Have Events in Crimea Killed Another BRAC?

WASHINGTON, DC—The events in the Ukraine and Crimea are becoming more worrisome by the day as the Western world steps up its response to Russia's military interference in the Ukraine. The latest development: the Group of Eight nations have booted Russia out of their club in response to these events; Russia, for its part, says it doesn't care.

As these events unfold, the possibility that another Base Realignment and Closure (BRAC) would be initiated becomes-for obvious reasons-more and more remote. It also appears likely that Defense Secretary Chuck Hagel's proposal last month to reduce the US active-duty armed forces from the current 520,000 to 440,000-450,000 will be back-burnered.

To be sure, the road to a formal BRAC process is a long one and requires Congressional sign off. However, the Obama Administration has been over the last few years signaling it would like to initiate another. The most overt indicator came last month from Hagel when he told reporters that the Pentagon would be unable to bring down its overhead costs "without cutting unnecessary and costly infrastructure." His hope, at that time at least, was to see a new BRAC round beginning in 2017.

"I am mindful that Congress has not agreed to (our) BRAC requests of the last two years. But if Congress continues to block these requests even as they slash the overall budget, we will have to consider every local tool at our disposal to reduce infrastructure," Hagel said.

If another BRAC had ever been on the table with Congress it is almost surely off now. Barry Rhoads, co-chairman of Cassidy & Assoc., told Barron's that he believes Russia's incursion into Crimea has slashed the possibility of another BRAC by 50%.

Certainly the troop reductions are not going to happen, another observer of Washington's political scene, David Jonson, CEO of Strategic Vision, tells GlobeSt.com. He speculates that Hagel and the administration never meant to follow through on the reductions in the first place. "I think it was a scare tactic to push back on the sequester," Johnson says.

Whether it was intended to be carried out or not, Fitch Ratings issued a warning that a proposed reduction in armed forces, as well as the retirement of two aircraft, would have ramifications for some military housing bonds.

Johnson does believe that BRAC will go forward eventually-possibly even as soon as after the election-even if it is temporarily derailed by the events in the Ukraine. "There is a feeling there are too many bases," he says. "No one likes the reductions but they always go forward."