US embassy cable - 04SANAA2940

UNCLAS SANAA 002940 
 
SIPDIS 
 
SENSITIVE 
 
PLEASE PASS TO TREASURY OASIA/MDM JFRANCO, STATE EB/IFD/OMA 
LGALLAGHER 
 
E.O. 12958: N/A 
TAGS: EFIN, EAID, YM 
SUBJECT: TRANSPARENCY OF MILITARY SPENDING IN YEMEN 
 
REF: STATE 239929 
 
1. (SBU)  Summary.  According to the standards defined by the 
1997 Omnibus Consolidated Appropriations Act, the military 
budgets in Yemen is not transparent.  The MOD is not 
accountable to any civilian auditing authority, and has only 
limited control over revenues and expenditures within 
branches of its own administration.  Yemen faces significant 
security challenges which necessitate military spending.  End 
Summary. 
 
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General Overview of Auditing Procedures 
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2.  (SBU)  The Ministry of Defense presents a budget annually 
to the Ministry of Finance for approval.  MOF reviews the 
budget, as it does for all ministries, and allocates 
resources on a six-month basis.  Differences arising between 
ministries are resolved by the President's office.  Military 
expenditures are not subject to external audit.  Spending in 
each section of the MOD is monitored ad hoc by deputy 
ministers, and monitoring and enforcement falls to military 
intelligence.  Ultimately, responsibility for military 
spending resides with the MOD. 
 
3.  (SBU)  There is no legislation or official policy 
regarding audits of military expenditure.  The MOD is 
fiercely independent, and not subject to the same auditing 
rules as other ministries.  In some instances, the weak 
central government is unable to monitor military spending 
within its ranks, especially in remote regions, due to 
limited capacity.  In the case of the official budget, the 
absence of an auditing process is intentional.  Criticism of 
MOD spending is considered crossing a political red line. 
 
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On-Budget and Off-Budget Revenues and Expenses 
--------------------------------------------- - 
 
4.  (SBU)  Yemen's defense budget does not include all ROYG 
security forces, some of which are located outside the MOD. 
There are considerable off-budget military receipts, which 
are not audited. 
 
5.  (SBU)  Comment:  The ROYG faces considerable challenges 
in both development and security.  There is cooperation 
between government ministries and donors to prioritize 
development objectives, with an understanding that security 
is fundamental to success in this effort.  Substantial 
military investment is necessary to provide the stability 
needed for broader growth.  Yemen is a partner in the Global 
War on Terrorism.  End Comment 
KRAJESKI