Scores on a scale of 15
Defense Finances & Economics

The defense budget is determined with input from military staffs and sectarian political elites, leading to a budget of lowest common denominators that prioritizes personnel costs such as wages and benefits over new infrastructure, weapons systems, or capabilities. It is very rare for the armed forces to be involved in business or economic activities. The negligible revenues from these activities remain with the armed forces, but are reported to the treasury. The state budget limits funding for defense sector needs, largely due to sectarian or factional politics and the absence of a mechanism for developing and negotiating broad national defense needs.

Fair Efficiency
Q1. Who determines the defense budget and its distribution?

Armed forces budget requests do not receive preferential treatment, and the resulting distribution of funds generally covers current spending on personnel costs, with little funding tied to capabilities development. The president, minister of finance, prime minister, speaker of parliament, and factional elites have substantial influence on the final defense budget. They generally favor maintaining current spending levels rather than capital spending to augment the capabilities and professionalism of the force. The defense budget is transparent, showing main budget headings such as infrastructure maintenance, intelligence, and personnel costs, but line items below these are, in practice, not revealed.

Capabilities Development Plans include assumptions about future spending, but these are also not released to the public. Off budget expenditures are uncommon and always reported to the treasury. Income from officer clubs; military cooperatives; and donations from citizens, civilian agencies, or foreign government donors allow the armed forces to cover some budget shortfalls, but these funds do not cover more than emergency expenses. Parliament also allocated funds to the armed forces in the absence of an official state budget from 2005 to 2017.

The Ministry of Defense’s General Directorate of Administration is responsible for procuring goods and services and managing public tenders. However, it is not an approving authority. After the Ministry of Defense endorses contracts, civilian agencies like the Ministry of Finance and the Court of Audit are meant to oversee defense sector finances and counter corruption risks. In practice, audits rarely take place, and little meaningful procurement has occurred since the 1970s. When the Ministry of Finance approves contracts, the General Directorate of Administration executes them. The process remains convoluted and often takes years to meet the real-world procurement requirements of the military.

Public debate of defense sector finances is permitted but superficial, due to limited public access to relevant information. This has led mainly to a discussion over salaries and pensions rather than a meaningful national conversation on defense needs. The armed forces’ engagement with nongovernmental organizations and media is intended to create pressure for an increased budget, to bolster personnel funding rather than procurement. The military is reluctant to engage with local nongovernmental organizations and think tanks because of a perceived lack of civilian expertise, fears of being tied to confessional conflict, and an overt focus on human rights issues.

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Intermediate Efficiency
Q2. Is the military involved in business and economic activity?

No law explicitly prohibits the military from doing business, but formal military businesses are very rare, the exceptions comprising military cooperatives, officer clubs, and a hotel. These activities are subject to the same laws and obligations as civilian businesses. The armed forces are not involved in the commercial exploitation of natural resources.

Nonbudgetary income resulting from construction or real estate assets and profits from military businesses are negligible. They are retained and managed by the military and do not appear in the defense budget, but these revenues are nonetheless reported to the Ministry of Finance. The armed forces construct housing for personnel, and rent from these properties is retained by the military, but in general the military is engaged in only limited construction of public infrastructure, and never for commercial purposes. Private business activity by serving military and civilian defense sector personnel is prohibited, and strong norms ensure consistent enforcement.

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Fair Efficiency
Q3. Does the state budget allocate sufficient funding for defense sector needs?

A process for crafting defense, security, and strategy documents does not exist, and civilian authorities have a limited understanding of armed forces purpose and sustainability, and rarely consider the need to establish a mechanism to develop and negotiate defense needs. The military has a clear understanding of its equipment, training, and personnel needs, but does not broach the wider discussion of defense needs for fear of exacerbating sectarian tensions.

The armed forces have grown accustomed to the limited capital expenditures provided by civilian authorities. Defense costs are not charged to the general budget or hidden in nonmilitary categories. Defense sector pay, benefits, and allowances are comparable to those in the rest of the public sector, although military personnel receive benefits that recognize the readiness requirements and dangers of their profession, and officers above a certain rank receive a driver for life. Military pensions are somewhat lower than in the rest of the public sector, although pension benefits associated with readiness and combat duty can raise them to a higher level, though not to a level viewed as excessive.

The basics of defense sector pay and pensions are known, but the process for calculating exact amounts of pay and pensions remains opaque. The negotiation of arms deals and foreign military assistance largely reflects actual defense needs as opposed to political or parochial interests, as it is difficult to extract rents or patronage from foreign assistance. Corruption in such deals is more likely to occur among political elites than among military personnel.

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Fair Efficiency
Defense Finances & Economics
Efficiency Levels
Q1 - Budget Process
Q2 - Extra-Budgetary Income
Q3 - Resource Sufficiency