Where does the need for state secrecy end, and the public interest in governmental transparency begin? That’s a question posed increasingly by Armenian civil society activists in reaction to news that Yerevan’s defense budget is increasing by 5.6 percent.

On November 1, parliament increased Armenia’s 2012 military budget to 150 billion drams (about $400 million) -- the country’s biggest annual defense outlay ever. But how exactly – and how efficiently -- the ministry will spend those additional funds is proving to be anybody’s guess. Defense spending has long been considered off limits to public scrutiny.

Few Armenians question the need for a strong military; the country has a wobbly cease-fire with Azerbaijan over the disputed territory of Nagorno-Karabakh. Energy-rich Azerbaijan’s military budget stands at a massive $1.76 billion (over 1.38 billion manats) for 2012 – an amount that makes many Armenians wonder how their government plans to make the best use of Yerevan’s far more limited financial resources.

“In a state of frozen war with Azerbaijan, when the opponent’s budget is six times bigger than Armenia’s military budget, a question keeps coming up: ‘How are they [Armenian officials] spending that small budget of ours?’” asked Emma Hunanian, a representative of a non-governmental organization, Soldier and Right, that lobbies for army soldiers’ interests. “Not always are we given the answer to that question.”
Defense Minister Seyran Ohanian told parliament that the additional funds would be spent on “increasing the number of professional soldiers and the acquisition of new arms and armaments.”

Any other information is considered out of bounds for public debate. The Chamber of Control, which monitors Armenia’s state budget, periodically makes outraged statements about various government offices’ financial wrongdoings, but it has never publicized any information about the Defense Ministry’s spending habits. A 2010 audit of the ministry was deemed “strictly classified.”

One civil rights group’s attempt to get answers about the ministry’s budgetary practices met with a broad roadblock. “We were asking for data about the share of the military budget that’s spent on provisions, stationery and household equipment, which cannot be a state secret,” recounted Artur Sakunts, head of the Vanadzor office of the Helsinki Citizens’ Assembly. “However, even through the courts, we were unable to acquire information. It’s a state secret, and there is no way around it.”

Defense Ministry spokesperson David Karaperian responded that it is only natural for the ministry to keep information about its budget and spending practices classified. “We work openly to the extent that it isn’t threatening to our national security,” Karaperian said.

But the ministry risks losing public trust by operating in such a closed system, objected Varuzhan Hoktanian, executive director of the Anti-Corruption Center, the Armenian affiliate of anti-corruption watchdog Transparency International. “Questions keep coming up with each passing day, and that lack of trustworthiness can be more damaging than working openly,” Hoktanian said.

The deaths of 23 army conscripts this year in non-combat-related incidents have raised a major wave of general public distrust toward Armenia’s army, as well as calls for the resignations of President Serzh Sargsyan and Defense Minister Ohanian.
While opposition political parties have joined in the cries of outrage over the non-combat deaths on conscripts, they routinely sidestep discussions about the military’s budget. Opposition Heritage Party MP Armen Martirosian, a member of parliament’s Financial and Budgetary Committee, commented that he is convinced that “the budget is spent mostly appropriately.”
“Risks of violations of the law and corruption are somewhere else; for example, commanders abusing their position demand bribes, start businesses, but the budget expenses are mostly incurred as planned, ” Martirosian asserted.

Independent military expert Artsrun Hovhannissian, a former Defense Ministry employee, meanwhile, asserted that officials are for the most part responsible in their procurement practices. Research that he has carried out over the past decade shows that “although there have been certain cases of financial abuse and administrative shortcomings” in military spending, such abuses have not been “to an extent which could put the country’s military effectiveness at risk.”
He conceded, however, that “[t]here certainly is a need for creating some control mechanisms, in order for the monies to be put to their best use.”

Sakunts scoffed at the notion that Defense Ministry officials can be trusted, and that no oversight mechanisms are necessary. “There are no signs of trust-inspiring [behavior] that make us believe [the ministry] has no corruption issues,” he said. He cited a report from one unnamed expert who alleged that the ministry was reporting an official purchase price for “a type of military equipment” that was more than five times the amount actually paid.

Acting out of a spirit of “ostensible patriotism” and declining to hold the Defense Ministry publicly accountable for its expenditures “might have irrevocable consequences for the development of our military force,” he added.

Countered military analyst Hovhannisian: “[W]e are in a state of war and the demands of making everything transparent are not justified in this case.”