Defence Spending Cut in Iran's Budget Bill Sparks Controversy

Iran Front Page - Friday 11th January, 2019
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The Iranian governments latest bill for state budget has been a hot topic in political and media circles in recent days. The bill, presented to the parliament by President Hassan Rouhani late last month, allocates over 4,700 trillion rials for the fiscal year that will start on March 21.

An in-depth analysis of the budget shows the spending for many activities has been reduced, at a time when the US is bent on minimizing Irans revenues through efforts to hamper Irans foreign trade and oil sale.

In this bill, for the first time, the government has broken down the budget for some sectors to two parts.

The first part of the budget is fixed, while the other part will be allocated if the governments predicted revenues are fully collected.

The new method has also covered the defence sector, leading to controversies among political and media circles.

According to the proposal, Irans military spending has been cut by 27%, compared to the 2017-2018 budget.

However, if all government revenues are met, this sectors budget would have been increased by 21%.

Although some officials have welcomed the initiative, the possibility of a plunge in the defence sector's share of the official spending has worried many.

Critics argued decreasing Irans defence budget makes no sense amid non-stop threats issued by US President Donald Trump, who has hardened his countrys line on Iran and controls dozens of military bases in Irans surroundings.

Put the US aside, critics say other adversaries of Iran have gone aggressive too, with the Saudi Crown Prince Mohammed bin Salman threatening to bring war against Iran inside the country and Israeli Premier Benjamin Netanyahu openly threatening to destroy Iran.

Opponents also criticize the government for failing to allocate at least five percent of the annual budget to this sector, as the Sixth Development Plan (2016-2021) demands.

The criticism prompted members of the parliaments National Security and Foreign Policy Commission to react, vowing to work to boost the defence sectors share amid mounting threats.

Notably, Allaedin Boroujerdi, the former chairman of the commission, said the panel is against any decrease in defence budget.

We believe that taking into account serious threats against [Iran] Tehran should not only avoid decreasing its defence spending but it needs to increase it. We will do our best in the commission and the parliament to make that happen, he said.

Surprisingly, the Western media and politicians who are quick to jump at the chances to magnify divisions inside Iran, were largely silent on the defence budget controversies.

But this could be natural, as a sharp decrease in Irans military spending weakens the narrative of the anti-Iran propaganda machine that spares no chance to talk up Irans military might and its alleged threats to the region, as part of their governments wider policy of framing Iran a pariah state.

In order to better grasp the situation, one only needs to look at numerous examples of the western media and politicians seeking to portray a caricature of the Iranian politics and show a scary image of the country.

Notably, Trump made a misleading claim about Iran's military budget early May, saying it had increased by more than 40 percent since the negotiation of the Iran nuclear pact.

"Iran's Military Budget is up more than 40% since the Obama-negotiated Nuclear Deal was reached…just another indicator that it was all a big lie. But not anymore!" Trump tweeted, as he announced the US withdrawal from the nuclear deal.

But had Irans military spending really increased that much?

Much to the frustration of anti-Iran fanatics who love to exaggerate Irans military activities, a close look at Irans military spending shows Iran is by no means dreaming to conquer the world.

According to statistics by the Stockholm International Peace Research Institute reporting countries military spending from 1988 to 2017, Irans military budget had increased by only about 30 percent from 2015, the year the Iran deal was reached, to 2017, the year Trump was referring to.

But putting this obvious mistake aside, Trump was missing an important context, failing to notice that looking at raw increase or decrease in any countrys military budget is not meaningful.

From 2015 to 2017, Irans military spending had increased alongside the overall government spending, not on its own.

Lets consider Irans military expenditure as a share of overall government spending. In 2015, it accounted for 15.4% of the government spending, and in 2017, it accounted for %15.8, showing a 0.4 percentage point increase.

Looking at Irans defence expenditure as a share of GDP, theres a similar trend: It has increased by only half a percentage point, going from 2.6 percent to 3.1 percent from 2015 to 2017.

The nuclear accord lifted sanctions and allowed for a rise in the oil export, enabling the government to go towards restoring budget levels of 2000s.

To be accurate, the 30-percent increase brought Irans military spending back to near-2006 levels.

Trump was missing an even more important context, failing to mention the military spending of regional rivals Iran could come into conflict with.

In fact, Irans military budget has fallen short of individual regional rivals for decades, if not centuries.

According to SIPRI, at nearly $16 billionin 2017, Iran's defence budget is teeny in comparison to its probable battlefield enemies: Israel's $18.5 billion (plus $3.5 billion in military aid from the US); Saudi Arabia's $76.7 billion; and the United States' nearly $600billion.

Moreover, military expenditure per capita reports put Iran $166 in 2017, ranking 53, while Saudi Arabia is at the top with over $2,100 dollar and Israel is second with more than $1,980.

Looking at facts, Irans budget has decreased significantly compared to the last year, taking into account the sharp devaluation of the Iranian currency in 2018.

In the 2017-2018 budget, Irans defence spending was nearly 618 trillion rials, or $16.2 billion based on an official exchange rate of around 38,000 rials for each dollar.

According to the governments proposal, this years military spending would be nearly 515 trillion rials, or $8.5 billion based on dollars official exchange rate of around 60,000 rials.

Even if government revenues are fully collected, the budget would be around 715 trillion, or $11.9 billion.

So Irans budget is disproportionate to similar powers in the region, let alone world powers.

Is this the same apocalyptic government that the 31-year-old Saudi Crown Prince has described?

Next time you heard a wily politician or a wicked reporter saying things that make you feel Iran is preparing to launch its world domination projects, just remember these facts.