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Understanding Egyptian Military Expenditure

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SIPRI Background Paper October 2020 UNDERSTANDING EGYPTIAN SUMMARY w Egypt has one of the largest MILITARY EXPENDITURE military forces and inventories of major weapons in the Middle East and North Africa (MENA). alexandra kuimova* However, based on the official figures provided by the govern­ ment, Egypt’s mili tary expendi­ I. Introduction ture averaged a comparatively moderate, by regional stand­ Egypt has one of the largest military forces in the Middle East and North ards, US$3.8 billion annually Africa (MENA) and the largest inventory of major weapons in the region. over the past decade. Egypt Amid a growing perception of intensified domestic and regional security thus appears to have one of the lowest levels of military threats, Egypt, under President Abdel Fattah al-Sisi, has made consider able spend ing in MENA. investments to modernize and train its armed forces. However, based on the This background paper official figures provided by the government, Egypt’s military expendi ture provides an in­depth explor­ averaged a comparatively moderate, by regional standards, US$3.8 billion ation of the official military annually over the past decade. Egypt thus appears to have one of the lowest spending figures for Egypt. levels of military spending in MENA: based on its official figures, in 2019 Through analysis of primary Egypt had the ninth-highest spending among the 14 countries in the region and secondary sources, it high­ for which data is available.1 lights gaps and shortcomings in Between 2010 and 2019 Egypt’s arms acquisitions increased signifi cantly the data reported by the compared with the previous decade (i.e. 2000–2009). It also launched Egyptian Government. By several military operations in the Sinai peninsula. At the same time, Egypt’s mapping and examining a official figures showed an overall real-terms decrease in its military budget. comprehensive list of Egypt’s Although it is not always feasible to assess Egypt’s disaggregated military arms procurement deals between 2000 and 2019, it also spending, this background paper aims to review Egypt’s official military shows that the growing number expenditure figures over the decade 2010–19 to obtain a clearer picture of of arms acquisitions apparently the level of financial resources Egypt dedicates to military issues. had no impact on the level of Previous studies have discussed the scale of resources absorbed by the military spending officially military in Egypt, but these studies focused on understanding the drivers reported by Egypt over the of total military spending, rather than examining the figures themselves.2 most recent decade. This paper fills this gap by investigating the uncertainties of the under lying The paper also identifies one mili tary spending data. Taking the Stockholm International Peace Research additional spending category Institute’s (SIPRI) comprehensive definition of military expenditure as a that could be included in an guide line, the paper explores different elements of military expenditure in the estimate of Egypt’s military con text of Egypt. It aims to answer the following questions: what elements of expenditure: costs related to specific activities of Egypt’s 1 SIPRI reported estimates of military spending for 14 of the 19 countries in the Middle East and paramilitary forces. North Africa in 2019: Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Morocco, The issues regarding the lack Oman, Tunisia, Turkey and Saudi Arabia. Estimates cannot be made for 5 states: Libya, Qatar, Syria, of com prehen sive official data the United Arab Emirates (UAE) and Yemen. SIPRI Military Expenditure Database, <https://www. on mili tary spending raised in sipri.org/databases/milex>. the paper can be resolved only 2 See e.g. Abu-Qarn, A. S. et al., ‘The demand for military spending in Egypt’, Defence and Peace Economics, vol. 25, no. 3 (2014), pp. 231–45; and Ali, H. E., ‘Military expenditures and human through promoting trans­ development: Guns and butter arguments revisited: A case study from Egypt’, Peace Economics, parency in military budgeting Peace Science and Public Policy, vol. 17, no. 1 (2011). in Egypt. * This work is funded by the Swedish Ministry for Foreign Affairs. 2 sipri background paper military expenditure are financed through Egypt’s official military budget? Are some items of military spending excluded? If so, can additional data for these items be obtained? The background paper also highlights whether there are indications that off-budget sources in Egypt fund military expenditure. By providing a better understanding of the level of financial resources Egypt dedicates to its military, this research aims to input into broader efforts to improve transparency in military matters in MENA. To facilitate the tracking of military spending in Egypt, the various elements of military expenditure are first described (section II). The next step to understanding the nature of Egypt’s military spending requires context: over time, by describing trends in the official military budget figures since 2010; and geographically, by comparing it with other countries in MENA (section III). A further step is to examine Egypt’s national reporting of military spending to identify the elements of military expendi ture that are reported and financed through Egypt’s military budget and those which are not (section IV). The latter includes spending on Egypt’s paramilitary force, which is under the authority of the Ministry of Interior (section V). The paper continues (in section VI) by analysing another ele ment of military expenditure—spending on arms procurement. By mapping and examining a comprehensive list of Egypt’s arms acquisition deals over the past two decades (i.e. 2000–2009 and 2010–19), the section aims to show that the growing number of arms acquisitions apparently had little to no impact on the levels of military spending reported in Egypt’s official military budget over the past decade. Section VII explores possible off-budget sources of funding and section VIII presents the paper’s key conclusions. II. Definitions, methods and sources Defining military expenditure To provide an easily identifiable measure of the scale of resources absorbed by the military, SIPRI provides annual figures on military spending levels of 169 countries, with historical coverage for the majority of states going back to 1988. To make these estimates, SIPRI collects government documents that include data on actual spending or the budget for those activities that fit within SIPRI’s definition of military spending. SIPRI has adopted a con- sistent definition of military expenditure for all countries. Where possible, SIPRI military expenditure data includes all current and capital expendi ture on (a) the armed forces; (b) defence ministries and other government agencies engaged in defence projects; (c) military space activities; and (d) para military forces. This should include expenditure on personnel, including salaries of mili tary and civil personnel, pensions of military personnel, and social services for personnel; procurement (expenditure for military equipment); oper ations and maintenance; military research and development (R&D); and military aid (in the military expenditure of the donor country).3 Spending on paramilitary forces is not always considered to be mili tary expendi ture by governments. SIPRI considers it to be part of military expendi ture if the forces, which often have a dual military and public order 3 SIPRI Military Expenditure Database, ‘Sources and methods’, [n.d.]. understanding egyptian military expenditure 3 role, are trained and equipped for military operations and can contribute to mili tary activ ities.4 Spending on such forces is included in military expendi- ture regardless of whether it is funded through the Ministry of Defence or another ministry. Thus, for example, expenditure on China’s People’s Armed Police, Morocco’s Gendarmerie and Russia’s National Guard is included in SIPRI’s military expenditure calculations for these countries. Similarly, North Atlantic Treaty Organization (NATO) countries report their ‘defence expenditure’ on ‘other forces’, even if they are financed through the budgets of ministries other than the Ministry of Defence.5 The case of Egypt As a general rule, SIPRI takes national data to be accurate until there is convincing information to the contrary. To estimate military spending for Egypt, SIPRI uses the official data from the state budget reported by the Egyptian Ministry of Finance. Detailed administrative reports on resource allocations and government expenditure by function and other classifi- cations are publicly available (in Arabic) through the Ministry of Finance’s electronic archive.6 Using primary and secondary open sources in Arabic and English, this paper examines the composition of Egypt’s military spending. This includes (a) spending on ‘defence and national security’, which currently con stitutes SIPRI’s military spending figures for Egypt; and (b) spending on paramilitary forces—the Central Security Forces (CSF). Based on its official figures, in 2019 Egypt’s spending on para military forces is not included in Egypt had the ninth-highest military SIPRI’s current calculation of Egypt’s military spending due to the impossibility of making an accurate estimate. spending among the 14 countries in Never the less, it needs to be carefully assessed for a better MENA for which data is available understanding of military expendi ture trends in Egypt (see section V). The spending figures for both elements (i.e. ‘defence and national security’ and paramilitary forces) are taken from the state budget. The data discussed in this paper is for budgeted expendi ture, not for actual expenditure, which can differ from budgeted spending. To make comparisons of military spending between different countries, this paper uses military expenditure figures in United States dollars pre- sented on a calendar-year basis. To examine national reporting of Egypt’s official military budget, as well as spending on paramilitary forces, this study uses data in Egyptian pounds and US dollars on a financial-year (July–June) basis.
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