Department Seal 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

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ARGENTINA



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:  USD 3.5 Billion

PERCENTAGE OF GDP:  0.8

PERCENTAGE OF BUDGET:  8.5

TRENDS IN REAL TERMS:

The military restructuring bill which was passed in March allows 
for three percent annual growth (based on a USD 3.5 billion 
dollar base) over the next five years.  This would be the first 
increase in over ten years.  However, the difficulties in  the 
global financial situation have affected Argentina as well and 
prospects for seeing any of this "new money" appear dim.  While 
the MOD has been able, so far, to weather the increasingly 
frequent budget cuts, it is unclear if that can continue.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:  98,100

Army

Officers    5,200
NCOs       21,000
Privates   15,000
Civilians   7,000
Total      48,200

Navy

Officers    2,500
NCO'S      13,300
Privates    3,400
Civilians   9,500
Total      28,700







Air Force

Officers    2,500
NCO'S       9,700
Privates    1,200
Civilians   7,800
Total      21,200

The armed forces do not perform any constabulary functions.  They 
may, however, provide logistical support to domestic security 
agencies.  The Argentine military has a tradition of 
participating in international peacekeeping operations since 
1958.  There are currently approximately 750 members of the 
Argentine military (including the quasi-military Gendarmeria) 
deployed in peacekeeping operations.  They are in 15 different 
countries.  Another 300 are due to depart next year to 
participate in the UN's MINURSO in the Western Sahara.

COMMENTS ON ITS POLITICAL ROLE:

The Argentine military does not play a political role.  In 
contrast to years past during the era of the military juntas, the 
armed forces no longer pose a threat to the constitutional 
regime.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The Argentine armed forces are fully under civilian authority.  
The president is the commander-in-chief of the armed forces and 
is responsible for choosing the military high command, based on 
the recommendation of the civilian minister of defense.  The 
Argentine congress must confirm all promotions into the senior 
ranks (colonel and above).  In recent years there have continued 
to be some (three or four per year) promotions refused due to 
involvement in the "dirty war" of the 1970s and 1980s.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Over the past 15 years, Argentina's defense budget and military 
personnel suffered deep (40 percent) reductions.  With the 
approval of the defense restructuring and budget bill mentioned 
above, the armed forces should see at least a halt in the 
downward slide.  If the economy improves, they also could see a 
slight increase, the first since 1983.  A large portion of the 
defense budget continues to be spent on personnel costs, 
estimated to be about 70-80 percent.


U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

The United States Government (USG) has worked with the Government 
of Argentina (GOA) to help ensure that it has a military capacity 
congruent with its international peacekeeping commitments.  With 
USG urging, the GOA ended its intermediate range missile program, 
the "Condor II," in 1992-94.  The GOA is now a member of the 
Wassenaar Arrangement regime and the Missile Technology Control 
Regime (MTCR).

As mentioned above, the GOA has reduced its defense spending by 
40 percent over the last 15 years.

HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO 
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO 
THE UN REGISTER OF CONVENTIONAL ARMS?

Argentina provides accurate data on military spending to 
international organizations, as well as information on arms 
transfers to the United Nations (UN) Register of Conventional 
Arms.  Argentina has regularly submitted standardized military 
expenditure (MILEX) reports to the UN from 1985 to 1998.  In 
1998, Argentina participated in the UN Register of Conventional 
Arms.  The MOD predicts that it will soon publish its first 
defense "White Paper" detailing its strategic planning.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

The GOA is an avid participant in the development of regional 
confidence building measures.  It has taken the lead in 
advocating joint exercises with its neighbors.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE  AND COMPLETE?

We have no evidence that there are any significant "off budget" 
sources of funds for the Argentine military.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

The military budget is developed, controlled, and approved by 
civilian officials.






BRAZIL



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

Data on authorized spending is based on Brazil's 1998 federal 
budget (Amounts have been converted to USD at the 1998 average 
rate of 1.165).  [Note:  The revised budget figures reflect most 
budget cuts actually absorbed during the course of 1998.]

Amount in Brazilian million reals/(USD):

            1998 Original          1998 Revised

Army        R$ 7,332 (USD 6,294)   R$ 7,169 (USD 6,154)
Navy        R$ 4,355 (USD 3,738)   R$ 3,843 (USD 3,299)
Air Force   R$ 3,889 (USD 3,338)   R$ 3,322 (USD 2,852)

Total       R$ 15,575 (USD 13,370) R$ 14,334 (USD 12,304)

PERCENTAGE OF GDP:  1.6 (Revised Budget).

PERCENT OF OPERATING BUDGET:  7.9 (Revised Budget).

TRENDS IN REAL TERMS:

Changing methodologies and erratic disbursement are inherent to 
the Brazilian budget process.  Ministries themselves cannot spend 
authorized amounts; they must depend on disbursements by the 
Finance Ministry, based on cash-on-hand.  Some ministries get 
close to their full authorizations, others fall short.  In 
general, changes in military spending result mostly from salary 
and military pension increases.  Trends in operations and 
maintenance, procurement and research/development were mostly 
flat or negative.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:  297,400.

			Total
Army           196,000
Navy            50,700 (including 16,000 Marines)
Air Force       50,700
Total          297,400



COMMENTS ON ITS POLITICAL ROLE:

See classified annex.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Brazil's military spending remained low in 1998 relative to the 
size of the national economy; it remained about the same as the 
previous year in terms of expenditures, but fell slightly in 
terms of percentage of GDP.  Use of conscription allows Brazil to 
avoid competitive salaries for the enlisted ranks.  The military 
has been operating for a number of years on a tight budget, with 
limitations on procurement, operations and training.  It does 
have long-term plans for progressive updates or replacements with 
modern equipment of a number of aging systems, including fighter 
aircraft.

U.S. EFFORTS TO ENCOURAGE REDUCED 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?

Brazil has regularly submitted standardized MILEX reports to the 
UN from 1991 to 1998.  In 1998, Brazil participated in the UN 
Register of Conventional Arms and contributes data to it.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

Along with the USG, Brazil officially co-sponsored in 1998 a 
major Organization of American States (OAS) initiative on 
transparency in regional conventional weapons acquisition.


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.



CHILE


REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:

According to the Government of Chile (GOC) general auditor's 
office, the CY1998 defense budget was USD 2.12 billion.  This 
figure includes USD 585 million for pensions and USD 240 million 
in revenue from the 1948 law (Ley de Cobre) setting aside
10 percent of gross proceeds from state copper sales for military 
acquisitions.  This figure does not include the "Order and 
Security" section of the budget that covers the national police 
(Carabineros) and investigative police.

PERCENTAGE OF GDP:

Defense spending as a percent of GDP was 2.79 percent (GDP for 
1998 is estimated at USD 76.1 billion).

[Note:  The Department's 1997 submission reported the percent of 
GDP for 1997 as 1.23 percent.  The correct figure was 2.78 
percent.]

PERCENTAGE OF BUDGET:

Percent of fiscal budget was 14.75 percent.  (This figure 
includes revenues from copper sales.)

[Note:  The Department's 1997 submission reported the percent of 
fiscal budget as nine percent, not including copper revenues.  
The 1997 percent of fiscal budget including copper revenues was 
15.26. percent.]

TRENDS IN REAL TERMS:

The trend in real terms is a decline in defense spending as a 
percentage of GDP (4.1 percent in 1990 to 2.72 percent estimated 
for 1999.)

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

Since publication of the 1997 "Book on the National Defense of 
Chile," military active service strength has declined slightly, 
from 89,600 to approximately 88,000 (army at 51,000, navy at 


24,000, and air force at 13,000).  According to the National 
Defense Book, the armed forces' role is to preserve the 
independence, sovereignty and territorial integrity of Chile 
primarily through deterrence.  The other objectives of the 
national defense are supporting the rule of law, creating the 
security needed for the common good and development of the 
nation, and helping to maintain international peace.  Although 
not part of the armed forces budget, Chile's police force 
(Carabineros and investigative police) are part of the larger 
defense, order and security budget.

Chile is currently participating in international peacekeeping 
operations, including the Peru-Ecuador observer mission, the 
India-Pakistan observer mission, and the UN Special Commission 
(UNSCOM) in Iraq.  The Carabineros form part of the international 
police force in Bosnia.

COMMENTS ON ITS POLITICAL ROLE:

The armed forces are an important national institution, and 
attention is paid to their views.  The armed forces seldom 
address issues not directly related to national security or their 
institutional interests.  However, the armed forces tend to view 
criticisms of their role during the Pinochet regime (1973-1990) 
as threats to their institutional status and resist judicial or 
other scrutiny of that period.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The armed forces are constitutionally subordinate to the 
president through an appointed civilian minister of defense.  
Service commanders can only be removed by the president with the 
concurrence of the multi-institutional National Security Council.  
The minister of defense and the president have final approval 
authority over all military appointments and retirements.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Real military spending levels are expected to decline in 1999 as 
part of general budgetary constraints and low copper prices 
(military revenues from copper peaked at USD 347 million in 1995 
and are expected to be USD 255 million in 1999).  A broad 
political consensus in Chile supports the current mission of the 
armed forces, its modernization and the general level of 
spending.  The multiparty congressional committees overseeing 
defense reflect this consensus.


U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

None.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

Chile is a leading proponent of transparency in military 
procurement and institutionalized regional confidence and 
security-building measures.

HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO 
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO 
THE UN REGISTER OF CONVENTIONAL ARMS?

Chile has often (ten times) submitted standardized MILEX reports 
to the UN from 1984 to 1996.  In 1998, Chile participated in the 
UN Register of Conventional Arms.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

Chile is an active participant in regional efforts for confidence 
and security-building measures.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The defense budget is considered accurate.  Other sources of 
income (e.g., the percentage of copper revenues from the 
parastatal copper company (CODELCO), and revenues from civil 
aviation, military industries, etc.) are publicly known, although 
revenues generated fluctuate.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

The Ministry of Defense has made a notable effort to be 
transparent, and significant expenditures such as the purchase of 
submarines or advanced aircraft are debated in the press and by 
the Congress.










COLOMBIA



MILITARY SPENDING

REPORTING PERIOD: January 1 through December 31, 1998 (Projected)

[Note:  Data sources are given in parentheses.  As accounting 
methodology differs, sometimes substantially, various sources 
often report inconsistent numbers.  Data are from the Colombian 
Planeacion (National Planning Office), which in turn are based on 
the Government of Colombia (GOC) comptroller-general's figures, 
as much as possible, since those statistics are considered to be 
the most reliable.]

AMOUNT:

Police.....1,558,347,000,000  cop*
Military...2,913,419,000,000  cop*
Total......4,471,766,000,000  cop*
(Source:  National Planning Office)

[*Note:  Inability to predict how much the Colombian peso 
exchange rate will change by the end of 1998 precludes provision 
of Colombian military spending in U.S. currency at this time.  
Hence, figures are provided in Colombian pesos (cop) only.  When 
complete exchange-rate figures for 1998 become available, the 
local currency can be converted to USD.  To avoid erroneous 
comparisons with dollar figures for previous years, it should be 
kept in mind that the peso has declined 45 (forty-five) percent 
against the U.S. dollar since July 1997.  As benchmarks, the 
exchange rate (cop/1 USD) on January 1 was 1,293.58; on September 
2, 1442.95; and on November 3, 1575.08.]

PERCENTAGE OF GDP:

Police.....1.2
Military...2.2
Total......3.4
(Source:  National Planning Office)

PERCENTAGE OF BUDGET:

Police.....6.60
Military..12.34
Total.....18.94
(Source:  National Planning Office)



TRENDS IN REAL TERMS (Real Growth Rates):

Figures below are percentage increase or decrease from previous 
year:

Year       Police           Military     Total
1994        3.7%             -6.5%       -3.1%
1995       13.3%             12.1%       12.6%
1996       11.3%             29.4%       23.0%
1997        5.6%             13.2%       10.8%
1998        9.5%             -8.9%       -3.2%

(Source:  The above figures for earlier years differ from those 
provided last year.  The difference may be attributable to the 
sources.  Last year's reported data from the Ministry of Defense 
(MOD) This year's reports data from the National Planning Office 
(meaning ultimately the comptroller-general's Office.)

The MOD failed to provide trends in real terms for this year.  
Due to potential confusion owing to differing sources for past 
year information, a complete breakdown of trends in real terms 
for years 1981-1998 is provided below:

Total Spending:  

Year  Personnel  General  Transfers  Operating  Investment  Total

1981       9.8%     -7.2%      5.2%     4.6%     -35.9%     0.4%
1982       7.3%    -12.3%     -4.7%    -0.2%     -12.9%    -1.0%
1983      17.2%     49.4%     26.7%    25.6%     121.6%    31.1%
1984       5.4%    -42.0%      1.9%    -5.7%     138.2%     8.2%
1985      -2.5%     12.6%     -6.8%    -1.8%     -33.6%    -8.6%
1986       3.4%    -29.1%     -4.4%-   -3.7%      19.9%    -0.1%
1987       6.3%     30.4%      5.9%     8.9%       1.0%     7.4%
1988       5.2%     17.8%      0.6%     5.6%      45.7%    12.6%
1989       2.9%    -14.9%      4.9%     0.8%      20.7%     5.3%
1990       4.8%      7.0%      2.3%     4.4%     -15.3%    -0.7%
1991       1.8%     59.7%     12.5%    12.1%     -49.7%    -1.6%
1992      16.7%     30.9%      8.9%    17.2%      50.7%    21.0%
1993      15.0%     49.1%     26.8%    24.9%      54.9%    29.2%
1994      12.8%    -19.9%     30.7%     9.4%     -64.5%    -3.1%
1995       8.5%      3.6%     29.7%    14.0%      -9.8%    12.6%
1996       2.2%      7.4%     37.3%    15.1%     173.8%    23.0%
1997      15.2%     10.7%    -18.6%     0.7%      92.2%    10.8%
1998       6.9%     21.7%      9.7%    10.3%     -60.0%    -3.2%





Military Spending:

Year  Personnel  General  Transfers  Operating  Investment  Total

1981      8.8%     -7.3%      4.9%      3.1%    -37.8%     -2.9%
1982      8.7%     -9.8%     -4.4%      0.0%    -12.1%     -1.1%
1983     13.9%     52.3%     11.1%     21.9%    133.7%     31.2%
1984     -0.1%    -45.0%      3.5%    -12.0%    132.9%      9.4%
1985     -2.7%      5.3%     -2.2%     -1.1%    -37.1%    -12.4%
1986      7.0%    -27.1%     -9.0%     -4.5%     38.1%      5.2%
1987      8.5%     31.4%      5.7%     11.0%    -16.0%      3.0%
1988      5.7%     26.7%      0.7%      7.9%     68.0%     22.5%
1989     -0.6%    -18.5%      4.7%     -2.9%     22.0%      5.4%
1990      6.3%      5.6%     62.4%     21.9%    -10.9%      9.3%
1991      1.8%     82.2%      8.8%     16.2%    -54.1%     -5.8%
1992     16.2%     22.1%      4.7%     13.5%     60.8%     20.7%
1993     19.3%     54.3%     25.9%     30.1%     37.7%     31.7%
1994     11.4%    -18.1%     30.8%      8.8%    -63.2%     -6.5%
1995     11.3%      0.7%     24.9%     14.1%     -9.1%     12.1%
1996      3.3%      6.5%     40.9%     19.4%    167.1%     29.4%
1997     11.8%     18.8%    -15.1%      0.0%     94.6%     13.2%
1998      6.9%      5.1%      8.9%      7.3%    -59.9%     -8.9%

Police Spending:

Year  Personnel  General  Transfers  Operating  Investment  Total
1981     10.8%     -7.0%      5.7%      6.6%    -23.4%      5.6%
1982      5.9%    -18.4%     -5.2%     -0.4%    -16.7%     -0.8%
1983     20.6%     41.5%     50.6%     30.5%     53.9%     31.0%
1984     10.6%    -33.6%      0.0%      2.1%    183.9%      6.6%
1985     -2.4%     30.3%    -12.2%     -2.6%     -8.8%     -3.0%
1986      0.3%    -33.0%      1.5%     -2.9%    -67.5%     -6.9%
1987      4.4%     28.4%      6.3%      6.7%    346.8%     14.0%
1988      4.7%     -1.4%      0.6%      3.1%    -39.7%     -0.6%
1989      6.2%     -4.8%      5.2%      5.0%      7.2%      5.1%
1990      3.4%     10.5%    -67.2%    -14.5%    -68.2%    -17.4%
1991      1.9%      8.4%     34.0%      5.7%    101.5%      7.7%
1992     17.1%     64.7%     28.5%     23.4%    -27.6%     21.5%
1993     11.1%     34.3%     30.5%     16.9%    350.3%     24.4%
1994     14.2%    -25.6%     30.4%     10.4%    -71.7%      3.7%
1995      5.9%     14.2%     46.9%     14.0%    -14.8%     13.3%
1996      1.0%     10.3%     26.3%      7.7%    222.4%     11.3%
1997     18.7%    -14.1%    -31.0%      2.0%     77.5%      5.6%
1998      6.9%     92.0%     13.2%     15.7%    -60.7%      9.5%

(Source:  National Planning Office, based on comptroller-general 
figures and the 1998 Colombian budget law.)



[Note:  The decline in overall military spending in 1998 is 
directly attributable to sharp declines in investment, e.g., 
equipment and munitions acquisitions, in the military and police 
forces.  In the case of the national police, U.S. aid constitutes 
virtually all investment for 1998.  In the case of the military 
forces, the drop in investment for 1998 is less severe when 
viewed in light of the sharp increases for 1996 and 1997 
(creating a higher baseline for 1998).  One part of the sharp 
increase for 1997 was a 440 billion peso addition to the budget, 
from "peace bonds".  These funds were obligated in 1997, many 
with out-year delivery of the goods.  For instance, a large 
quantity of munitions were purchased in 1997 for 1998 delivery, 
thus obviating the need for a similar purchase in 1998.]

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

Police.....100,469
Military...153,792
Total......254,261
(Source:  Ministry of Defense, September 1998 payroll)

COMMENTS ON ITS POLITICAL ROLE:

Colombia has the longest running continuous democracy in South 
America and, under the 1991 constitution, a civilian minister of 
defense.  The constitution states that the military and police 
comprise Colombia's "public forces" with the "defense of 
sovereignty, independence and integrity of the national 
territory" as the responsibility of the military; and with the 
police defined as a "permanent armed force of a civil nature--
responsible for maintaining the conditions necessary for the 
exercise of public rights and liberties and to ensure Colombians 
live together in peace."

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY
OFFICERS?

Commanders serve at the pleasure of the president who is 
commander-in-chief.  Civilian leaders may freely appoint and 
remove senior military officers, a power most recently exercised 
by newly elected President Pastrana, who replaced all the service 
chiefs and the commanding general of the military forces in 
August 1998.





REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

It is not strategically feasible, given the current security 
situation in Colombia, for the GOC to reduce military spending in 
the foreseeable future.  Guerrilla insurgents, paramilitaries, 
common criminals and well-armed drug traffickers combine to 
create a dangerous security situation for Colombia's  public 
forces.  In many regions of Colombia there is already little or 
no military/police presence, making it easy for guerrillas or 
other armed groups to control the local populations.  Colombia 
has largely cordial relations with its neighbors, although 
guerrilla incursions and cross-border refugees have caused 
strain, particularly with Venezuela and Panama.  Additionally, 
guerrillas utilize Ecuadorian territory for safe haven.

Many observers opine that the current military is simply not big 
enough or properly equipped to handle Colombia's vast expanses 
and myriad problems.  Other commentators disagree and cite a lack 
of intelligence capability, communications equipment, air 
mobility, and political will as the roots of the military's 
current poor performance.  In either case, reducing military 
spending is not a realistic or desirable option in the near term.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

Due to the threats outlined above, the USG has not encouraged 
Colombia to reduce military expenditures.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

Fiscal realities in Colombia may soon force the armed forces to 
stabilize their defense budget as a percentage of GDP (as opposed 
to the trend of increasing percentages of GDP in recent years).  
Colombia is not making any multilateral efforts to reduce 
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?

Colombia occasionally (four times) has submitted standardized 
MILEX reports to the UN from 1983 to 1993.  In 1998, Colombia did 
not participate in the UN Register of Conventional Arms.  In the 
past, Colombia has participated.  Colombia has provided military




spending data to interested parties.  The accuracy of the data is 
sometimes questionable--different GOC sources often report widely 
differing statistics for the same element, and sometimes the 
Colombians themselves do not accurately know basic facts, such as 
precisely how much each service spent in any given year, or 
exactly how much their defense spending has changed from year to 
year.  These differences are attributed more to statistical 
errors or different compilation methods rather than any 
unwillingness on the part of the GOC to provide the data.  Other 
factors in the Colombian military funding and appropriations 
processes which can cause inadvertent confusion are described 
below:

Since the entitlement portion of the defense budget is 
obligatory, the operations and investment/acquisition portions 
become the only areas where cuts can be made.  So far, the 
military has mainly been able to avoid such cuts by simply 
increasing the overall defense budget to accommodate the 
increasing entitlement requirements while maintaining roughly 
historical levels of spending on operations and investment.  In 
1999, however, the GOC's critical budget plight raised a 
possibility of real cuts in the military budget which, barring 
immediate and drastic reform of the military entitlement 
structure, would have come from operations/acquisitions.

One factor mentioned which tends to confuse defense-budget 
analysis is the Colombian process of appropriation.  Through 
supplemental appropriations and other various in-year 
adjustments, the Colombian armed forces almost always wind up 
spending more than their initial annual appropriation.  For 
example, the 1997 "cut" in the defense budget was more than made 
up for in war bonds (a one-time supplemental tax), and the armed 
forces actually spent an amount slightly more than their initial 
appropriation.

Another confusing element to the defense budget is the fact that 
the CNP in particular receives a large portion of its operations 
and investment equipment directly from local or international 
sources, "off the books" from the perspective of the central 
government.  For example, local mayors and departmental governors 
often provide fuel, ammunition, radios, flak jackets, etc., 
directly to the CNP units responsible for their municipality or 
department.  Likewise, other nations such as the U.S. provide 
equipment such as helicopters and arms to the CNP.  The CNP has 
no obligation to report these acquisitions to the central 
government.  The Planeacion data suggests that the CNP does not 
depend on the central government for a large portion of its 
acquisitions and operating expenditures.


HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS AIMED
AT REDUCING MILITARY SPENDING?

No such talks have taken place.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The armed forces' budget is generally complete.  Local police 
stations in particular, and probably to a lesser extent local 
military bases, often receive material assistance directly from 
the local departmental and municipal governments they support.  
Although not illegal, such assistance is "off the books" from the 
perspective of the central government, hamstrings the National 
Planning Office's (Planeacion) efforts to accurately gauge the 
investment expenditures of the public forces, and contributes to 
inaccuracies in defense spending data.  The Colombian army is 
also known to receive substantial sums of money directly from 
corporations, including multinational oil companies for whom the 
army provides security protection.  In 1997 a compulsory peace-
bond issuance resulted in a 440 billion peso one-time addition to 
the armed forces' original appropriation.

However, in general, the Colombians are relatively open about 
their resource shortfalls and spending patterns, if for no other 
reason than to solicit help.  Rumors of corruption (accounting 
for, by one specialist's estimate, 30 percent of the military 
investment budget) surround some military and police officers, 
but they are not thought to be using illicit income to supplement 
the public forces budget.  The guerrillas and paramilitaries, on 
the other hand, are well-financed through criminal activity and 
ties with narcotraffickers.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

Notwithstanding the inaccuracies and inconsistencies noted above, 
the military budget is generally transparent.  The U.S. Embassy 
has encountered little resistance from any GOC office in 
providing whatever budgetary statistic asked for.  The military 
is accountable to civilian authority for budget performance, as 
for any other activity.








CZECH REPUBLIC



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998

AMOUNT:

Military spending for 1998 was 1.1 billion U.S. dollars or 
30.2 billion Czech Crowns (One dollar equals 29 Czech Crowns).

PERCENTAGE OF GDP:  1.8

PERCENTAGE OF BUDGET:  6.9

TRENDS IN REAL TERMS:

Military spending increased by 0.1 percent of GDP, a sign of the 
Czech Republic's commitment to its imminent NATO membership.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

Armed forces personnel strength held steady at roughly 55,000.  
The armed forces participate in Partnership for Peace and various 
international peacekeeping operations.  They contributed a 
mechanized infantry battalion to the NATO Stabilization Force 
(SFOR) operation in Bosnia.

COMMENTS ON ITS POLITICAL ROLE:

The Czech armed forces are apolitical.  Officers are barred from 
elected office and membership in political parties.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

Civilian control of the military is accepted in theory and 
practice.  The civilian minister of defense has authority to 
appoint and remove officers.  The president appoints and promotes 
generals.







REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

In connection with efforts to improve interoperability with NATO 
and prepare for membership in the Alliance, the Czech focus has 
been on increasing rather than REDUCING MILITARY SPENDING.  The 
U.S. and other NATO allies have encouraged these efforts.  The 
current Czech government has reiterated the commitment of its 
predecessor to increase military spending to at least 2.0 percent 
of GDP by the year 2000.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:  None.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:  None.

HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO 
THE UN REGISTER OF CONVENTIONAL ARMS?

We have no reason to doubt the accuracy of the military spending 
information the Czech Republic has provided to relevant 
international organizations, including NATO, although the U.S. 
Embassy does not have the resources to verify this information.  
The Czech Republic has regularly submitted standardized MILEX 
reports to the UN from 1991 to 1998.  In 1998, the Czech Republic 
participated in the UN Register of Conventional Arms and provided 
arms transfer data.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

There are no such regional talks.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The budget is believed to be accurate.  In 1997, the bulk of the 
Czech contribution to SFOR was funded outside the defense budget.  
However, these costs were included in the 1998 defense budget.  
We are aware of no "off-budget" sources of income.  The Czech 
Republic now uses NATO's definition of "military" spending, which 
does not include some budget items (e.g., military pensions) 
included in previous reports under the heading of defense 
spending.




TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

The budget is transparent, prepared by the civilian-controlled 
Ministry of Defense, and the subject of often-contentious debate 
within the government and parliament.  The military is fully 
subordinate to civilian authorities.



EGYPT



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:  Uncertain.  An unknown percentage of LE 22 billion
(about USD 6.47 billion).

[Note:  No amount was given for defense and security in the 
1998/99 budget. Subtracting all other listed expenditures from 
the budget leaves LE 22 billion (USD 6.47 billion).]

This year's figure contains more than just the 
defense/interior/justice accounts.  The Government of Egypt (GOE) 
has over the past several years combined expenditures on the 
military, internal security, and justice and provided only one 
figure.  The military portion (unspecified) of this figure has 
traditionally included military wages, local purchases and 
maintenance but does not include USD 1.3 billion in USG Foreign 
Military Financing (FMF) security assistance.  Other (non-FMF) 
military procurement, debt servicing, and support for the 
military have never been made available to the public.

However, it is not known what other expenditures were left out as 
well.  In past years, defense, interior and justice have been 
included together.  Since this year's amount is almost double 
what was spent for those three agencies last year, it must be 
assumed that additional expenditures are included in this year's 
amount.  At the same time, there may be some dual-use 
expenditures which are part of other line items.  In any event, 
it is clear that the LE 22 billion figure is not a true 
reflection of what the GOE spends on defense, which could be 
considerably lower.

PERCENTAGE OF GDP:  7.4 percent.

Using the omnibus LE 22 billion (same caveat as above; again 
almost double last year, therefore likely contains other 
funding).

PERCENTAGE OF BUDGET:  24.23 percent.

Using the omnibus LE 22 billion (same caveat as above; again 
almost double last year, therefore likely contains other 
funding).



TRENDS IN REAL TERMS:

Probably half of Egyptian military spending is provided by USG 
FMF assistance (USD 1.3 billion annually since FY 1987).  In 1979 
dollars, today's assistance would amount to less than $600 
million after the effects of inflation are taken into account.

ROLE OF THE ARMED FORCES

SIZE OF ARMED FORCES:

According to International Institute for Strategic Studies (IISS) 
information for 1995, the active duty Egyptian armed forces 
number approximately 440,000.  This figure represents more than a 
one-third reduction since the signing of the Camp David accords.  
Egyptian forces participate in a number of international 
peacekeeping operations and Egypt currently has peacekeepers 
serving in Angola, Western Sahara, Georgia, and Macedonia.  An 
Egyptian battalion served for two years with SFOR in Bosnia until 
its departure in December 1998 as part of a coordinated drawdown 
of forces.

COMMENTS ON ITS POLITICAL ROLE:

The Egyptian military is considered the ultimate guarantor of 
political stability in Egypt.  Although the armed forces normally 
play no role in maintaining internal security, the armed forces 
are prepared to step in to maintain order in extreme cases of 
unrest.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

President Mubarak's civilian government has ultimate 
responsibility for appointments and removals in the military.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Egypt is largely reliant on foreign funding or excess defense 
articles for its weapons systems acquisition.  The government 
minimizes the amount of national funds spent on the military, 
using national funds only when foreign security assistance will 
not support weapons acquisitions and follow-on support.  As noted 
above, Egypt already has lost at least 50 percent of its U.S. 
security assistance due to inflation.




U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

Encouraging reduction in Egyptian military expenditures is not a 
USG priority.  Significant cuts would jeopardize the joint
U.S.-Egyptian objective of armed forces modernization and other 
USG interests in the region.  However, the USG has worked with 
the Egyptian government to improve prioritization and better 
utilize the funds the GOE does have available.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

Given the absence of public information on the military budget, 
no information is available on government reductions in military 
spending.  However, due to inflation and stagnation, it is likely 
that Egyptian military spending (as with FMF) has been reduced in 
real terms.

Also 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?

The defense budget is closely held and has not been provided to 
any international organizations.  Egypt has never submitted a 
standardized MILEX report to the UN.  In 1998, Egypt did not 
participate in the UN Register of Conventional Arms.  In the 
past, Egypt has participated.  Egypt provided information to the 
conventional arms register its first year but has declined to 
provide information since then in protest of what it considers 
deficiencies in the register which have not been addressed.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

Egypt in the past has been an active participant in the arms 
control and regional security working group of the Middle East 
Peace Process.  No official meeting were held in 1998, but 
Egyptian officials have participated in academic meetings on 
similar issues.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The military budget is not shared publicly.




TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

Portions of the military budget are reviewed in closed sessions 
by designated committees of the People's Assembly.




EL SALVADOR



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:

The 1998 defense budget was approx. USD 104.6 million,
or 915.6 million colones (at 8.75 colones to the dollar).

PERCENTAGE OF GDP:

The 1998 defense budget represented 0.9 percent of GDP.

PERCENTAGE OF BUDGET: 

The 1998 defense budget was approximately 5.4 percent of the 
total 1998 government budget.

TRENDS IN REAL TERMS:

Although the FY 98 budget represents a slight increase over the 
FY 97 budget of USD 101.2 million, the budget is not sufficient 
to address many of the El Salvadoran armed forces (ESAF) 
requirements.  With more than 75 percent of the budget going to 
personnel expenses, there is little left for equipment purchases 
and maintenance.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

The ESAF has an approximate strength of 15,000 soldiers under 
arms and a civilian/administrative workforce of approximately 
5,000 personnel.

The 1992 peace accords mandated the removal of internal security 
forces from military control.  The president has the power to 
employ the ESAF for internal security purposes in exceptional 
circumstances only.  For the past four years, in response to 
critical crime levels during the establishment of the national 
civilian police (PNC), the president has directed the ESAF to 
participate in joint rural patrols under PNC operational control.  
Close to 200 such patrols, including six ESAF personnel and two 
PNC agents, are in the field at any one time.  The ESAF is 



anxious for the circumstances to develop in which this role is no 
longer necessary, because the ESAF receives no additional funding 
for this activity.

ESAF personnel have participated in international peacekeeping 
operations (PKO).  There are currently two army captains serving 
with the UN PKO in the Western Sahara (third rotation) and one 
army first lieutenant in Kuwait with the Argentine contingent.

The ESAF has abided by its constitutional mandate to provide for 
external defense.

COMMENTS ON ITS POLITICAL ROLE:

The ESAF is entirely apolitical and is under civilian control.  
In January 1998, the minister of defense retired from the 
military, and is now a civilian.  This is meant to provide a 
transition to the practice of appointing civilians as ministers 
of defense.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The president has the power to appoint and remove the minister of 
defense, the high command, and all officers.  He also has the 
constitutional prerogative of approving or disapproving officer 
promotions.  In practice, the current president only has 
exercised this privilege with regard to general officer 
promotions; he has not reviewed company or field grade 
promotions.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

The military budget continues to be effectively reduced by 
inflation.  The decline in real terms of the military budget has 
led to an erosion of military capability.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

The U.S. has encouraged the Government of El Salvador (GOES) to 
bring military spending in line with legitimate defense needs.  A 
declining budget in real terms, and the continuing reduction in 
money available through Foreign Military Spending (FMS), will 
lead to continued reductions in real capabilities.  The ESAF has 
received no new FMF dollars since the end of the civil war.




COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

Efforts to reduce military spending have been unilateral, by 
permitting the budget to decline in real terms.

HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO 
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO 
THE UN REGISTER OF CONVENTIONAL ARMS?

The GOES provides military spending and arms transfer data to 
international organizations.  The ESAF military budget is 
unclassified and available to the public.  El Salvador has 
submitted standardized MILEX reports to the UN two times--1987 
and 1996.  In 1998, El Salvador did not participate in the UN 
Register of Conventional Arms.  In the past, El Salvador has 
participated.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

El Salvador has participated in regional talks on security 
issues.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The military budget does not include the following off-budget 
income sources:

-- U.S. bilateral military assistance.

-- Self-sufficient efforts.  Six military organizations are 
authorized to engage in for-profit ventures in order to maintain 
and upgrade the equipment on hand.  Funds generated in this way 
must be deposited into an identified account in the national 
treasury, whence they are disbursed to the military.

-- The military retirement fund, the government contribution to 
which is included in the budget, earns funds through investments 
in the private financial sector.  The type of investments allowed 
by the government is tightly controlled.  Military personnel also 
pay a portion of their salaries into this fund.

-- Military cooperative stores are managed with contributions 
from military members on a share holder basis.  Their assets are 
not included in the overall military budget.



Although there is no practice of making supplemental 
authorizations to augment the initially-approved military budget, 
the 1998 privatization of a national power distributor enabled 
the Assembly to authorize as additional 16 million colones (USD 
1.8 million) for the FY 98 ESAF budget.  The ministry of defense 
stated that the supplement would be spent on infrastructure 
renovation and wheeled vehicles.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

The military budget is becoming more transparent and, as a 
result, there is increased accountability to civilian 
authorities.  The ESAF presentation to the legislative assembly 
of the FY 99 budget was well received by the Assembly.



ERITREA


Eritrea, an impoverished state which became independent in 1993 
after a 30-year fight for its freedom, does not publish a budget.  
The government is particularly sensitive about releasing any 
information on military expenditures.  Between 1993 and mid-1998 
the government made a great effort to reduce the size of the 
force which had won independence.  However, in May 1998 a border 
dispute broke out between Eritrea and Ethiopia.  Since then both 
sides have made Herculean efforts to expand their armed forces.  
While there is anecdotal information available concerning the 
extent of Eritrea's military build-up, we have no firm figures on 
actual costs.  It is therefore impossible to produce numbers on 
military spending except to say that the budget has grown 
exponentially beyond the USD 82.66 million projected for 1998.

The U.S. Department of Defense hopes to assign a permanent 
military attachˇ to Asmara in the very near future.  This will 
markedly improve our ability to estimate the strength of the 
Eritrean military.


MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:  Figures not available.

PERCENTAGE OF GDP:  Figures not available.

PERCENTAGE OF BUDGET:  Figures not available.

TRENDS IN REAL TERMS:

In the first five months of 1998 Eritrea continued its efforts to 
decrease the size of the revolutionary force which won the 
country's independence from Ethiopia.  More than 100,000 men and 
women were in the armed forces at the time of independence.  By 
early 1998 that figure had been reduced to 47,000.  Every citizen 
between the ages of 18 and 40 is required to serve 18 months of 
national service, six months of which is military training.

After the border dispute with Ethiopia broke out in May, the 
government called up all reservists bringing the armed forces 
back to over 100,000 members.  Taxes on citizens resident in 
Eritrea and Eritreans in diasphora were increased.  Overseas 
citizens have contributed generously.  Unknown amounts of funds 
have been provided by foreign governments, including Libya and 


Qatar.  Economic and social development spending was dramatically 
reduced.  Funds generated in these ways have been used to expand 
the military.  Huge purchases of the most sophisticated equipment 
(i.e. MiG-29s, SAMs) were made from various sources, mostly in 
Eastern Europe and the CIS.  

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

Over 100,000.  The military does not participate in international 
peacekeeping operations.

COMMENTS ON ITS POLITICAL ROLE:

The military does not have a direct role in civilian affairs.  
However, it should be noted that the President of Eritrea was the 
military commander during the war for independence, and the 
military has a strong voice in decisions far outside the usual 
military purview.  The military's primary role is to provide for 
the national defense and to assist in rebuilding infrastructure, 
much of which was destroyed during the war for independence.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The defense minister is appointed and removed by the civilian 
(formerly military) president and reports directly to the 
president.  The minister of defense plays a significant role in 
approving major strategic military decisions.  Subordinates 
within the military and ministry of defense are selected by the 
minister of defense.  Senior ranking officers are not approved by 
the National Assembly, as is the case for Congressional 
confirmation of senior U.S. military officials.  The military is 
clearly under the control of the civilian leadership.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Eritrea is situated in a volatile region of strategic importance 
to the U.S.  The Eritrean Islamic Salvation (formerly the 
Eritrean Islamic Jihad), which is given funds and safehaven by 
Sudan, has committed terrorist acts against foreigners and "soft" 
non-military targets, including schoolyards and wedding parties.  
Sudanese planes have bombed targets inside Eritrea.  Eritrea has 
also engaged in minor armed clashes with Yemen and Djibouti over 




the past five years, but these issues appear to have been 
resolved.  The 47,000-person force which existed in early 1998 
was adequate to meet these challenges.

These issues have been dwarfed by Eritrea's response to the 
border crisis with Ethiopia.  If that crisis is resolved 
peacefully, it is possible that Eritrea will again reduce the 
size of its armed forces.  However, it is unlikely that the armed 
forces will go down to 47,000 any time soon given the degree of 
mistrust which now prevails between Eritrea and its large 
neighbor to the south.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING; COUNTRY 
EFFORTS TO REDUCE MILITARY SPENDING:

Eritrea is not making any effort currently to downsize its 
military.  The U.S. has sent facilitation teams led by former 
National Security Advisor Lake to the region to help Eritrea and 
Ethiopia to reach a peaceful resolution of their border problem.  
The U.S. also supports similar efforts undertaken by the 
Organization of African Unity.

HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO 
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO 
THE UN REGISTER OF CONVENTIONAL ARMS?

No.  No overall budget exists; no military budget is published.  
Few financial documents of any sort have been made available.  
However, general figures found in the recently published National 
Economic Policy Framework for 1998-2000 mark a start in 
publishing figures for government spending.  USAID has provided 
assistance in developing government statistics.  As that 
statistical base is developed, the government can be expected to 
increase the number of statistical and financial reports.

Eritrea has never submitted a standardized MILEX report to the 
UN.  In 1998, Eritrea did not participate in the UN Register of 
Conventional Arms.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

No.  No such forum exists.








ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

No.  See above.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

Not at all, both because of limited statistical capability and a 
reluctance to publicize information which might be useful to 
Ethiopia in the current border crisis.





ETHIOPIA



MILITARY SPENDING

REPORTING PERIOD:  

Because of the different calendar followed in Ethiopia, its 
budget runs from July 8, 1998 to July 7, 1999.

AMOUNT:  

Figures are provided in Ethiopian birr, with the dollar amount in 
parentheses, calculated at the current rate of exchange (7.25 
birr to USD 1).  Ethiopia's FY 98-99 budget allocation for 
military expenditures is birr 995 million (USD 137.2 million) out 
of a federal budget of birr 11.1 billion (USD 1.53 billion).

PERCENTAGE OF GDP:

2.18 percent of GDP (roughly USD 6.3 billion in 1998/99).

PERCENTAGE OF BUDGET:

The military budget is about 8.9 percent of the total budget.

TRENDS IN REAL TERMS:

In birr, military spending increased 13.9 percent in 1998/99.  
The birr devalued against the U.S. dollar by about 6.8 percent in 
the last year, therefore the increase in dollar terms was only 
about 8.89 percent.  On the other hand, since the overall 1998/99 
budget decreased by 7.48 percent from that of last year, the 
military share of the budget actually increased significantly 
from 7.25 percent in 1997/98 to the current 8.9 percent.  The 
increase in the defense budget (the first increase in seven 
years) reflects increased spending as a result of the ongoing 
border dispute with Eritrea.

Also see classified annex.









ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

The size of Ethiopia's armed forces, which had been significantly 
downsized over the last several years, has at least doubled since 
June to approximately 200,000 (or more, according to some 
sources).  The military consists of three infantry corps with 
limited armor (although this has been increased since the 
outbreak of the border dispute) and artillery support, and an air 
force which is severely constrained by maintenance problems and 
pilot shortages.  Ethiopia is landlocked and no longer maintains 
a navy.

Also see classified annex.

COMMENTS ON ITS POLITICAL ROLE:

The armed forces are increasingly apolitical.  There is a clear 
distinction between those ruling party members who occupy civil 
positions and those in the military.  The establishment of a 
national police force in 1994 reinforced this trend.  
Nevertheless, until the armed forces better reflect the ethnic 
diversity of the population, some segments of the population will 
continue to perceive the military as ethnically-based and biased.  
(Comment:  The armed movement which overthrew the Mengistu regime 
was essentially a Tigray-based movement, and the officer corps 
remains heavily Tigrayan.)

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The military is clearly subordinate to the political leadership 
and civilians appoint military officers and direct operational 
activities.  The government has emphasized that the military is 
working to create an ethnically representative, apolitical 
institution (with political rights for the individual), subject 
to the constraints of the constitution and the authority of the 
elected civilian government.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Given the threat posed by continuing instability in Somalia, the 
potential for conflict with Sudan and the requirements associated 
with Ethiopia's emerging role as a participant in international 
peacekeeping operations, the size of Ethiopia's 



armed forces (100,000 in April 1998) just before the outbreak of 
the conflict with Eritrea was appropriate.  Further reductions in 
defense spending were not feasible and would have been imprudent.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

The U.S. is deeply concerned by the ongoing Ethiopia-Eritrea 
dispute, and has been actively involved in facilitating 
negotiations for a peaceful resolution.  To date, however, there 
has been no settlement and it is unlikely that any outside party 
could convince Ethiopia to abandon its current military build-up 
before a peace agreement is signed.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

See above response.

HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO 
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO 
THE UN REGISTER OF CONVENTIONAL ARMS?

The USG has urged Ethiopia to participate in international and 
regional peacekeeping efforts.  Their support for, and interest 
in, participating in the Africa Crisis Response Initiative (ACRI) 
continues, although scheduled training was canceled due to the 
border dispute with Eritrea.  Once that conflict is resolved, 
Ethiopia is expected to continue its willingness to contribute to 
peacekeeping operations.  Ethiopia is a signatory to 
international weapons conventions and willingly responds to its 
obligations in terms of reporting.  Ethiopia has never submitted 
a standardized MILEX report to the UN.  In 1998, Ethiopia 
participated in the UN Register of Conventional Arms.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

Ethiopia does not participate in any regional talks aimed at 
REDUCING MILITARY SPENDING.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The published overall budget reflects available revenues as 
accurately as they are known, and presents the government's best 
estimate and plans for military spending.  When, as happened this 
year, the government suddenly overspent the military budget, the



funds were siphoned from other line items, and not paid from some 
off-budget source.  There is no practice of Parliament's making 
supplemental military appropriations.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

The details of the military budget are not available to the 
general public, nor are defense contacts open to discussing them.



GHANA



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:

$56 million; $40.5 million recurrent expenditure and $15.5 
million in development/capital expenditure
(2300 cedis: $1).

PERCENTAGE OF GDP:

0.73 percent of Ghana's estimated GDP of $7.659 billion.

PERCENTAGE OF BUDGET: 

4.4 percent of the total budget; military recurrent expenditure 
accounts for 5.9 percent of total recurrent expenditure and 
military development/capital expenditure accounts for 2.6 percent 
of total development/capital expenditure.

TRENDS IN REAL TERMS:

In real terms, defense spending is rising significantly and is 
expected to continue to rise as the Ghana armed forces (GAF) plan 
to acquire major platform items from the U.S.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

Approximately 7,000 people.  The GAF serve in a traditional 
national defense role, patrol borders, monitor coastal waters, 
etc.  The GAF also play an important international peacekeeping 
role, with nearly one-fifth of the force currently outside the 
country, primarily in Lebanon and Liberia.

COMMENTS ON ITS POLITICAL ROLE:

The GAF is officially apolitical; however, groups with political 
affiliations do exist within the military, primarily associated 
with the ruling party.  In additional, active duty officers 
routinely take secondments to political jobs.




CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

Civilian control of the military has become a widely accepted 
concept in the GAF.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Resources for the GAF are already extremely limited, particularly 
in light of extensive Economic Community of West African States 
Ceasefire Monitoring Group (ECOMOG) peacekeeping duties.  Thus, 
it is unlikely that any reduction in military spending is 
forthcoming.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

None; indeed, the USG is actively promoting the acquisition of 
U.S. excess defense articles, for which rehabilitation costs are 
expected to increase GAF expenditures.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:  None.

HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO 
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO 
THE UN REGISTER OF CONVENTIONAL ARMS?

Ghana has never submitted a standardized MILEX report to the UN.  
In 1998, Ghana did not participate in the UN Register of 
Conventional Arms.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

Ghana participated in sub-regional discussions on limitations in 
the trade of small arms, but no discussions regarding reduction 
of military spending exist in the region.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The budget is accurately presented.  The GAF does, however, 
receive support for its peacekeeping efforts; from the U.S. and 
UN, amongst others.  For example, the U.S. Department of State 
provided a large package of non-lethal aid to Ghana during the 
1998 ACRI training.



TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

Military budget allocations are transparent as funding for the 
GAF is approved by the democratically-elected parliament.  The 
accountability of the GAF's expenditures, however, is under no 
independent or public review.  The GAF has consistently refused 
to provide Parliament a year-end accounting of expenses.







GUATEMALA



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:

The proposed defense budget for calendar year 1999 is
845 million quetzales or USD 132.3 million at an exchange rate of 
USD 1 equals q6.40.

PERCENTAGE OF GDP:  0.63.

PERCENTAGE OF BUDGET: 

Defense spending is 4.4 percent of the national
budget.

TRENDS IN REAL TERMS:

Despite a six (6) percent nominal increase in projected defense 
spending, real spending is flat, as Guatemala's inflation rate 
for 1999 is projected at approximately 6 percent.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:  See classified annex.

COMMENTS ON ITS POLITICAL ROLE:  See classified annex.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

President Arzu continues to dismiss, appoint and transfer senior 
officers at will.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:  See classified annex.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

The U.S. has had only a limited relationship with the Guatemalan 
military for some time and has very little leverage on defense 
budget planning.  We are working to strengthen the cadre of 
civilian professionals trained in defense resource management so 
that they will be able to produce reasonable and effective 


military budgets as civilianization of national defense 
increases.  We continue to focus our use the E-IMET program to 
achieve this.  We have arranged to send the legal advisor to the 
Guatemalan Congress' Defense Committee to a National Defense 
University course on defense resource management in early 1999.  
We have also proposed that Guatemalan universities establish 
national security education programs.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

Within the past two years the government has significantly 
reduced the military budget in accordance with the peace accords.  
We expect that the government will concentrate on other pressing 
issues while the army adjusts to downsizing and reorientation of 
its mission.  Over time, increased democratic oversight of 
national security spending should help to ensure appropriate 
military budgets.

HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO 
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO 
THE UN REGISTER OF CONVENTIONAL ARMS?

Guatemala has never submitted a standardized MILEX report to the 
UN.  In 1998, Guatemala participated in the UN Register of 
Conventional Arms.  We understand that Guatemala provided a null 
report to the UN Register of Conventional Arms.  We do not know 
if Guatemala provided accurate military spending data to relevant 
international organizations.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

Guatemala participates actively in the Conference of Central 
American Armed Forces (CFAC).  It was the CFAC's headquarters in 
1998 and will remain so in 1999.  Among CFAC's projects is 
consideration of the possibility that regional militaries could 
share tasks and standardize equipment purchases to pool 
increasingly scarce resources.  Guatemala is also engaged in 
planning its participation in the Third Defense Ministerial of 
the Americas, which will promote decreased defense spending by 
fostering mutual confidence and security in the hemisphere.


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.






HONDURAS



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT: 

The official CY 1998 national government budget allocation for 
the three branches of the armed forces (army, navy, air force) 
was 444.5 million Lempiras, which is equivalent to USD 32.92 
million (at the exchange rate of 13.5 lps/USD).

PERCENTAGE OF GDP:  

The 1998 defense budget represented 0.6 percent of GDP.

PERCENTAGE OF BUDGET: 

The 1998 defense budget represented 2.9 percent of the total 
CY 1998 budget.

TRENDS IN REAL TERMS:

The CY 1998 defense budget represented an increase in real terms 
of 1.32 percent over CY 1997, however, when adjusted for 
inflation actually represented a decrease of 12 percent.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

See classified annex.

COMMENTS ON ITS POLITICAL ROLE:

See classified annex.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

At present, the president has no constitutional authority to 
appoint, promote, or remove military officers.  Under the 
constitution, the Congress must approve the selection of the CINC 
and all promotions above the rank of major.  In practice, the 
CINC has been selected by a collegium of senior officers, and 
rubber stamped by the Congress (as is the promotion list).  



However, once the approved constitutional military reforms are 
ratified in January 1999, the president will have the power 
(through the minister of defense) to appoint, promote, and remove 
officers.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

In real terms, military spending has fallen over the last several 
years, and is likely to continue to be reduced following the 
implementation of the constitutional reforms.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

See classified annex.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

The GOH has recognized the requirement for greater defense 
austerity, and has reduced the military budget in real terms over 
the last several years.

HAS THE COUNTRY PROVIDED ACCURATE MILITARY SPENDING DATA TO 
RELEVANT INTERNATIONAL ORGANIZATIONS AND ARMS TRANSFER DATA TO 
THE UN REGISTER OF CONVENTIONAL ARMS?

Military spending data has been limited to reporting the budget, 
however, with the transition to civilian control, military 
spending should become much more transparent.  Honduras has never 
submitted a standardized MILEX report to the UN.  In 1998, the 
GOH reported "nil" for the seven categories of the UN Register of 
Conventional Arms.  Honduras did submit reports to the UN 
Register in 1996 and 1997, but has not submitted a report yet for 
1998.

HAS THE COUNTRY PARTICIPATED IN REGIONAL TALKS TO REDUCE MILITARY 
SPENDING?

Honduras continues to participate in the Central American 
Security Commission (CASC), whose principal function is to 
implement the 1995 Central American Security Treaty.  Honduras 
has also been involved in both bilateral and multilateral talks 
with her neighbors, attempting to find ways of consolidating 
regional security responsibilities and coordinating missions 
(such as humanitarian) among all the Central American nations.  





ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

See classified annex.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

As mentioned above, the military budget is not transparent, and 
there is no line-by-line accounting provided by the military to 
account for its expenditures.  Congress approves a lump-sum 
budget for the military, which neither reports to the president 
nor to the Congress how the funds are actually spent.  Once the 
constitutional military reforms are ratified in January 1999 and 
the civilian-run Ministry of Defense assumes control of the 
military budget, general transparency and oversight should 
improve dramatically.


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