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French Version

How the Lebanese Army could be an economic asset (Daily Star)

Top economist urges government to use armed forces for development projects

A Lebanese economist has urged the Lebanese government to involve part of the armed forces in some of the development projects to help contain high public spending.

Rock Mehanna, professor of business and economics at the American University of Science and Technology in Beirut, made these recommendations during a public lecture Thursday on his essays on Finance, Trade and Development in the Middle East at the Press Club in Beirut.

Mehanna told the Daily Star that Lebanon's defense budget was considered one of the highest in the world compared to the country's gross domestic product, adding that the army could still play a positive role in the economy.

Mehanna's calls came amid appeals by many economists and officials from the International Monetary Funds (IMF) to reduce public spending to contain the $33 billion public debt.

With almost 180,000 public employees (including civil servants, teachers and army and security personnel) on the payroll of the government, there is an urgent need to reconsider public spending in some areas.

Some economists have drawn attention to high defense spending, one of the highest in the world compared to the country's GDP. Mehanna explained that Lebanon's defense spending as a percentage of gross national income (GNI) in 1999 (4 percent) was above the world average of 3.3 percent, the average of middle and high income countries of 2.7 percent and 2.3 percent respectively, and the European average of 1.9 percent. Most defense spending, however, goes to cover the salaries of the army and end of service benefits."Additionally, Lebanon's defense spending as percentage of central government expenditures remained very high throughout the 1990s," Mehanna said.

The 2004 budget projects revenue of $3.3 billion and spending of more than $6.6 billion. The cost of debt servicing consumes 45 percent of the total budget and the second largest expense is salaries of the public staff.

Echoing similar information, the Beirut based I Monthly publication said in its March 2004 issue that Lebanon's military spending is estimated to be $1.2 billion a year. The publication attributed these figures to the government budget.

Emerging from a devastating war, Lebanon decided to build a strong army and security force to maintain stability and protect the country from Israeli aggression."Military spending, which is detailed in annual budget laws, reached $767 million in 2003. In addition, the costs of retirement and end of service indemnities added another $459 million (excluding the parliamentary police)," I Monthly said.

It also noted that the largest portion of Defense spending (excluding the security forces), was $370 million for wages and benefits, or 71.5 percent of Ministry of Defense expenditure.

But Mehanna, who is aware of the sensitive geopolitical nature of Lebanon, is not calling for defense cuts, but rather to deploy part of the army and security forces in some civil service departments and even help in some development projects."The government can cut waste by using the new army draftees in some civil service departments. This way the cabinet will not be obliged to hire more people to do certain jobs," Mehanna said.

He added that countries like Norway and the United States use part of their armies to carry out the work of civil servants."There is nothing wrong with letting the army take part in development projects during an economic recession," Mehanna said. He added that many of the army draftees were high school graduates and university students.

"Many of these army draftees can work in the Finance Ministry for example, while others can help in different departments.""Now the civil war is over and the government has finished its aggressive human resource defense policy to absorb former militia members, the government should abandon its expansionary defense policy," Mehanna said.

He added this policy increased the number of armed personnel by 54 percent in five years, to 58,000 (about 4 percent of Lebanon's labor force).

Mehanna said that allowing army personnel to work on development projects might improve the country's finances, by cutting public spending, improving standards of living, narrowing income disparities, and perhaps promoting aggregate growth.

Beirut 07-06-2004
Osama Habib
The Daily Star

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