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Germany

Germany Strains to Pay up for A400M Aircraft

Germany struggles to shell out 8.6 billion euro for 73 Airbus A400M Transport Aircraft, as the deadline to ratify the contract looms.

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A computer model of the craft

The future of the ambitious 18 billion euro Airbus A400M Military Transport Aircraft project has plunged into uncertainty, as Germany dithers over ratification of a contract to buy 73 of the aircraft.

Germany’s controversial military purchase led to a hot debate in Parliament yesterday, with the opposition scathingly criticising the move as "unnecessary and too expensive".

Opposition leaders also warned that the move could provoke a constitutional conflict.

But the ruling coalition of Social Democrats and Greens managed to push through the contract and get the Parliament to put the Airbus A400M project on top of its agenda for late Thursday evening.

What about the dough?

Yet the all important question of financing remains unanswered.

Germany has to shell out 8.6 billion euro ($ 7.61) for 73 A400M planes, according to German Defence Minister Rudolf Scharping.

He signed on the dotted line last December, along with seven other European Union and NATO defence ministers. Germany is now under intense pressure to live up to its commitment to allied countries.

Vexing budgetary problems

The ruling Red-Green coalition has ruled out the conservative opposition's calls to finance the purchase in a supplementary budget.

Opposition parties maintain that the current plan for a simple parliamentary statement of intent would breach German budget rules. But the government plans to set aside funding in the 2003 budget.

There was confusion over whether Germany planned to revise its 2002 budget to cover the 8.6 billion euro. The Finance Ministry denied there were plans to change the budget.

So far only 5,1 billion euro have been earmarked for the deal in the 2002 budget. This is just enough to buy around 40 aircraft.

"We will only sign the contract and give the go-ahead to parliament when we know the costs have been worked through," Brigitte Schulte, state secretary in the defence ministry, said.

Germany jeopardizes entire project

As Germany wrestles with gathering the necessary finances, it runs the danger of missing an end-January deadline to ratify the contract to buy the 73 planes.

Unless the German Parliament clears the deal by January 31, the whole project could fall through.

This could leave Britain and France in the lurch. Both are potential buyers of the A400M. They will be realeased from the deal too if Germany fails to keep its side of the promise.

Other countries worked into the deal as envisioned a month ago include Spain, Turkey, Belgium, Portugal and Luxembourg. Italy backed out of the project late last year.

Common military transport for united Europe

The Airbus A400M is central to European plans for a rapid reaction military force.

The final contract was signed in Brussels last December between Airbus Military SAS, the manufacturers of the A400M and the European Joint Arms Purchasing Authority, OCCAR, which represented the customer nations.

Alberto Fernandez, CEO of Airbus Military, said the A400M will be a "formidable new military airlifter, the fruit of a close partnership between European airforces and aircraft manufacturers. The A400M marks the beginning of a new era in military air transport capability".

The transport aircraft A400M was designed as a successor model for the aging European tactical transport fleet, with its Hercules C-130s and Transall C-160s. The new planes would be a core element in a common military transport for a united Europe.

They boast sophisticated features, such as greater cargo capacity for transportation of miltary vehicles and other equipment for relief missions, high cruise speed increasing fleet productivity and long range to allow non-stop operation between departure and destination.

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