Eritrea - Military Spending

Underlining its relative strength in comparison to all other African countries, Eritrea unquestionably spends a larger portion of its gross domestic product (GDP) on defense. Because of the country’s secretive nature, exact numbers are hard to come by. After its independence, by 1997, Eritrea’s defense budget was US$88 million, or 13.6% of its GDP. A looming war with Ethiopia induced apprehension in the county, and in 1999, Eritrea ratcheted up its defense expenditures, devoting an astronomical 38.5% of GDP to its defense budget, amounting to a total of US$271 million.

Paragraphs 5 and 6 of Security Council resolution 1907 (2009) require all Member States to take the measures necessary to prevent the sale or supply to Eritrea by their nationals or from their territories or using their flag vessels or aircraft, of arms and related materiel of all types, including weapons and ammunition, military vehicles and equipment, paramilitary equipment and spare parts for the aforementioned, and technical assistance, training, financial and other assistance, related to the military activities or to the provision, manufacture, maintenance or use of these items, whether or not originating in their territories.

Following the easing of tensions, spending decreased to 25.7% of its budget in 2002, and only 19.4% of its budget in 2003. For its part, SIPRI has offered a slightly different vision of expenditures.

After 2003 the deeply secretive Asmara stopped publishing exact numbers on defense expenditures, but figures forwarded by the CIA World Factbook for the year 2006 suggest that spending is still at 6.3%, ranking Eritrea ninth internationally in defense expenditure as a proportion of GDP.

Eritrea does not publish a budget, making its fiscal condition difficult to assess. According to the International Monetary Fund, the overall fiscal deficit in 2003 was 17 percent of gross domestic product (GDP). Government expenditures for that year were estimated to be US$375 million, with revenues of only US$235.7 million. In 2002 the fiscal deficit was 32 percent of GDP. Current expenditures continue to exceed budgeted spending, particularly in defense and other discretionary expenditures. Monetary policy remains subservient to the financing demands of the government, and debt is unsustainably high. This situation is not likely to change until demobilization of the military occurs.

Military spending appears to drain resources. Chronic deficits, in the neighborhood of 125 per cent in recent years, are attributable in part to personnel costs associated with required national service, worsening already-fragile monetary stability. The current size of earnings from the two per cent “Diaspora tax” is not known, but may have shrunk from the 20-some per cent of the budget that it appeared to comprise when the IMF last calculated a possible figure in the mid-2000s. At the same time, the reliance of Eritrean people on informal remittances from relatives abroad appears to have gone up in recent years, but figures are not available to substantiate this.

While some Eritreans manipulate the system in order to survive, the high-ranking military officers are making fortunes on the backs of the conscripted army. Unraveling the depth of the military corruption is an ongoing effort, as anecdotes trickle out. The schemes and scams of individual military officers clearly occur with the full knowledge and support of the Office of the President in order to buy the military's loyalty.

For example, military officers ranked colonel or higher as well other high-ranking government officials are provided with free homes in Asmara and the surrounding areas. They are encouraged to choose the house they want and then the GSE expropriates the property. This attempt by the GSE to buy loyalty has been met with not only fury by the former, legal owners but with the discontent of those military and government officials who did not receive a free home.

With the strangulation of the private sector by the GSE, the EDF generals have stepped in to fill the void. While the PFDJ controls many of the industries, the EDF generals have managed to get their individual fingers in the pie as well ) especially in trade, smuggling, and foreign exchange.

General Filipos, who is now in charge of the Asmara region, was formerly head of the far western military area. During his tenure there, he established successful trading routes, smuggling items in from Ethiopia and Sudan and becoming the "go-to" general for individuals attempting to illegally depart Eritrea. For about 3,000 USD, General Filipos' soldiers would ensure the transportation of fleeing Eritreans to the Sudanese border.

General Wuchu, overseeing the far western border, established his own business conglomerate, varying from hotels in Asmara and trade to the black market foreign currency exchange. One of the investigators into Col Ghebredenghil's assassination was shocked at the wealth General Wuchu had accumulated on his military salary. The Eritrean said that General Wuchu had enough control over the black market foreign currency exchange that he could manipulate the nakfa exchange market both inside and outside of Eritrea.

The crowning shame of corruption within the military was the complete acceptance of its business operations by the GSE. These business operations include the military's control over shops and farms run by the military themselves. Some of the largest agricultural projects are military-owned and run. With virtually no labor costs due to the use of the conscripted soldiers, these projects produce the food for the country, which is then sold to the people of Eritrea. The GSE, happy to have food to sell in the market, looks the other way as the military officers pocket the proceeds from these projects.

The same graft occurs in the military shops (the equivalent of the U.S. military Post Exchanges). Items are sold to military personnel and their families, supposedly at a subsidized at-cost rate. In truth, the military officers have established their own chain of "Giant Supermarkets," profiting on the sale of goods, much of it smuggled in through military channels. These stores have true vertical integration in their business models.