Although European countries have reduced the size of their armed forces by 12 percent, defense expenditure is still on the rise, a report by the Center for Strategic and International Studies says.

The troop reduction can be explained by the growing number of European countries, anchored by Scandinavia, that are reorganizing their defense capacities to be smaller, more efficient and more responsive to rapid overseas needs.

The report found that between 2001 and 2006, defense spending increased by 2.6 percent. Expenditure per soldier has risen 26 percent.

The report confirmed nearly every country cut personnel during the five-year span. France, for example, is shedding a sizable portion of its armed forces simply by not replacing certain retirees.

The total European defense budgets went from $272 billion to $279 billion, with exchange rates kept even. Yet 74 percent of that was represented by France, Germany, Italy, Spain, Sweden and Britain.

The 10 EU countries that joined the bloc in 2005 each increased their defense budgets by an average of 14.5 percent by 2006. Europe's involvement in foreign missions has grown from 65,000 to 80,000 from 2001 to 2006.

CSIS also found relative to gross domestic product, most countries were spending relatively less in the defense industry.

The report included all EU countries, Albania, Bosnia-Herzegovina, Croatia, Macedonia, Moldova, Norway, Serbia and Montenegro, Switzerland and Turkey.

Russia backs India into aircraft carrier corner

Despite having previously agreed to sell and upgrade its Admiral Gorshkov aircraft carrier to India for $1.5 billion, Russia is now asking for an additional $1.2 billion, citing extra costs to deliver the ship, according to Indian news sources and Defense News.

The original contract was signed in 2003 in conjunction with a contract for a batch of MiG-29K fighters in 2003. Although the ship was due to be delivered in August 2007, Russia had indicated about a year ago it would need more money, although never specifying how much.

The Indian navy is rumored to have no choice but to accept the higher price as it's reliant on the extra ship for its military designs, a fact Russia is well aware of.

India needs three aircraft carriers operational, but with the Admiral Gorshkov delayed and its own Air Defense Ship three years behind schedule the country is getting deeper into trouble since its only active ship, the INS Viraat, will have to be retired in four years.

The latter will be upgraded sometime in the summer of 2009, which could result in the Indian navy having no aircraft carriers whatsoever for at least a year.

Alternative plans are being made and cooperation with Pakistan to solve the logistical issue is being discussed.

Boeing drops out of Swiss fighter competition

Boeing has withdrawn its Super Hornet fighter jet from a competition for the partial replacement of Switzerland's fighter jet fleet, indicating that its fighter is much more advanced than what the Swiss are in the market for, according to several defense news outlets.

Switzerland is replacing its F-5 Tiger fighter but also owns several F-28C/Ds.

This is good news for Saab, which entered the Gripen; Eurofighter, which will try to sell its Typhoon; and Dassault, which will try to unload some more of its unpopular Rafales. Bids for the 24-plane contract are thought to be due sometime in June.