A study by the prestigious London-based International Institute for Strategic Studies (IISS), an independent think tank, has revealed many hidden aspects of Iran’s defense spending and the shifting balances within the Islamic Republic’s military structures.
One key finding is that the 2018–19 defense budget bill is much higher than what even the hawks within the Iranian establishment had sought. The hawks wanted 5 percent of the country’s total budgetary outlay for defense, which was already achieved in 2016.
Iran’s military expenditure for 2018–19 is estimated at $19.6 billion out of $260 billion total outlay, which makes defense spending at 7.5 per cent of Iran’s total budget.
The IISS study says when measured in real-terms, Iran’s military expenditure is 53% higher in 2018 when compared to five years ago.
Access to funds
This upward trajectory for defense spending is exacerbated in Iran by the fact that “many institutions, especially those in defense, can access funds from sources outside the official budget and leverage finances from extra-budgetary funds, such as the income from domestic oil sales.”
Apart from the above, the Islamic Revolutionary Guard Corps (IRGC) has other ways it can raise revenue: by establishing private companies, as well as using its influence to get infrastructure contracts and private tenders worth more than $2.5 million in diverse sectors like housing development, energy, road construction, food and transportation.
Another pitfall when it comes to assessing Iran’s defense spending is that it has other irregular forces that may operate as a military force.
The latest defense budget also has an 84 percent rise in allocations for local forces pointing to rising internal dissent.
The IRGC also gets an allotment of 33 percent of the entire defense budget amounting to $6.4 billion.
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