III. THE CONDUCT OF THE CAMPAIGN
284 We examined how much the intervention cost, and
what its implications were for the future of the defence budget.
The Kosovo campaign tied up a considerable amount of the military
resources of NATO's lead nations. The US carried the lion's share.
Like the MoD, the US Department of Defense monitors the additional,
rather than the total, costs of such operations ("contingency"
operations in the US; "unprogrammed" operations in the
UK). The DoD estimated in June 1999 that in the full fiscal year
to September 1999, assuming the conflict would continue, it would
require an additional $5,184million $3,301million for operations
and personnel costs, $1,548million for munition replenishment,
and $335million for humanitarian assistance.
With the conflict ending later that month, some of these costs
were avoided, but others also arose such as the redeployment and
of forces previously engaged in the conflict. As a result, the
US General Accounting Office has calculated that in the year to
September 1999, for operations in Kosovo
the additional costs were $3,000million for the DoD and another
$256million for other US agencies.
For the 2000 fiscal year, there would be further costs, expected
to be $2,025million and $302million respectively.
Some of the major costs in the year to September1999 included
$1,556million for the air operation, $1,157million for the US
contribution to KFOR, $351million to redeploy and reconstitute
forces stood down after the end of the air campaign, and $173million
on assisting refugees.
285 These figures, however, do not include expenditure
on replacing munitions or lost US aircraft.
The DoD spent $445million on replacing TLAM cruise missiles, $253million
on US Air Force cruise missiles and aircraft towed decoys, and
$300million on other items of equipment expended during the conflict
(including $40million for replacing lost UAVs).
In addition, Congress has made a further provisional $1,100million
available for other equipment/munitions replacements and to implement
'sustainability enhancements' identified as necessary after the
286 Though on a more modest scale, the resources
contributed by the UK were proportionately no less significant.
These were provided not just by the MoD but also by other government
departments (on humanitarian aid, for example) and local authorities
(care of refugees in the UK). Post-conflict, there are also costs
for the international community in rebuilding some of the infrastructure
destroyed in the war. For the MoD, the conflict imposed costs
on its budget included additional operating costs for the aircraft
involved in the air campaign, the consumption of missiles and
bombs, the chartering of ships and transport aircraft, and the
provision of accommodation in-theatre. There are also further
continuing costs as a result of the MoD's involvement in post-conflict
287 The bulk of the additional cost for the MoD arose
in 1999-2000 and will continue in subsequent years. In February
2000, the MoD estimated the additional costs of the Kosovo operations
in 1999-2000 at £206million, and a further £136 million
to pay for Urgent Operational Requirements (much of which will
provide enhanced capability beyond the end of the conflict):
|Additional Operating Costs
|Equipment support||£31 million
|Urgent Operational Requirements
Earlier, when the MoD had presented its Spring Supplementary
Estimate for 1999-2000 it had expected the extra cost to be £398million
(the subsequent lower figure reflected a slippage in payments
for some UORs),
and we sought from the Department details of the major adjustments
in the revised Estimate.
This showed that the additional costs of operations in Kosovo
for the year had fallen mainly on RAF Strike Command (£40million),
Chief of Joint Operations (£50millon), Defence Logistics
Organisation (£144millon) and Adjutant General (where additional
pay and allowances generated £19million extra expenditure).
288 These cost figures represent the additional cash
outlays that were needed within the 1999-2000 year. As such they
do not take account of the resources consumed. Most importantly,
such cash figures do not subsume munitions consumed or equipment
lost until they are replaced. They exclude, therefore, consumed
ordnance valued at £45 million (on an historic cost basis),
as well as the C-130 and UAVs lost during the operation. The MoD
has recently announced orders worth £25million for guided
munitions, including 23 TLAM missiles (£1.1million each)
and 18 Paveway II bombs (£18,000 each),
but only a part of this should be seen as a cost of the Kosovo
campaign. In similar vein, many Urgent Operational Requirements
represent expenditure on assets not consumed in the conflict,
but were simply outlays brought forward. The NAO's report on the
campaign also highlighted that although additional cost figures
for the sorties flown were calculated on the basis of the extra
flying hours completed, the sort of flying involved was less wearing
on the aircraft than the low level training that was displaced.
289 Some of the MoD's costs for the Kosovo operation
have been shared with other government departments (for example
the Department for International Development and the Foreign and
Commonwealth Office) and with other nations (for example the costs
of NATO and the UN Mission). By January 2000, the MoD had recovered
£5.7 million with a further £4.9 million to be recovered.
Parliament needs to be informed of the extent to which the
costs of the Kosovo conflict and its post-conflict commitment
are being refunded to the MoD by other government departments
and by the Treasury, or whether substantial costs are ultimately
being borne by the defence budget.
290 The introduction of Resource Accounting and Budgeting
should allow the Department to produce more meaningful analyses
of the resources consumed in military operations. In the meantime,
a better view of the additional costs is possible by looking across
a number of years, removing the distortions produced when consumed
items are only replaced some time later. Indeed, many of the additional
costs associated with operations in Kosovo will be borne in the
current and subsequent years. The NAO's report on the conflict
sets out the MoD's estimate of the £866 million additional
cost of its Kosovo commitment over the five years to 2002-03,
of which Urgent Operational Requirements account for 27% (£234
In the recent Spending Review the Secretary of State announced
an additional £200million for the MoD's current (2000-01)
budget, in particular to help address the main equipment lessons
learned from the Kosovo campaign
(including providing an all-weather precision-guided bombing capability,
Maverick anti-armour missiles, and enhanced secure air-to-air
communications). The MoD further estimates that the additional
costs of operations in Kosovo will be some £300 million over
the three years of the latest Spending Review,
including £25 million to replenish consumed munitions.
Such additional costs of so-called 'unprogrammed operations' are
usually added to the MoD's budget in Spring Supplementary Estimates,
and then only if they cannot be absorbed within existing allocations.
The National Audit Office Report on Kosovo expressed its concern
about the 'scale of uncertainly regarding future costs'.
The Ministry of Defence needs to keep Parliament fully informed
of the future costs to the defence budget of the UK's Kosovo commitment.
We will be continuing our annual monitoring of the MoD's Estimates
and annual reporting documents to ensure that the Defence budget
is fully reimbursed for the costs of operations in Kosovo, as
well as other critical operations. We will also be examining
how the proposed joint MoD/Foreign Office/DfID 'Conflict Prevention'
budget, announced in the 2000 Spending review,
will allow a proper planning and provision for the resources needed
to defuse or (if need be) to tackle future crises.
658 Military Operations: Some Funds for Fiscal Year
1999 Contingency Operations Will Be Available for Future Needs,
Briefing Report GAO/NSIAD-99-244BR, US General Accounting Office,
21 September 1999 Back
costs are defined as those involved in cleaning, inspecting, maintaining,
replacing and restoring equipment to the required condition at
the end of operations (GAO/NSIAD-99-244BR, op cit). Back
Operations Allied Force, Balkan Calm, Joint Guardian,
Eagle Eye, and Sustain Hope. Back
State Department, Agency for International Development, Department
of Transportation, US Treasury. Back
Security: Current and Projected Factors Affecting Regional Stability,
Briefing Report GAO/NSIAD-00-125BR, US General Accounting Office,
April 2000, Appendix IV. Back
op cit Back
F-117 fighter was shot down, and the US lost two Apache helicopters
during training. Back
op cit Back
666 ibid Back
p 24, Figure 8. Back
para 2.6 Back
pp 269-271 Back
670 ibid Back
para 2.8 Back
Deb., 20 June 2000, c136w Back
para 2.14 Back
p 28, Figure 9 Back
para 2.7 Back
Deb 24 July 2000, c 777 Back
in 2001-02, £108m in 2002-03, and £83m in 2003-04 Back
Report, Session 1999-2000, op cit, paras 150-152 Back
p 24, para 2.10 Back
Review 2000, Cm 4807, pp141-142 Back