Austrians have been traditionally reluctant to allocate significant sums for improving the nation's defense. This attitude, combined with a sluggish economy and uncertainties over the shape of the armed forces in the post-Cold War era, have forced the military to postpone equipment acquisitions and to accept compromises in performance levels, operational readiness, and maintenance standards.

Set at S18.3 billion (for value of the schilling--see Glossary) in 1992, and climbing to S19.0 billion in 1993, the budget was higher than in 1989 (S17.2 billion) and 1990 (S17.5 billion) but was roughly the same in terms of real growth. Having reached a peak in 1986, the defence budget declined between 1987 and 1989 to level off at approximately the 1982 spending rate in real terms.

The government expects to maintain a relatively constant defense budget during the remainder of the 1990s. However, anticipated lower expenditures on personnel will permit some expansion in equipment procurement and improvement of facilities and infrastructure. In 1986 personnel costs absorbed 51 percent of the budget operations, 32 percent and investment, 17 percent. A downward trend in the investment budget has since been reversed. In 1992 new procurements were expected to reach S6.5 billion, or more than one-third of the entire budget. Part of these funds were to be allocated to renovating housing and barracks, much of which dates from the occupation period after World War II. Some S1.3 billion was earmarked for SAMs and airto -air missiles.

Austria's defense spending as a proportion of the gross national product (GNP--Glossary) is the lowest in Europe, except for Luxembourg. During the 1981-91 decade, annual defense outlays were in the range of 1.0 to 1.3 percent of GNP, with the lowest percentage occurring recorded in 1991. Sweden and Switzerland, neutral countries often compared with Austria, had defense spending in 1991 that amounted to 2.8 and 1.9 percent of GNP, respectively. The Austrian defense budget in 1991 was 2.9 percent of total central government expenditure. The corresponding levels for Sweden and Switzerland were 6.4 and 19.4 percent, respectively. Military expenditures per capita amounted to US$213 in Austria in 1991, compared with US$751 in Sweden and US$667 in Switzerland in the same year. In defending the level of defense spending, an Austrian defense minister asserted that although it was not generous, it was sufficient to achieve high standards for the ground forces, although air defense remained inadequate. He rejected the comparison with Switzerland, because the Swiss have adopted the more ambitious goal of the absolute capability of defending their country against attack from any source.

Data as of December 1993