Pakistan Raises Annual Defense Spending 11 Percent

ISLAMABAD - Pakistan's government jacked up defense spending and government employees' pensions in a new budget June 3 that set a deficit of 4 percent of GDP.

The budget for the fiscal year 2011-2012 starting July 1 came as pressure mounts on Pakistan to launch a military offensive in the restive North Waziristan region, known as the hub of Taliban and Al Qaeda linked militants.

It earmarked 495 billion rupees ($5.7 billion) for defense, an 11 percent increase on the current year.

"We stand by our valiant men, who are laying down their lives to safeguard our country," finance minister Abdul Hafeez Shaikh told parliament. "The country has constantly been suffering because of the existing security situation," but the government was determined to improve the economy and provide security to the people, he said.

More than 4,410 people have been killed across Pakistan in bomb blasts and suicide attacks blamed in Taliban- and Al-Qaeda-linked militants since July 2007.

The Pakistani Taliban has claimed responsibility for a string of recent attacks against government security forces and has vowed to launch even larger ones to avenge the killing of Osama bin Laden, shot dead in a U.S. raid last month.

The total budget for the next year was fixed at 2,504 billion rupees ($29.1 billion), with a budget deficit of 850 billion rupees ($9.9 billion), or four percent of gross domestic product (GDP), Shaikh said.

The budget also provides rises of up to 20 percent in government employees' pensions and promises to bring at least 2.3 million new taxpayers into the tax net.

Pakistan has long defied Western pressure to end giant tax-dodging in a country where barely 1 percent of the population pays at all, as a corrupt bureaucracy starves energy, health and education of desperately needed funds.

The International Monetary Fund last year halted a $11.3 billion assistance package over a lack of progress on reforms, principally on tax.

In the wake of catastrophic 2010 floods that cost the economy $10 billion, Washington donated hundreds of millions of dollars and demanded that Pakistan's rich, whose lifestyles outstrip many in the West, step up to the plate.

Shaikh said Pakistani exports grew by 28 percent, an unprecedented rate, during the current fiscal year.

"We also hope that our remittances will reach a level of $12 billion by close of this year," he said, adding: "Our foreign currency reserves have reached $17.3 billion."

He said that the government had achieved some macrostability, checked inflation and begun to impact the growth rate.

Local newspaper The News reported this week that Pakistan had decided to launch a "careful and meticulous" military offensive in North Waziristan after a recent visit by U.S. Secretary of State Hillary Clinton to Islamabad.

But Lt. Gen. Asif Yasin Malik, the corps commander supervising all military operations in Khyber Pakhtunkhwa province, told reporters on June 1, "We will undertake operation in North Waziristan when we want to."

Russian Leader Vows Probe Into Fatal Armory Fire

MOSCOW - More than 20,000 people were evacuated and dozens injured when a fire at a munitions depot in central Russia triggered a succession of explosions and sent a fireball blazing into the sky.

The huge blaze at a military depot storing artillery shells and rockets came after a similar fire late last month, prompting President Dmitry Medvedev to vow that those responsible for the latest "doomsday" accident would face the sack.

Officials battled through the night to put out the blaze at the depot near the village of Pugachyovo in the Volga region of Udmurtia that broke out June 2, minutes before midnight, hurling shrapnel into the air and sending people running for their life.

"Anything that could have exploded did," emergencies ministry spokesman Mikhail Turkov said.

About 60 people sought medical help, including 25 people who were hospitalized - many of them elderly, officials said, adding one man had his finger amputated as a result of the accident.

Two elderly people - a woman and a man - died of heart attacks, said Elena Ivanova, a spokeswoman for the regional health ministry in Udmurtia, declining however to link the deaths to the fire or the explosions themselves.

More than 500 personnel were battling the blaze, along with four planes, three helicopters and robotic equipment, officials said, adding more than 40 tons of water have been dumped over the blaze as of early June 3.

By that time, authorities said they had the fire under control and many people were beginning to return home as doctors were helping local residents who sustained emotional trauma.

"I thought it was thunder. No, looks like it is not thunder. I then hear the base is going up in the air," local villager Galina Morozova said in televised remarks, adding the force of the blast broke windows.

"You really can't put it into words," a visibly shaken witness said.

Explosions at military weapons depots are relatively common in Russia and are often linked to ageing equipment and lax enforcement of safety rules.

Some observers have suspected foul play, noting that corruption in the military is rife and such fires can help hide the illicit sale of munitions on the black market.

Late last month, a similar fire at a munitions depot in the nearby region of Bashkortostan triggered explosions that lasted several days.

Officials could not immediately pinpoint the reason for the fire but a spokesman for the FSB security service in Udmurtia said that a terrorist attack was ruled out.

A granite-faced Medvedev told Defence Minister Anatoly Serdyukov to conduct an internal investigation and establish who was responsible for the latest accident in the country's armed forces.

"We are having a doomsday for the second time in a row," Medvedev said in televised remarks.

"Two times is already systematic. Put together proposals as to who and how should be held responsible for this," he said, noting that several officials have already been let go due to similar explosions in the past.

Early on June 3, Udmurtia leader Alexander Volkov met local residents, who were evacuated to the nearby villages, saying the government would compensate them for damage sustained in the fire.

Turkov, the emergencies ministry spokesman, said officials had prepared to evacuate about 28,000 but ended up evacuating more than 22,000 people living nearby.

The defense ministry quickly put a lid on the exact quantity of munitions stored at the depot.

"This is confidential information," Moscow-based defense ministry spokesman Igor Konashenkov said. Turkov said earlier in the day the depot could have contained up to 10,000 rail trucks worth of shells.

The silo also stores a small amount of rockets for Grad rocket launcher systems but they are kept in a concrete shelter and did not explode, Konashenkov said.

France Unveils Plan for New Defense Headquarters

PARIS - French Defense Minister Gérard Longuet on May 31 unveiled a detailed architectural model and plans for the building complex, popularly dubbed the French Pentagon and expected to house 9,300 command and civilian staff in 2014 under a 3.5 billion euro ($5.1 billion) public-private partnership (PPP) contract.

Builder Bouygues led a group that includes Thales, Sodexo and Dalkia to win the PPP contract, initialed by Longuet on May 30, to build and manage the site under a 27-year lease, receiving an annual rent of 130 million euros. The other bidders were Vinci and Eiffage. A bank pool including Natixis, Dexia, Société Générale and BBVA will lend financing.

Architect Nicolas Michelin said he designed the main building as an environmentally friendly system inspired by the lines of stealthy military aircraft.

Defense officials hope the new site will encourage a joint approach in military affairs by bringing together at the Balard site, located in east Paris, the headquarter staff of the services, which are dispersed around the capital. The Direction Générale de l'Armement procurement office will also join the defense staff.

The government retains the Hotel de Brienne, the 18th-century building that served as the headquarters of Gen. Charles de Gaulle when he led the provisional administration on the liberation of Paris in August 1944.

North Korea Threatens Retaliation over Kim Targets

SEOUL - North Korea's military on June 3 threatened retaliation against South Korea unless Seoul punishes troops who used pictures of Pyongyang's ruling dynasty as rifle-range targets.

The South's defense ministry said earlier this week it had ordered the army reservists to discontinue the practice and to use normal targets.

But the North's military general staff called for an apology and stern punishment for those involved.

The North's regular armed forces and reservists would "escalate the practical and overall retaliatory military actions till the puppet authorities have taken measures to punish the prime movers... and make an apology for them," said a military statement on the official news agency.

Several Seoul media outlets published pictures of targets depicting the North's leader Kim Jong-Il, his late father and founding president Kim Il-Sung and Kim Jong-Il's youngest son and heir apparent Kim Jong-Un.

"The recent hideous provocation is a never-to-pardoned treason," said the North's statement, which did not elaborate on the threatened retaliation.

It called on the South's "puppet authorities" - a reference to President Lee Myung-Bak's government - to "apologize to the nation for the evil deeds committed by traitor Lee Myung-Bak and the puppet army hooligans and take a responsible step for their prevention."

Cross-border relations have been icy for more than a year, since the South accused the North of sinking one of its warships and imposed trade sanctions.

The North denies involvement in the March 2010 sinking. But it shelled a South Korean border island last November, killing four people including two civilians.

In an abrupt change of tack in January, the North began calling for peace and dialogue. But this week it announced it would no longer deal with Lee's government.

On June 1 it said it had rejected a South Korean proposal to hold a series of three summits designed to ease tensions on the peninsula.

South Korea confirmed it had held a secret meeting with the North in Beijing in May. But it said the main purpose was to try to persuade the North to apologize for the two border incidents and to promise no recurrence.

Seoul says its neighbor must take responsibility for the incidents before there can be any serious peace dialogue.

Some analysts believe the North will not mount further attacks while it is seeking U.S. food aid and preparing for a major political anniversary next year.

But others say its decision to disclose the diplomatic contacts is worrying. Seoul critics cited Lee's alleged double-dealing in seeking summits while publicly maintaining a tough line with Pyongyang.

But U.S. academic Marcus Noland said the disturbing aspect "is not Lee Myung-Bak's alleged hypocrisy but rather North Korea's recklessness.

"One has to assume that this behavior is connected to North Korea's internal political machinations and could augur further provocations in the future," he wrote in a blog posting.

Several U.S. and South Korean officials have warned of heightened uncertainty as Kim puts in place a succession plan involving his son.

Homegrown Radar to Boost India's Air Defenses

NEW DELHI - The Indian Air Force on June 3 will integrate a locally built radar into its Integrated Air Command and Control Systems.

The Arudha medium-power radar will be installed at the Naliya air base in the Indian state of Gujarat, near the Pakistani border, a senior Indian Air Force official said.

The Arudha, built by the state-owned Electronics and Radar Development Establishment, part of the government's Defence Research and Development Organisation (DRDO), will improve India's air defense capabilities.

Several of the Air Force's air defense radars are old and need replacement. The service has only 50 percent of the medium-power radars it requires, the Air Force official said, and only 24 percent of the low-level transportable radars it needs.

There is also a shortfall in high-power static radars (HPSR) and mobile radars.

The HPSRs are 3-D radars that cover aerial threats at a height of two kilometers and above and have a range of 450 kilometers. India plans to procure HPSRs directly procured from the overseas market.

Currently, India's air defense system is made up of the Air Defence Ground Environment System, an integrated network of surveillance radars, air defense control centers, air and missile bases and anti-aircraft guns. The system was developed in the early 1970s with equipment purchased from the former Soviet Union. The system is still the mainstay of the country's air defenses, with surveillance radars deployed across India.

U .S. Military Chief 'Open' to Ideas on Japan Base

WASHINGTON - The head of the U.S. military said on June 1 that he was open to ideas on resolving a long-running row with Japan over bases after three senators called the two governments' agreement infeasible.
"I think we need to be as open as we possibly can to solutions now," Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, told a breakfast with reporters.

Sens. Carl Levin, John McCain and Jim Webb last month called for the United States to rethink base realignment plans in East Asia due to political opposition in Japan and cost overruns in both Japan and South Korea.
Japanese and U.S. officials earlier dismissed the proposal, saying that the plan worked out in 2006 was the best approach and would reduce troop numbers on Okinawa Island, where tensions with local residents have been frequent.
Mullen, whose term ends in September, did not comment specifically on the senators' proposal but said that the United States needed to be mindful both of costs and the political situation in Japan.
"This thing's been discussed for 15 years. There have been 20 different kinds of solutions that I've seen - all of them are difficult. So I think we have to be realistic here," Mullen said.
Any solution needs to preserve "the kind of influence and stability that our presence in that part of the world has done for 60-plus years, and at the same time recognize limitations and that there are needs on both sides."
The senators said that Japan needed to focus on reconstruction from its massive March 11 earthquake and not be distracted by the base dispute, which contributed to the resignation of a prime minister, Yukio Hatoyama, last year.
Under the 2006 plan, the United States would move the flash point Futenma base out of a crowded urban area and to an isolated stretch of beach elsewhere on Okinawa.
Some Okinawan activists have demanded that the base be removed from the island completely. The senators said Futenma was needed for security but that its functions could largely be shifted to Okinawa's existing Kadena Air Base.
The United States stations 47,000 troops in Japan under a post-World War II security treaty, with half in Okinawa. The 2006 plan aims to shift 8,000 Marines and their families from Okinawa to the U.S. territory of Guam in 2014.

Assa d, in New Position, To Help Pentagon Get Best Deal

There will be a new negotiator at the table as the Pentagon and Lockheed Martin hammer out a pricing deal for the latest batch of F-35 Joint Strike Fighters.

Pentagon veteran Shay Assad has been named the U.S. Defense Department’s director of defense pricing. (File photo / U.S. Defense Department)

Shay Assad, the newly named director of defense pricing, will help the U.S. Defense Department buy weapons at a lower cost than official budget estimates. The creation of the new position is part of the Pentagon's quest to drive down the cost of weapons at a time when defense budgets are constricting.

"We simply intend to be much more professional, much more capable, when it gets to sitting at the table and negotiating the price on behalf of the taxpayers," Assad said during a June 2 briefing at the Pentagon.
The creation of the position is part of Pentagon acquisition executive Aston Carter's Better Buying Power initiative to buy more for less money. Part of that initiative is looking beyond program cost estimates and determining what a program should cost.
In his new role, Assad will help program managers hit these should-cost targets, which will be set at levels less than official budget estimates.
In addition, he will spend more time improving the contracting and pricing work forces in "improving their skills on what it is we pay on the goods and services we buy."
One of the major elements of this is to transform the Defense Contract Management Agency (DCMA), Assad said. DCMA has hired 300 pricing analysts who will assist contract officers during negotiations for weapons, sustainment, services and other contracts. It will take 18 to 24 months to bring this work force up to speed, Assad said.
Officials are also creating an online system that will "enable our contracting officers to get insight into the financial aspects of the companies that we deal with in a real-time way," he said. The system, which already includes rate data, is being tested.
Currently, it could take contracting officers months or even a year to compile this type of data. Soon it will all be organized under one roof and should take minutes to retrieve.
"What we're really trying to do is have contracting officers push away from the table and say: 'I did very well by the taxpayers,' " Assad said.
Assad previously served as director, defense procurement and acquisition, a position he has held since 2006. Richard Ginman, Assad's former deputy, has assumed that position and is responsible for general acquisition and contract policy.
While Assad will conduct peer reviews for sole-source programs that cost more than $1 billion and selective deals above $500 million, Ginman will work on competitive programs.
Assad will be "intimately involved" supporting the acquisition of the F-35, the Pentagon's most expensive program. DoD converted the program to a fixed-price construct last year and has entered new negotiations for the fifth batch of production aircraft.
The F-35 negotiations will likely not wrap up until this fall, Assad said.