Impact of Global Financial Crisis on Future of Navies - Case Study Example

Title: Impact of Global Financial Crisis on Future of Navies Name: Course: Instructor: Date: IMPACT OF GLOBAL FINANCIAL CRISIS ON FUTURE OF NAVIES INTRODUCTION The economy of the country plays a major role in the administration of the nation. Thus, any change in economy tends to affect the key department in the states thus affecting the whole system of the nation. Over years, the economy of the world has been steady until 2007 when it depreciated. This has caused significant changes in the key economic activities in countries as well as contributed to failure to many businesses. Global financial crisis started in United States as result of too lax regulation and loose money around the nation. It was then aided by china that was willing to give United States endless credit as long as their products could get entry into the United States. In the end, it resulted into increase in mortgage rate in United States as well as increase in loan incentives in major banks all over the world (Allen, Roy 23). As result of low economy, globally, major activities in nations have felt the impact including sectors such as the defence departments in the nations as they need finance assistance from the government to be able to maintain the security of the nation, as well as the business sectors. In Australia, global financial crisis greatly affected the defence force in such away that the department could no longer afford to raise the money to purchase the equipments that they needed at that time. Being one of the most sophisticated and large navy force in pacific region, this led to negative effects on other departments in the nation as well as to their neighbouring nations that they offer security services. These effects were as well felt in other navies worldwide. Australia navy is a branch of the Australian defence force (National Library of Australia 33). In 1913, it became a new navy of the commonwealth of Australia (National Library of Australia 33). It is known to be the most sophisticated and large naval force in the pacific ocean with considerable existence in the Indian Ocean together with global operations to maintain peacekeeping and military operations. This gives the navy the demand to very expensive and up to date military equipments that will enable them to carry out their duties more effectively and efficiently. Thus demanding more finance support to the department to facilitate the purchase of the equipments as well as to maintain the resources at the department as well as the service providers. AIM The goal of the paper is to investigate on the impacts that current global financial crisis will have on future navies. To attain this, the paper will have to discuss on the current effects that global financial crisis has caused on navies and later reflect it on future navy. It will tend to base its argument in reference to the Australian navy, as it is the largest navy in pacific region. It will as well discuss on how other navies round the world will be affected in future, such as the United States navy and Russian navy. IMPACTS OF GLOBAL FINANCIAL CRISIS ON FUTURE NAVIES Global financial crisis has affected the navy department in many ways both financially and physically. Having affected the crucial component (economy) of the government, the navy department felt the same impact. The paper will look at the ways in which the current global financial impact will affect future navies. Therefore, the paper will discuss the budge of future navies, the personnel at the navies, the relationship with other navies and the rate of immigration at their home nations. These elements are though to satisfy the whole future of the navy in general both physically and financially. IMPACT ON NAVY FINANCIAL BUDGE With decrease in economy, the government revenue has also decreased greatly. This gives an alarm to the navies on the ways in which they will be able to operate on low cost at their department. In normally circumstances, the navy operated on $22billion annual billion (National Library of Australia pp 33). The management of the department will have to alter their budge to ensure that they meet all the needs of their employees in future. Apparently, the department had to purchase the fourth air warfare destroyer worth $2billion, which was to deliver an affordable, flexible, effective and sustainable air warfare destroyer capability for the security of Australia (). With the reduction of finances at the department, the administration had to delay the plan little bit longer than expected to enable them meet the crucial needs at the department. With change in time for their plan, it is then evident that, the navy will drag behind on its plans to strengthen their forces in the field in future. Other than delaying on their plans, the management will require to alter some of their strategic plans for the future and thus giving it a different view all together. This will include such issue like not replacing their 32 years old fleet of Orion AP-3C maritime surveillance planes with Boeing P8A Poseidon - a combined mix of unmanned aerial systems and a new patrol aircraft (). As result, they will not have adequate equipments for their services to the nation and other countries at the right time. Therefore, this is thought to lead to low value of service from the navy due to unavailability of high technology equipments in the department. With regard to the Russian navy, the department has reduced the number of the submarine in the department. This is forced to minimise the expenditure that the department inquire in attaining the equipment. Reduction of submarine will lead to reduced availability of equipment that will reduce the efficiency of navies in future (Meconis & Nikolaevich 1996 pp65-115). This will also lead to reduced number of personnel required in the navy. The reduction of financial support in the navy also led to the reduction of construction program in the navy. This reduced the number of large blue waters capable vessel used by the navy during security duties. Due to this, the navy have had few aircraft carriers to their disposal in time of service. IMPACT ON NAVY PERSONNEL This is the strongest personnel organisation in the country. With the effects of global financial crisis, the management is now worried on how they will be able to sustain their strong and expensive personnel. To this, they have now come up with strategy that allows them to train their personnel more than one service. This provides them with better employees without having to recruit more people every year. Therefore, in future, the navy will have less number of personnel but more efficient in that they will have to qualify in all areas of service at the defence force. The reduction of personnel is expected to be felt inmost navies such as Australian navy, United States navy and the Russian navy. In United States navy, the department has infected the use of few sailors who are supposed to perform same duties in the department (Naden 1999 35-45). This is in regard of minimal finances at the department to cater for their salaries. The same policy is used in the Russian navy where the number of personnel and that of combats have been reduced drastically. In Russian navy, the department has modified their form of recruitment. They have adapted the use of two year employment contract and volunteers work (Meconis & Nikolaevich 1996 pp65-115). This is supposed to minimise on department responsibilities such as allowances and insurances that their permanent employees are entitled to. This gives the navy new face in future of contract based service. IMPACT ON NAVIES SUSTAINABILITY With reduction of finances in the department, the administration has come up with other strategies that they can help the navies to sustain themselves. There has been the formation of navy family accountability and assessment system (NFAAS) that is intended to care for the families of the navies a well as to sustain them at their career. With comfortable lifestyle for the navies, it is hoped that they will perform better in future at their respective station. Other than the formation of the organisation, global financial crisis has also led to introduction of personal financial classes among the navies (Meconis & Nikolaevich 1996 pp65-115). This educates the navies on ways in which they can honour and manage their commitment. Thus it is assumed that future navy will be more committed to their responsibility and commitment. Among the Russian navy, the management reduced the loan rates that they implemented on their employees from 9% to 10% (Meconis & Nikolaevich 1996 pp65-115). This is intended to give the navy more opportunity of attaining loans from their respective work places. Thus, it is hoped that, in future, the navy will be more accessed to loans than any other department in the nation. IMPACT ON INTERNATIONAL RELATIONSHIP Having to attain the best equipment for their services, the navy department will have to create good relationship with United States, as it is the only nation known for good quality machine. The navies is also hoped to have more relationship with each other globally. This is in regard of the formation of the navy family accountability and assessment system that brings navies form different nations together (Naden 1999 35-45). RATE OF IMMIGRATION With change in economy in nations, majority of people moved from their country to Australia for refuge. This has increased the population in the country forcing the defence force to control the number of immigrates in their nation. They have been able to attain this through sending some of their commandos at the coastal region of the nation where they are expected to block the illegal immigrants from intruding into the nation (). Therefore, it is to the view that the global financial crisis will shift the location of the navy in the country to the coastal region of the nation from where they will be expected to offer security services to the nation. It was observed that some of the immigrants who come in the nation are their rivals’ thus causing problem to the nation. . CONCLUSION As much as the financial crisis has had negative impacts on the navy department in Australia in the beginning, the administration of the department is working hard to ensure that the future of the navy is bright. Therefore, they try to budge for their finance wisely as well as to come up with strategies that will enable them to gain more finances to support their activities for reinforcement of security in the country. They also purchase equipments, which will be offer more than one service to them thus minimising the cost of maintenance at the departmental level. Thus we can say that the management of the department works very hard to ensure that the navy force offer excellent services in future despite the economic status of the nation. REFERENCES: 1. Allen, Roy. Financial Crises & Recession in the Global Economy 2nd Ed Edward Elgar Publishing 1999 pg 23 2. Australia Faces Asylum Wave 2009 Retrieved 0n 30th Oct 20009 from 3. Citizens Electoral Council of Australia Global Financial Crash Drives East Timor Crisis University of Michigan Citizens media Group 1999 pg 9 4. Frost Ellen Asia’s New Regionalism NUS Pres 2008 pg 124 5. Meconis, C. & Nikolaevich, B. US-Russian Naval Cooperation Greenwood Publishing Group 1996 pp 65-115 6. Naden,C. US Navy Bt Bound 1999 pp 34-75 7. National Library of Australia Australia National Bibliography National Library Australia 1995 pg 33 8. Walters Patrick & Dodd Mark Global Financial Crisis Stall Billions in Defence Spending 2009 Retrieved on 29th Oct 2009 from Read More