Switzerland's defense dilemma: Funding crisis and future plans exposed

Since the end of January, Switzerland has been caught up in a scandal concerning the financing of its armed forces, or rather the lack of it. It came to light that one of the world's wealthiest countries is unable to fulfil its existing contract obligations. Moreover, the plan to increase defense spending to 1% of GDP has been delayed, exposing a long-known yet overlooked fact: the financial records of the defense department are rarely shared, not just with the public, but also with politicians.

The unrest started when the military announced the cancellation of this year's AirSpirit air shows at the end of January. Subsequently, it was disclosed that the Axalp air shows and the next year's Defense fairs were also cancelled. These events are staple in the Swiss military calendar, thus their cancellation sparked significant public and media interest. In an interview with SRF, the public broadcaster, armed forces commander Lieutenant General Thomas Süssli cited funding shortages as the cause for these measures.

SRF journalists investigated further and soon uncovered that, according to a confidential report from January, the military faced a budget deficit of over a billion pounds (over £820 million). Later findings revealed a larger deficit of £1.2 billion. This prompted questions about the reasons behind this shortfall and accusations were levelled against General Süssli and the head of the defense department Viola Amherd.

However, it would be unfair to place the blame solely on these individuals. The deficit is clearly the result of ongoing defense budget cuts for over three decades. These cuts began after the end of the Cold War. As a neutral country, Switzerland was able to allocate less to defense compared to NATO or Warsaw Pact nations. The peak of defense spending was in 1986-1987, when 1.8% of GDP was dedicated to it, but then a downward trend ensued, leading to a mere 0.8% of GDP in 2022. Amherd rightly noted that the military had been "saved to death".

The problems became more evident with subsequent modernization programs. Notably, the procurement of thirty-six F-35A combat aircraft at a cost of about £5 billion, the modernization of anti-aircraft defense systems (approximately £1.6 billion), and the acquisition of forty-eight 120mm caliber self-propelled mortars mounted on the Piranha IV armored vehicle chassis (around £470 million).

And this is just the start, as we're talking about contracts already concluded. A significant upgrade of army equipment is on the horizon, including new self-propelled howitzers, anti-tank systems, drones, and cyberspace operations, which may cost up to £10.6 billion by 2030. Despite the expenses for the F-35 and Patriot upgrades, the Swiss military formulated a cost-saving "master plan" in 2018, significantly limiting procurement. Issues arose in 2020-2021 when the defense department sought funding for purchases not included in the "master plan" and received it.

For years, Amherd has advocated for increasing defense spending, but her efforts over the last two years demonstrate that good intentions don’t always lead to good outcomes. It's worth mentioning that the parliament did not approve all her proposals, blocking the purchase of twenty-four Piranha Vs in an armored infantry vehicle configuration, as well as the expedited procurement of new anti-tank systems.

The challenge of funding already signed contracts persists. General Süssli's only proposed solution so far is to begin negotiations with manufacturers to arrange on-schedule deliveries with delayed payments. However, commentators caution that this approach could pose challenges for smaller firms.

For the Swiss, as with others across Europe, Russia's full-scale invasion of Ukraine served as a wake-up call, although the issue of insufficient defense spending had already been noted. Pre-war plans intended to raise the defense budget from £4.2 billion in 2022 to £4.9 billion by 2032. The onset of the war prompted parliament to propose more generous funding. According to a resolution from June 2022, defense spending was to double over ten years, exceeding £8.2 billion.

Yet, a period of reassessment followed. It became apparent that the federal budget was too constrained for such a steep increase in military funding, similar to Germany, where public debt is legally capped. In December 2023, parliament voted for a modest, yet notable, increase in defense funding to £7.3 billion by 2032.

Politicians across the board were infuriated by their previous lack of access to true financial records of the military. This is likely to dominate discussions around Amherd and Süssli in the upcoming months. The anger is magnified because, in recent years, the Swiss have frequently and vocally criticized Austrians for making excessive budget cuts. However, over the past two years, Vienna has notably reversed its stance, a change made more significant by the influence of pro-Russian sentiments at the highest levels of its political system.

The Swiss are exploring solutions to their current dilemma, with proposals already emerging. In discussion with Tages Anzeiger, Stefan Holenstein, president of the territorial defense association, suggested a referendum on a constitutional mandate to allocate at least 1.5% of GDP to defense. While Switzerland is synonymous with neutrality, and its pacifist movements have been prominent recently, the military lobby remains a formidable force. With over 250,000 members across paramilitary, reservist, officer, and shooting clubs, garnering the necessary hundred thousand signatures for a referendum is not expected to be a hurdle. Persuading voters, however, might prove more challenging. Holenstein plans to search for additional military funding by proposing cuts to public transport, agriculture, and energy sectors, and potentially by increasing VAT.