The savings package, which end up hurting several industry giants, aims to help Berlin reach the target of cutting the defense budget -- $38.5 billion for 2010 -- by around $1.3 billion per year. (Note: The U.S. defense budget for 2010, including overseas operations, stands at $663.8 billion.)

German daily Bild reports that the strategy paper laying out the cuts, called "Prioritization materials investment," contains the following proposals:

-- to immediately retire 15 aging Transall transport planes and at the same time reduce the numbers of orders for their replacement, the Airbus A400M, a European military project that is years later and billions over budget;

-- to reduce the orders of the multipurpose NH90 helicopter developed and built by Eurocopter daughter NHIndustries from 80 to 40;

-- to retire as quickly as possible the remaining 100 Panavia Tornado combat jets and refuse to enter into service 37 Eurofighter jets the Bundeswehr had planned to procure;

-- to retire, in the medium and long term, eight frigates, 10 speedboats and 21 Westland WS-61 Sea King helicopters, a British license-built version of the American Sikorsky S-61 helicopter.

-- to order three, and not four, Type 125 class of large frigates currently developed for the German navy by ARGE F125, a joint venture of Thyssen-Krupp Marine Systems and Luerssen. The costs for a single ship are estimated to be around $700 million.

The Defense Ministry in a statement confirmed the existence of the strategy paper but said "there have not been any decisions when it comes to savings related to weapons procurement." Rather, the proposals would be the basis for ministerial and parliamentary discussions. German Defense Minister Karl Theodor zu Guttenberg might "change or complement" the austerity proposals, the statement added.

The Bundeswehr for many years has been on a tough cost-cutting course.

Guttenberg recently proposed to reduce the number of troops from 254,000 to 150,000, with the yearly draft being put on hold.

In 2004, the Defense Ministry announced it would streamline its forces, agreeing to cut more than 100 bases to a total number of 400 bases in Germany.

Germany is one of the world's major arms exporters. The Stockholm International Peace Research Institute estimates the country is No. 3 in the global market, trumped only by Russia and the United States.

Companies including ThyssenKrupp, Rheinmetall and Krauss-Maffei Wegmann develop high-quality submarines, ships, armored vehicles and tanks. And European Aeronautic Defense and Space Co., a multinational giant producing all kinds of airplanes and helicopters, has a strong German profile.

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