Publication: Eurasia Daily Monitor Volume: 4 Issue: 236

Although Ankara reduced its defense budget in recent years due to economic restraints, on December 11 Turkey’s parliament approved a 1.7% increase for the Ministry of Defense (MD) budget for fiscal year 2008.

The budget, which includes the land, air, and naval commands, as well as the ministry, has been fixed at 13.27 billion lira ($11.3 billion) for 2008. This corresponds to 6% of the proposed total fiscal year budget for 2008, fixed at 222.31 billion lira ($185.26 billion) or 1.85% of the gross national product.

The budget does not however, include extra-budgetary figures, few of which are disclosed. For example, the Under-Secretariat for the Defense Industry (SSM) Support Fund is unofficially estimated to have reached to 2.4 billion lira (around $2 billion) in 2007, about 98% of which goes toward major arms-production projects.

In October Murad Bayar, SSM under-secretary, stated that the SSM has roughly $2.5 billion in financial resources. Furthermore, he noted that in 2008 the SSM will earmark a considerable amount of these resources for major military projects to be implemented that same year. Although no official figures are available, it is estimated that Turkey will earmark $4-5 billion for arms purchases in 2008.

Other disclosed extra-budgetary allocations include 3.12 billion lira (down 0.85%) for the Gendarmerie General Command; 233.31 million lira (up 1.47%) for the Coast Guard Command, 27.4 million lira for the SSM administrative budget; as well as an estimated 600 million lira ($500 million) for military projects guaranteed by the Treasury. Combined, the known-extra budgetary sources earmarked for defense and the Ministry of Defense budget add up to 19.66 billion lira, representing 8.8% of the total fiscal budget and 2.74% of GNP.

Based on Ministry of Defense budget forecasts for 2009 (13.99 billion lira) and 2010 (14.78 billion lira), planners expect a 2-3% increase in military budgets above the inflation rate, which is estimated to be around 10% each year. These percentages, however, do not reflect the extra-budgetary resources to be earmarked for defense in the coming two years.

Meanwhile, the latest report made public about Turkey’s terror-stricken eastern and southeastern regions revealed that Ankara earmarked one-third of its 2006 fiscal budget for these regions.

According to the report, prepared by Turkish economist Mustafa Sonmez and released on October 1, the budgets for the eastern and southeastern regions — covering 21 provinces — allocated 18% of the budget to ensure public order and security and 11% for defense ( Altogether 29% is earmarked for security, compared to an average rate of 13% in other parts of Turkey. Sonmez urged the government to change this balance in favor of helping the regions’ development and welfare.

Two factors have contributed to the increase in military budgets. First, hostilities have increased between the Turkish armed forces and the outlawed Kurdistan Workers’ Party (PKK), based mainly in neighboring Iraq. Second, Ankara is beginning a major overhaul program in an attempt to turn Turkey into a technology-friendly economy, with an emphasis on strengthening the domestic defense industry – an area that has long been neglected.

SSM has already earmarked around $1 billion for research and development (R&D) programs.

According to a strategy paper released by SSM earlier this year, the government plans to increase the proportion of defense systems produced locally from the current 25% to 50% by the year 2010. Concurrently, Turkey would increase exports of defense products and services to around $1 billion per year by 2011, up from the current $200-300 million per year. The SSM target for defense exports is $1.8 billion between 2006 and 2016.

Speaking to Jamestown, however, several Ankara-based Western defense contractors warned Turkey to not be selective regarding local programs. “Turkey should focus on the projects to be locally produced to ensure that they can be sold in the world markets,” they said.

Meanwhile, the European Union’s Progress Report of 2007 for Turkey, released on November 6, stated that there has been no progress made in terms of strengthening parliamentary oversight of the military budget and expenditure.

“The Parliamentary Planning and Budget Committee reviews the military budget only in a general manner. It does not examine programs and projects. Furthermore, extra-budgetary funds are excluded from parliamentary scrutiny,” the report concluded.

According to the constitution, the Turkish Court of Auditors can carry out an external ex-post audit of military expenditures and properties. However, the report said, “The Court remains unable to audit military properties, pending the adoption of the Law on the Court of Auditors. Furthermore, the 2003 Law on Public Financial Management and Control providing for the internal audit of security institutions has yet to be properly implemented.”