September 17, 2019

Dutch Choose F-35 Fighter Jets, but Fewer of Them

The Dutch defense minister, Jeanine Hennis-Plasschaert, proposed to Parliament the purchase of 37 F-35s — far fewer than the 85 planes initially envisioned before the European financial crisis put a squeeze on military budgets across the region.

The plan sets a budget of 4.5 billion euros, or $6 billion, for the aircraft and a further 270 million euros per year for maintenance and operating costs — equivalent to the annual operating costs of the current F-16 fleet. It also builds in a “contingency reserve” of 10 percent to account for any unforeseen rise in the final cost.

Deliveries of the first planes are expected to begin in 2019 and be completed by 2023, when the F-16 fleet will be phased out.

“The cutbacks in defense budgets which many NATO member states, including the Netherlands, are facing demand careful consideration and astute choice,” the ministry said in a statement. “Above all, opting for a modest number of the best aircraft attests to a sense of reality.”

The proposed order will be put to a parliamentary vote later this year, said Sascha Louwhoff, a defense ministry spokeswoman. Approval is likely, she said, given that the proposal has the support of the governing coalition of the conservative V.V.D. and Labor parties, which took power a year ago.

The Netherlands is one of nine countries that partnered to help develop the F-35 “Joint Strike Fighter,” securing lucrative subcontracting deals for local companies from Lockheed Martin. Most of those partners have stuck with the program despite the cost overruns that have put the plane at more than 70 percent over budget.

But opposition to the escalating costs had prompted some politicians in the Netherlands and other industrial partner countries, like Denmark and Canada, to urge that the process be opened up to competitive bids from other manufacturers, including Boeing, Saab of Sweden and Eurofighter, a European consortium led by European Aeronautic Defense and Space.

“This could have gone either way,” Richard Aboulafia, an aerospace analyst at the Teal Group in Fairfax, Va., said of the Dutch decision. “Politics might have driven them to an open competition. The fact that they are staying in the fold is a boost for the program.”

After parliamentary approval, the Netherlands would become the seventh export customer for the F-35, after Australia, Britain, Israel, Italy, Japan and Norway. The American military is by far the largest customer for the F-35, with more than 2,400 planes of the three different models on order at an estimated cost of $392 billion.

In a statement, Lockheed Martin said it welcomed the Dutch decision, calling it “testimony to the Netherlands’ confidence in the program” and said the order would help secure high-technology jobs over the long term with Dutch companies involved in the plane’s design and manufacture.

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Greece Wins Concession on Tax for Restaurant Meals

Starting on Aug. 1, the tax will drop to 13 percent from the current 23 percent, a move devised to aid small businesses and bolster the crucial tourism sector.

“For the first time, we are not just averting something unpleasant, but we are bringing positive change,” Mr. Samaras said in a televised address. He noted that government officials had also dissuaded Greece’s lenders from imposing new cuts to pensions and a tax on the self-employed.

Earlier this month, euro zone finance ministers approved 6.8 billion euros, or $8.9 billion, in rescue loans, to be disbursed in installments. But the payouts are subject to the Greek government’s honoring its commitments to the so-called troika of lenders, the International Monetary Fund, the European Commission and the European Central Bank.

The extent of the austerity measures, which Greek lawmakers are set to vote on early Thursday, has been a point of contention.

Mr. Samaras has long lobbied for the lowering of the value-added tax on restaurants and taverns. Government officials had insisted that a cut in the V.A.T. would increase revenue, not reduce it, as well as curb tax evasion.

“They don’t believe it yet,” Mr. Samaras said, referring to the troika. “But they agreed to try reducing taxes for the first time.”

A European Commission spokesman said the reduction would be made on a trial basis.

“A reduction in the V.A.T. rate for the restaurant sector would be possible without running any budgetary risks, so long as it was just a temporary measure,” the spokesman, Simon O’Connor, said in Brussels.

The initiative drew a caustic response from the main political opposition, the leftist party Syriza, which accused Mr. Samaras of “cynicism and hypocrisy” for announcing the tax cut a few hours before a parliamentary vote on new austerity measures that calls for thousands of layoffs and wage cuts in the Civil Service.

“The delayed and temporary reduction on V.A.T. in the food service sector is a drop in the ocean of the catastrophic policies of the memorandum,” the party said in a statement, referring to Greece’s bailout deal with the troika.

Despite the objections of Syriza and other opposition parties, as well as some lawmakers from the governing coalition, the legislation is expected to be approved by the 300-seat Parliament, where the government has a slim majority of 5. A vote was to begin at midnight on Wednesday after two days of debate.

With the volatile political climate, Mr. Samaras will have a tough time enforcing the new reforms, particularly layoffs of civil servants, who have remained relatively unscathed during four years of austerity that have crippled the Greek private sector, pushing unemployment above 27 percent. In a bid to appease the local authorities, the government late Tuesday withdrew an article in the bill that would have imposed disciplinary action on mayors found to exceed their budgets.

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Market Falls on Fear Cyprus Deal Could Hurt Euro

The stock market lost ground Monday as investors worried that a proposal to seize money from bank depositors in Cyprus could cause more anxiety over the fate of the euro, Europe’s shared currency.

The Dow Jones industrial average fell 62.05 points, or 0.4 percent, to close at 14,452.06 Monday. It plunged as much as 110 points early, briefly turned positive in the afternoon, then fell again in the last hour of trading.

The Standard Poor’s 500-stock index fell 8.60 points, or 0.6 percent, to 1,552.10, moving further from its high of 1,565.15, set in 2007. The Nasdaq composite index dropped 11.48 points, or 0.4 percent, to 3,237.59.

European markets recovered most of an early decline and closed with modest losses. Yields on government bonds issued by Spain and Italy edged up, and the euro fell to a three-month low against the dollar.

The market rally that has pushed the Dow to record levels this year has been punctuated by concerns about the euro zone’s lingering debt crisis.

“Europe has got problems,” said Uri Landesman, president of the hedge fund Platinum Partners. “You could get more stuff like this, and the market isn’t priced to handle that.”

Cyprus reached an agreement last weekend with its European partners for its government to raid bank accounts as part of a 15.8 billion-euro ($20.7 billion) financial bailout, the first time in the euro zone crisis that the prospect of seizing individuals’ savings has been raised. The measures are stoking fears of bank runs in the other 16 nations that use the euro.

Cypriot authorities, facing an uproar, delayed a parliamentary vote on the seizure and ordered the country’s banks to remain closed until Thursday while they try to modify the deal to lessen its impact on small depositors.

Markets in Europe and Asia also fell during early trading, before retracing some of their losses later in the day. Germany’s DAX index dropped 0.4 percent and Spain’s main stock index shed 1.3 percent. Indexes in Britain and France each lost 0.5 percent.

The American stock market’s reaction to euro zone developments has eased over time.

The Dow slumped more than 8 percent last year from May 1 to June 1 on concerns that Spain and Italy would be dragged into Europe’s debt crisis. While the Dow initially dropped last month in reaction to the unsettled Italian election results, which threw the country into political paralysis, it has since gained 4.6 percent. Likewise the market recovered much of the early loss on Monday prompted by the Cyprus bailout deal.

Even with the stock market’s pullback Friday and Monday, the Dow is still up 10.3 percent this year, while the S. P. 500 is up 8.8 percent.

The stock market’s resilience suggests that traders consider the Cyprus situation to be contained for now, said Quincy Krosby, a market strategist for Prudential. The threat of rising volatility may also deter the Fed from thinking about ending its economic stimulus program. The central bank starts its second two-day policy meeting of the year Tuesday. “Absent the Cyprus flare-up, the markets were slowing a bit and it looked as if investors were digesting the gains and waiting for the next catalyst,” Ms. Krosby said.

In the bond market in the United States, interest rates slipped. The price of the Treasury’s 10-year note rose 10/32, to 100 13/32, while its yield fell to 1.96 percent from 1.99 percent as investors moved into low-risk investments.

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