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### Viewing cable 07THEHAGUE63, NETHERLANDS: DEFENSE BUDGET WOES -- PRICE FOR

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07THEHAGUE63 | 2007-01-12 17:05 | 2011-01-17 00:12 | CONFIDENTIAL | Embassy The Hague

`

    VZCZCXYZ0000
    OO RUEHWEB

    DE RUEHTC #0063/01 0121719
    ZNY CCCCC ZZH
    O 121719Z JAN 07
    FM AMEMBASSY THE HAGUE
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 7848
    INFO RUEHZG/NATO EU COLLECTIVE PRIORITY
    RUEKJCS/CJCS WASHDC PRIORITY
    RHEHNSC/NSC WASHDC PRIORITY
    RUEKJCS/SECDEF WASHDC PRIORITY

` `

    C O N F I D E N T I A L THE HAGUE 000063

    SIPDIS

    SIPDIS

    STATE FOR EUR/UBI

    E.O. 12958: DECL: 01/12/2017
    TAGS: MARR PGOV PREL NL
    SUBJECT: NETHERLANDS: DEFENSE BUDGET WOES -- PRICE FOR
    AFGHANISTAN?

    Classified By: CDA Chat Blkeman, r...

    92463,1/12/2007 17:19,07THEHAGUE63,"Embassy The
    Hague",CONFIDENTIAL,,"VZCZCXYZ0000
    OO RUEHWEB
    DE RUEHTC #0063/01 0121719
    ZNY CCCCC ZZH
    O 121719Z JAN 07
    FM AMEMBASSY THE HAGUE
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 7848
    INFO RUEHZG/NATO EU COLLECTIVE PRIORITY
    RUEKJCS/CJCS WASHDC PRIORITY
    RHEHNSC/NSC WASHDC PRIORITY
    RUEKJCS/SECDEF WASHDC PRIORITY
    ","C O N F I D E N T I A L THE HAGUE 000063
    SIPDIS
    SIPDIS
    STATE FOR EUR/UBI
    E.O. 12958: DECL: 01/12/2017
    TAGS: MARR PGOV PREL NL
    SUBJECT: NETHERLANDS: DEFENSE BUDGET WOES -- PRICE FOR
    AFGHANISTAN?
    Classified By: CDA Chat Blkeman, reasons 1.4 (b,d)
    ¶1. (C) Summary: The cost of the Dutch deployment in
    Afghanistan and probems related to the Dutch Ministry of
    Defense reoganization -- coupled with negotiations on
    defene issues during coalition formation talks of the nw
    Dutch government -- could jeopardize several key projects for
    the 2007 defense budget. While ""al options are still on the
    table,"" possible projct options include postponing or
    withdrawing fro the NATO C-17 Strategic Airlift Initiative,
    as ell as new Chinook helicopter, Tactical Tomahawk (TACTOM)
    missile, and unmanned aerial vehicle (UAVs acquisition.
    Defense Minister Henk Kamp and MODState Secretary Cees van
    der Knaap will discuss ptions January 16. End summary.
    ¶2. (C) MOD conacts tell us the rising cost of the Dutch
    deployment to Afghanistan -- already half a billion euros -
    is severely restricting Dutch defense investmets. A number
    of defense projects slated for 200 and 2008 are likely to be
    cut or delayed as a rsult. In addition, an on-going defense
    ministry reorganization is compounding the problem.
    Previously, Dutch services jealously guarded their own
    budgets. With the reorganization, the army, navy and air
    force for the first time are working from a combined budget
    -- oversight has been lax. As a result, project costs have
    run higher than anticipated. MOD Director of General Policy
    Affairs Lo Casteleijn told Charge January 12 that the GONL
    often funds projects up to 130 percent in case of cost
    overruns -- in this case, most 2006 projects are running at
    about 120-130 percent, which is cutting into 2007 project
    financing.
    ¶3. (C) MOD contacts stressed ""all options are still on the
    table"" regarding defense-related projects. DM Kamp and MOD
    State Secretary van der Knaap will discuss various options on
    January 16, and shortly thereafter send a letter to
    Parliament presenting the ""finalized"" budget. Kamp will then
    appear before the parliamentary Defense Committee for further
    discussion. Major projects include:
    -- Joint Strike Fighter (JSF): The GONL initially expressed
    interest in purchasing three early JSF aircraft in order to
    participate in the test and evaluation phase. MOD contacts
    suggest the Dutch will now purchase two -- which still
    qualifies them for the test and evaluation program.
    Casteleijn told Charge January 11 that JSF will be a topic of
    coalition formation talks, especially as the Labor Party
    (PvdA) opposes JSF program participation. Casteleijn said
    the Christian Democrats (CDA) and PvdA need to ""define the
    boundaries"" for discussion on JSF. He suggested program
    participation will remain intact while the number of aircraft
    purchased will become a topic of negotiation. Casteleijn
    also expected PvdA to push for an independent, non-partisan
    review of JSF to determine whether it is the ""best plane for
    the best price.""
    -- NATO C-17 Strategic Airlift Initiative: MOD and defense
    consultant contacts note the price for ""leasing"" C-17s per
    hour has nearly doubled from earlier estimates, while Boeing
    insists participating NATO allies purchase planes in advance
    to leasing them -- this may force the Dutch to withdraw from
    the initiative. Casteleijn expressed disappointment over the
    revised terms of reference, and confirmed that the Dutch
    delegation at NATO has received instructions to push back --
    if the initial terms are not possible, then the Dutch will
    have to pull out. He said strategic airlift remains a
    priority -- he would not be surprised if the number of JSF
    aircraft acquired was reduced to support C-130 or C-17
    acquisition.
    -- CH-47 Chinook Helicopters: The Dutch are relying heavily
    on their Chinooks in Afghanistan, and have requested six new
    Chinooks with specialized -- and expensive -- Honeywell
    cockpits in addition to refurbishing the rest of their
    Chinook fleet. While postponing the new Chinook acquisition
    is a possibility, MOD and defense consultant contacts say the
    MOD leadership is ready to go ahead with the purchase.
    Refurbishing the fleet will most likely be delayed.
    -- Tactical Tomahawk (TACTOM) missiles: TACTOM was considered
    a key part of DM Kamp's plan to improve the Dutch navy;
    equipped with TACTOM, the relatively new Dutch LCF frigates
    would become a force to be reckoned with. The Dutch MOD had
    received parliamentary support to become the third country
    after the United States and the UK to acquire TACTOM.
    However, PvdA vociferously opposed TACTOM acquisition, while
    the GONL was panned in the Dutch press for attempting to
    acquire a weapon viewed as ""aggressive and offensive"" in
    nature. MOD Deputy Director for General Policy Affairs Jan
    Geerts Siccama told polmiloff January 5 that while DM Kamp
    may continue to push TACTOM, he would not be surprised if the
    almost USD 60 million acquisition becomes a casualty of
    coalition formation talks with PvdA. Casteleijn agreed; he
    believed TACTOM was ""dead"".
    -- Unmanned Aerial Vehicles (UAVs): The Dutch have informally
    walked away from their MALE UAV program with the French, and
    expressed keen interest in the U.S. Predator B UAV program.
    However, MOD working level and defense consultant contacts
    suggest pursuit of Predator B will be suspended indefinitely
    due to financial constraints. Casteleijn noted that UAV is
    ""still on the agenda,"" but funding it in 2007 will be
    difficult given budget constraints.
    Comment
    -------
    ¶4. (C) The Dutch pride themselves on ""doing more"" with a
    limited defense budget. While Dutch spending on defense as a
    percentage of GDP is well below NATO's two percent target,
    the Dutch have invested generously -- over 20 percent of its
    defense budget -- on new defense-related projects in recent
    years. The Dutch are now over-committed and looking to
    prioritize ongoing operations and big ticket acquisitions
    with smaller investments -- while keeping Afghanistan and JSF
    at the top of the list. The Ambassador will engage further
    with CHOD Gen. Berlijn and senior MOD leadership next week.
    BLAKEMAN

`