Treasury prepares to foot the Kosovo bill

1 Jul 99
The Treasury is to raid its contingency fund to meet the military costs of the Kosovo conflict while protecting public spending levels.

02 July 1999

The last figures, published at the end of May, put the cost of the military campaign at £43m. But defence secretary George Robertson admitted last week that the final bill will be much higher. 'I would anticipate that £43m is going to go dramatically upwards,' he said.

Pundits were estimating costs to at least double by the end of September, because of the additional number of peacekeeping forces now in the area. A Treasury spokesman dismissed the estimate as 'wild speculation', adding that ministers had not set a timetable for funding, but would 'wait and see' how long the department would need to finance the operation.

The Treasury was anxious to stress that it was not unusual for it to meet costs incurred by the Ministry of Defence. 'The Treasury administers the central contingency fund which was set up to finance such situations,' the spokesman said. The department will pick up the bill for military costs described as 'additional', including the transportation of troops to and from the Balkans, supplies, food, equipment and personnel.

But the MoD will meet the costs for replacing munitions. The bill just for restocking cruise missiles is believed to be in the region of £63m.

This week the official repatriation programme for Kosovar refugees began in Macedonia, although 400,000 had already returned to their homes.

The Department for International Development has announced a £90m aid package to assist the repatriation, including £40m in humanitarian aid.

But the costs of rebuilding Kosovo are still a political minefield, with US President Bill Clinton determined that Europe should pay the lion's share. It looks likely that the bulk of the funds will be provided through financial institutions, including the EU Investment Bank, of which the Treasury is also a contributor.


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