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Annual Report on Military Expenditures, 1998 Submitted to the Committee on Appropriations of the U.S. Senate and the Committee on Appropriations of the U.S. House of Representatives by the Department of State on February 19, 1999, in accordance with section 511(b) of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1993 |
INDIA
MILITARY SPENDING
REPORTING PERIOD:
Indian fiscal year 1998-99 (April 1 - March 31).
AMOUNT:
Figures are expressed in USD, based on the exchange rate of 42.25
rupees per dollar. The rate of inflation factored by the
wholesale price index is about 8 percent.
Army 5.10 billion USD
Air Force 1.35 billion USD
Navy 0.69 billion USD
Total defense spending as reported by the Indian government, is
approximately 11.2 billion USD. In addition to the subtotal of
7.14 billion USD for the three military services, the 1998-99
budget reflects approximately 2.45 billion USD for capital
purchases for all three services.
PERCENTAGE OF GDP:
Official defense spending accounts for about 2.5 percent of GDP.
PERCENTAGE OF BUDGET:
About 17.7 percent of total government spending.
TRENDS IN REAL TERMS:
In real terms, the Indian defense budget received about a 15
percent increase in 1998-99 after adjusting for an estimated
inflation rate of approximately 8 percent. A significant portion
of the increase--perhaps as much as 10 percent--is committed to
meeting the recommendations of the fifth pay commission, a plan
to increase salaries of government employees including military
personnel.
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
Army: 1.1 million
Air Force: 150,000
Navy: 55,000
Paramilitary Organizations:
Border Security Force: 174,000
Central Reserve Police Force: 160,000
Assam Rifles: 52,000
Rashtriya Rifles: 36,000
Coast Guard: 8,000
Indo-Tibetan Border Police: 30,000
Federal Security: 196,000
Home Guard: 55,000
State Armed Police: 400,000
Territorial Army: 40,000
COMMENTS ON ITS POLITICAL ROLE:
The Indian armed forces (IAF) pride themselves on an apolitical
tradition dating back to the creation of India in 1947. However,
the army and paramilitary forces increasingly are concerned about
the political dimension of their involvement in several ongoing
insurgencies in the country.
The armed forces continue to play a major role in humanitarian
and disaster relief operations within India. Internationally,
the IAF perform an important role in supporting UN peacekeeping
operations.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
The armed forces continue to support the core national principle
of civilian control over the military. Officer appointments
traditionally are made on the basis of seniority. Removal
procedures are subject to review by civilian authorities,
including the court system.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
The BJP made national security a prominent issue in its coalition
government which came to power in March 1998. An added factor in
the use of increased visibility of the defense complex is India's
nuclear tests in Pochran in May 1998. The defense budget likely
will receive increases in the future.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
The U.S. continues to seek a security dialogue with India to
address our concerns following nuclear tests in May 1998. U.S.
policy continues to support reductions in military spending that
would accrue through a reduction in tensions between India and
China and between India and Pakistan. We continue to encourage
Indian restraint regarding weapons of mass destruction and
believe that the nuclear capabilities of the three countries--
India, Pakistan, China--have led to heightened tensions in the
region.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING: None reported.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
India is an active participant in the UN group of governmental
experts on the UN Register of Conventional Arms. In 1998, India
participated in the UN Register of Conventional Arms. India has
never submitted a standardized MILEX report to the UN.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
Regional talks among the South Asian nations remain focused on
trade, economic, and cultural issues. Multilateral talks on
REDUCING MILITARY SPENDING have not been held in this region.
India's relations with China were improving before the nuclear
tests particularly with regard to implementation of confidence-
building measures along their border. Since May, however,
relations have stagnated. Relations with Pakistan remain
difficult, although the governments in New Delhi and Islamabad
are publicly committed to continuing their political dialogue
which gained some momentum in 1997. Following nuclear tests in
both countries, India and Pakistan have come under strong
international pressure to resolve these differences to reduce
tensions in the subregion. On the heels of a prime ministerial
meeting on the margins of the UN General assembly (UNGA) in
September 1998, foreign secretary level talks were held in
Pakistan from October 16-18. They were followed by extensive
talks on outstanding issues--Kashmir, border, economy, and
security--on November 5-13 in New Delhi. The two foreign
secretaries will hold further talks in February. To date the
talks have resulted in small but promising agreements concerning
cross-border transport and energy purchases and further
agreements are possible.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
The Indian defense budget numbers, as reported in the Ministry of
Defense annual report and available in the public domain,
probably provide a fairly accurate overview of aggregate
statistics such as the percentage of total government spending on
defense.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
There is no transparency on the amounts spent on specific
programs, particularly programs of proliferation concern. The
government does frequently make supplemental appropriations
during the fiscal year to augment its initial defense budget.
INDONESIA
Overview: Indonesia's overall military expenditures are far from
transparent as funds have traditionally flowed to the military
from business activities, private contributions, and off-budget
government money. Based on the officially published budget
alone, Indonesian defense expenditures traditionally have been
low in comparison to the country's GDP and population. Since
1988, according to the U.S. Arms Control and Disarmament Agency's
(ACDA) "World Military Expenditures and Arms Transfers, 1996,"
Indonesia's officially published military budgets have generally
been characterized by low comparative ratios in all areas,
including percent of total budget, percent of GNP, and in per
capita spending per annum (in the latter Indonesia has averaged
between USD 10 and 12 over the last decade). According to ACDA's
statistics, in recent years arms imports have also been
comparatively low, generally amounting to less than one percent
of total imports. During 1997-98, Indonesia's severe financial
crisis, and its unstable currency, have made accurate assessment
of Indonesia's military expenditures even more problematical. It
is probable, however, that military spending has declined,
perhaps as much as 30 percent in dollar terms. Most major arms
import deals have been shelved, with the exception of a 400
million dollar purchase of HAWK aircraft from the UK. In 1995,
Indonesia ranked 107 in the world in GNP per capita, and its
ranking in (officially published) military expenditure per capita
was 115.
MILITARY SPENDING
REPORTING PERIOD:
Indonesian Fiscal Year, April 1998 to March 1999.
AMOUNT: Estimated USD 1.0 billion.
PERCENTAGE OF GDP: 1.3 percent.
PERCENTAGE OF BUDGET: 7.9 percent.
[Note: In light of the economic turmoil gripping Indonesia, the
budget from which the above figures are drawn must be viewed as a
work in progress, with major revisions likely as the Indonesian
government continues to negotiate with the International Monetary
Fund (IMF). The drastic depreciation of the rupiah (from
rp2,400/USD in mid-1997 to rp15,000/USD in mid-1998) and its
subsequent partial recovery (to the 7-8,000/USD level in late
1998), can make defense spending comparisons based on U.S. dollar
amounts very misleading. Indonesia's high inflation rate (75-80
percent in the first 11 months of 1998) will reduce the buying
power of the defense budget. In terms of buying power, most
observers here believe that the Indonesian defense budget has
declined by as much as 30 percent in the past year. Given the
instability of Indonesia's economic situation, the percentage of
GDP given above is a very rough estimate at best, and is based on
the assumption that both the economy as a whole and the defense
budget will be declining in real dollar terms with the result
that the relationships between them will remain more or less the
same. In terms of the military's share of overall government
spending, it is likely that greatly increased spending on social
safety net items eventually will push down the military's
percentage of total government outlay.]
TRENDS IN REAL TERMS:
Prior to the financial crisis, officially published Indonesian
defense spending, including police expenditures, had been falling
in relation to GNP, from a peak level of 3 percent of GNP IN 1981
to levels of about 1.5 percent in the 1990's. Defense spending
had experienced similar declines in relation to overall
government outlay. Real growth in the military budget from 1988
to 1997 paralleled the steady expansion of the Indonesian economy
during that period.
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
The total manpower complement of the Indonesian armed forces,
including police is 451,000. The breakdown by service is:
Army: 216,000
Navy: 26,000
Air Force: 27,000
Marines: 12,000
Police: 170,000
Indonesia has contributed peacekeeping forces abroad under the
auspices of the UN a total of 17 times since its first
deployment, to the Sinai in 1957, and to Bosnia most recently.
COMMENTS ON ITS POLITICAL ROLE:
The armed forces (ABRI) exercises a socio-political role under
the concept of "dual function." "Dual function" means that
active duty officers are posted to jobs in all levels of
government, from the cabinet to the smallest village, in the
legislatures at all levels, and also in commercial and state
corporation areas. For example, 14 of Indonesia's 27 provincial
governors are active duty or retired military officers, and a
significant percentage of local district chiefs are military men.
The military also retains 75 appointed seats in the National
Assembly. In 1998 there were growing calls for an end to ABRI's
political role especially concerning the military's seats in the
parliament. ABRI's leadership said it would only consider
gradual reduction of the military's political role. Armed Forces
Chief/Defense Minister Wiranto has said that in the future all
military officers assigned to civilian positions must be in
retired status. ABRI's primary roles are to maintain internal
security and to protect the country from external threats. The
police are under military command [although scheduled to be
separated in April 1999], and ABRI units are stationed in every
province and district. Continuing serious unrest throughout the
country in 1998 resulted in significant military involvement in
internal security.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
Under former President Soeharto, appointments, transfers, and
dismissals of high-ranking officers were approved personally by
the president. While President Habibie retains the formal
ability to appoint and dismiss high-ranking officers, he is in a
much weaker position vis-a-vis the military than his predecessor.
Most military personnel decisions are taken within the military
itself and the Ministry of Defense and Security whose current
minister is also the chief of the armed forces. However, in
regard to key military assignments, it appears that the armed
forces chief continues to be subject to pressure from cabinet
members as well as from within ABRI.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
See classified annex.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
U.S. efforts to reduce arms spending in Indonesia and elsewhere
in the region are indirect and focus on our support of regional
confidence-building, especially through the ASEAN Regional Forum
(ARF). In the long term, regional initiatives such as the ARF,
and the Indonesian-sponsored informal workshops on reducing
tension in the South China Sea, are the hopes for reducing
tensions, addressing long-term security threats, and ultimately
removing or ameliorating the potential causes for a regional arms
race. The U.S. is also encouraging efforts to reach a settlement
in East Timor, in part through a reduced ABRI presence in the
province, which could result in a minor reduction in overall
defense spending.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
See classified annex.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
Indonesia has submitted standardized MILEX reports to the UN
three times--1980 to 1982. Indonesia has provided accurate and
timely information to the UN Register of Conventional Arms. In
1998, Indonesia participated in the UN Register of Conventional
Arms. The U.S. Embassy is unaware of any other Government of
Indonesia obligation to provide data on military spending to
international organizations.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
At present, no regional forum or ongoing dialogue is specifically
addressing REDUCING MILITARY SPENDING. Indonesia is a founding
member of the ARF (see above), which is addressing the general
topic of confidence-building measures.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
See classified annex.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
See classified annex.
ISRAEL
MILITARY SPENDING
REPORTING PERIOD: January 1 to December 31, 1998.
AMOUNT:
1996 1997 1998
Nominal (in NIS bn) (a) 30.0 32.2 34.4
Exch. rate (NIS/USD)(b) 3.19 3.45 3.77
Notes:
(a) actual for 1996-97; budgeted for 1998.
(b) actual annual average rate for 1996-97; estimated for
1998.
PERCENTAGE OF GDP:
1996 1997 1998
Pct. of GDP 9.9 9.6 9.0
PERCENTAGE OF BUDGET:
1996 1997 1998
Pct. of budget 20.6 19.5 19.8
TRENDS IN REAL TERMS:
In real terms, total Israeli military spending increased slightly
in CY-98, primarily because of higher personnel costs and
increased R&D expenditures. Despite some efforts to reduce
personnel costs by trimming reserve forces, eliminating
redundancies, and reprogramming funds to priority projects,
Israeli defense spending likely will increase in the medium term,
especially given expensive modernization and procurement plans,
as well as projected Wye-related expenditures. Long-term savings
in Israeli defense spending would be fostered by regional
political normalization and concomitant arms control efforts.
[Note: Estimates of Israeli defense spending must take into
account the inclusion of dollar-based U.S. defense assistance to
Israel and fluctuations in the shekel/dollar exchange rate.]
The following is an index of defense spending in real
(constant-shekel) terms, as estimated by Israel's Central Bureau
of Statistics:
Index of real defense spending (1990 = 100)
(billions of constant 1990 shekels)
Real
NIS ('90) pct.
Year bn. chng. Index
1990 14.2 8.4 100.0
1991 14.7 3.5 103.5
1992 13.7 -6.5 96.8
1993 14.7 6.7 103.5
1994 13.4 -8.7 94.5
1995 12.8 -4.7 90.1
1996 13.6 7.8 97.1
1997 13.9 2.4 99.5
1998 14.1 1.4 100.9
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
According to the best estimates available, the Israeli Defense
Force (IDF) maintains standing forces of approximately 175,000
and reserve forces of approximately 400,000.
COMMENTS ON ITS POLITICAL ROLE:
By law, the IDF is apolitical. However, senior officers often
speak publicly on national security issues, and their
professional judgments inevitably bear on the ongoing Israeli
debate over Peace Process issues.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
Civilian control over the military is a firmly established and
respected principle in Israel. The IDF is under the control of a
civilian defense minister who makes key appointments in it.
While he can also remove officers, such disciplinary action
usually is carried out within the IDF.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
For now and the foreseeable future, a reduction in Israeli
military expenditures in absolute terms is highly unlikely.
Long-term trends in military spending reflect increasing
personnel costs, an ambitious modernization program aimed at
maintaining Israel's "qualitative edge," continued subsidies to
Israeli defense industries, and spending related to the Wye
Agreement. Absent further progress in the Peace Process overall,
especially in the Syrian and Lebanese tracks, substantial IDF
expenditures on the continuing low-intensity conflict in Lebanon
and protecting settlements in the Golan, West Bank and Gaza will
be required. Threats of terrorist activity in these and other
areas, and Israeli defense efforts to counter regional
proliferation of weapons of mass destruction and related delivery
systems, will also work against reductions in military spending.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
Continuing U.S. efforts to advance regional peace remain the best
way to reduce Israeli and other military expenditures in the
Middle East over the longer term. Israel generally has been
skeptical of multilateral efforts to limit arms exports to the
region, viewing them as inadequate in scope and unduly influenced
by commercial interests.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
The IDF is chronically short of the funding needed to match its
ambitious procurement, R&D, and other programmatic spending
requirements, including its support to defense industries and
redeployment commitments under the Wye Agreement. In keeping
with Prime Minister Netanyahu's 1996 pledge before the U.S.
Congress, the Government of Israel (GOI) is following up with the
United States concerning phasing out Economic Support Funds (ESF)
and allocating a portion of the money saved to FMF. In addition,
new U.S. assistance to Israel for its long-term defense
modernization program, as well as aid expected under the Wye
Agreement, means that overall defense spending will not decrease
but in fact will rise over the next 8-10 years.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
Government officials state that Israel has provided all required
arms transfer data to the UN Register. In 1998, Israel
participated in the UN Register of Conventional Arms. Israel has
submitted standardized MILEX reports to the UN four times--1988
to 1991.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
Israel was an active participant in the Arms Control and Regional
Security (ACRS) working group of the Middle East peace talks
until the work of the group was suspended due to problems in the
Peace Process and differences over nuclear/NPT issues. Israel
sees ACRS as an important part of multilateral regional
cooperation and views these discussions, coupled with political
and economic normalization, as offering some hope for eventually
reducing overall military spending by Israel and other countries
in the region.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
As part of the regular budget of the GOI, the Israeli defense
budget is in the public domain. It includes broad functional
breakdowns of military spending (e.g., salaries, procurement,
pensions, etc.) and specific policy changes for the new budget
year and their estimated budgetary effects. We have no reason to
doubt these estimates. Supplemental military appropriations in
the Knesset are not uncommon.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
The overall military budget and its major components are approved
by the Knesset. Its relative transparency also is enhanced by
press reporting. In addition, the Office of the State
Comptroller serves as an internal control mechanism by overseeing
all government ministries and presenting an annual report to the
Knesset.
KENYA
MILITARY SPENDING
REPORTING PERIOD: January 1 to December 31, 1998.
AMOUNT:
Actual spending by the Kenya Department of Defense (KDOD) during
the 1997/98 fiscal year (July-July) was Kenya shillings
(Kshs)10.79 billion or USD 174.3 million. The KDOD budget
estimate for the 1998/99 Fiscal Year is Kshs 11.56 billion or USD
197 million. In addition to KDOD, the 1998/99 budget
appropriates Kshs 8.93 billion or USD 149.6 million for non-
military security forces. The average exchange rate for 1997/98
was Kshs 61.9 equals USD 1.00; The projected rate for 1998/99 is
Kshs 59.7 equals 1.OO.
Table I: 1997/98 Kenyan Security Budget Expenditures
(millions of Kshs)
Total Recurring Development
Department of Defense:
Initial Estimate 12,094.8 11,412.8 682.0
Approved Expenditures 10,789.5 10,668.9 120.6
--DOD Administration 34.3 34.3 0.0
--Armed Forces 10,755.2 10,634.6 120.6
- Army - - 118.6
- Air Force - - 2.0
- Navy - - 0.0
Non-military security: 9,088.4 8,669.7 418.7
General Service Unit 951.2 881.1 70.1
National Police 5,434.6 5,318.8 115.8
Administrative Police 1,656.2 1,655.2 1.0
National Youth Service 1,046.4 814.6 231.8
Source: Kenyan Ministry of Finance.
Table II: 1998/99 Kenyan Security Budget Estimate
(millions of Kshs)
Total Recurring Development
Department of Defense: 11,759.0 11,558.0 201.0
DOD Administration 32.5 32.5 0.0
Armed Forces 11,726.5 11,525.5 201.0
- Army - - 128.1
- Air Force - - 54.4
- Navy - - 18.5
Non-military Security: 8,933.3 7,555.7 1,377.6
General Service Unit 995.1 907.2 87.9
National Police 5,090.1 5,003.4 86.7
Administrative Police 897.3 892.9 4.4
National Youth Service 1,950.8 752.2 1,198.6
Source: Kenyan Ministry of Finance.
Table III: Other Date (millions of Kshs)
1996/97 1997/98 1998/99 est.
Total GOK approved budget 201,454 272,481 241,742
Recurring budget 156,439 231,871 203,476
Development budget 45,015 40,610 38,266
Fiscal Year GDP 564,699 605,766 614,496
Ave. Exch. Rate (Kshs/USD) 55.3 61.9 59.7
Sources: Kenyan Ministry of Finance, Central Bureau of
Statistics, and the Central Bank of Kenya.
PERCENTAGE OF GDP:
The KDOD budget amounted to 1.8 percent of GDP in 1997/98 and is
projected at 1.9 percent of GDP in 1998/99.
PERCENTAGE OF BUDGET:
The KDOD budget amounted to 4.0 percent of the total budget in
1997/98 and a projected 4.9 percent in 1998/99. Budget totals
include debt service and other statutory obligations.
TRENDS IN REAL TERMS:
Due to a Government of Kenya (GOK) budget shortfall in mid-1998,
the Ministry of Finance imposed an across-the-board 10 percent
spending reduction. In 1997/98, the Department of Defense spent
11 percent less than Parliament appropriated, primarily because
the armed forces only spent 18 percent of its USD 11 million
development (procurement and construction) budget. The 1998/99
development budget is only USD 3.4 million. KDOD uses
procurement funding to modernize Kenyan forces by replacing
existing weapons systems, rather than to expand the overall
military establishment. For 1998/99, the recurrent (operating)
budget is up 1.3 percent above original 1997/98 projections and
up 8.3 percent above last year's austerity program expenditures.
The armed forces have very little money available for operations
and maintenance.
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
The armed forces include about 22,000 personnel, including the
army (18,000), the navy (1,000), the air force (3,000), and KDOD
headquarters staff (200). A number of Kenyan military personnel
participate in international peacekeeping operations in Angola,
Bosnia, Croatia, Western Sahara, and the Kuwait/Iraq border. In
addition to the armed forces, Kenya employs up to 40,000 police
and paramilitary personnel. The national police, which report to
the Commissioner of Police in the office of the president, field
about 18,000 officers. The General Service Unit (GSU) has around
5,000 paramilitary personnel. In addition, Administrative Police
(AP) report to local district commissioners, who in turn report
to the office of the president. Finally, the National Youth
Service (NYS), which is administered by the office of the
president, provides some paramilitary training to young job
trainees.
COMMENTS ON ITS POLITICAL ROLE:
The Kenyan military is a professional, apolitical force that
supports existing civil authorities. Its main mission is defense
of the country's borders in a notoriously unstable region.
Military commanders resist pressure to become involved in
politics, including intervention in tribal clashes. The police
or GSU are generally used for politically sensitive missions.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
President Daniel Arap Moi also holds the GOK defense portfolio.
KDOD, like the police, is part of the office of the president.
All but senior military officers are appointed, promoted, and, if
necessary, removed by the military's professional personnel
system. The president appoints and retires senior military
officers.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
It is unlikely that the GOK will reduce its military budget in
the near future. The cost of carrying out the military's mission
is increasing. Armed groups of pastoral tribesmen periodically
move across the Somalia, Ethiopia, and Sudan borders and
challenge GOK security forces. Chronic instability in Somalia
and the ongoing civil war in southern Sudan also pose threats to
Kenya's national security. The GOK is devoting some funds to
needed modernization programs.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
The U.S. and Kenya enjoy a close military relationship. Kenya
has long been a force for regional stability, and actively
participates in international peacekeeping operations. Kenyan
military spending levels are in the normal range. Nevertheless,
the U.S. has consistently encouraged the Kenyan military to make
more efficient use of its resources.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
GOK budget shortfalls forced the military to adopt austerity
measures and defer some modernization programs. The current
armed forces high command is making inroads against institutional
corruption and reducing traditional officer perks. Major
spending reductions are unlikely, however, as the military
already lacks financing to sustain the current force. The armed
forces is unable to maintain adequate training levels or replace
aging equipment.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
As presidential discretionary spending is not included, the
accuracy of GOK security-related budget figures is unknown. The
GOK provides arms transfer data to the UN Register of
Conventional Arms. In 1998, Kenya did not participate in the UN
Register of Conventional Arms. In the past, Kenya has
participated. Kenya has never submitted a standardized MILEX
report to the UN.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
Through the Commission on East African Cooperation (EAC), Kenya
is developing a closer security relationship with Tanzania and
Uganda. EAC talks are likely to result in increased regional
military coordination, but not a reduction in Kenyan military
expenditure.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
Official budget allocations may be reduced due to austerity
measures. On the other hand, KDOD can benefit from the
discretionary funds of the office of the president.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
There is little factual information available about GOK military
spending other than the parliament appropriation bills. The GOK
does not normally make supplemental appropriations to augment the
defense budget. The appropriation process enhances the
accountability of the armed forces to the civilian political
authorities, particularly the office of the president. The lack
of open debate on the budget or mission of the armed forces,
however, limits their accountability to the public.
KUWAIT
MILITARY SPENDING
REPORTING PERIOD: July 1, 1997 to June 30, 1998.
AMOUNT:
$2,703,237,900 ($1 equals .303 Kuwait dinars). This amount
includes the budget for the Ministry of Defense and the National
Guard, as well as a supplemental budget for military rebuilding.
PERCENTAGE OF GDP:
Approximately 9 percent of GDP. This reflects a projected drop
of roughly 11 percent in GDP for 1998 due to the fall in oil
prices.
PERCENTAGE OF BUDGET:
Approximately 19 percent of budgeted government expenditures.
TRENDS IN REAL TERMS:
Although military spending stayed at relatively the same level
for 1998, the projected drop in GDP due to the fall in oil prices
may cut the amount projected for 1999.
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
Approximately 21,000. These forces are dwarfed by those of Iraq
and Iran, Kuwait's northern neighbors. Kuwait's huge oil
reserves (96 billion barrels, more that the United States and all
of the former Soviet Union combined) represent both a strategic
asset to the West and a temptation to Kuwait's neighbors.
COMMENTS ON ITS POLITICAL ROLE:
Kuwait's military commanders have never taken a political role in
governing the country, and there are no indications they will do
so in the future. In fact, members of Kuwait's armed forces are
not allowed to run for public office or to vote, although
legislation is being considered to grant military personnel the
vote. Although most of the officer corps is Kuwaiti, enlisted
military personnel are a mixture of Kuwaitis and third-country
nationals.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
The civilian leadership has complete control over the appointment
and dismissal of military officers.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
See classified annex.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
See classified annex.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
The cost of rebuilding its armed forces has strained the budget
and forced Kuwait to look for ways of reducing defense
expenditures. Spending levels are of great interest to the
National Assembly, the only freely elected parliament in the GCC
(Gulf Cooperation Council). However, given its strategic
situation, the government has decided that defense spending will
remain a high priority--and we agree completely.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
In 1998, Kuwait did not participate in the UN Register of
Conventional Arms. Kuwait has never submitted a standardized
MILEX report to the UN. Kuwait has expressed a willingness to
provide spending data and arms transfer information to the UN or
regional organizations, but has not, to our knowledge, done so
yet.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
Kuwait is a strong proponent of regional cooperation, and has
been involved in joint exercises with GCC and Damascus
Declaration elements. Those forces are not, however, at a high
level of readiness, and Kuwait must still look to its own
resources and outside allies for security.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
The military budget is generally accurate and complete,
particularly on the procurement side. Although it has not done
so thus far in the Kuwaiti fiscal year, the government has on
occasion submitted supplementary appropriations requests to the
National Assembly for unforeseen expenses ( for example, a
supplemental appropriation was authorized in 1995 to pay for the
costs of the U.S. response to the Iraqi buildup in October 1994).
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
The overall Government of Kuwait budget is made public, and must
be approved by the National Assembly, but details are vague and
opportunities for off-budget spending significant. The National
Assembly is playing an increasingly important role in the entire
budget process, and its scrutiny of the budget may lead to
greater details in the breakdown of expenditures, which are
currently divided into only five major categories: salaries,
goods and services, transport equipment, construction projects,
and miscellaneous expenditures and transfer payments. On the
revenue side, Kuwait has stringent financial secrecy laws which
cover government-owned assets, including the Fund for Future
Generations (FFG), managed by the Kuwait Investment Authority
(KIA). KIA's assets are estimated to be about USD 60 billion,
and have, in the past, been used to help defray the deficit and
cover reconstruction costs from the Iraqi invasion.
MALAYSIA
MILITARY SPENDING
REPORTING PERIOD: January 1 to December 31, 1998.
AMOUNT:
Amount in Malaysian ringgit and U.S. dollar: 5.346 billion
ringgit or 1.364 billion U.S. dollars. The estimated operating
expenditure is 3.064 billion ringgit; the estimated development
expenditure is 2.282 billion ringgit. (The dollar/ringgit
exchange rate fluctuated widely in 1998. We are using the 1998
average exchange rate of 3.92 ringgit to the dollar.)
PERCENTAGE OF GDP:
The U.S. Embassy calculates that the 1998 combined operating and
development defense budget represents 1.9 percent of GDP.
PERCENTAGE OF BUDGET:
The Malaysian armed forces (MAF)'s operating expenditure budget
for CY 98 is estimated to represent 6.6 percent of the Government
of Malaysia (GOM)'s operating expenditure budget. The MAF's
development expenditure budget is estimated to represent 11.8
percent of the government's total development expenditure budget.
The defense budget, including expenditures for both operating and
development costs, is estimated to be 8.1 percent of the
government's total budget.
TRENDS IN REAL TERMS:
According to the Ministry of Finance's budget figures, since 1994
the MAF received the following amounts in billions of ringgits:
Year Operating Development
1994 3.399 2.166
1995 3.647 2.474
1996 4.030 2.061
1997 4.063 (estimated actual) 1.814
1998 3.064 (latest estimates) 2.282
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
B. ROLE OF ARMED FORCES
The MAF structure calls for 110,000 personnel, but actual
strength is perhaps twenty percent less. The MAF is planning to
rebalance the personnel numbers among its three services as part
of its modernization program for the year 2020, which it hopes to
substantially complete in three years.
-- The army officially has 90,000 billets, but its actual
strength is around 75,000. The MAF proposes to reduce the army's
billets to 80,000.
-- The Royal Malaysian Air Force (RMAF) is supposed to have
10,000 personnel, but its actual strength is around 8,000 plus.
The RMAF is seeking to have 11,500 billets under the
modernization program.
-- The Royal Malaysian Navy is supposed to have 10,000 personnel,
but it is similarly understaffed. Under the new program, the
navy hopes to have 11,000 billets.
Malaysia has been a major contributor of military personnel to UN
peacekeeping operations and has participated in 15 peacekeeping
operations and observer missions under the auspices of the United
Nations. In July 1998, however, the Minister of Defense
announced that Malaysia would no longer engage in any
peacekeeping missions at its own expense because of national
austerity measures. The Royal Malaysian Police, which reports to
the Ministry of Home Affairs, is primarily responsible for
maintaining internal security.
COMMENTS ON ITS POLITICAL ROLE:
The MAF refrains from engaging in either partisan activities or
making politically-charged pronouncements. The GOM civilian
leadership sets the MAF's overall policy orientation and
determines the size of its budget. The MAF's primary mission is
the protection of the nation and EEZ (exclusive economic zone)
from external threats, and the MAF's leadership focuses on these
narrowly interpreted professional responsibilities.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
The civilian leadership appoints and removes all senior military
officers.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
Until mid-1997 Malaysia, along with some other ASEAN (Association
of Southeast Asian Nations) countries, was in the process of an
ambitious defense modernization program. The GOM has viewed its
force modernization program as a prudent, modest and, until
recently, financially sustainable enhancement of its conventional
deterrent capabilities.
However, the economic turmoil which struck the region in the
second half of 1997 led Malaysia to slash its defense budget by
21 percent. To implement this cut, the Ministry of Defense cut
the armed services' operating budgets, capped salaries,
downgraded the operational readiness of military units, scaled
back joint exercises with other countries and deferred big-ticket
defense purchases.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
U.S. efforts are indirect and focus on our support of regional
confidence-building, especially through the ASEAN Regional Forum
(ARF) process. In the long term, the continued success of ASEAN
and regional initiatives such as the ARF are the best hopes for
reducing tensions, addressing long-term security threats, and
ultimately removing or ameliorating any potential causes for a
regional arms race.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
Even at the height of the defense modernization efforts in
Southeast Asia, the GOM dismissed arguments that there was an
arms race underway in the region. Pointing to ASEAN's record of
resolving regional problems through diplomatic means, the GOM
maintained there was little necessity for ASEAN members to engage
in regional discussions to reduce military spending. However,
the financial crisis which struck the region starting from the
second half of 1997 has forced the GOM to unilaterally cut
military spending.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
The GOM values the ARF as a potentially useful mechanism for
promoting defense transparency and confidence-building diplomacy
in the larger East Asia region. The ARF has endorsed the UN
Register of Conventional Arms to which the GOM has regularly
submitted data on its latest arms acquisitions. In 1998,
Malaysia participated in the UN Register of Conventional Arms.
Malaysia has submitted standardized MILEX reports to the UN two
times--1987 and 1990.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
At present, no regional forum or ongoing dialogue is specifically
addressing REDUCING MILITARY SPENDING. Malaysia is a founding
member of the ARF (see above), which is addressing the general
topic of confidence-building measures.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
Malaysia does not release details of its military budget, and the
actual magnitude and composition of GOM defense spending is not
clear. The MAF's budget has some flexibility. There have been
cases in the past when the MAF's budget was revised upward rather
quickly to achieve a GOM policy goal - such as providing airlift
to Malaysian troops in Bosnia. On the other hand, economic
problems in 1997 led the GOM to slash the defense budget.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
It is unclear whether portions of the civilian budget are used
for military spending. However, as mentioned above in our
comments on the MAF's political role, the GOM civilian leadership
determines the size of the military budget. The overall budget,
including military spending, is debated in Parliament.
MOROCCO
MILITARY SPENDING
REPORTING PERIOD: January 1 to December 31, 1998.
AMOUNT:
1997: 1322.7 million dirham. $1450.8 million.
(exchange rate: 9.1 dirham = $1 U.S. dollar.)
PERCENTAGE OF GDP: 4.2 (1997).
PERCENTAGE OF BUDGET: 17.8 (1997).
TRENDS IN REAL TERMS:
Military budgets in real terms in Morocco have fallen slightly
over the past decade. However, the military budget as a
percentage of GDP actually increased in 1997 due to the fall in
GDP. With a forecast GDP growth rate of 6.8 percent in 1998, the
military budget's share of GDP should fall back to about 3.8
percent.
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES: 198,500
Army: 175,000
Air Force: 13,500
Navy: 10,000
Gendarmes: 12,000
The armed forces have, and do, participate in international
peacekeeping operations including IFOR, SFOR, and Somalia.
COMMENTS ON ITS POLITICAL ROLE:
The Moroccan military does not play a significant political role
in the Moroccan government. After surviving two military coup
attempts in the 1970's. King Hassan II goes to some lengths to
prevent the military from becoming a power center. For example,
the king has ensured that the three military services remain
separate. While the king has some close associates in the
military, the military does not have significant political power.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
Civilians have virtually no authority in military appointments or
removals. The king is the supreme commander-in-chief and makes
essentially all important policy decisions. Officer
appointments, promotions, and retirements are handled by elite
power groups within the military--with the king's approval, and
according to the king's schedule. A civilian was recently
appointed to lead the National Defense Administration, the
successor agency to the Ministry of Defense, which was abolished
after the coup attempts.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
With the current size and deployment of the Moroccan military,
reduction in spending is unlikely, since the services are
considered underfunded as it is--particularly with regard to
spare parts. The only real prospect for a military spending
reduction would be for a corresponding reduction in forces to
occur. The Moroccan armed forces currently has 50-60 percent of
its forces in the Western Sahara--a huge drain on resources. If
an eventual successful conclusion to the dispute there occurs, a
reduction of forces and budget would then be possible in theory.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
In 1994 FMF was eliminated, after averaging $43 million a year in
the proceeding decade.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
Morocco's efforts appear to be limited to reducing acquisitions.
There have been no force reductions or base closures of which we
are aware. Instead, several military installations have opened
in recent months.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
Morocco has never submitted a standardized MILEX report to the
UN. In 1998, Morocco did not participate in the UN Register of
Conventional Arms.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING? No.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
The military budget is not generally considered to be always
accurate and complete.
Also see classified annex.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
Morocco's audit office is responsible for monitoring and auditing
the expenses of all government offices, including the military.
The military's budget is provided from the general budget of the
state through the minister delegate for defense administration, a
civilian.
NICARAGUA
MILITARY SPENDING
REPORTING PERIOD: January 1 to December 31, 1998.
AMOUNT:
The 1998 defense budget is approximately 25.49 million dollars
(268.4 million cordobas) at the 1998 average exchange rate of
10.53 cordobas per dollar.
PERCENTAGE OF GDP: 1.28 percent.
PERCENTAGE OF BUDGET: 4.12 percent.
TRENDS IN REAL TERMS:
As anticipated, military spending declined in 1998, both in
nominal and real terms. Much of the real decrease resulted from
the Government of Nicaragua's (GON) one percent per month
crawling peg devaluation of the official exchange rate. The
proposed budget for 1999 is 294 million cordobas. At an average
exchange rate of 11.7 cordobas per dollar (assuming continued
devaluation), this would put the 1999 budget at approximately
26.7 million dollars--up 9.5 percent from 1998 levels, but still
lower than the 29.83 million dollar 1997 budget. 1999 figures
are subject to adjustment; the National Assembly is expected to
postpone considering the 1999 budget until February of 1999, in
order to take better account of new expenses related to Hurricane
Mitch.
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
The size of the army is officially 14,143, which includes 1,374
civilians.
COMMENTS ON ITS POLITICAL ROLE:
The Nicaraguan army has evolved from a Sandinista-dominated,
revolutionary army in the 1980's to a downsized, relatively
apolitical professional army officially answering to a civilian
Ministry of Defense. In September 1994, then-President Chamorro
signed into law a new military code which was an important step
forward for the democratic process. It provided a framework for
institutionalizing civilian control of the armed forces. As
stipulated in the code, then-army commander General Humberto
Ortega stepped down on February 21, 1995. The President named
General Joaquin Cuadra to replace him. Upon taking office in
January 1997, President Arnoldo Aleman appointed Liberal
Constitutional Party legislator Jaime Cuadra, to be the first
incumbent of the newly-created civilian defense ministry--the
first in Central America. In September 1997, Jaime Cuadra was
replaced as defense minister by Pedro Joaquin Chamorro, son of
former President Violeta Chamorro. Joaquin Cuadra remains the
army commander.
Initially, the new Ministry of Defense focused exclusively on
encouraging the demobilization of "re-armed groups" in the North.
With the completion of the disarmament process in December 1997,
the ministry shifted its focus towards transforming itself into
an institution that could exercise effective civilian control
over the military. Legislation enacted in 1998 defining the
Ministry of Defense's relationship was helpful. The Nicaraguan
army's central role in responding to the aftermath of Hurricane
Mitch served as a catalyst to improved civilian/military
coordination. The army carried out orders from the civilian-led
National Emergency Committee for helicopter deliveries of food
and medicine, and rescue of stranded and injured
persons--including some U.S. citizens. Defense Minister Chamorro
coordinated the army's role. The Nicaraguan military
demonstrated through its response to the disaster a high degree
of professional competence, an increased willingness to accept
civilian direction, and a desire and capability to coordinate
effectively, including with U.S. military personnel and resources
sent to assist in the relief effort.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
Under the military code, the civilian president may appoint and
remove the commander-in-chief of the army. The president names a
new commander of the army based on nominees submitted to the
"Military Council," which is composed of the top several dozen
military commanders. The president can also reject the slate of
candidates and ask the military council to provide other names.
The commander-in-chief of the army can be removed by the civilian
president only for cause, which the military code defines as
insubordination, mental or physical deficiencies, violation of
the apolitical nature of the commander's duties, or conviction
for a crime requiring punishment beyond the equivalent of a
military letter of reprimand.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
In the short term, the Nicaraguan army's role in rebuilding after
Hurricane Mitch will make further spending reductions difficult.
The army provided disaster response capabilities no other GON
entity has. In the areas of disaster response, and in combating
armed criminal bands in remote rural areas, the Nicaraguan army
has unique capabilities. For 1999, the army is seeking increased
funds to repair and upgrade navy patrol craft, and to install
new, more fuel-efficient engines in its aging fleet of trucks.
It seeks a larger role in combating drug trafficking along the
Caribbean coast and in protection of natural resources, and has a
legal mandate to perform those functions.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
The U.S. supports the policies of international financial
institutions, such as the IMF's Enhanced Structural Adjustment
Facility (ESAF), which requires cuts in overall Nicaraguan
government spending. The Nicaraguan government signed a
three-year ESAF in January 1998, and to our knowledge was in
compliance at the time Hurricane Mitch hit.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
Nicaragua has greatly reduced military spending in conjunction
with the downsizing of its army. Since 1990, the size of the
army has been reduced from about 90,000 - 95,000 to the current
level of 14,143. The number of military facilities was 496 in
1990, and has been reduced to a current total of 168 military
installations/facilities. Moreover, direct foreign military
assistance from the Former Soviet Union and Soviet Bloc countries
has ended.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
Nicaragua makes public basic national budget information.
Nicaragua has never submitted a standardized MILEX report to the
UN. In 1998, Nicaragua did not participate in the UN Register of
Conventional Arms. In the past, Nicaragua has participated.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
In December of 1995, Nicaragua signed the "Central American
Democratic Security Treaty," which strengthens regional
democratic norms and creates a fuller framework for regional
cooperation. The National Assembly ratified this treaty in July
1996. It has not entered into force because the required
ratification by at least three Central American countries has not
occurred. The treaty contains some military cooperation and
confidence-building commitments, but they have not formally been
implemented. It also contains provisions on law enforcement, the
environment, and drug trafficking.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
The Nicaraguan army operates businesses whose income goes into a
military welfare and retirement fund, the "Institute of Military
and Social Welfare." The army does not publicly report this
income, though it says the funds are not used to augment its
operational budget. The civilian comptroller-general has
oversight responsibilities for the administration and finances of
the institute. The minister of defense participates as a member
of the institute's board. No information on finances of the
institute is available publicly.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
The overall military budget is published as part of the
government's national budget. However, the submission on the
military contains far fewer details than are provided in the
budget submissions of other government ministries.
NIGERIA
Note: This report on Nigeria updates information provided in
last year's report, covering CY 1997 and CY 1998 expenditures.
MILITARY SPENDING
REPORTING PERIOD: January 1 to December 31, 1998.
AMOUNT:
Nigeria's total published military budget allocation for CY 1997
was 17.91 billion naira, equivalent to USD 210 million at the
market exchange rate of 85 naira per USD 1.00. Of the total, 72
percent (12.97 billion naira) was budgeted for recurrent
expenditures, while 28 percent (4.94 billion naira) was allocated
for capital expenditures, However, Nigeria made an undetermined
amount of foreign procurements at an official exchange rate of 22
naira per USD 1.00. Thus, USD 210 million is an underestimate of
Nigeria's publicly acknowledged military expenditures.
Nigeria's published military budget for CY 1998 is 23.07 billion
naira, with 66 percent (15.13 billion naira) allocated for
recurrent costs and 34 percent (7.94 billion naira) for capital
expenditures. At the market exchange rate, the total military
budget would equal USD 271 million. The government has indicated
that in 1998 it will approve fewer instances in which its
purchases will be made at the official (22 naira to USD 1.00)
dollar rate. However, USD 271 million should still be concerned
an underestimate.
Also see classified annex.
PERCENTAGE OF GDP:
In 1997, acknowledged military spending, at a market exchange
rate, represented 0.4 percent of Nigeria's estimated GDP of USD
51.4 billion. This is an underestimate, for reasons cited above
and below in the military budget accuracy assessment.
PERCENTAGE OF BUDGET:
In 1997, publicly acknowledged military expenditures represented
12.6 percent of total recurrent expenditures, and 5.6 percent of
capital expenditures. Overall, publicly acknowledged military
expenditures accounted for 9.4 percent of the 1997 budget.
In the 1998 budget, acknowledged military allocations make up 13
percent of recurrent expenditures, 5.7 percent of capital costs,
and 9 percent of total allocations.
TRENDS IN REAL TERMS:
Between 1996 and 1997, acknowledged military expenditures rose
16.6 percent in nominal terms. In real terms, this represents an
increase of 8.1 percent.
From 1997 to 1998, acknowledged military spending is slated to
rise 28.8 percent in nominal terms. However, reduction in use of
the official exchange rate for military purchases would result in
a less of an increase in acknowledged military spending.
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
Estimated total personnel - 76,500, consisting of:
- Army 62,000
- Air Force 9,500
- Navy 5,000
Nigeria's armed forces participate in regional and UN
peacekeeping deployments.
Also see classified annex.
COMMENTS ON ITS POLITICAL ROLE:
Nigeria has been under military rule for all but nine years since
independence in 1960. A military coup overthrew the country's
last elected civilian president in 1983. After a protracted
program to return to civilian rule, the former military
government of General Babangida annulled results from the June
1993 presidential elections. General Sani Abacha took power in a
palace coup in November 1993. In 1995, Abacha began a return to
civilian rule program seemingly designed to maintain himself in
power. Upon Abacha's death in June 1998, General Abdulsalami
Abubakar became head of state. The military regime rules through
select use of a previous constitution supplemented by decrees,
which may not be challenged in court. Military administrators
function as governors of Nigeria's 36 states. The Abubakar
administration is conducting a transition to civilian rule
scheduled to culminate in a hand over to an elected civilian
government in May 1999. Following the turnover to civilian
leadership, the Nigerian military will continue to play an
important, albeit unofficial, role in the country's political
life.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
Under the current conditions of military rule, civilian
authorities are not able to appoint or remove military officers.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
Significantly reducing Nigeria's military spending is very
unlikely until after the establishment of civilian government.
Even under a civilian administration, the military will remain a
powerful political force that can effectively lobby for a
significant budget allocation.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
U.S. ability to engage Nigeria on military issues has been
minimal since the imposition of sanctions on Nigeria following
annulment of the 1993 elections and subsequent events. As a
result of these sanctions, bilateral military contacts were very
limited. However, bilateral contacts have significantly improved
since General Abubakar came to power in June 1998. Because of
sanctions in place, the U.S. does not sell or service military
equipment in Nigeria, nor does it provide military training such
as IMET. However, this has not prevented Nigeria from acquiring
equipment from suppliers in some other nations.
Also see classified annex.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
Led by a military government, Nigeria has not been inclined to
reduce military spending. Additional factors also provide
Nigerian leaders with arguments against reducing military
expenditures. Nigeria has on-going border disputes with
neighboring Cameroon which has led to periodic military clashes.
Nigeria also has demonstrated its desire to project its influence
in West Africa in part through its military forces under the
banner of the Economic Community of West African States (ECOWAS)
and its Cease-fire Monitoring Group (ECOMOG). A military force
less than 80,000 strong is not excessive, Nigeria believes, for a
country of 110 million people.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
Nigeria has never submitted a standardized MILEX report to the
UN. In 1998, Nigeria did not participate in the UN Register of
Conventional Arms. In the past, Nigeria has participated.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
None.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
The formal budget figures presented above do not present an
accurate or complete picture of Nigeria's military spending; they
are underestimates. As noted above, some military purchases
employ an artificially low naira/dollar exchange rate. In
addition, major portions of Nigeria's participation in ECOMOG and
military procurement traditionally have been off-budget. A
portion of Nigeria's oil revenues are deposited in what are
termed dedicated accounts which provide the government with funds
to finance projects and programs not subject to fiscal oversight.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
Due to the factors listed above, Nigeria's military budget cannot
be considered transparent. Under current conditions of military
rule, the military is not accountable to civilian authorities and
the public.
PAKISTAN
Under the terms of the "Pressler Amendment," USG military and
security assistance, FMS, and new economic assistance were cut
off in 1990 when the President determined that he could no longer
meet the legal requirement to certify that Pakistan did not
possess a nuclear explosive device. In January 1996, the
President signed legislation (the "Brown Amendment") that
provided one-time relief from Pressler sanctions by releasing USD
358 million worth of materiel that, while paid for by Pakistan,
had been blocked in the pipeline. By the end of 1998, that
pipeline had been almost completely emptied. The 1996
legislation, however, did not unblock 28 F-16 fighters that
Pakistan paid for, but which remained undelivered. In December
1998, this issue was resolved by a bilateral agreement. Pakistan
withdrew its claim for the aircraft in return for a payment of
$326.9 million from the U.S. Treasury Judgement Fund, a fund used
to settle legal disputes that involve the U.S. Government. In
addition, the U.S. Government agreed to use all available means
to provide Pakistan with goods and benefits up to a value of
$140 million. The 1996 legislation also removed International
Military Education and Training (IMET) and Overseas Private
Investment Corporation (OPIC) from Pressler sanctions, but
resumption of these programs was blocked by sanctions under the
Symington Amendment. In October 1998, further legislation (the
"Brownback Amendment"), gave the President authority to waive
certain sanctions on Pakistan, including programs under the
Foreign Assistance Act (including IMET and TDA [Trade and
Development Agency], loans by private banks, loans by
international financial institutions, and credits, such as those
of the Export-Import Bank and OPIC. In November, President
Clinton decided to exercise that authority.
MILITARY SPENDING
REPORTING PERIOD: January 1 to December 31, 1998.
AMOUNT:
FY 97/98 revised budget (millions of Pak rupees)
Total military expenditures: Rs 133,834
or, converted at USD 1 = Rs 42.4, USD 3.16 billion.
Note: Converted at mean interbank floating rate for 1997.
FY 98/99 budget (millions of Pak rupees)
Total military expenditures: Rs 145,000
or, converted at USD 1 = Rs 50, USD 2.90 billion.
Note: Converted at mean interbank floating rate for year to
date.
PERCENTAGE OF GDP:
FY 97/98 revised budget: 4.7 percent.
FY 98/99 budget: 4.4 percent.
PERCENTAGE OF BUDGET:
FY 97/98 revised budget: 29 percent.
FY 98/99 budget: 29 percent.
TRENDS IN REAL TERMS:
1998/99 spending is a nominal 9 percent increase over 1997/98
revised expenditures in Pak rupees. Inflation is running at
approximately 6.5 percent, which means that military expenditures
have a real increase of roughly 2 percent. This is reduced
somewhat by the fact that the Pak rupee has depreciated nearly 14
percent against the U.S. dollar over the past year, raising the
cost of goods purchased with hard currency. In contrast to
recent years, 1998/99 military purchasing power has remained
roughly equivalent with that of the previous year.
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
Active-duty Pakistan armed forces are estimated to number about
775,000 personnel, including auxiliary units, divided as follows
(essentially unchanged from last year's report):
Army: 550,000.
(19 infantry divisions, 2 armor divisions, and 1 artillery
division.)
Air Force: 35,000.
(15 fighter squadrons and 3 training squadrons that are combat
capable.)
Navy: 23,000.
(12 surface combatant ships, 6 submarines, 4 Atlantiques, and 3
P-3C aircraft.)
Paramilitary: 150,000.
Coast Guard: 1,000.
Marine security: 1,000.
Marines: 120.
COMMENTS ON ITS POLITICAL ROLE:
The armed forces of Pakistan--particularly the army--play a
significant political role, albeit a lesser one than that they
played as recently as ten years ago, when Pakistan was under
martial law. During 1998, the military demonstrated its respect
for Pakistan's democratic institutions, most notably when General
Jehanghir Karamat, the army chief of staff and highest-ranking
military officer, resigned over differences with
Prime Minister Nawaz Sharif over public criticisms he had leveled
against the government for mismanaging the affairs of state and
failing to consult. Although his criticisms reflected
unhappiness within the military over government mishandling of
the economy and other issues, his resignation, following a
meeting with the prime minister, demonstrated a continuing
military commitment to respecting constitutional norms. The
military appears unwilling to insert itself directly into the
political process except in dire circumstances. In November,
however, the army was itself tasked to establish military courts
in Karachi to support governor's rule.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
Civilian authorities appoint the most senior officers of the
military, i.e., the chief of each of the three services and the
chairman of the joint chiefs of staff committee. Effective
April 1, 1997, Prime Minister Nawaz Sharif amended the
constitution, removing the president's power to make these senior
military appointments at his own discretion. Generally, senior
military officers serve out their appointed terms and then
retire. While political leaders normally do not try to remove
senior military leaders in advance of their scheduled
retirements, when the prime minister expressed unhappiness over
the public criticisms of his government by General Karamat, the
general decided to resign.
Appointments to lower levels in the military are approved by the
political leadership, but only after consulting the chiefs of the
three services, who play the central role in determining who
serves in the critical subordinate ranks.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
As noted above, Pakistan's officially-declared military
expenditures have declined in dollar terms and only slightly
increased in real rupee terms (they have remained roughly the
same as proportions of both the budget and GDP). Realizing that
the weak Pakistani economy cannot provide additional resources
for badly-needed equipment modernization, Pakistan's military
leadership is assessing means to reduce manpower and training
costs without undercutting fighting capability. That said,
significant reductions in Pakistan's military spending are not
likely. Although there is some discussion in the media, the
military, and among intellectual elites of the trade-off between
military spending and funds available for desperately needed
social and economic development, major political parties do not
publicly advocate reducing military expenditures or the size of
the armed forces in the existing security context. There is a
broad political consensus on the need to maintain an effective
defense.
In light of the current imbalance between the military
capabilities of Pakistan and its greatest perceived external
threat--India--Pakistan is not likely to make unilateral military
reductions that could exacerbate an already unfavorable military
equation. There is little domestic pressure for such reductions.
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
In general, U.S. efforts to influence Pakistan's defense
structure have focused on nonproliferation goals rather than the
size of Pakistan's defense budget. Specifically, the U.S. has
urged that Pakistan avoid a nuclear weapons or missile race with
India, the results of which would be disastrous for the Pakistani
economy. In 1990, Pressler Amendment sanctions were imposed on
Pakistan following the President's inability to certify that
Pakistan did not possess a nuclear explosive device. The
Symington Amendment (1976, amended 1994) imposed further
sanctions. Although the Brown Amendment in 1996 removed some of
these sanctions, the nuclear tests carried out by Pakistan in May
of this year in response to tests by India automatically
triggered further sanctions under the Glenn Amendment
(1977, amended 1994). Subsequent negotiations between the U.S.
and Pakistan aimed at securing adherence to global
nonproliferation objectives produced a Pakistani commitment to
sign the Comprehensive Nuclear Test-Ban Treaty (CTBT), the
removal of Pakistani objections to the Conference on
Disarmament's (CD) establishing of an ad hoc Committee in Geneva
to negotiate a Fissile Material Cutoff Treaty (FMCT), and ongoing
meetings with U.S. experts on steps to improve export controls.
Progress in these talks, which are ongoing, coupled with
Pakistan's dire economic straits, prompted the President in
November to exercise the waiver authority granted him under the
Brownback Amendment to ease a number of sanctions against
Pakistan. On the military side, this includes the resumption of
IMET.
In addition, realizing that any progress Pakistan makes towards
nonproliferation goals will depend largely on similar action by
India, the USG continues to encourage both governments to engage
in a serious bilateral dialogue on the range on contentious
issues between them, including Kashmir. The U.S. was encouraged
by the resumption of official, senior-level talks between the two
countries in late 1998. By strongly encouraging India and
Pakistan to engage in bilateral dialogue aimed at reducing
tensions, the U.S. seeks to create conditions that make it
possible for both nations to reduce their military expenditures.
The virtual elimination of U.S. assistance to Pakistan and the
reduction of military-to-military cooperation since the original
imposition of Pressler sanctions have diminished our ability to
influence the government on these issues. By allowing resumption
of the IMET program, Brownback is a potentially important step
toward expanding our mil-to-mil relationship in response to
progress on our nonproliferation agenda.
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
The euphoria that immediately followed Pakistan's nuclear tests
was followed, in turn, by growing concern about how Pakistan's
already-fragile economy would weather post-test international
sanctions as well as an expensive arms race with India. These
concerns have strengthened the growing realization, in civilian
as well as military circles, that there are very real limits on
the national resources Pakistan can devote to military spending.
While high-profile initiatives to cut military spending are
unlikely to be announced, many national decision-makers are
increasingly attuned to the need to keep military spending in
check.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
Pakistan has provided official military expenditure data to the
World Bank (its accuracy is in question for reasons explained
below). Pakistan provides arms transfer data to the UN every
year. In 1998, Pakistan participated in the UN Register of
Conventional Arms. Pakistan has never submitted a standardized
MILEX report to the UN.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
There have been no official talks in South Asia focused on
reducing regional military spending. However, Pakistan's
dialogue with India, which resumed at the foreign secretary level
during 1998, has been aimed at resolving contentious issues
(namely, Kashmir) and identifying possible avenues of
cooperation, including negotiation of confidence-building
measures. This dialogue offers the promise of lowering mutual
threat perceptions, with lower military expenditures on both
sides of the Indo-Pak border a possible result.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
Official military expenditure figures do not fully reflect
reality. An undetermined amount of military expenditures are
hidden elsewhere in the budget (for example, in spending on
communications infrastructure). Certain sensitive programs, such
as nuclear weapons and missile development, are not identified in
any published budget figures. Given the secrecy that envelops
military spending, it is difficult to tell whether supplemental
appropriations are made to augment official budget figures.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
The military budget is not transparent. Only two line items in
the official budget ("Defense Administration" and "Defense
Services") represent all military expenditures. There is no
explanation of what these line items stand for, or how the funds
are spent. Parliamentary consideration of the budget
traditionally has not shed any light on military expenditures.
This lack of transparency leads to impressions that kickbacks and
other forms of corruption take place at the upper levels of the
national defense establishment, among civilians as well as
members of the military. For example, three naval officers were
recently convicted for taking money in connection with submarine
construction.
PERU
MILITARY SPENDING
REPORTING PERIOD: January 1 to December 31, 1998.
AMOUNT:
1998: USD 913.3 million (2,676 million soles; 1998 average
exchange rate 2.93)
Projected 1999: USD 882.5 million (2,772 million soles;
estimated 1998 average exchange rate 3.14) (figures do not
include significant off-budget expenditures).
PERCENTAGE OF GDP:
1998: 1.42 percent; projected 1999: 1.35 percent
(Note: Off-budget expenditures not included).
PERCENTAGE OF BUDGET:
1998: 9.1 percent; projected 1999: 8.5 percent.
TRENDS IN REAL TERMS:
Given forecasts of 6 percent inflation, 7.2 percent depreciation
of the sol versus the U.S. dollar, and 3 percent growth in
overall GDP, U.S. Embassy expects 1999 defense spending will drop
about 2 percent in real terms.
ROLE OF THE ARMED FORCES
SIZE OF THE ARMED FORCES:
122,000 (army, air force, and navy); 100,000 (national police).
COMMENTS ON ITS POLITICAL ROLE:
According to the Peruvian constitution, the president presides
over the system of national defense made up of the armed forces
(the army, navy, and air force) and the national police. The
armed forces are primarily tasked with guaranteeing the
independence, sovereignty, and territorial integrity of Peru.
The armed forces also "assume control of internal order" in
accordance with article 137 of the constitution dealing with
states of emergency and states of siege. In 1998, the president
continued states of emergency in a number of departments
comprising over 10 percent of Peruvian territory and over 20
percent of the Peruvian population. These emergency zones were
established previously in response to two terrorist insurgencies
which continue to operate in certain areas of Peru.
CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?
The constitution established the president as the supreme
commander of the armed forces, but in practice, the degree of
civilian control depends entirely on the president's relationship
with the military leadership. In August, the Peruvian president
dismissed the president of the armed forces joint command who had
headed the joint command for over six years, and replaced him
with the defense minister. The current president of the joint
command and the new defense minister are both active duty army
generals. There has never been a civilian minister of defense in
Peru since the defense ministry was created in 1986. The
president must approve the promotions and retirements of all flag
rank officers of the three armed services and the national
police.
REDUCING MILITARY SPENDING
FEASIBILITY OF REDUCING MILITARY SPENDING:
In the wake of the October 26 signing of a global and definitive
peace agreement between Peru and Ecuador, the Government of Peru
(GOP) is likely to curtail projected increases, and perhaps
reduce, its defense spending. President Fujimori announced in
November that Peru will suspend the purchases of military
aircraft and missiles in order to shift resources to education
and health care. He also noted that the defense budget will
undergo a progressive annual reduction resulting in the savings
of "tens of millions of dollars."
U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:
The U.S. Government--along with the other three Guarantors of the
1942 Rio de Janeiro protocol (Argentina, Brazil, Chile)--helped
Peru and Ecuador conclude in 1998 a global and definitive
settlement of their long-standing border dispute. Peru and
Ecuador reached an agreement on confidence- and security-building
measures as part of that comprehensive accord. In addition to
its role as a Guarantor of the Peru-Ecuador peace process, the
USG also continued to work toward a multilateral agreement on
transparency and confidence in conventional arms acquisitions at
the Organization of American States (OAS).
COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:
Peru engaged in successful substantive negotiations with Ecuador
to resolve their long-standing border dispute. The Peruvian
president has publicly indicated that a substantial reduction in
defense spending will be one of the benefits of reaching a peace
accord with Ecuador.
HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO
THE UN REGISTER OF CONVENTIONAL ARMS?
Peru has submitted standardized MILEX reports to the UN three
times--1992 to 1994. Peru did report arms transfer data to the
UN Register of Conventional Arms in 1998.
HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY
SPENDING?
Peru promotes bilateral military commissions to build confidence
with each of its five neighbors. Peru, like other OAS members,
is engaged in discussion of the USG-proposed OAS resolution on
transparency and confidence in conventional arms acquisitions.
ASSESSMENT OF MILITARY BUDGET ACCURACY
IS THE MILITARY BUDGET ACCURATE AND COMPLETE?
Military budget figures are not considered definitive and
spending on the military includes significant "off budget" items.
The extent of this additional spending is unclear as the
military, citing security reasons, does not reveal a breakdown of
military expenditures. The Interior Ministry maintains separate
budget items for defense and national security and for
maintenance of internal order.
TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?
The military budget is not transparent. This lack of
transparency significantly diminishes the accountability of the
military to civilian authorities and the public. President
Fujimori did announce in July 1998 that Peru had acquired
18 MiG-29s at the cost of "hundreds of millions of dollars." The
GOP has never revealed the exact cost of its MiG-29 acquisitions
or the extent of other close air support aircraft purchases,
however.
[End of section]