Azerbaijan Military Spending

According to the 2020 Azerbaijani draft budget, the defense expenses must make 3 billion 853 Azerbaijani manat (about 2 billion 267 million USD) which is more from the last year’s 3 billion 187 manat by 20,9%. Speaking to Aysor.am on 22 October 2019, Razminfo coordinator Karen Vrtanesyan said in general in Azerbaijan the budget increase is being officially explained with the economic growth. “The increase of the military budget by a country getting prepared for war is justified. Azerbaijan has never hidden its dreams of military “settlement” of the Nagorno Karabakh conflict,” Vrtanesyan said. Armenia’s 2019 budget draft envisaged 300 billion 437 million AMD (about 629,5 million USD) and the 2020 budget draft envisages 301 billion 243 million (about 631 million USD).

The Bonn International Conversion Institute (BICC) published the Global Militarization Index 2019 by the end of 2019. According to the report, Azerbaijan ranked 10th in the ranking, moving ahead by 2 points compared to last year (12th place). Armenia ranked third, Russia 6th, Iran 24th, Turkey 19th, and Georgia 49th. BICC has chosen Israel as the most militarized state in the world. Singapore ranked second, with South Korea finishing its first "5th." Top 10 also includes Kuwait, Jordan, Cyprus, Greece and Belarus. According to the Institute, Nagorno-Karabakh also continues to spend large sums on the armed forces of Armenia and Azerbaijan for the protracted conflict. The authors have been conducting such studies every year, starting with the 1990s. They estimate about 150 countries around the world on a number of parameters, such as military expenditure, the number of people employed in the area, and the number of heavy weapons in the country. The report is based on data from the Stockholm World Problems Research Institute (SDPTI), the International Monetary Fund (IMF), the World Health Organization (WHO) and the BICC.

Azerbaijan’s government is increasing defense spending this year, allocating 4.6 percent more money than was budgeted in 2018, setting a record-high amount that will be used to support the country’s national security infrastructure. Colonel-General Najmaddin Sadikov, Chief of General Staff of the Armed Forces of Azerbaijan, said 22 January 2019 the budget plans for 2019 increased the national defense and security expenditures by 132.4 million Azerbaijani Manats (AZN), or $78 million. "For supporting the defense capabilities and national security of the country in 2019, it is estimated to allocate 3.37 billion AZN (almost $2 billion), which is 4.6 percent more than in 2018, " Sadikov said in an interview with the state-run journal Milli Majlis (“the parliament”) last week, according to Marja.az. Sadikov said that the projected increase in the defense budget will allow equipping Azerbaijan’s armed forces with new hardware and technologies.

The country increased its defense spending tenfold in the five 2005-2009 years and as of 2009 was spending nearly 2 billion dollars annually on defense. While this rate of growth may sound alarming, it is tempered by the fact that it represents an approximate three percent of GDP, the Azerbaijani Army is in need of replacing or repairing many items and infrastructure, and the sum of money is spread across multiple ministries, not just the MoD.

Military spending reached a substantial $1.5 billion by 2010, but little has been done to reform rank-and-file conditions in Azerbaijan's poorly paid conscript army, where the International Crisis Group said in a 2008 report that corruption, nepotism, and mistreatment were common. Many Azerbaijanis consider the Defense Ministry to be one of the country's most corrupt institutions. Azerbaijan reportedly received weapons of uncertain origin from various Islamic nations to assist in the struggle to retainNagorno-Karabakh. In late 1993, the Ministry of Foreign Affairs made an official report to the CSCE on the weapons at Azerbaijan's disposal, fulfilling the requirement of the 1991 Conventional Forces in Europe Treaty (CFE). According to this report, during 1992 and 1993 Azerbaijan received more than 1,700 weapons—including tanks, armored personnel carriers, aircraft, artillery systems, and helicopters — from Russia and Ukraine, far above the CFE Treaty limits.

According to IMF and Azerbaijani government data, defense expenditures placed a severe burden on the national budget. In 1992 some US$125 million, or 10.5 percent of the total budget, went to defense. The Nagorno-Karabakh conflict also raised expenses for internal security to 4 billion rubles in 1992. By 1994 military expenditures officially reached US$132 million, although unofficial estimates were much higher.

Azerbaijan, with its vast energy resources now more readily exportable to international markets amid higher prices, would have the cash flow to increase dramatically budgetary spending. Despite many international observers' fears of massive, out-of-control government spending, the 2007 state budget reflected a disciplined approach to maintaining Azerbaijan's growing economic machine. Finance Minister Samir Sharifov negotiated hard to keep spending under control, fighting many line ministries pushing for more money and a larger part of the budget pie. Minister Sharifov, a relative budget hawk in Azerbaijan, was concerned that large government spending could lead to higher inflation and macroeconomic distortion.

While defense expenditures increased again in the 2007 budget reaching more than USD 900 million, the largest government expenditure remained the "Industry, Construction and Mineral Resources" area. Based on the current budget document, however, it is not possible to determine how much of the USD 916 million budget (an increase of 45 percent) for this area will be actually used for government ministry expenses and large capital expenditures.

Azerbaijan accounted for 13% of all of Europe's arms imports over the five years 2010-2014, behind only the United Kingdom. While overall arms imports had been decreasing across Europe, Azerbaijan imported 249% more arms in 2010-2014 than it did in 2005-2009, the report stated. The former Soviet state also was the world’s fourth-largest importer of drones since 1985, trailing only the UK, India and Italy.

Those numbers contributed to the swell in Azerbaijan’s defense budget, which saw the second-largest increase in the world over the previous ten years, according to SIPRI. Azerbaijan acquired 85% of its arms from Russia – a particularly striking figure considering Moscow’s alliance with Armenia, which is bracing for renewed conflict with Azerbaijan over the disputed territory of Nagorno Karabakh.

Azerbaijan needs American weapons systems to build adequate defenses. Azerbaijanis complain bitterly about the restrictions of Section 907 of the Freedom Support Act even though the waiver provision is applied, because of the "parity" policy on assistance to Armenia and Azerbaijan observed by Congressional appropriators.

In 2008-2009 President Aliyev and other senior ministers continually asked to purchase US military equipment. Last year the Ministry of Defense provided a list of requested "defensive equipment," that included Patriot missiles, self-propelled mortars, Multiple Launch Rocket Systems, Javelin anti-tank missiles, Stinger missiles and UAV aircraft. EUCOM reviewed the entire list and did not believe any of the items would be approved for sale.

The US encouraged the Ministry of Defense to put together a Foreign Military Sale request that could be used to begin incrementally a relationship on military sales. For example, President Aliyev mentioned air defense and yet their initial equipment list lacked an air defense radar system. Offering enhanced cooperation on security to Azerbaijan, particularly in terms of access to US defense technology, may be the best tool to mollify Baku's concerns about Turkey-Armenia rapprochement and patch up souring relations.