Germany plans to increase the spending share to about 1.27 percent in 2021.

© 2017 Bloomberg L.P



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