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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PHILIPPINES



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:  CY98 budget:  USD 934.6 million at 41.10 peso = 1 USD.

PERCENTAGE OF GDP:  1.4 percent.

PERCENTAGE OF BUDGET:  7.3 percent.

TRENDS IN REAL TERMS:

The CY98 budget represents a 2.7 percent increase over the CY97 
budget in peso terms but a 26.4 percent decrease in dollar terms.  
In real peso terms, the Armed Forces of the Philippines (AFP) 
budget contracted by 6.5 percent from 1997.  As a percentage of 
GDP, there was no change, and as a percentage of the national 
budget there was a slight decline from the CY 1997 share of 7.6 
percent.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

The AFP has a strength of 106,000 with the following breakdown 
for the component services:

Army           66,000
Navy           24,000
Air Force      16,000

(The figure for the navy includes 8,000 marine and 2,000 coast 
guard personnel.  A presidential directive has effected the 
transfer of the coast guard to the Department of Transportation 
and communications.  However, most of the funding, assets, and 
personnel are still provided by the Philippine navy.  The army 
figure does not include approximately 40,000 civilian militia 
reservists in the citizens' armed forces geographical units.)

COMMENTS ON ITS POLITICAL ROLE:

The military has not played an active role in politics since the 
election of President Ramos in 1992.  In July 1998, newly-
inaugurated President Estrada appointed the first civilian 
defense secretary in over 20 years.  Additionally, the number of 


retired military officials holding senior and mid-level positions 
in government has declined dramatically under the Estrada 
administration.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The AFP chief of staff is appointed by the president and all 
military promotions for the rank of colonel and above must be 
approved by the Congressional Commission on Appointments.  
Additionally, to be eligible for promotion, an officer must first 
receive clearance from the Government of the Philippine's (GOP) 
Commission on Human Rights.  The military services are allowed to 
handle their own personnel matters without interference, but 
civilian authority to appoint and remove military officers is 
unquestioned.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

For several decades the Philippine military has focused on 
internal security/counter-insurgency efforts.  Having succeeded 
in managing the internal threat, the AFP is now turning its 
attention to restoring its external defense capabilities.  To 
realize its goals the AFP has designed an ambitious 15 year 
modernization program--originally envisaged to cost 331 billion 
pesos (approximately $8.275 billion) over a 15-year period.  The 
7.8 billion peso proceeds from the sale of military-owned land 
have been earmarked for this program, and other monies will be 
appropriated.  The program will seek to modernize equipment, 
force structure, and doctrine.  In light of the current economic 
downturn, however, the new Estrada administration delayed for 
several months going forward with major new military 
expenditures.  Bids for major equipment purchases under the 
modernization program have been accepted and are expected to be 
opened soon.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

Due to the AFP's previous concentration on internal security, 
Philippine air and naval forces have at present only a modest 
ability to defend Philippine sea and air space.  The U.S. and the 
Philippines remain treaty allies, committed to coming to each 
other's defense in the event of an armed attack.  The USG 
accordingly supports efforts to improve the AFP's external 
defense capabilities.  The USG has not urged a reduction in the
Philippines' modest defense budget, but rather is working closely 
with the GOP and U.S. defense industry to support a program that 
meets Philippine and U.S. security and economic interests.

The Philippines has been an active participant in the ASEAN 
Regional Forum (ARF), where it often has been supportive of U.S. 
positions, designed to promote peace and stability and to reduce 
tensions and increase transparency among the militaries in the 
region.  The Mutual Defense Treaty between the U.S. and the 
Philippines is a component of the Philippines' defenses against 
external threats but the U.S. recognizes that the Philippines 
must modernize its armed forces.  Thus, the U.S. is supportive of 
the Philippines' efforts at military modernization to provide for 
an adequate defense of the country.  In the long term, the 
continued success of the ARF and ASEAN initiatives to address 
long-term security threats such as the disputed Spratly Islands, 
provides the best hope for ultimately eliminating any potential 
causes for a regional arms race and for allowing the Philippines 
to spend more on economic development and less on military 
modernization.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

Except for budgetary constraints, it is unlikely the GOP will 
undertake unilateral measures to reduce military expenditures 
until it has completed its modernization program.

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

The Philippines participates in the UN Register of Conventional 
Arms, and provides the most accurate data available.  In 1998, 
the Philippines participated in the UN Register.  The Philippines 
has submitted standardized MILEX reports to the UN three times--
1988, 1993, and 1994.

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

There are currently no regional discussions aimed at reducing 
military spending; however, in the ASEAN Regional Forum the 
Philippines has previously proposed the establishment of a 
regional arms registry and remains supportive of 
confidence-building measures.




ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The military budget accurately reflects projected military 
spending in all areas except disaster assistance.  Since the AFP 
has traditionally played a key role in non-military activities 
such as road-building, civic action programs and rural 
infrastructure, the Department of National Defense is the lead 
agency for coordinating disaster response.  Therefore, 
supplemental military appropriations can augment the initially 
approved military budget in order to fund disaster relief efforts 
as needed.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

The military budget is unclassified and obtainable by the general 
public.  The military is fully accountable to civilian 
authorities and is conducting its modernization program with the 
expectation that major purchases will require public and 
congressional support.



RUSSIA



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT: 

The budget for the first three quarters of 1998 (January through 
September) was USD 7.00 billion or 50.6 billion new rubles (the 
average exchange rate for the first three quarters of 1998 was 1 
USD equals 7.23 new rubles).  Actual expenditures for this period 
were 4.66 USD or 33.7 billion, i.e. 66.5 percent of budget was 
fulfilled.

PERCENTAGE OF GDP:  

For the first three quarters of 1998, actual military 
expenditures were 1.8 percent of overall GDP.  The budgeted 
amount would have constituted 2.7 percent of GDP.

PERCENTAGE OF BUDGET: 

For the first three quarters of 1998, actual military 
expenditures were 15.1 percent of the overall Russian budget.  
The budgeted amount would have constituted 15.8 percent of the 
overall budget.

TRENDS IN REAL TERMS:

In 1998, the military budget continued to shrink both in percent 
of GDP and percent of overall expenditures.  The decline in terms 
of percent of GDP reflects the general compression of budgetary 
expenditure undertaken by the Russian government.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

As of January 1, 1999, the authorized peacetime strength of the 
Russian armed forces is to be 1.2 million, following massive 
personnel cuts and reduction of peacetime billets over the past 
two years.  Actual personnel strength is difficult to determine, 
due to lack of standardized counting methods and internal 
security procedures, which obscure strength figures.  Strength 
accounting is also complicated by the fact that Russia maintains 
several militarized formations subordinate to non-defense 


security services, including the Ministry of Internal Affairs, 
the Federal Border Guards Service, the Ministry of Emergency 
Situations, the Federal Security Service, the Federal Agency of 
Government Communications and Information, the Federal Service of 
Railroad Troops, and the presidential security regiment.  Some 
estimates include these paramilitary units and others exclude 
active duty armed forces personnel who are detailed to the 
government or the commercial sector.  Ministry of Defense (MOD) 
and press reports estimate actual personnel strength of the armed 
forces at 80-85 percent of the authorized peacetime manning 
levels.

What is clear is that the number continued to decline in 1998, 
due to Ministry of Defense directed downsizing, chronic 
conscription shortfalls, and cadre resignations.  Current 
downsizing efforts continue to focus on reducing the officer 
corps by 35,000 officers in order to meet force target figures.  
However, the military's chronic under financing continues to 
affect its ability to provide entitlements required by law 
(severance pay, housing, pensions, relocation costs), which are 
conditions for separation from the service.  An attempt to 
accelerate this process by introducing a housing certificate 
system (a government "promissory note" to cover 80 percent of 
housing costs, with the balance paid by the service member) met 
with mixed success.  A total of 42,000 certificates were to be 
issued in 1998, at a cost of 5.1 billion rubles; however, the 
program was suspended by the Finance Ministry in August after 
12,788 certificates were issued at a cost of 1.8 billion rubles.  
Since the certificates' value is not indexed, the program's 
continued viability is dubious.

Currently, approximately 10,000 soldiers from Russia's armed 
forces remain deployed abroad, in UN peacekeeping operations in 
Croatia and Bosnia (former Yugoslavia), and other operations in 
Transnistria (Moldova), South Ossetia (Georgia), Abkhazia 
(Georgia), Armenia, and Tajikistan.  The Russian contingent in 
Bosnia is fully financed through the defense budget.  The 
battalion in Croatia receives subsidies from the UN.  The 
peacekeeping forces in the remaining areas receive subsidies from 
the country in which they are based, but salaries, munitions, 
uniforms and equipment come from the Russian defense budget.  
Although in early 1998 the Ministry of Defense had announced that 
peacekeeping missions would be assigned exclusively to the 
airborne forces, this policy was changed by mid-year to include 
designated ground forces units.


COMMENTS ON ITS POLITICAL ROLE:

Despite the continued deterioration of the military's economic 
and service conditions (several months' pay arrears, crumbling 
infrastructure, minimum subsistence-level provisions, resource 
shortfalls, loss of prestige), there are no indications that the 
military has, or aims to become, a viable political element.  On 
the contrary, as evinced during the mass nationwide strikes and 
demonstration in the Fall of 1998, the armed forces remain 
deliberately apolitical and averse to either organized or 
incidental involvement in political and social action.  
Notwithstanding disaffection on the part of individual service 
members toward the current government, attempts to organize the 
armed forces into opposition movements, such as that founded in 
1997 by the late Duma Defense Committee chairman Lev Rokhlin, 
have fizzled after receiving little support from the armed forces 
and have had negligible impact on Russia's political order.

Extensive lobbying through the media and in the legislature to 
highlight the military's economic hardships did not result in 
increased government or public support for reinforcing either the 
1998 defense budget or the armed forces' actual financing.  
Russia's current economic crisis and predicted fiscal austerity 
programs have put reform projects within the armed forces on 
hold.  The military's influence within the Primakov government 
has been diminished by debilitating economic conditions and 
competing priorities of the other power ministries, although 
Deputy Prime Minister Maslyukov has stated his intention to 
maintain and revitalize Russia's defense industries.  While the 
Ministry of Defense remains the principal authority on the 
military aspects of international arms control, decision-making 
on military related issues has become increasingly hostage to 
internal political debate and funding.  Despite intensive 
lobbying for START II (Strategic Arms Reduction Treaty) 
ratification by senior level military officers, the treaty 
continues to be under review in the State Duma as of
mid-December.  Peacekeeping deployments that project military 
presence to influence developments along Russia's periphery and 
attempts to forge closer integration among CIS armed forces have 
been marginally successful.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

Although 1998 did not witness major changes in senior level 
Ministry of Defense appointments, as had the two preceding years, 
the constitutional authority of the president to undertake such 
action was reaffirmed during two restructurings of the 



government.  From late 1997 through 1998, Yeltsin replaced the 
directors of the other leading power ministries (Federal Border 
Guards Service, the Federal Security Service, and the Ministry of 
Internal Affairs), as well as successive secretaries to the 
security council and senior officials within his own 
administration.  Yeltsin's continued support for Marshal 
Sergeyev, despite the minister of defense's (MINDEF) reported 
unpopularity within the defense establishment and recurring 
rumors of his imminent replacement, supported the president's 
principal role in the selection of senior cadres.  The key factor 
in this has been Sergeyev's commitment to proceed with military 
reform under austere financial conditions without too strongly or 
publicly challenging and criticizing the government.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Russia's current economic crisis has only aggravated what was 
already a dismal fiscal situation for the armed forces.  Despite 
aggressive lobbying, the military was allocated only 81.7 billion 
rubles (13.62 billion USD at the January 1998 exchange rate) in 
the 1998 federal budget.  As a result of budget corrections and 
sequestering throughout the year, caused primarily by revenue 
shortfalls, the Ministry of Defense had received a total of 30 
billion rubles by the end of November 1998.  Additionally, the 
ruble's threefold devaluation and the concurrent inflation on 
basic items since mid-August further reduced the military 
budget's purchasing power and increased the Ministry of Defense's 
indebtedness to 60 billion rubles (16 billion of this for 
personnel pay and entitlements).

Combat training has become virtually non-financed, with the 
military receiving only 6 percent of the resources required for 
combat training in 1998.  Even this amount was apportioned only 
for maintaining infrastructure, forcing the military to finance 
fuel, ammunition, and training equipment costs from other 
sources.  Training continues to be conducted on a reduced scale 
or is replaced by less resource-intensive activities (e.g., 
command post exercises replacing field tactical exercises).  
Personnel shortfalls, combined with lack of materiel, contributed 
to postponement or non-execution of unit training plans.  In the 
ground forces, only 35 percent of planned regimental-level and 73 
percent of battalion-level tactical exercises were conducted in 
1998.  Sea duty for Russian fleet submarines was reduced by 25 
percent and for surface vessels by 33 percent.  Russian air force 
elements executed between 15-40 percent of their standard 



training norms.  This is contributing to rapid decay of combat 
readiness; according to MOD internal assessments, the average 
Russian soldier is only marginally combat capable.

The Russian armed forces' living standards remain at the low end 
of the country's socioeconomic scale.  Throughout 1998, the 
government remained 3-4 months' delinquent in paying service 
members' wages, with no imminent settlement apparent by the end 
of the year.  The decline in the military's living standards 
continues to contribute to the increase in crime (particularly 
theft) and corruption in the armed forces, as well as to suicides 
among service members and widespread evasion of military service.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

The U.S. Government continues to pursue arms control agreements 
and nonproliferation programs with the Russian government which 
could help reduce the military's weapons production, storage, and 
maintenance costs.  Additionally, military-to-military exchanges, 
legislative initiatives, and defense conversion cooperation 
programs are designed, in part, to reduce overall spending on 
defense in both countries.  Another area where the U.S. can 
continue to help is training and advice on managing force 
reduction, recruiting, and non-commissioned officer development.  
Such training can help Russia manage a transition to a smaller 
and more professional force.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

Over the past year, MINDEF Sergeyev has continued to move forward 
with implementing reform and restructuring within the armed 
forces despite severe budget shortfalls.  These actions have 
focused on consolidation of related services and command 
structures, elimination of redundant institutions, and 
deactivation of undermanned and cadre formations.  The endstate 
of current reforms is to be a force that can be manned, equipped, 
and sustained at a high level of combat readiness under existing 
and projected funding limits.

As a result of the military's financial restrictions, both force 
modernization (acquisition and procurement of new equipment) and 
plans to transition from conscript to all-contract armed forces 
have been deferred until well into the next decade.  The Ministry 
of Defense estimates that, even if fully funded, defense orders 
will meet only the most urgent requirements (foremost, in the 
strategic rocket forces).  Consequently, it is focusing on 
upgrading and repairing the armed forces' current inventory to 
extend the life of existing systems.


At the beginning of December 1998, MINDEF Sergeyev assailed the 
draft 1999 defense budget, which allocates only 2.6 percent of 
the GDP (vice the 3.5 percent which Yeltsin decreed in 1997 to be 
the standard funding level).  Sergeyev maintained that, under 
current economic conditions, such a budget would be "deadly" to 
the armed forces.  Even though the Finance Ministry has prepared 
a 60 percent pay raise for service members starting January 1, 
1999, it is unlikely that service members will receive this 
income increase at that time.  To reduce diversion of allocated 
funds to commercial financial institutions (credits and 
transaction charges), all distributions are now occurring through 
the federal treasury.

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

We are not in a position to assess the accuracy of the military 
spending data provided by relevant international organizations or 
on arms transfer data provided by Russia to the UN Register of 
Conventional Arms.  In 1998, the Russian military budget was a 
"closed" item in the federal budget.  Regression from the 
transparency of the preceding year.  The official Ministry of 
Defense press organ Krasnaya Zvezda (Red Star) publishes weekly 
and monthly figures of military budget allocations, although this 
does not correspond to similar data released by the Finance 
Ministry.

In 1998, Russia participated in the UN Register of Conventional 
Arms.  Russia has submitted standardized MILEX reports to the UN 
four times--1990, 1995, 1997, and 1998--for six years.  Russia 
split data for several back years.

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

Russia participates in a number of multinational regimes--such as 
the OSCE (Organization for Security and Cooperation in Europe) 
and CFE (Conventional Armed Forces in Europe) adaptation talks--
which address arms levels and regional security.  These, in turn, 
affect Russia's (as well as other countries') military 
expenditures.  The Russian government is also engaged in 
activities with China and Central Asian states about security 
arrangements and force reductions along their common borders.  
However, the overriding factor in REDUCING MILITARY SPENDING 
remains the under financing of the military budget and federal 
budget revenue shortfalls.




ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The budget data is reasonably accurate.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

As opposed to the years 1996-97, the military's budget in 1998 
was closed.  An unofficial line-item defense budget is published 
on a monthly basis in Krasnaya Zvezda.  This unofficial budget 
occasionally reflects discrepancies such as the receipt of less 
money by the Ministry of Defense than that which the Ministry of 
Finance announces as paid.  Via this unofficial budget, the 
military demonstrates their accountability for what money is 
received, and documents their claim that they do not receive 
enough funds to be combat ready.  On the other hand, the Finance 
Ministry and treasury have been unsuccessful in obtaining a 
detailed accounting of defense expenditures consistent with the 
budget.  The Defense Ministry maintains the only federal 
government agency not yet included in the treasury's cash 
management system.  Many Duma members continue to seek 
additional, more detailed information regarding the government's 
plans for the armed forces and defense spending.




SAUDI ARABIA



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:  19.5 billion USD (estimated).

PERCENTAGE OF GDP:  15.6 (estimated).

PERCENTAGE OF BUDGET:  30 (estimated).

TRENDS IN REAL TERMS:  13 percent decrease over 1997 (estimated).

The figures and percentages shown above are estimates.  Official 
Saudi budget figures will not be available until the end of 
December.  As with last year's report (which reported total 
military spending of $22.3 billion), the figures above include an 
estimate of defense related off-budget expenditures.  As a 
result, the total spending figure reported above is likely to be 
several billion dollars higher than the official military 
spending figure that will be reported by the government.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

The Saudi armed forces number approximately 226,500, broken out 
as follows:

--   15,500 in Royal Saudi Navy (RSNF) (including marines).
--   20,000 in Royal Saudi Air Force (RSAF).
--   16,000 in Royal Saudi Air Defense Forces (RSADF).
--   75,000 in Royal Saudi Land Forces (RSLF).
--  100,000 in Royal Saudi National Guard (SANG)
            (including 25,000 irregular troops).

COMMENTS ON ITS POLITICAL ROLE:

None of the branches of the Saudi armed forces has a formal role 
in national politics.  However, the military plays a significant, 
while indirect, political role by bolstering national cohesion 
and development.  For instance, the SANG draws recruits from key 
tribal confederations, an important means by which the Saudi 
royal family secures and maintains the loyalty of these groups.  
In addition, the SANG is charged with protection of the Islamic 
holy cities of Mecca and Medina, a responsibility central to the 


Al-Saud's domestic and international legitimacy.  The embassy 
expects that when Crown Prince Abdullah succeeds King Fahd, he 
will initially retain command of the SANG, which will enhance the 
SANG's political weight.

The Saudi military services also fill important roles as a source 
of employment for Saudi youth, and as training institutions that 
equip many less-educated Saudis with technical skills needed in 
the Saudi private sector.  In addition, the Saudi military 
services provide as much as 20 percent of the medical care for 
the Saudi population.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

Civilian authorities have the ability to appoint and remove 
military officers.  This authority has been exercised on several 
occasions during and since the Gulf War.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Saudi Arabia faces an urgent and growing need to fund social 
services to meet the needs of a rapidly expanding population.  
1998 was a particularly difficult year for Saudi Arabia, since 
oil prices remained well below the price level used by Saudi 
budget planners to estimate national income.  During the summer, 
a budget reduction of 10 percent for certain spending categories 
was applied across the government, including the military 
services.

Regarding the feasibility of military budget reductions, it is 
important to note that the Saudi services face a need to carry 
out significant (and expensive) training, maintenance and 
sustainment on the advanced aircraft, armored infantry vehicles, 
and defensive systems acquired in recent years.  The country is 
still far from achieving its goal of building a military force 
able to defend an attack from any potential regional aggressor 
until allied forces are able to deploy to the region.  As a 
result, future military budget cuts may not be feasible from the 
perspective of military readiness, but are nonetheless likely, as 
the government finds itself increasingly compelled to address 
severe shortfalls in income.  Defense budgets will trend 
downward, but will continue to consume about a third of the 
national budget in the years immediately ahead.




U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

Since King Fahd's 1993 decree that Saudi Arabia cease all major 
new military procurements, the USG has been working with the 
Saudi government (SAG) to reduce the size of Saudi commitment to 
the U.S. FMS program.  The 1992 FMS level of commitment to buy 
over $25 billion has been reduced to under $10 billion in 1998.

In addition, the USG works closely with each Saudi military 
service through U.S. Security Assistance Organizations (SAO) to 
ensure that Saudi defense funds are spent wisely, and where 
needed most.  During 1998, the USG worked closely with the Saudi 
Ministry of Defense to prioritize spending across all the 
services coming under the MODA umbrella (Air Force, Land Forces, 
Air Defense Force, and the Saudi Navy), in order to prepare MODA 
to adjust to reduced budgets with a minimum of damage to ongoing 
sustainment programs.  Other USG initiatives that could result in 
greater efficiencies include encouragement of combined and joint 
operations within and among Saudi services, and more effective 
and comprehensive short- and long-term planning.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

At the outset of 1998, the SAG had planned to maintain defense 
spending at about the 1997 level.  However, decreased revenues 
resulting from sharply lower oil prices during 1998 compelled the 
government to implement budget cuts in military as well as 
civilian government agencies.  The Ministry of Finance has told 
visiting U.S. officials that it will be difficult for the country 
to maintain the current level of military spending in the year 
ahead.

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

The SAG does not provide military spending data directly to 
international organizations other than by way of the Saudi 
Arabian Monetary Agency's (SAMA) annual report, which includes 
defense spending as an aggregate category, "Defense and National 
Security."  Similarly, the SAG does not provide arms transfer 
data directly to the international organizations; this data is 
derived by ACDA and the UN from information about Saudi Arabia's 
import and export activity (some of which is published in the 
SAMA's annual report).  In 1998, Saudi Arabia did not participate 
in the UN Register of Conventional Arms.  Saudi Arabia has never 
submitted a standardized MILEX report to the UN.



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

The SAG participates in Gulf Cooperation Council (GCC) meetings 
aimed at enhancing security cooperation among six of the states 
of the Arabian peninsula, and until recently in the Arms Control 
and Regional Security (ACRS) multilateral peace talks.  While 
REDUCING MILITARY SPENDING is not the primary focus of the GCC or 
ACRS, it is one of the sought-after consequences of enhanced 
security cooperation.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The defense spending figure included in SAMA's annual reports 
have in the past included a "Defense and National Security" 
category.  This category had included spending for the national 
commercial air carrier Saudi Arabian Airlines, and for internal 
police functions.  For the purposes of this reporting 
requirement, the embassy has deducted estimated expenditures for 
these two functions.  Also, the "Defense and National Security" 
has not in the past included significant defense programs that 
are "off-budget."  The figure cited above under Military Spending 
includes an amount representing expenditures on off-budget 
defense-related programs.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

The SAMA annual report describes defense spending in an aggregate 
as "Defense and National Security."  The details of budgets of 
particular services are not officially released.  There is no 
formalized institutional mechanism responsible for holding 
military authorities accountable on budgetary matters.  Overall 
budgets for the Ministry of Defense and Saudi Arabia National 
Guard are negotiated each year with the Ministry of Finance prior 
to the Saudi fiscal year which begins at the beginning of each 
February.  Within MODA, Prince Sultan is the final authority on 
financial matters, as is Crown Prince Abdullah for the SANG.

All major procurements are reviewed by the Council of Ministers 
and require the approval of the King.  In addition, informal but 
nonetheless powerful oversight of military budget and spending is 
currently exercised by Crown Prince Abdullah, who has 
demonstrated a willingness to use his authority to curtail or 
prevent certain military expenditures.  The Ministry of Finance 
has acquired a significantly more influential role in determining 
military budgets.  For instance, during 1998, the ministry 


unilaterally decreased the funding levels for several military 
contracts proposed by MODA.  There is no direct accountability to 
the public for military spending.





SINGAPORE



MILITARY SPENDING

REPORTING PERIOD:  Fiscal Year 1998, which runs from April 1, 
1998 to March 31, 1999.

AMOUNT:  sd 7.26 billion (USD 4.35 billion).

Conversion of Singapore dollars (sd) to U.S. dollars (USD) is at 
the rate of sd 1.65 equals USD 1.00.

PERCENTAGE OF GDP:  4.62 percent.

(Note:  The constitution caps the defense budget at 6 percent of 
GDP, a level which Singapore has never reached.)

PERCENTAGE OF BUDGET:  26.69 percent.

TRENDS IN REAL TERMS:  11.4 percent increase over actual FY 1997 
spending.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

Virtually all citizen males are required to serve two years in 
the military.  Singapore has approximately 55,500 active duty 
personnel, of whom approximately 45,000 are army; 6,000 air 
force; 4,500 navy.  Singapore also has approximately 250,000 
reservists ("national servicemen").  Singapore's armed forces 
have played limited roles in a few international peacekeeping 
operations.

COMMENTS ON ITS POLITICAL ROLE:

The Singapore military is under civilian control and plays no 
direct role in political affairs.

Also see classified annex.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The government has the full authority to appoint, promote, and 
remove 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:

Singapore is committed to efficiency in its military spending, 
but, because of its commitment to technological superiority, has 
not made significant 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?

To the best of our knowledge, Singapore has provided accurate 
information to international organizations and arms transfer data 
to the UN Register of Conventional Arms.  Singapore has 
participated actively in discussions within the ASEAN Regional 
Forum (ARF) designed to reduce tensions and increase transparency 
among the militaries in the region.  In 1998, Singapore 
participated in the UN Register of Conventional Arms.  Singapore 
has never submitted a standardized MILEX report to the UN.

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.  Singapore 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?

To the best of our knowledge, it is accurate and complete.  
However, it does not include the budgets of Singapore 
Technologies, a government-linked defense-related corporation.



TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

Some specific elements of the military budget are not made 
public.  However, the defense establishment is under strict 
civilian control and the defense budget is subjected to annual 
public debate in parliament, with the defense minister present to 
explain the projected budget and respond to questions from 
members of parliament.





SLOVAKIA



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT: 

In USD:  406.3 million (36 sk - 1 USD).
In Slovak crowns (koruna):  14.628 billion.

PERCENTAGE OF GDP:  2.01 percent.

PERCENTAGE OF BUDGET:  8 percent.

TRENDS IN REAL TERMS:

The trend in real terms continues down.  Defense spending rose
5 percent while inflation increased approximately 7 percent.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

Under the Conventional Forces in Europe treaty, Slovakia has a 
ceiling of 46,667 personnel.  Parliament has authorized the army 
to have 45,483 peacetime personnel, but due to budgetary 
difficulties the current number of personnel is 39,110.

COMMENTS ON ITS POLITICAL ROLE:

The armed forces play a stabilizing role.  Opinion polls show the 
army is the country's most trusted institution with 74 percent 
support.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

Yes.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

The budget barely meets minimum requirements to maintain 
subsistence.  It does not allow for military upgrades or 
modernization.  However, the military plans to reduce its size to 
35,000 by the year 2000.


U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

None.  The U.S. is urging spending to improve NATO 
interoperability (regional airspace, communications, etc.).

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

For budgetary reasons, the Slovak parliament has annually reduced 
the military budget in real terms since 1995.

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

Yes.  In 1998, Slovakia participated in the UN Register of 
Conventional Arms.  Slovakia has submitted standardized MILEX 
reports to the UN four times--1995 to 1998.

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

Slovakia participates in all applicable arms control and security 
fora.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

All defense-related purchases are reflected in the defense 
budget.  Necessary extraordinary expenses are approved by the 
Defense Minister, passed to the government's Defense Council, and 
then discussed and approved/vetoed by the government.  If 
approved, the government directs the Finance Ministry to put 
money into the state budget.  It is then passed to the Ministry 
of Economy for review, and put into the defense budget.  The only 
time this has been done, according to the Ministry of Defense, 
was the request in 1996 for an additional sk 200 million 
(approximately USD 6 million) for construction of much needed 
military housing.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

The budget is fully transparent.  The transparent budget supports 
the accountability of the military to civilian authorities and 
the public.





THAILAND



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT:  USD 2.065 billion (82,612,000,000 baht).
Average rate for the year of 40 baht/1 USD.

PERCENTAGE OF GDP:  1.68 percent.

PERCENTAGE OF BUDGET:  9.95 percent.

TRENDS IN REAL TERMS:

As a result of the Asian financial crisis, military expenditures 
showed a sharp downturn in real terms and a decline as a 
percentage of both the national budget and GDP.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

The size of the Thai armed forces has decreased from 301,000 to 
about 280,000 personnel, including approximately 190,000 army, 
45,000 air force and 45,000 navy (including the marine corps).  
The paramilitary border patrol police, which reports to the 
Minister of Interior through the Royal Thai Police Department, 
numbers about 40,000.  An irregular light infantry force (the 
Tahan Phran) has about 22,600 volunteers divided between the army 
and marines.  Thailand is not currently participating in 
international peacekeeping operations.

COMMENTS ON ITS POLITICAL ROLE:

Despite an economic crisis that battered the nation and drove the 
government of retired former army commander Chavalit Yongchaiyud 
from office, the military avoided overt involvement in national 
politics in 1998.  Thailand successfully has held four successive 
peaceful transfers of power, including three national elections, 
since the violent suppression of pro-democracy demonstrations in 
May 1992.  The government of Prime Minister Chuan Leekphai has 
won high marks from the international community for faithful 
implementation of IMF austerity programs.  The new army commander 
General Surayud Chulanont has publicly stressed his determination 
to follow the orders of the Royal Thai Government's (RTG) 
civilian leaders.  Senior military commanders continue to serve 


in the appointed upper house of Parliament (the Senate).  
However, under the newly adopted constitution, the Senate will 
become an elected body following completion of the current Senate 
term.  Active duty military officers will not be eligible to 
serve in the new Senate, as they are barred from seeking elective 
office.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The king, acting on the recommendation of the prime minister, 
formally appoints senior military officers to their positions.  
The prime minister, in turn, makes his recommendations based on 
proposals from the minister of defense, who receives nominations 
from the supreme commander and the commanders of the three 
military services.  Although not legally required, the position 
of defense minister has traditionally gone to a retired military 
officer, either from the ranks of Parliament or as a non-partisan 
appointment.  The current prime minister, Chuan Leekphai, 
concurrently holds the post of defense minister.  He is an 
exception to the above rule, as he does not have a military 
background.  Officers named to the most senior military posts 
generally serve in them until mandatory retirement at age sixty.  
However, civilian prime ministers have on several occasions 
removed senior officers from their posts.  Fears of such a move 
played a role in sparking the last successful military
coup d'etat in February 1991.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

Recent governments have sought to exert greater control over 
defense spending, on occasion rejecting procurement requests for 
expensive military hardware.  In March of this year, Prime 
Minister Chuan successfully obtained the President's consent to 
release Thailand from its contractual obligations to purchase 
eight F/A-18 aircraft at a cost of USD 390 million.  Thailand 
contracted to buy the aircraft prior to the onset of the 
financial crisis and when the crisis struck was simply unable to 
afford the purchase.  The financial crisis, including the large 
depreciation of the baht against the dollar, has led to a major 
decline in defense spending, particularly in dollar terms.  The 
decrease from USD 4.0 to 2.25 billion represents a decrease in 
dollars of 43.75 percent in the defense budget.  This trend is 
likely to continue through next year.  However, once the economy 
begins to recover, the armed forces will want to purchase 
equipment postponed during the period of austerity.



U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

The U.S. has taken concrete action to assist Thailand in reducing 
defense spending during its time of crisis by relieving Thailand 
of its commitment to buy the F/A-18.  The U.S. also increased 
IMET funds for Thailand to help defray the costs of Thai military 
students' travel and other expenses while in the U.S.  By 
maintaining our commitment to refrain from being the first nation 
to introduce certain types of sophisticated weapons to the region 
and by maintaining a significant forward defense presence in East 
Asia, the U.S. has discouraged a regional arms race.  Aside from 
these specific steps, U.S. efforts to reduce military spending in 
Thailand and elsewhere in the Southeast Asian region are largely 
indirect and focus on support for regional confidence-building 
especially through the ASEAN Regional Forum (ARF), and on 
providing assurances that the U.S. will maintain its stabilizing 
forward defense presence.  In the long term, a continued U.S. 
presence and regional initiatives such as ARF are the best hope 
for reducing tensions, addressing long-term security threats and 
ultimately removing or ameliorating the potential causes for a 
regional arms race.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

As noted above, the current government has reduced military 
spending as part of an overall austerity program.  All but a 
handful of major defense procurements have been canceled or 
deferred.  Multilaterally, Thailand has taken part in
confidence-building measures such as those promoted in the ARF to 
encourage dialogue on regional issues to reduce their potential 
for aggravating tensions within the region.

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

Thailand has submitted data to the UN Register of Conventional 
Arms in the past and will continue to do so.  In 1998, Thailand 
participated in the UN Register of Conventional Arms.  Thailand 
has submitted standardized MILEX reports to the UN seven times 
between 1983 and 1998.





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.  Thailand 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?

Funding for major acquisitions by the armed forces is provided 
for in the annual defense budget.  While the services have other 
sources of revenue, from military-owned radio and TV stations, 
for example, we are not aware that the funds generated have been 
used to augment government-approved procurement budgets.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

Traditionally, the military budget has contained a number of 
covert programs.  Oversight of defense spending by the elected 
lower house has been limited by the reluctance of senior military 
leaders to present extensive information or submit to detailed 
questioning by Members of Parliament.  In recent years, House 
members have displayed increased willingness to insist upon more 
detailed information and greater accountability, a trend to which 
the military appears to be gradually yielding ground.  The 
publication of official Defense White Papers in 1994 and 1996 has 
increased the amount of publicly available information about the 
Thai armed forces.  The military intends to continue to publish 
these on a two-year cycle.  Thailand's free and increasingly 
sophisticated media also have focused greater attention on 
military procurement practices, increasing the general level of 
transparency.





TURKEY



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT: 

Turkey's official annual military expenditures for 1998 amounted 
to approximately USD 7.2 billion or tl 1.8 quadrillion (at an 
average exchange rate of tl 250,000:USD 1).

PERCENTAGE OF GDP:  3.6 percent.

PERCENTAGE OF BUDGET:  12.1 percent.

TRENDS IN REAL TERMS:

The above is an increase over recently revised 1997 expenditures 
of approximately USD 5.4 billion or tl 807 trillion (at an 
average exchange rate of tl 150,000:USD 1) which represented an 
estimated 2.8 percent of GNP and 12.6 percent of the national 
budget.  While military spending as a relative share of the 
budget declined slightly, the near doubling of the budget between 
1997 and 1998 included a 33 percent increase in military 
spending, calculated in current dollar terms.  Turkey's military 
expenditures are expected to continue to increase; the projected 
defense budget for 1999 is for USD 8.96 billion.  Recent fiscal 
discipline and tight monetary and exchange rate policies have 
preserved Turkey's credibility in debt markets despite continuing 
triple-digit interest rates and high, although falling, 
inflation.

The sources of Turkish military expenditures include the Ministry 
of National Defense budget, the Turkish Defense Fund, income from 
the Turkish Armed Forces Foundation, foreign military aid, income 
from a special remuneration earmarked for the Ministry of Defense 
and funds allocated by the Department of the Treasury for loan 
payments.




ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

The total size of the Turkish armed forces, the second largest 
force in NATO, is 609,700 divided among the army (495,000), air 
force (60,100) and navy (54,600).  In addition, there is a 
separate constabulary force, the Jandarma, which is responsible 
for maintaining order in rural areas.  In peacetime, the 150,000 
Jandarma personnel fall under the direction of the Interior 
Ministry rather than the Turkish General Staff (TGS); however, 
their commander and many senior officers are serving army 
officers.  Coast Guard personnel (1,050) are navy personnel 
assigned to Coast Guard missions.  The Coast Guard falls under 
the direction of the Interior Ministry in peacetime.

Turkey participates in a variety of peacekeeping operations.  
Turkey has 700 troops deployed in Bosnia as part of the 
Stabilization Force (SFOR) and it maintains a mechanized infantry 
company in SACEUR's strategic reserve for SFOR.  One Turkish 
frigate is part of the "Standing Naval Force Mediterranean" 
(STANAVFORMED), another frigate is on a 5 day on-call status and 
a minesweeper is on a 7 day on-call status in support of SFOR's 
maritime operations.  One F-16 fighter squadron of 5 aircraft is 
based in Ghedi, Italy to support SFOR air operations over Bosnia.  
Turkey has volunteered up to 100 observers to the OSCE Kosovo 
Verification Mission (KVM) and a headquarters staff element to 
the French-led Kosovo Extraction Force.  During 1998, the 
Government of Turkey (GOT) donated USD 25,000 to the Bosnian 
demining effort.  Turkey continues to participate in the 
Temporary International Presence in Hebron (TIPH).  Approximately 
80 Turkish military personnel are assigned to Operation Northern 
Watch (ONW), to enforce the no-fly zone over northern Iraq.  
Turkey also has contributed 5 officers since 1994 to the 
Observation Mission in Georgia (UNOMIG), 7 officers since 1991 to 
the Iraq/Kuwait Observation Mission (UNIKOM), and several police 
officers in the Preventative Deployment Force (UNPREDEP) in the 
former Yugoslav Republic of Macedonia and the multinational 
police forces in Albania.

COMMENTS ON ITS POLITICAL ROLE:

Turkish military forces play a significant role in domestic 
politics.  They are the most respected institution in Turkey, and 
they take very seriously their traditional role as guardian of 
the Ataturk legacy of a secular, western-oriented Turkey.  The 
military has staged three direct coups since 1960, most recently 
in 1980, which was prompted by a collapse of Turkey's internal 


economic/security situation.  Turkey returned to civilian rule in 
1983, and the military drew back from an overt role in politics.  
However, the TGS retains strong political influence exercised 
through the National Security Council (NSC), a constitutional 
body chaired by the president which consists of five civilians 
(the president, the prime minister, foreign, interior and 
national defense ministers) and five general officers (chief of 
the TGS, the three service chiefs and the commander of the 
Jandarma).  The Secretary-General of the NSC is an active duty 
general officer of four-star rank.

The Islamist-led government of Necmettin Erbakan resigned in June 
1997, in large part because of TGS pressure on the government to 
adhere to secular practices.  The succeeding government of Prime 
Minister Yilmaz, which lost a no-confidence vote in November 1998 
due to a corruption scandal, faced continued pressure to 
implement the agenda first enunciated at the NSC in February 1997 
when Erbakan was prime minister.  The new coalition government 
headed by Buelit Ecevit faces the same requirement.  The new 
(August 1998) leadership of TGS has adopted a much lower public 
profile than its predecessors, and this has ameliorated relations 
between the military and the politicians.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The three armed services are subordinate to the TGS which is 
directly under the authority of the prime minister in peacetime 
and the president when Turkey is at war.  The Defense Ministry 
has several interrelated functions with the TGS (primarily 
defense procurement) but is separate and plays no significant 
role in formulating TGS policy.  The chief of the TGS has a 
higher protocolary rank than any minister other than the prime 
minister.

The president and the prime minister sit on the Supreme Military 
Council (SMC), which meets at least once a year, but recently 
every six months, to decide upon all flag/general officer 
promotions, assignments and retirements.  It also rules on 
expulsions from the services, usually for membership in 
proscribed religious or extremist organizations.  The prime 
minister normally appoints the chief of the TGS and there has 
been only one instance in the last 20 years when the prime 
minister has not selected the individual whom the senior Turkish 
military leadership had proposed.  Other than participation in 
the SMC, the civilian leadership is not normally directly 
involved in any promotions, assignments or retirement selections.  
Thus, the Turkish military enjoys considerable institutional 
independence concerning personnel matters.


REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

The Government of Turkey is not likely to reduce military 
spending over the next five years.  To the contrary, the TGS has 
an ambitious USD 150 billion, 25-30 year modernization plan 
designed to ensure Turkey can cope with regional threats, keep 
pace with NATO modernization, and develop its indigenous 
military-industrial base.  Turkey borders on three state sponsors 
of terrorism (Syria, Iraq and Iran), all of whom also have 
varying degrees of weapons of mass destruction (WMD)(for Iran and 
Iraq this includes nuclear) capability.  Despite the demise of 
the Soviet Union, Turkey firmly believes it is only a matter of 
time before Russian hegemonism returns to the Caucasus, and 
Turkey is developing foreign policy initiatives aimed at 
expanding its regional influence in the Caucasus and the Balkans.  
Since the Imia/Kardak crisis with Greece in January 1996, the 
Turkish military has given greater attention to Greece's 
potential as a military threat.  Greece's "Joint Defense 
Doctrine" with the Government of Cyprus and attempts by the 
Government of Cyprus to acquire S-300 missiles in 1998 have 
exacerbated the tensions always present in the Aegean between 
Greece and Turkey.  Overall, Greece is viewed more as a military 
irritant than a genuine threat.

Turkey also faces a significant internal threat from the 
separatist/terrorist Kurdistan Workers' Party (PKK).  Turkey 
claims that more than 30,000 civilians and soldiers have been 
killed in the last 14 years in the GOT's battles with the PKK.  
In 1998, Turkey made some military progress in reducing the PKK's 
ability to launch terrorist attacks in the Southeast.  Through 
the threat of military action, Turkey also convinced Syria to 
expel PKK leader Abdullah Ocalan from his Damascus headquarters 
and to limit PKK operations in and from Syria.  Ocalan's flight 
to Rome and Italy's subsequent refusal of Turkey's request for 
extradition has soured Turkish relations with Italy.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

The U.S. does not encourage reduced Turkish military spending
per se, given Turkey's NATO membership and our desire to 
encourage burdensharing by alliance members.  In fact, the U.S. 
encourages Turkey to modernize its forces and promote 
interoperability of equipment through purchases of U.S. military 
equipment.  We do, however, coordinate with Turkey on disarmament 
efforts such as the Treaty on Conventional Forces in Europe (CFE) 



and the arms control and regional security component of the 
Middle East Peace Process in which Turkey has long played a 
positive role.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

With a long shopping list and limited economic resources, the TGS 
increasingly has been setting priorities on its procurement 
efforts.  In addition, the Turkish armed forces have engaged in 
some downsizing after stabilizing the situation in the Southeast.  
The Turkish army, the largest of the services, plans to reduce 
its size further within the next five years and is researching 
options, such as developing a reserve component system similar to 
that in the U.S.  The Turkish navy recently has decommissioned 
old destroyers and acquired more modern frigates to achieve
long-term savings.

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

Turkey provides accurate data annually to the UN regarding 
conventional arms transfers and to NATO on its defense 
expenditures.  In 1998, Turkey participated in the UN Register of 
Conventional Arms.  Turkey has regularly submitted standardized 
MILEX reports to the UN from 1982 to 1994.

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

Turkey participates in the CFE and OSCE processes and the arms 
control and regional security component of the Middle East Peace 
Process.  Turkey also endorses Annex 1B on the Dayton Accords 
concerning regional stabilization and supports the build-down of 
forces in the former Yugoslavia.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?  TO WHAT DEGREE IS 
THE MILITARY BUDGET TRANSPARENT?

Some part of the funding for the Jandarma command, the Interior 
Ministry and the Coast Guard may be used partially for military 
purposes, including the fight against the PKK.  Other budget 
items which may have some military purposes include the Guard 
Command of the Turkish parliament, pensions, national civil 
budgets, construction costs, external military debt payments, 
defense industry support funds and funds provided by the 


Foundation of the Armed Forces.  In the Southeast, the police may 
also perform some military functions.  Defense budgets are 
prepared in accordance with state planning organization and 
Ministry of Finance strictures and are subject to approval by the 
General Assembly of the Turkish Grand National Assembly.  The 
Ministry of Finance supervises payments and contracts, and 
defense expenditures are subject to Ministry of Finance audits at 
the end of each fiscal year.





UKRAINE



MILITARY SPENDING

REPORTING PERIOD:  January 1 to December 31, 1998.

AMOUNT: 

Ukrainian Hryvnya (Hr) 1.501 billion (equal to USD 600.400 
million, at an averaged rate for the year of Hr 2.5 equals USD 
1.0).

PERCENTAGE OF GDP:  

Approximately 1.5 percent, based on a nominal GDP of Hr 101.900 
billion in 1998 (USD 40.760 billion).

PERCENTAGE OF BUDGET:  6.0 percent.

TRENDS IN REAL TERMS:

In 1998 the national defense category of the budget (210) fell 
slightly by 0.1 percent of nominal GDP, while real GDP fell an 
estimated 1-1.5%.  Military spending consequently fell by 
approximately 0.12 percent in real terms.

Two other categories of the budget may be construed as military.  
Category 604 (Main directorate of the Command of the National 
Guard of Ukraine) was budgeted at Hr 59.210 million (equal to USD 
23.684 million).  Category 606 (Main directorate of internal 
troops of the Ministry of Internal Affairs of Ukraine) was 
budgeted at Hr 75.000 million (equal to USD 30.0 million).

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

The manpower strength of the Ukrainian armed forces remains 
difficult to establish exactly.  A variety of sources, official 
and unofficial, leads us to peg it at around 350,000, which 
represents an approximately five percent reduction during 1998 
from the 1997 level of about 365,000.




COMMENTS ON ITS POLITICAL ROLE:

Some active duty military officers have run for office and sat in 
elective bodies such as the national parliament.  But they have 
seldom played a significant role in those bodies.  Nor have the 
armed forces played an active part in Ukraine's broader political 
life.  Most observers believe the Ukrainian armed forces would be 
unlikely to support a coup or extra-constitutional action.  Apart 
from traditions of extreme hazing of their own recruits, the 
Ukrainian armed forces have a generally good human rights record.

CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

The president of Ukraine, as commander-in-chief, exercises the 
constitutional authority to appoint and remove military officers.  
Under the constitution, parliament does not "advise and consent" 
to these actions except at the cabinet-minister level.

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

REDUCING MILITARY SPENDING hinges on reform and restructuring of 
the Ukrainian armed forces.  To some extent, this will entail a 
temporary increase in spending as officers are pensioned off, 
housing (a statutory benefit for retired officers) is built, 
bases are closed and cleaned up, and so forth.  Lack of funds for 
this purpose continues to impede genuine ability to down-size the 
armed forces and the cost of running them.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

Under the NATO-Ukraine Charter, the United States has helped 
develop the Joint Working Group on Defense Reform to assist 
Ukraine in taking steps toward restructuring its defense 
establishment.  Under the Security Committee of the Gore-Kuchma 
Binational Commission, the United States shares experiences on 
closing bases.  The Nunn-Lugar Cooperative Threat Reduction (CTR) 
Program, by providing assistance for destroying Ukraine's heavy 
bombers, ICBMs, and missile silos (among other activities), is 
helping the Ukrainians to shut down their Strategic Rocket Forces 
and their strategic bomber forces.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

The Ukrainians have participated in the programs described above.  
They have also eliminated conventional forces equipment in 
accordance with the CFE Treaty.  In addition, military spending 


has been reduced arbitrarily as a result of the decline in gross 
domestic product and in government revenues over the past nine 
years.

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

The Ukrainians have apparently been meeting their obligations to 
report data on arms sales in the framework of the Wassenaar 
Arrangement.  They also appear to be in compliance with the 
Treaty on Conventional Armed Forces in Europe (CFE) and its 
reporting requirements.  Their data on conventional arms 
transfers for the UN Register of Conventional Arms seems 
generally accurate.  In 1998, Ukraine participated in the UN 
Register of Conventional Arms.  Ukraine has submitted 
standardized MILEX reports to the UN three times--1993, 1994, and 
1997.

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

No such talks exist per se.  To the extent that the CFE Treaty 
affects levels of military spending, Ukraine is active in the 
Joint Consultative Group negotiating adaptation of the treaty in 
Vienna.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The budget consists of expenditures that are authorized by the 
parliament at the conclusion of a budget process more or less 
like ours.  Actual allocations of funds are made by the executive 
branch out of the revenues on hand.  In recent years, the funds 
disbursed to the Ministry of Defense have reportedly fallen well 
short of the budget figures.  The amount of the shortfall is not 
released publicly.

In order to survive, some military units have adopted various 
strategies depending on their economic potential.  For example, 
construction units may sell their services, units that control 
natural resources (such as rock quarries) may sell them off, and 
naval vessels may seek sponsors among cities or businesses that 
would provide uniforms, food supplements, and so forth.



TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

On an official level the military budget is transparent, and 
accountability is clear.  But military spending shares the 
two-sided character of the Ukrainian economy as a whole.  There 
is an official side, which is reflected in statistics, and the 
"shadow" side described above, which is not.  At this point, the 
"shadow" side of military spending appears to be a survival 
mechanism above all.  This mechanism is common to a variety of 
Ukrainian institutions.  By its nature, it is nearly impossible 
to quantify.  Because it operates at unit levels, "shadow" 
funding does not appear to be an efficient way for the military 
to escape civilian control.  For the same reason, however, it 
opens up possibilities for corruption and abuse.




ZIMBABWE



MILITARY SPENDING

REPORTING PERIOD:

July 1, 1997 to December 30, 1998, are listed below, reflecting 
the Government of Zimbabwe's (GOZ) extension of the last budget 
to 18 months in order to change the fiscal year to coincide with 
the calendar year.  Also included are projected figures of 
military expenditure contained in the GOZ 1999 budget.)

AMOUNT: 

July 1, 1997 - December 30, 1998:  z$5.42 billion (USD 317.2 
million at USD 1 = z$17).

The GOZ's 1999 proposed defense, announced on October 15, is 
z$5,240 billion (USD 141.62 million at the current exchange rate 
of z$37 - USD 1).  In local currency terms it is a nominal 50 
percent increase over the previous period's budget.  It contains 
no provision for Zimbabwe's military involvement in the 
Democratic Republic of the Congo (DROC), which is apparently 
being handled off-budget.  The budget was commended for having 
some positive elements, but was criticized by economists, 
parliament, and political commentators for allocating more 
resources to the Ministry of Defense at the expense of other 
sectors of the society.

PERCENTAGE OF GDP:  

July 1, 1997 - December 30, 1998:  3 percent.

Projected CY 1999:  3.2 percent based on projected GDP of z$163.4 
billion.

PERCENTAGE OF BUDGET: 

July 1, 1997 - December 30, 1998:  7.7 percent.

Projected CY 1999:  9.2 percent.

TRENDS IN REAL TERMS:

Last year's report of Zimbabwean military expenditure at 7.7 
percent of the national budget and 3 percent of GDP was described 
as relatively stable.


Assuming 30 percent inflation in 1999, the current working 
assumption, defense spending is slated to grow by approximately 
20 percent in real terms.  We have not yet learned which areas of 
the military are expected to benefit from the increased budget.

ROLE OF THE ARMED FORCES

SIZE OF THE ARMED FORCES:

In early 1998, the Zimbabwean government announced plans to 
downsize and restructure the Zimbabwean Defense Forces (ZDF) from 
approximately 40,000 to 30,000 (the army was to be 25,000 and air 
force 5,000) beginning in August 1998.  The reasons given by the 
GOZ were the reduction in external threats against Zimbabwe and 
budget reductions required to better support the national 
economy.  Following limited efforts to begin that process, the 
GOZ stopped the downsizing and restructuring in response to 
complaints from senior and mid-level military officers that the 
exercise was adversely affecting morale in the armed forces, as 
well as pushing up the already huge costs of retirement pay and 
benefits.  In August, President Mugabe, as chairman of the 
Southern African Development Community (SADC) organ on politics, 
defense, and security, deployed Zimbabwean troops to the DROC in 
response to attacks on the Kabila government, ostensibly by 
Rwanda and Uganda in support of Congolese rebels.  To date, 
Zimbabwean troop strength in the DROC is estimated at 
approximately 6,000.  The ZDF continues to have UN peacekeeping 
personnel on duty in Angola.

COMMENTS ON ITS POLITICAL ROLE:

Zimbabwe's defense forces are under very firm civilian control.  
Under current circumstances, the military establishment poses 
little threat to the civilian political leadership, although we 
believe that dissatisfaction with GOZ policies is growing within 
the military as in other segments of society.  Specifically, the 
professional military is widely believed to be opposed to the 
GOZ's deepening intervention in the DROC in which the Zimbabwean 
soldiers are fighting a guerrilla war in unfamiliar and difficult 
terrain, with little motivation, and no popular support for their 
involvement at home.  President Mugabe has maintained that 
Zimbabwe will remain in the Congo until the rebels are defeated 
and Rwanda and Uganda withdraw.







CAN CIVILIAN AUTHORITIES APPOINT AND REMOVE MILITARY OFFICERS?

Selection, promotion and posting of all officers are political 
decisions closely guarded by the senior political leadership.  
Promotions to the most senior positions continue to be based 
heavily on the political reliability and loyalty of the officers 
involved.  The political leadership would have little difficulty 
removing an undesirable officer.  In the last month, President 
Mugabe has filled several key government positions with active 
and retired military officers, most notably as the 
director-general and deputy director-general of the Central 
Intelligence Organization (CIO).

REDUCING MILITARY SPENDING

FEASIBILITY OF REDUCING MILITARY SPENDING:

See classified annex.

U.S. EFFORTS TO ENCOURAGE REDUCED MILITARY SPENDING:

The United States has used a variety of means to encourage 
Zimbabwe to reduce the size of its forces and restrict military 
spending, including lobbying of senior officials by the 
ambassador, AID mission director, defense attachˇ and other 
embassy officers.  In light of the estimated z$15 million daily 
which the GOZ is spending to prosecute the war in the DROC, the 
ambassador and other mission officers have urged the GOZ to 
withdraw its troops from the DROC, push for a cease-fire, and 
work towards a negotiated solution to that conflict.  In 
addition, reduction of defense forces is a theme stressed in many 
of the U.S. military lectures at Zimbabwe's staff college, in 
which large numbers of ZDF members participate.  The ZDF also 
funds training courses which deal with defense resource 
management.

COUNTRY EFFORTS TO REDUCE MILITARY SPENDING:

The previously announced planned reduction in the armed forces by 
approximately 10,000 soldiers was designed to substantially 
reduce GOZ military expenditures.  Similarly, the proposed 
restructuring of the ZDF was intended to create a more 
cost-efficient and streamlined military.  The mission continues 
to urge the GOZ to implement those plans and supports IMF 
conditionalities that seek transparency in the GOZ budget for its 
involvement in the DROC war and a curtailment of those expenses.




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

Post is unable to determine what information Zimbabwe provides to 
international organizations.  However, Zimbabwe has not provided 
any arms transfer data to the UN, according to Ministry of 
Foreign Affairs officials.  This was also confirmed with the UN.  
In 1998, Zimbabwe did not participate in the UN Register of 
Conventional Arms.  Zimbabwe has never submitted a standardized 
MILEX report to the UN.

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

Zimbabwe consults regularly with neighboring and regional 
countries through the SADC and Organization of African Unity.  
The subject of REDUCING MILITARY SPENDING is addressed in these 
venues.


ASSESSMENT OF MILITARY BUDGET ACCURACY

IS THE MILITARY BUDGET ACCURATE AND COMPLETE?

The GOZ figures fail to account for military-related expenses 
which are not identified in budgets for other ministries, such as 
military construction performed by the Ministry of Local 
Government and National Housing and drawn from that ministry's 
funding.  In addition, the military budget does not include debt 
repayment for previous defense acquisitions or the amount of the 
"contingency" reserve which exists elsewhere in the overall 
budget and is available for unprogrammed expenses/purchases.  The 
GOZ's 1999 budget does not include any figures for the country's 
military involvement in the DROC which began in August 1998 and 
is continuing as of this writing.

TO WHAT DEGREE IS THE MILITARY BUDGET TRANSPARENT?

See classified annex.



[End of Document]

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