KYIV POST
Defense spending to hit nearly $10 billion in 2020
Published Sept. 20 at 10:52 am
Ukraine’s $46 billion state budget for 2020 shows that the country’s military sector will get more re-sources to help defend the nation against Russia’s war in the eastern Donbas region.
The draft budget presented on Sept. 16 sets national security spending at Hr 245.8 billion ($9.9 billion), an increase of 16 percent from the 2019 budget.
This is a record-high security budget for Ukraine. It is nearly 21 percent of the country’s expected overall spending and 5.4 percent of Ukraine’s gross domestic product, according to the bill. [
Unless I am wrong - and I might be - isn't this well above what NATO members are supposed to spend on defense? More than President Trump has been able to push most NATO members into spending? I know, most NATO members are not under military assault by Putin (yet) but just saying .... RAM
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The new budget continues the focus on defense and security — but it also challenges the new Defense Minister Andriy Zagorodnyuk to reform and develop the military sector by optimizing expenses and combating corruption instead of plugging the holes with more money from Ukrainian taxpayers.
No changes for the military
In 2019, the nation’s defense spending was set at Hr 211.9 billion ($8.6 billion), which, in turn, was an increase of 21 percent since 2018.
However, this caused a rather strong reaction from then-Defense Minister Stepan Poltorak, who asserted that the Hr 101.4-billion ($4.1 billion) budget allocated for the Armed Forces, though the biggest ever, was way too low to meet the nation’s vital needs in the military.
Back then, the government agreed to cover only 70 percent of the Hr 143 billion ($5.8 billion) budget requested by the Defense Ministry for 2019, according to Poltorak. His appeals to the Cabinet resulted mostly in additional appropriations for munitions storage in the wake of more mass fires and detonations in Ichnya and Kalynivka in 2018, which revealed the extremely poor conditions of military am-munition depots across the country.
Had he stayed in office, Poltorak would be unhappy about the 2020 spending as well: Next year, the Defense Ministry is expected to get Hr 102.5 billion ($4.1 billion), or just 1 percent more than in 2019.
In general, the military expenditure headings for 2020 mostly mirror those of this year. The Armed Forces are expected to spend Hr 657.6 million ($26.6 million) on command and control, Hr 81.6 billion ($3.3 billion) on supplies, training, and medical care for the country’s 250,000 active service troops, and Hr 16.9 billion ($680 million) on weapons and hardware.
The good news is that housing construction will again get a considerable budget (Hr 832.2 million, or $33.7 million) to hopefully rid more personnel of the curse of living in rotten barracks or muddy tent camps at military units.
Also, Hr 1.5 billion ($61 million) will be again allocated for improving the army’s ammunition depots — although, according to the military, this painfully neglected sector requires urgent appropriations costing at least Hr 10 billion ($410 million).
Interestingly, the proposed military appropriations plan supposedly fails to meet the requirement of spending at least 3 percent of the country’s gross domestic product (GDP) on the Armed Forces alone, as outlined by the 2018 National Security Law.
According to the budget bill, the Ministry of Economic Development expects the country’s nominal GDP to increase to Hr 4.551 trillion in 2020 ($185.2 billion) — and in this case, military spending can claim only nearly 2.2 percent of GDP.
Insignificant growth
National security agencies are also expected to enjoy narrow increases in their budgets.
The Interior Ministry is again the second-biggest recipient, with Hr 83.8 ($3.4 billion) expected to be allocated for its purposes, only a 1.8 percent increase from its 2019 budget.
Its subordinate agencies should also expect mostly insignificant budget growth. The National Police in 2020 will probably be receiving Hr 29.5 billion ($1.2 billion) — almost the same amount of funds it has now — while the National Guard will get Hr 12.4 billion ($500 million, 0.4 percent up).
The State Border Guard Service is getting the same Hr 10.8 billion ($440 million) budget. Of all Interi-or Ministry agencies, only the State Emergency Service will get a 3-percent increase, bumping its budget up to Hr 13.8 billion ($560 million).
Expenses on intelligence and counter-espionage remain traditionally lavish though not drastically in-creased for 2020.
The SBU, the domestic security service, is expected to get Hr 9.6 billion ($389 million, a 2.1-percent increase), while the Chief Directorate for Intelligence, the main military intelligence body, will get Hr 2.8 billion ($110 million, a 3.7-percent increase), and the Foreign Intelligence Service — Hr 2 billion ($81 million, almost no increase in 2020).
In the 2020 budget draft bill, the government forecasts 6-percent inflation, which would effectively eat away much of the expected increase in spending.
A line in the nation’s cost sheet indicates an astonishing boost in spending on Ukraine’s National Security and Defense Council, known in Ukraine as RNBO, run by recently-appointed Secretary Oleksandr Danylyuk. The appropriations proposed to allocate as much as Hr 28.1 billion ($1.1 billion) — an increase of close to 16,000 percent compared to the body’s normal annual budget of Hr 177 million ($7.2 million).
However, according to Iryna Vereschuk, the Cabinet’s representative in the Verkhovna Rada, almost all the funds allocated to the RNBO will be effectively dispensed among other security and defense agencies.
“In fact, these are the funds that the RNBO should have been allocated in previous months before the (next) budget was formed,” the official said on Sept 18. “But this never happened.”
Indeed, the 2020 budget draft bill notes that Hr 28 billion of unspent funds are to be appropriated in compliance with a special RNBO decree.
Spending overkill?
Experts polled by the Kyiv Post, however, universally note that this draft bill can be changed a lot before being passed in December.
In terms of defense appropriations, the effectiveness and transparency of spending is significantly more important than the amounts of funds allocated, says Mykhailo Samus, the deputy director of the Center for Army, Conversion and Disarmament Studies, a Kyiv-based defense think tank.
“What is of key importance is the reform of the system of spending these funds, as well as of the procurement of military hardware, their development, state defense contracting and, of course, the military industry,” Samus says.
Numerous graft scandals in the last several years — in which various military hardware was procured at inflated prices — indicate that much of the defense budget funds were being spent ineffectively. If the Ukrainian security sector had a $100-billion budget, it would have never been implemented cost-effectively in such a corrupt system, Samus adds.
“Nothing will be enough for the military, no matter what,” he continues.
“And we indeed need a lot of money: If we’re talking about full rearmament of the Armed Forces, we need to purchase new air defense units, create a new navy from scratch, launch a brand new Air Force fleet within 5–10 years.”
But before Ukraine increases military spending in line with GDP growth, the planning system for the Armed Forces must be put in order and corruption and excessive spending must be stopped, Samus says.
“I believe (the budget) we have now is enough to prepare the system, to increase its performance factor. Only after this should it be ready for even higher budgets for military buildup.”
