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61. Aggregating Demand for Pharmaceuticals is Appealing, but Pooling Is Not a Panacea

Author:
Cassandra Nemzoff, Kalipso Chalkidou, and Mead Over
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
As low- and middle-income countries reduce their reliance on donor aid, they are increasingly obliged to assume some degree of financial responsibility for donor projects. This challenge will be particularly complex in the procurement of health commodities. In recent decades, recipient countries have benefitted from donor-aggregated demand and pooling mechanisms, negotiated prices, purchasing, and delivery of commodities. However, as countries shift away from donor support, their challenge will be finding a way to aggregate demand in order to achieve the benefits that the pooled purchasing arrangements of vertical health programs now provide. As a first step in tackling this challenge, much can be learned from a diverse group of pooled procurement initiatives that have developed over the past 40 years in high-, middle-, and low-income countries. This note reviews the rationale and functions of these initiatives, notes their potential benefits and barriers, and draws lessons regarding how best to incorporate pooled pharmaceutical purchasing models into the design and implementation of health financing reforms in countries in transition. We first provide a brief background on the procurement challenges faced by countries in transition. In section 2, we provide an overview of different types of pooling initiatives, highlighting the key features of each. Leveraging our research and key interviews, we outline the real and potential benefits of pooling in section 3, and the most pressing barriers that organizations or countries will face as they seek ways to aggregate demand in section 4. In section 5 we discuss some of the issues that countries and development partners should address when considering pooled procurement initiatives and make two recommendations: (1) countries and development partners should conduct further research on the merits of pooled procurement, and (2) they should develop a straw model of a pooled procurement governance structure that could be tested using a series of pilots.
Topic:
Budget, Public Health, Medicine, and Pharmaceuticals
Political Geography:
Global Focus

62. The Global Exchange (Spring 2018)

Author:
Adam Frost, David J. Bercuson, Andrew Rasiulis, Ross Fetterly, Lindsay Rodman, Lindsay Coombs, Stephen M. Saideman, Eugene Lang, David Perry, Alan Stephenson, Ian Mack, Adam Lajeunesse, Charity Weeden, and David Higgins
Publication Date:
03-2018
Content Type:
Journal Article
Journal:
The Global Exchange
Institution:
Canadian Global Affairs Institute (CGAI)
Abstract:
“Canada is a fireproof house, far from inflammable materials.” These were the naïve words of Canadian Senator Raoul Dandurand during his 1924 address to the League of Nations. Ironically, his speech took place between the two most devastating global conflicts in human history, and Canada was an active belligerent in both. However misguided Dandurand’s statement may have been, its sentiment has been woven into Canadian psyche by virtue of geographic reality. Canadians enjoy the privilege of a tremendously productive relationship with the United States, which remains the global hegemon. With geographical ties, Canadians and Americans also share a common history and broad cultural kinship. The strength of this relationship has afforded Canada a degree of security that would otherwise be unattainable, which affects Canadians’ perception of national security. It is an exceptional privilege of circumstance that defence is not required to be frequently in the forefront of public dialogue. However, while it is unlikely Canada will be confronted with an existential threat in the foreseeable future, it would be foolhardy for Canada to become complacent about preserving the means to defend its national interests when necessary. The 21st century international arena is rife with instability and change. These conditions create uncertainty. Canada’s armed forces are charged with the task of safeguarding and advancing Canada’s national interests when called upon, often in the most challenging of circumstances and environments. In order for the Canadian Armed Forces (CAF) to be successful, the government of the day must adopt and implement pragmatic defence policy, and provide the CAF with the appropriate resources to meet expectations. This issue contends with the questions of how best Canada can enable the CAF to succeed in its assigned tasks, and outlines what some of those tasks ought to be to defend against contemporary threats in our era of increasing uncertainty. Policy-makers must consider the evolving threat environment in order to enable the CAF to effectively defend Canada’s interests. The proliferation of long-range ballistic missiles and offensive cyber capabilities poses significant threats to Canada and its closest allies. Climate change is also exposing Canada to new challenges in our Arctic territories, creating a growing need for surveillance and governance in the high Arctic to protect Canadian sovereignty. These are only a few of the emerging threats addressed in this issue. For the CAF to be capable of adapting to the multiplex of eventualities that it must be prepared to confront, it requires sufficient personnel and materiel. The mix of skills required in today’s armed forces is very different than in bygone eras. Personnel must also be properly equipped if they are to be effective in their roles. Therefore, recruiting and retaining people with expertise in diverse trades and the efficient and timely procurement of vital equipment are paramount if the CAF is to be a capable, adaptable and effective force.
Topic:
Defense Policy, Armed Forces, Military Affairs, Budget, and Missile Defense
Political Geography:
Canada, North America, and United States of America

63. Italy's Defence Expenditure: What Impact on EU Defence Cooperation?

Author:
Andrea Aversano Stabile and Paola Sartori
Publication Date:
12-2018
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
On 15 October 2018, the Italian Ministry of Defence released its Plurennial Programmatic document (Documento Programmatico Pluriennale, DPP) outlining Italy’s defence expenditure forecasts until 2020.[1] The DPP was eagerly awaited this year, especially in light of the defence cuts announced by the current government, which is already embroiled in a difficult negotiation with the EU over Italy’s increasing budget deficit. Coming at a time when the EU is devoting increased effort and resources to boost its defence cooperation and the US Trump administration is admonishing its European allies for not paying their share to defend Europe through NATO,[2] Italy’s envisioned defence cuts are likely to cause some concern in Brussels and Washington. Ultimately, these may also increase scepticism as to Rome’s reliability as a key European partner in the defence realm.
Topic:
Defense Policy, NATO, Military Affairs, Budget, and Military Spending
Political Geography:
Europe, Italy, and European Union

64. Measuring the Impact of Sequestration and the Drawdown on the Defense Industrial Base

Author:
Rhys McCormick, Andrew Philip Hunter, and Gregory Sanders
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The presence of a technologically superior defense industrial base has been a foundation of U.S. strategy since 1945. While the implementation of the budget cuts in the Budget Control Act of 2011 has caused concerns for the industrial base, the resulting debate has been lacking in empirical analysis. The purpose of this research is to measure the impact of the current defense drawdown across all the tiers of the industrial base. This report analyzes prime and subprime Defense Department contract data to measure the impacts of the drawdown by sector to better understand how prime and subprime contractors have responded to this external market shock.
Topic:
Science and Technology, Military Strategy, Budget, and Defense Industry
Political Geography:
United States

65. Trump’s 2019 Missile Defense Budget: Choosing Capacity over Capability

Author:
Tom Karako and Wes Rumbaugh
Publication Date:
02-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
President Trump’s 2019 budget request includes $12.9 billion for missile defense programs, including $9.9 billion for the Missile Defense Agency and about $3 billion in modernization in the military services, building upon the acceleration initiated in the $323 million FY 2017 Above Threshold Reprogramming and the FY 2018 Budget Amendment of $2.0 billion. The proposed budget continues the recent trend of procurement consuming a greater portion of overall missile defense spending, reflecting a choice for prioritizing near-term capacity over longer-term capability. With the exception of two new Pacific radars and a modest effort for tracking hypersonic threats, the request includes strikingly few changes to the program of record. The submission fails to address past shortfalls for more research and development of new missile defense technologies and capabilities, most significantly with its lack of real movement toward a space-based sensor layer for tracking and discrimination, as opposed to merely missile warning. Pursuit of more advanced capabilities will require substantial programmatic changes in the 2020 budget, or with a budget amendment later this year, if such capabilities are recommended by the forthcoming Missile Defense Review. On February 12, the Department of Defense (DoD) released its budget request for FY 2019, which included a total of $12.9 billion for missile defense-related activities. The proposed topline for the Missile Defense Agency comes in at $9.9 billion, comprising $2.4 billion for procurement, $6.8 billion for research, development, test, and evaluation (RDT&E), $500 million for operations and maintenance (O&M), and $206 million for military construction (MILCON). The $9.9 billion request is a 26 percent increase from the FY 2018 budget request of $7.9 billion. Funding for ballistic missile defense within the services includes about $3 billion, largely for the procurement of Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) and Standard Missile-6 (SM-6) interceptors. Overall, the budget reflects a near-term focus on capacity of existing programs, even at the expense of capability improvements. In its current form, the request boosts funding for all four families of interceptors. For homeland missile defense, this includes the continued improvements to the capacity and reliability of the Ground-based Midcourse Defense (GMD) system by continuing to deploy an additional 20 interceptors, several testing spares, and a new missile field at Fort Greely, Alaska. The request also deepens the magazines for Terminal High Altitude Area Defense (THAAD), Aegis, and Patriot interceptors, continuing a procurement-heavy trend from last year.1 The focus on capacity does not answer the question, however, how missile defense efforts will be adapted to the new reality of great power competition described by the National Security Strategy and the National Defense Strategy.2 One of the few new muscle movements in the entire budget is the addition of two radars in the Pacific for discriminating long-range missile threats to the homeland. The idea of a discrimination radar for Hawaii had been publicly floated over the past two years, and had previously been part of the yet-unpassed appropriations marks from the House and Senate appropriations committees. The Hawaii radar is scheduled for a 2023 deployment, with an additional radar deployed by 2024 at a yet-undisclosed location. The two radars will cost approximately $2.5 billion over the course of the Future Years Defense Program (FYDP). The inadequacy of the request lies not with the top line, but rather with the capabilities and strategy that the top line fails to prioritize. Although these radars would be useful to close the near-term Pacific midcourse gap against limited ballistic missile threats to the homeland, such funds must be weighed against the opportunity cost for larger improvements in capability provided by a space-based sensor layer that could provide substantially more capable birth-to-death tracking and discrimination on a more global scale and against a wider diversity of threats. The choice for capacity over capability reflects a near-term time horizon, but further delay in more advanced technologies will carry costs at a later time. In sum, the administration’s budget request for FY 2019 prioritizes near-term readiness against limited but growing ballistic missile threats from sources such as North Korea. This choice, however, falls short of connecting missile defense efforts to the reality of renewed great power competition as articulated in the National Defense Strategy. The inadequacy of the request lies not with the top line, but rather with the capabilities and strategy that the top line fails to prioritize. The 2019 request’s modesty of ambition is manifested by low funding for more advanced programs, such as boost-phase intercept, space-based sensors, and volume kill. Should the forthcoming Missile Defense Review address some of these issues and recommend programmatic changes, their implementation may have to wait until the 2020 budget, unless a budget amendment of some kind prioritizes them for the coming fiscal year.
Topic:
Security, Defense Policy, Military Strategy, Budget, and Missile Defense
Political Geography:
United States, Europe, Asia, and North America

66. Military Spending: The Other Side of Saudi Security

Author:
Anthony H. Cordesman
Publication Date:
03-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The shifts in Saudi Arabia's power structure that have taken place since King Salman came to power in January 2015 have created a new set of Saudi priorities for shaping Saudi Arabia's future. These new priorities have led to major changes in Saudi Arabia’s national security structure and leadership, and to calls for major social and economic reform. They have changed the leadership of the Saudi Ministry of Interior, National Guard, and Foreign Ministry. These new priorities have led to participation in a major war in Yemen, efforts to isolate Qatar that have broken up an already weak and divided Gulf Cooperation Council (GCC), and deeper tensions with Iran over its military build-up and efforts to expand its regional influence. Most of the earlier changes at top levels of the Saudi government and security structure were motivated by new King's desire to consolidate power at the top of the government and royal family. In the process they have made Mohammed bin Salman bin Abd al-Aziz Al Saud (normally referred to as Mohammed bin Salman or “MBS”) the Crown Prince, First Deputy Prime Minister, Minister of Defense, and President of the Council for Economic and Development Affair – combining the responsibilities for Saudi Arabia’s security, civil sector, and economic development to one man. The more recent changes to the Saudi national security sector and military command made in February 2018 are harder to interpret. There is no way­­—as of yet— to put the changes in the Saudi national security sector and military command structure into perspective. One can speculate that these changes were either a further effort to assert control by a new regime, or part of a serious effort by the Crown Prince to improve Saudi military planning, budgeting & fiscal management, and military operations. Mohammed bin Salman may have been reacting to the lack of progress in the war in Yemen, Saudi tensions with Qatar, and MBS's feelings that too much of the Kingdom's security spending has been wasteful, poorly planned, and involved some element of corruption. Speculation aside, there are no credible reports that provide a reliable "inside" picture of what is happening. What is clear, however, is that the Kingdom has been spending far too large a portion of its economy on security priorities that have yielded uncertain results. This spending on security is large enough to compete with Saudi Arabia's ability to fund its 2030 plan to reform and modernize its economy and social structure. Saudi Arabia must better balance its civil and national security spending by reducing its security spending and using its resources far more effectively.
Topic:
National Security, Military Strategy, Budget, Leadership, and Military Spending
Political Geography:
Middle East, Saudi Arabia, and Persian Gulf

67. The U.S. Defense Budget in FY2019: Underlying Trends

Author:
Anthony H. Cordesman
Publication Date:
08-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The report draws on a wide range of official sources and is designed to provide an overview of official reporting on major trends rather than make an independent analysis. The U.S. provides a vast amount of detail on its annual budget request for military and international affairs spending – much of it in graphic, tabular, and summary form. The material presented here is an attempt to pick the key materials to show where the U.S. is focusing its military spending, how it relates to its strategy, how major force improvements will affect U.S. capabilities, and how the U.S. is dealing with its strategic partners and potential threats. However, the user should be aware that much of the material presented is often uncertain and is not comparable from source to source. There also is no easy or single way to summarize the trends in the U.S. defense budget. The materials that go into just the unclassified portions of the Department of Defense’s annual submission of President’s budget request to Congress, and the subsequent Congressional review of that request, run well over several thousand pages. It is also critical for the reader to understand that only the portion of the report dealing with the National Defense Authorization Act (pages 24-43) represents the final result of Congressional action and the FY2019 budget signed by the President, and not all of the portions of reference action by the key Committees involved were approved in exactly the form shown in the final bill signed by the President. Much of the material is drawn from sources that precede the final Congressional markup because the Department never updates most of the tables and charts in the Department of Defense request until the following year and new budget submission. The material presented also shows that different sources define total defense spending in different ways, and include different expenditures and convert current to constant dollars in different ways. More importantly, most sources report in terms of “Budget Authority” (BA) – the total money the Congress authorizes in a given Fiscal Year that can be spent over a period of years. This is the best estimate of what the Congress is actually approving. However, some sources in terms of “Budget Outlays” (BO) – only the money that can be spent in 12-month period of that U.S. Fiscal Year. (Which begins on 1 October of the year the Congress acts upon, and ends on 30 September of the following year). This is the best way of assessing the impact of spending on how well the budget is balanced, the size of the deficit, and impact on the federal debt. Budget projections for future years present other problems. The Congressional Budget Office (CBO) provides detailed estimates of how the President’s budget request – and the final budgets the Congress authorizes – will impact over time. Many such estimates precede Congressional action on the budget, and it then takes several months for the CBO to estimate the probable future trends in the total federal budget and impact of the final Congressionally approved levels of U.S. defense spending on that total federal budget and the U.S. GDP. This often creates major lags in official estimates of the trends in every aspect of federal spending, the budget deficit, and the national debt. More broadly, the Department of Defense has effectively abandoned any serious effort to create a program budget, and to provide a realistic estimate of the cost of the Future Year Defense Program beyond the fiscal year directly under review. It essentially rolls forward current activities and plans to make estimates of the next four years that are based on the spending levels in the budget year under review. It bases such estimates largely on input categories such as personnel, O&M, RDT&E, and procurement. The Department of Defense does not report expenditures by major mission or command. The Department defines “strategy” largely in terms of broad concepts and goals. It does not tie its “strategy” to net assessments of the balance in terms of threats and strategic partners, to specific force plans, to specific actions and schedules, to specific costs, or to measures of success and effectiveness. Unclassified reporting in “PPB” – or planning, programming, and budgeting– form has become a functional oxymoron. The Congress does hold strategy hearings and directs studies of key strategic issues, but these efforts rarely address any of the practical details of any aspect of the nature and cost of U.S. strategy. Similarly, the outyear estimates of military spending by the Department of Defense, OMB, and the Congressional Budget Office (CBO) focus on a “baseline” that assumes the United States does not actually use its military forces in any operational form. The limited estimates provided for future Overseas Contingency Operations are “placeholders” and not actual estimates. This is partly inevitable given the inability to predict the future, but it creates a practical problem in a country whose civil plans call for major future increases in mandatory spending on retirement, medical case, and welfare. This means the official U.S. projections of civil spending rise relative to military spending in ways history indicates will be highly unrealistic.
Topic:
Defense Policy, Military Strategy, Military Affairs, and Budget
Political Geography:
United States, Europe, Middle East, and North America

68. United States Budgetary Costs of the Post-9/11 Wars Through FY2019: $5.9 Trillion Spent and Obligated

Author:
Neta C. Crawford
Publication Date:
11-2018
Content Type:
Special Report
Institution:
Watson Institute for International and Public Affairs at Brown University
Abstract:
The United States has appropriated and is obligated to spend an estimated $5.9 trillion (in current dollars) on the war on terror through Fiscal Year 2019, including direct war and war-related spending and obligations for future spending on post9/11 war veterans. This number differs substantially from the Pentagon’s estimates of the costs of the post-9/11 wars because it includes not only war appropriations made to the Department of Defense – spending in the war zones of Iraq, Syria, Afghanistan, Pakistan, and in other places the government designates as sites of “overseas contingency operations,” – but also includes spending across the federal government that is a consequence of these wars. Specifically, this is war-related spending by the Department of State, past and obligated spending for war veterans’ care, interest on the debt incurred to pay for the wars, and the prevention of and response to terrorism by the Department of Homeland Security. If the US continues on its current path, war spending will continue to grow.
Topic:
Defense Policy, Government, Military Affairs, Budget, Military Spending, War on Terror, and Veterans
Political Geography:
Pakistan, Afghanistan, Iraq, South Asia, Middle East, Syria, and United States of America

69. The Liberal Government and Canadian Defence Policy

Author:
Andrew Rickter
Publication Date:
10-2018
Content Type:
Journal Article
Journal:
Journal of Military and Strategic Studies
Institution:
Centre for Military, Security and Strategic Studies
Abstract:
The Liberal government of Justin Trudeau has been in office for almost three years, and thus enough time has passed to reach some early observations on its defence record. This paper looks at 3 critical issues – the government’s approach to defence spending, its recent defence White Paper, and its actions regarding the CF-18 replacement project – and concludes that while there have been some positive developments, defence is clearly not a priority of the government. Moreover, its tendency to politicize the defence file and to issue misleading policy pronouncements on matters related to it do not inspire much confidence. Thus, barring an unexpected increase in spending, Canada’s defence prognosis is poor and the Canadian Armed Forces will likely see their capabilities erode further over the near-to-medium term.
Topic:
Defense Policy, Military Strategy, Budget, and Liberalism
Political Geography:
Canada and North America

70. Fiscal Space: What Is It? Who Has It? When to Use It?

Author:
James A. Haley
Publication Date:
08-2018
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
This paper reviews the concept of fiscal space, or the capacity to deploy fiscal stimulus should it be needed; identifies the key factors that determine its size; and discusses considerations relevant to its use. The paper is motivated by the remarkably rapid mobilization of fiscal stimulus in the 2008-2009 global financial crisis, coordinated by the International Monetary Fund (IMF), which was followed by the equally remarkable rapid adoption of austerity in key advanced economies. This switch from stimulus to austerity occurred despite the languid pace of the global recovery, in which growth was, as subsequently described by IMF Managing Director Christine Lagarde, “too low, for too long.” At the time, the change was justified in terms of concerns over large debt burdens and diminished capacity for future action. Curiously, however, the principled voices defending the interests of future generations were silent with respect to more recent tax cuts and the adoption of higher budgeted spending.
Topic:
Budget, Fiscal Policy, IMF, and Stimulus
Political Geography:
Global Focus