Balancing the defense budget

Imanuddin Razak, Staff Writer, The Jakarta Post, Jakarta

The government, through the Ministry of Defense, launched on March 31 a white paper on defense strategy.

To some, the publication of the paper was welcome, an indication of transparency on the part of the defense ministry and the Indonesian Military (TNI).

Still, the paper has received strong criticism, as it calls for the importance of restoring the military's territorial function.

The function, which includes Army bases and posts at all administrative levels down to that of the village, has been blamed for TNI's dominating political role and abuses during the leadership of then president Soeharto.

However, while most of the paper's content sets out the military's defense strategies and policies, the last section, Chapter Six, calls for an increase in the annual defense budget, from below 1 percent of gross domestic product (GDP) to around 2 percent of GDP within the next two or three years.

In the long term -- 10 years to 15 years from now -- the ministry is seeking a defense budget of 3.86 percent of GDP.

The government slightly increased the TNI budget to Rp 13.9 trillion (US$1.5 billion) this year. Last year, it received Rp 11 trillion.

The paper indeed contains a contradictory statement, as it says that within the next 10 years to 15 years Indonesia will not face serious threats from other countries in the form of invasion or military attack; but that it will face a variety of domestic threats, including radical movements, communal conflicts, terrorism and separatist movements.

A contradicting reality was when TNI chief Gen. Endriartono Sutarto said last Wednesday that it was now in the process of purchasing 48 Russian jet fighters, including Sukhoi-27s and Sukhoi-30s, over the next four years.

The question is whether the country needs that number of modern jet fighters, given that the defense ministry said that there would be no serious threats from other countries in the next 15 years. Modern jet fighters are needed to cope with outside threats, not domestic radical and separatist movements, terrorism or communal conflicts.

Also, the purchase of Sukhoi fighters is considerably controversial: A Sukhoi fighter, fully equipped with arms and combat technology, is worth around $100 million. Regardless of how it will be paid for, if Indonesia purchases 48 Sukhois, it will have to pay $4.8 billion, or triple this year's defense budget.

It is indeed true that TNI needs to upgrade its Navy and Air Force fleets and its Army's equipment.

But TNI should not hastily ask for more money, especially when the country has yet to recover from the economic crisis.

TNI should spare a thought for its fellow citizens, such as those working in the informal sector, like vendors, who have worked hard to survive economic hardship. Scores of laid-off workers have also tried to run their own business.

Business-wise, management pundits always advise that in the event of an organization's financial problems, it must immediately look for new sources of income to finance its operational activities.

Military analysts have estimated that the government's budgetary allocation to TNI accounts for only 30 percent to 35 percent of its actual expenditure. The remaining 65 percent to 70 percent is raised by "off-budget" businesses, including foundations and other "less legal" operations, they said.

It has widely been suggested that TNI's business foundations and units should be put under a holding company, to be managed and audited by the government, which could then return some 75 percent of its profits back to TNI for soldiers' welfare.

It should also be made clear whether the money that results from its business units and foundations really goes into TNI's coffers for use on the welfare of its troops -- or if it has merely lined the pockets of its individual leaders.

And if all these other sources of income still cannot cover its expenditure, any adviser would surely refer to the basic principle of business prudence -- that spending should not be greater than revenue.

The paper reveals in Chapter Six that the defense budget has largely been used to cover routine spending -- troop salaries, purchase of goods, maintenance and official trips of its officers -- rather than developing the state's defense system.

For example, 2002 saw budget spending amounting to Rp 2.8 trillion and routine spending of Rp 9.8 trillion.

To cut spending, the TNI could consider reducing the purchase of unnecessary goods and minimizing officers' trips, particularly overseas ones.

Perhaps, the TNI should adopt the words of late U.S. president John Fitzgerald Kennedy: "Don't ask what your country can do for you, but what you can do for your country."