US embassy cable - 04AMMAN9370

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 009370 
 
SIPDIS 
 
EB/IFD/OMA FOR GALLAGHER 
TREASURY FOR OASIA/MDM FOR FRANCO 
 
E.O. 12958: DECL: 11/23/2014 
TAGS: EFIN, EAID, MARR, JO 
SUBJECT: RE: TRANSPARENCY OF BUDGETS/MILITARY SPENDING 
 
REF: SECSTATE 239929 
 
Classified By: Charge d'Affaires Christopher Henzel for reasons 1.4 (b) 
, (c), and (d) 
 
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A. General Overview of Auditing Procedures 
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1. (SBU) Jordanian military expenditures are audited 
concurrently by three different entities.  Expenditures are 
audited continuously by the Jordanian Armed Forces' own 
internal auditors. These expenditures are also reviewed by 
(civilian) Ministry of Finance personnel detailed from the 
Office of the Financial Controller, who report to the 
Minister of Finance on the degree of variance between the 
military's budget and its actual income and expenditures. 
This arrangement is mandated by Jordan's Budget Law. 
 
2. (SBU) Separately, the (civilian) Audit Bureau, which is a 
department within the Prime Ministry functioning as the 
Jordanian equivalent of the General Accounting Office, keeps 
a department containing 13 auditors permanently stationed at 
the militray's General Headquarters, where they monitor the 
military branches' financial accounts on a continuous basis 
and immediately reports discovered irregularities to the 
General Staff for resolution.  The Audit Bureau annually 
reports the result of its ongoing audit to Jordan's 
Parliament, copying the offices of the Finance Minister and 
Prime Minister.  This framework for annual audit was 
established under the Audit Bureau Law, most recently amended 
in 2002 to give the Audit Bureau responsibility to fully 
audit all governmental entities and to provide full reports 
on such audits to the Parliament. 
 
3. (C) Post DAO and Military Assistance Program report that 
they have no reason to believe that audit control is 
ineffective.  While the reports issued by the Audit Bureau to 
Parliament are generally lacking in detail, the civilians in 
both the Audit Bureau and the Ministry of Finance appear to 
have first-hand access to all details on normal military 
expenditures. 
 
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B. The Military Budget and On-budget and Off-budget Revenues 
and Expenses 
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4. (C) The national budget includes - among a total of over 
60 separate chapters detailing budgeted expenditures for 
different GOJ entities - chapters for four entities that make 
up Jordan's defense and security services.  These entities 
are Ministry of Defense/Jordanian Armed Forces, Royal Medical 
Services, Ministry of Interior/Public Security Directorate 
(PSD), Ministry of Interior/Civil Defense.  While the 
chapters of the national budget detailing expenditures for 
the Royal Medical Services and the Ministry of Interior/Civil 
Defense deliver a level of detail similar to that of the 
chapters for most non-security-related GOJ entities, the 
chapters detailing budgeted expenditures for Ministry of 
Defense/JAF and for Ministry of Interior/PSD are noticeably 
more vague.  According to Ministry of Finance Budget Director 
Ibrahim Al-Dwairi, the JAF budget is left vague in order to 
allow it greater flexibility in prioritizing its expenditures 
based on events.  The budget of the PSD (national police) is 
used to hide part of the budget of the General Intelligence 
Directorate (GID). 
 
5. (SBU) In-kind military aid (e.g., transfers of equipment 
and training) is entirely off-budget, but to the best of 
post's knowledge, these are the only significant off-budget 
receipts.  The off-budget items are audited by both the JAF 
internal auditors and by the Audit Bureau. 
 
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C. The Military Component of the National Budget 
--------------------------------------------- --- 
 
6. (SBU) Jordan's military budget is large in comparison with 
other countries of similar GDP, but small in comparison with 
the expenditures of its neighbors.  While almost 30 percent 
of this year's Jordanian national budget went to the 
military, there are indications that the GOJ is acting to 
restrain such expenditures.  These include the success of the 
Minister of Finance in making significant cuts in the 
military's human resources-related expenditures in the 2004 
budget. 
 
7. (SBU) The entire GOJ budget must be approved by Parliament 
in a two-step process.  First, Parliament must approve the 
submitted budget of each GOJ entity (each chapter of the 
budget), and then it must approve the budget as a whole. 
Parliament does not have discretion to amend any chapter of 
the budget submitted to it, and must instead vote it up or 
down; within at least the last seven years, Parliament has 
never failed to approve any part of the budget.  Nonetheless, 
its power to reject the budget gives it a significant voice 
in the budget's formulation, prior to the budget's 
presentation to Parliament. 
HENZEL