Paper endorsed by the Miltinational Steering Group
15/16 March 2001
Vienna
 

Transparency of Defence Budgeting

PREAMBLE

Democratic changes in countries in Central and Eastern Europe over the last 12 years have led to fundamental restructuring in their armed forces and have laid the basis for their integration into the Euro-Atlantic structures. Most of the former socialist states are in the process of radical defence reforms, aimed to change the role of the military in the national political system as well as to develop a new type of armed forces.

In the majority of these states systems of democratic control over the Armed Forces have been established, based on clear organizational and functional structures and clear identification of responsibility and accountability. An important step to launch that process was the introduction in those states of similar Planning, Programming and Budgeting Systems that provided a methodology to align policy and plans with the available resources. But more importantly, those new defence management systems provided an opportunity to address issues like: public accountability; visibility of results (actual capabilities); integrity and continuity; interoperability with NATO and other partners.

The nature and pace of transition is characterized by the quality and content of public debate and by the creation of mechanisms for making the executive authority accountable to the public through its elected representatives. In the transition process, transparency of national security decision-making processes is important in order to ensure that the organizing principles of democratic public policy are applied in the case of the national armed forces.

On 10th June 1999 the Stability Pact (SP) for South-Eastern Europe (SEE) was launched. At the Sarajevo meeting (15-16 February 2000) of SP Working Table III /Security Issues/, Bulgaria, in close cooperation with the United Kingdom, took on the leadership of a Task Force to initiate a comparative study of military budgeting. An initial seminar, "Promotion of Transparency and Democratic Decision Making in the Formation of SEE States Military Budgets" was held in Sofia over 6-7 June 2000, in cooperation with the United Kingdom. This seminar sought to raise awareness among SEE countries of the need for and the benefits from transparency of military budgets as well as to explore the scope of such transparency. At this seminar and in the course of discussion a "non-paper" was considered that outlined the proposal for establishing a Task Force on transparency of defence budgeting. The substance of this non-paper was subsequently presented formally to and endorsed by the Sofia meeting of Working Table III (4-5 October 2000).

I. MISSION OF THE PROJECT

The mission of the project "Transparency of Defence Budgeting" is twofold:

  • to promote domestic and international transparency of defence budgets and the defence budgeting process, throughout South Eastern Europe and,

  • to encourage good practice in defence decision making (policy making, planning, programming and budgeting), with particular reference to accountability.

The successful achievement of this mission should encourage the efficient management of the defence resources and increase the effectiveness of the civilian control over the armed forces thereby contributing to the improvement of regional stability and confidence building among the South-East European states.

II. GOALS OF THE PROJECT

  1. Providing transparency in the process of defence budget formulation.

  2. To promote and suggest proper mechanisms allowing countries to identify adequate Armed Forces according to need and affordability.

  3. Preparation of the countries of the region for accession to the European and Euro-Atlantic security structures.

  4. Promoting best practices in the defence budgeting processes and the management of defence resources.

  5. Acting as a catalyst for continuous improvement of the civilian control over defence budgeting.

  6. Supporting the initiatives within the OSCE.

III. TASKS TO BE SOLVED BY THE PROJECT

  1. Creating of a methodology for comparative study of defence budgeting.

  2. Creating of a mechanism for exchange of information for SEE states' defence expenditures.

  3. Organizing exchange of the best practice in the area of defence planning, programming, and budgeting and harmonizing the initiatives in the planning and budgeting system.

  4. Identifying common trends in the evolution of requirements towards national defence and defining the defence policy goals.

  5. Developing and maintaining the defence budgeting' information system.

  6. Supporting implementation of the fundamental concepts for management of defence resources. Developing, assessing, and introducing methods for system analysis and modeling for supporting the process of decision making on defence resources' allocation.

  7. Adopting common terminology and standards for defence expenditures' allocation and proposing a common system for budget classification.

  8. Defining the organizational structures for implementation of the tasks, and a mechanism for decision making.

  9. Training experts in the field of budgeting systems within the Stability Pact framework.

  10. Developing common cost factors for arms and equipment and for the defence infrastructure on the Balkans.

IV. STRATEGY

For successful implementation of the project it is necessary:

  1. The project be developed within the Stability Pact framework.

  2. Strong political support be ensured for the implementation of the project in the frame of bilateral cooperation and cooperation within the Stability Pact, NATO, and the OSCE.

  3. Precise mechanisms providing for smooth functioning of the Project's executive bodies should be developed.

  4. Financing the activities of the Project should be guaranteed on multilateral and bilateral basis in the Stability Pact framework.

  5. A mechanism for consensus-based decision making within the framework of the Project should be created.

  6. A system for reporting and evaluation of results has to be put in place.

V. STRUCTURES INVOLVED IN IMPLEMENTATION OF THE PROJECT

  1. External structures:

    • Organization for Security and Cooperation in Europe;
    • SEE Security Cooperation Steering Group supported by NATO;
    • Stability Pact, Working Table III "Security Issues".

  2. Internal structures:

    • Multinational Steering Group (MSG);
    • Academic Working Group (AWG);
    • Group of Experts (GOE).

  3. Sources of Expertise:

    • Geneva Centre for the Democratic Control of Armed Forces, Switzerland;
    • Institute for Defense Analysis, USA;
    • University of National and World Economy, Bulgaria;
    • Centre for European Security Studies;
    • Resource Management Centre, Brasov, Romania.

Further details for the internal structures are presented in Annex 1

Additionally Bulgaria will contribute to implementation of the project through structures within the MOD and within the Defence Staff College "G. S. Rakovski".

VI. PLAN FOR IMPLEMENTATION OF THE PROJECT

  1. Formation of secretariat of MSG, including representatives from the Bulgarian MOD and MFA - 31.01.2001

  2. Presentation of the Project to representatives of the Geneva Centre for the Democratic Control of Armed Forces.

  3. Joint meeting of the MSG and AWG in Vienna - 15-16.03.2001.

  4. Ensuring the involvement of international organizations as an element of the Project - spring 2001.

  5. Start of the functioning of the GOE in Sofia - May 2001.

VII. FINANCING OF THE PROJECT

  1. Financing of the international structures:

    • Multinational Steering Group
    • Academic Working Group
    • Group of Experts

    Financing the international structures directly involved in the implementation of the Project will be done through donor contributions in the framework of the Stability Pact. Start up funding, $ 41 000, will be provided by the UK. For year 2001 Bulgaria will contribute 15 000 BGN/DM for the implementation of the Project. In order to reduce the overall cost to the donors, the basic salary of individuals working within the Group of Experts organization may be paid by the countries lending them.

  2. Financing of the structures within the Bulgaria's MOD and the participation of MOD's representatives in the international structures

    Financing the structures within the MOD will be a part of the defence budget. Bulgaria may provide offices for the Group of Experts. Participation of Bulgaria's representatives in the International Steering Group and in the Academic Working group will be paid by the donor.

ANNEX 1: STRUCTURE, FUNCTIONS, AND RESPONSIBILITIES OF THE INTERNATIONAL STRUCTURES

I. MULTINATIONAL STEERING GROUP

  1. Includes 20-22 representatives of the countries from the SEE region, representatives of NATO member states and EAPC/PfP Partner countries with special interests in the region, and interested international organizations. The group is chaired by two chairmen, one from Bulgaria, and the other from the UK.
  2. Supports sharing of information related to the defence budgets, and develops mechanisms for co-operation.
  3. Encourages achievements in the area of planning, programming, and budgeting.
  4. Provides for framework for information exchange.
  5. Approves standards and a system of indicators for defence budgeting information exchange.
  6. Coordinates the Project's working programs in the framework of available resources.
  7. Develops a mechanism for reporting the Project's accomplishments.
  8. Implements surveys and coordinates the Project's activities.
  9. Assesses the correspondence between the results achieved and mission of the Project.
  10. On the basis of the results observed, it changes the Project's functioning.

II. ACADEMIC WORKING GROUP

  1. Includes 12 representatives from the academic community of the region, and arrangements for the University of Groningen in the Netherlands, the Geneva Centre for the Democratic Control of Armed Forces, G. Marshall Centre, and Institute for Defence Analysis (USA) to make a contribution that complements the regional input.
  2. Supports the Multinational Steering Group, acting as a catalyst for change, defines the best practice in the area of defence budgeting and transparency.
  3. Develops standards and a system of indicators for exchange of information on defence budgeting, and proposes them for approval to the Multinational Steering Group.
  4. Participates in seminars and conferences in the Project's framework.
  5. Recommends to the Multinational Steering Group solutions to problems related to the transparency of defence budgeting.

III. GROUP OF EXPERTS

  1. Multinational group that includes 6 persons, 1-2 of them from Bulgaria. Bulgaria will provide several offices, office equipment, Internet access. Location - in the Defence Staff College "G. S. Rakovski". The Group works permanently in Sofia.
  2. Accomplishes the practical work of the Project.
  3. Implements research and prepares reports for the work done for the Multinational Steering Group.
  4. Produces solutions to problems in the field of planning, programming, and budgeting.
  5. Maintains the Project web page on the Internet.
  6. Coordinates Project activities among different countries and organizations, working to avoid duplication of efforts of the structures.
  7. Makes reviews of the progress on the Project during seminars in the region.