Fms Letter Of Agreement

The real situation in the EU is described in detail in a study commissioned by the European Defence Agency and published in 2007 on defence compensation in EU countries. [80] According to this study, the volume of EU clearing agreements in 2006 exceeded €4-5 billion. [81] The distribution of these offsets is described in the graph: direct offsets, military indirect offsets, civilian indirect offsets. The Ministry of Defence is competent and offset guidelines were issued in 2000. The threshold is about 500,000 euros, the offset request is 100% of the value of the contract. Multipliers range from 1 to 7. Foreign direct investment and technology transfer have the largest multipliers. [73] The purchase of 135 patria AMV tanks in 2006 is the largest in Slovenian military procurement history (€278 million, delivery 2007-2013), and the Patria case is the political controversy over allegations of bribery of Slovenian officials by the Finnish company Patria. According to Jorma Witakorpi, CEO of Patria at the time of the sale, a kick of around €21m (7.5% of the total contract price) was paid to Slovenian decision-makers, politicians and the military to advance the sale. [74] [75] The Patria AMV agreement on vehicle compensation provides for direct compensation for 30% of the market value (co-production of amV in Slovenia) and 70% of indirect compensation, mainly export aid granted to Slovenian companies. [76] Indirect offsets are ancillary agreements that are not directly related to the product or service purchased/sold. Most people call this category civilian offsets, although there are many indirect offsets that are not civilian offsets.

Indirect compensation may take the form of services, investments, counter-negotiation and/or co-production. For example, Greek companies produce part of the Lockheed C-130 they bought from the United States. The Greek co-production is a direct offset in the United States. Or, in a more sophisticated form of compensation involving three countries, Portugal is responsible for the maintenance of Kuwaiti Lockheed Martin aircraft. This is a Portuguese „direct compensation“, since Portugal bought the aircraft and is responsible for maintenance as a partner. [18] An investment in a Romanian security software company or support for the export and marketing of a Belgian environmental company in difficult sectors are other forms of real indirect compensation. Nation P controls not only the provision of military systems or services, but also the implementation of offsets in accordance with the offset agreement, which is or is linked to the main supply contract. This control is the responsibility of the Minister of Defence and/or the Ministry of Economy or Finance or the Ministry of Industry and Trade. Often, arms-importing countries set up special agencies to monitor defence compensation. [16] The last EU quasi-common agreement on defence compensation is the Code of Conduct on Compensation signed in October 2008 by all EU countries (with the exception of Romania and Denmark). The main objective of the code, voluntary and non-binding, is to promote a „European technological and industrial defence base“ and to outline a roadmap to completely eliminate offset practices in the EU`s internal market. In other words, to open up the European defence and security market to tenders and to overcome the restrictions of competition imposed by the European Treaties of Rome and Lisbon, Article 346.

The ideal objective is „competition in the EU defence market“ and „government sales to the government“. However, the realistic goal is more modest: to limit oneself and limit the amount of offset to 100% of the market value. Indirect offsets (civilians and other agreements not related to the manufacture of armaments, tanks). They could also be military or security, but are not directly related to the main acquisition, i.e. tanks) The Ministry of economy – Commissariat for Military Production (CMP) is responsible for the policy and implementation of compensation (in accordance with a memorandum of understanding with the Ministry of Defense). . . .