GEL 1 billion is spent on defence and NATO projects. Georgia’s defence needs GEL 600 million and we are going to spend GEL 400 million to purchase weapons from NATO

Verdict: FactCheck concludes that the statement of the Alliance of Patriots of Georgia is a LIE.

07/05/2019

Lie

Resume: The state budget can be analysed both in an organisational prism, such as structural units (Ministry of Defence, Ministry of Internal Affairs, etc.) and in a functional prism – funds allocated for specific fields (defence, public order, etc.). In accordance with the 2019 state budget plan, GEL 903 million of the total expenses and the non-financial assets indicator is allocated for functional defence (this includes respective expenses for the Ministry of Defence). Organisationally speaking, the Ministry of Defence’s budget is GEL 875 million which will increase to GEL 953 million according to 2020 estimates. Therefore, in terms of the state budget, GEL 1 billion will not be spent on defence this year nor is it projected to reach GEL 1.4 billion by 2020.

Of the Ministry of Defence’s budget, GEL 42.8 and 44.3 million (estimated) are allocated for international missions in 2019 and 2020, respectively. However, these funds are not only intended for events under the NATO aegis and include expenses designated for different activities such as, for instance, those covering participation in European Union missions.

It is unwarranted to divide defence expenses into “needed for defence” and other expenses as well as not putting expenses for weapons purchases into the “needed” expenses category and regarding them as “spent on NATO.” Given the field specifics, it is hard to ascertain the precise amount of funds spent on weapons purchases. However, it is possible to have a rough understanding of the funds allocated for weapons acquisition by the amount of funds given in the “Keep and Enhance Defence Capabilities” and “Strengthening Armed Forces Capabilities” components which amount to GEL 196.2 million as of 2019. Of note is that these funds are not fully spent on weapons acquisition and, moreover, they do not comprise weapons imports from NATO countries alone. Therefore, together with the idea of considering weapons acquisition funds as “spent on NATO” as absurd, asserting that GEL 400 million is allocated for weapons purchases is a substantial exaggeration.

In accordance with the World Bank’s data, Georgia (2.46%) is only ahead of Turkey (2%) whilst it significantly lags behind Azerbaijan (4.44%), Armenia (4.05%) and Russia (4.53%) from among its neighbours in terms of the defence expenses to GDP ratio.[1]

Analysis

The Alliance of Patriots of Georgia political union issued an agitation leaflet which reads: “GEL 1 billion is spent on defence and NATO projects. Georgia’s defence needs GEL 600 million and we are going to spend GEL 400 million to purchase weapons from NATO. In the next year, GEL 1.4 billion is to be allocated. Of that amount, GEL 600 million will be spent on defence and GEL 800 million will again be spent on NATO.”

In accordance with Georgia’s 2019 state budget, GEL 875 million (6.7%) of the total planned allocations (GEL 13.1 billion) is allocated for the Ministry of Defence. In regard to the functional division, the total sum of budget expenses and the growth of non-financial assets[2] constitutes GEL 11.8 billion and GEL 903 million (7.7%) of this amount is planned to be spent on defence. These allocations are within the margins of 2% of the estimated GDP which is a NATO standard.[3] In accordance with the Country Basic Data and Directions (BDD) document, it is planned to allocate 1.96% of the GDP for the Ministry of Defence annually. The respective data are given in Graph 1.

Graph 1: Allocations for the Ministry of Defence in 2015-2022

Source: Ministry of Finance of Georgia

As illustrated by the graph, allocations for the Ministry of Defence of Georgia have been within the margin of 2% of the GDP in the last years. These allocations are neither at the GEL 1 billion mark in 2019 nor will they increase to GEL 1.4 billion in the next year.

Of note, however, is that defence expenses are not expenses made by the Ministry of Defence alone and they include any expenses made by any other state body vis-à-vis the country’s defence. Graph 2 demonstrates defence expenses in Georgia and its neighbour countries. These figures are calculated in line with the NATO definition of defence expenses (expanded expenses).

Graph 2: Defence Expenses in 2010-2017

Source: World Bank

In 2013-2017, Georgia’s defence expenses equal 2.46% of the GDP on average and are substantially below the respective data of the neighbour countries except for Turkey which spent around 2% of its GDP in the same period. Therefore, the assertion that large sums of funds are spent on defence in Georgia and they need to be cut is far from reality. At the same time, if the defence expenses to GDP ratio is kept at an average indicator (2.46%), it is possible to reach GEL 1 billion in 2019 although it will only reach GEL 1.4 billion in 2022 in accordance with the initial estimates of GDP growth.

In regard to the partition of the Ministry of Defence’s expenses as “needed for defence” and other expenses, it is unclear upon what this definition is based or what corroborates the assertion that GEL 600 million is needed for defence. To compare, the Ministry of Defence needs an average of GEL 390 million annually just for labour remuneration. Moreover, the approach that funds allocated for weapons purchases are separate from funds “needed for defence” and are considered as “spent on NATO” is without reason.

Table 1: Ministry of Defence’s Budget

Source: Ministry of Defence of Georgia

As illustrated by the table, only GEL 42.8 million was allocated for funding international peacekeeping missions in 2018, which theoretically can be considered as funds “spent on NATO,” whilst the estimated amount for 2019 is GEL 44.3 million. However, this component does not only include operations under the NATO aegis (Resolute Support Mission – RSM and NATO Response Forces – NRF) but events as part of the Georgia-EU Association Agreement agenda and the EU Common Security and Defence Policy as well as participation in missions under the EU aegis (in the Central African Republic – EUTM RCA and the Mali Republic – EUTM Mali).

Given the specific nature of defence expenses, it is practically impossible to collect precise information about the budget’s detailed allocations and expenses for weapons purchases. Furthermore, it is hard to identify which country (NATO-member or non-NATO member) was the supplier of weaponry. However, it is possible to have a rough understanding in regard to the amount of funds spent on the acquisition of weaponry based on funds allocated in the “Keep and Enhance Defence Capabilities” (budget code 29 08) and “Strengthening Armed Forces Capabilities” (budget code 29 10) components which constitute GEL 196.2 million as of 2019. Of note is that these funds are not fully spent on weapons purchases let alone on the import of weapons from NATO-member countries. Therefore, together with the idea of considering weapons acquisition funds as “spent on NATO” as absurd, asserting that GEL 400 million is allocated for weapons purchases is a substantial exaggeration.

[1] In accordance with budget data, defence expenses are within the margins of 2%. However, these indicators are calculated by a different common methodology (defence expenses are defined as per the NATO approach) which ensures comparability between the data of different countries.

[2] Payments in the financial assets change and servicing obligations part are excluded.

[3] It is required of NATO member countries to spend at least 2% of their GDP on defence.

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