Scores on a scale of 15
Defense Finances & Economics
The defense budget is determined according to an institutionalized government process, and civilian government authorities control its distribution. The military has only very limited involvement in businesses or other economic activities, and the revenues from these activities are reported to and overseen by the government. Funding for defense needs appears to be insufficient, owing to limited overall national resources and to the lack of both a process for negotiating defense needs and strategic direction between military and civilian authorities.
Fair Efficiency
Q1. Who determines the defense budget and its distribution?

As with any ministry’s budget, after coordination with the Ministry of Finance, Parliament scrutinizes the defense budget, but these deliberations tend to be more perfunctory and less challenging than for other ministries, given the sensitive nature of defense affairs. Civilian authorities also exercise meaningful oversight of the implementation of the defense budget, with the Ministry of Finance holding funds before disbursement and the Ministry of Defense’s Central Administration Directorate submitting monthly statements and documenting expenses.

The publicly available defense budget is extensive and details each of the major expenditures by category, but does not include extra-budgetary sources of income such as foreign military assistance and sporting clubs, and sometimes uses vague language to describe categories, in the interest of security. The armed forces do not hold special funds off the books, but Parliament allocates a fixed budget for the Defense Intelligence and Security Agency, which is kept secret and monitored exclusively by the Ministry of Defense.

The Court of Auditors oversees defense sector accounts generally, while three other agencies counter the risk of corruption: Military Security reports internally to the Ministry of Defense, the Ministry of Public Service reports to the government, and the National Authority for the Fight against Corruption provides external review. Extensive means are in place for dealing with corruption risks in defense procurement, and are both active and effective. These include the government agencies that normally audit the preparation and execution of public contracts, and the General Inspectorate of the Armed Forces and the Defense Intelligence and Security Agency, which review all Ministry of Defense contracts.

Parliamentary debates on the defense budget are broadcast on public television and hearings on defense affairs are followed by the media and sometimes discussed on television political shows. However, access to information from the Ministry of Defense itself is complicated and, in effect, limited. The armed forces work with Transparency International and other foreign partners in a de facto policy of openness on defense finances with nongovernmental organizations and media, but local organizations generally lack the expertise to follow defense programs and so rarely question defense finances.

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

The armed forces are involved in only very limited official business activities, including a public-private partnership for shipbuilding, agricultural production, infrastructure construction in difficult-to-reach areas, land reclamation, and sports clubs, none of which produce substantial revenues. The laws and obligations governing these military businesses are the same as those for their civilian counterparts, including obligations to provide health and social security, follow safety rules, and allow unionization.

The military is not involved in the commercial exploitation of natural resources, but it may help in solving technical or logistical problems for public companies that engage in these activities. Revenues from armed forces economic activities remain with the Ministry of Defense, but are reported to the Ministry of Finance and Parliament. Extra-budgetary income from peacekeeping operations is reported to the government but either retained by the Ministry of Defense, to pay for mission support, or passed on to the military personnel taking part in these missions.

The armed forces construct buildings for the Office for Military Housing; what little income is generated remains with the Ministry of Defense but is subject to Ministry of Finance and parliamentary controls. Defense sector personnel, whether military or civilian, are state officials, and as such are prohibited from engaging in private business activities. On the rare occasions that military officers are involved in private businesses, a relative or friend is generally the titular owner.

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

The inability to approve a national defense white paper prevents a comprehensive understanding of defense goals and available resources, particularly among civilians. Some defense officials estimate that budget allocations are insufficient for overall defense needs, but national resources are limited. Institutional mechanisms are effective at negotiating defense budgets, but of only limited effectiveness in developing defense funding needs. Significant cost items are almost never shifted from the defense budget to the general budget, but the government occasionally borrows internationally to finance urgent military programs, and it is unclear which budget these debts are charged to.

Scales of pay, benefits, and allowances in the defense sector are commensurate with those in the rest of the public sector, and military personnel enjoy perquisites such as military housing, staff cars, and access to military clubs that are not available to civilians. Aggregate personnel costs are available from the budget, and political parties have campaigned to improve the remuneration of military personnel. Defense needs are the determining factor in negotiating arms deals and foreign military assistance, with needs decided by the Supreme Council of the Armies and negotiations over assistance conducted by military and finance ministry officials.

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