x Abu Dhabi, UAEThursday 20 July 2017

US to spend $640bn on defence in year ahead

The United States will spend more than US$640 billion on defence and related areas such as the energy department in the coming year.

The United States will spend more than US$640 billion (Dh2.35 trillion) on defence and related areas such as the energy department in the coming year.

House and senate negotiators agreed yesterday on defence legislation authorising some US$640.7bn in the current fiscal year for the Pentagon and related programmes at other agencies.

But negotiators defied the White House and passed the budget bill that includes a ban on funding for the final year of a joint ground-based missile defence programme with Italy and Germany.

They prohibited a final US payment of $400.9m for development of the medium extended air and missile defence system (Meads), saying Washington had no plans to continue funding the system being built by Lockheed Martin and its partners in Italy and Germany.

Leon Panetta, the US defence secretary, the German ambassador to the US and the Italian defence minister all wrote to policymakers urging them to preserve the funding.

Giampaolo Di Paolo, Italy's defence minister, told policymakers this month Meads was ideally suited to help address "the current and future air, tactical and ballistic missile threats that Italy, Europe and Nato will have to face for many years to come".

Failure by the United States to fulfil its funding commitment for next year would be "a unilateral withdrawal of our transatlantic agreement and [memorandum of understanding] and the US would be held financially liable", he said.

Politicians moved to cut off Meads because "we're not going to use it", Mr Levin said.

"We don't see the value outweighs the cost."

Meads has been in development for more than a decade at a combined cost of more than $4bn.

Industry executives and foreign officials say the government may face termination fees nearly equal to the money required to finish the system. Michael Amato, a spokesman for the Democrats who serve on the house armed services committee, said US participation in the programme was based on "availability of appropriated funds".

He said policymakers agreed to fund the programme in fiscal 2012 on condition the Pentagon wrap up funding for the programme, and propose a lower-cost solution.

"This year, the House and Senate were clear that they would prohibit the funds for this programme as there are no plans for production," he said.

The White House had no additional comment, referring to its previous statement of administration policy.

The annual authorisation legislation calls for added economic sanctions on Iran, while giving Barack Obama, the US president, more time to implement them, policymakers said. The administration had said it was too soon to add to the sanctions already in place.

The house representative Howard "Buck" McKeon, a California Republican who heads the house armed services committee, said the measure would be brought to the house floor for final approval today, followed by a senate vote that would clear the bill for the president to sign.

The measure includes provisions that would require defence contractors to report computer security breaches and would reduce restrictions on exports of commercial satellites.

The new budget bill authorises $633.3bn under the direct jurisdiction of the congressional defence committees, or about $1.7bn more than requested by Mr Obama. The bill also includes $88.5bn to continue funding for combat in Afghanistan.

The legislation asks the Pentagon to weigh three options for an east-coast missile-defence system, delaying action on that issue. The United States currently has interceptor silos in Alaska and California. The measure also would prohibit the transfer to the US of detainees from the US military prison at Guantanamo Bay, Cuba, where accused and suspected terrorists are held.

The spending outlined in the authorisation bill will not take effect unless funding is provided later by the congressional appropriations committees. The measure also does not account for the possibility of automatic defence cuts that would be required under the process called sequestration.

* compiled from Bloomberg News and Reuters