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Cyprus Defense Spending
Defense costs were divided into two categories,
budgetary
spending and off-budget expenditures. The former were
believed to
include mainly the ongoing personnel and training
expenditures of
the National Guard, while the latter included capital
expenditures,
notably arms purchases. Off-budget expenditures were
disbursed from
a defense fund, the size of which was not disclosed. The
defense
fund was financed by a special defense levy on interest,
dividends,
rents, and company profits. This levy was raised from 2 to
3
percent effective July 1990, and was to be extended for
three years
until mid-1993. In addition, receipts from increased taxes
on
gasoline and cigarettes were to be deposited in the
defense fund.
Private companies and the Church of Cyprus, considered to
be the
wealthiest institution on the island, also contributed
directly to
the fund.
According to data published by the United States Arms
Control
and Disarmament Agency (ACDA), which included only
regularly
budgeted defense items, military spending had gradually
tapered
off, from US$42 million in 1981 to US$35 million in 1987.
With
inflation taken into account, the reduction was even more
marked,
from US$52 million in 1981 to US$35 million in 1987, in
constant
1987 dollars. Budgeted defense spending constituted only
0.9
percent of the gross national product
(GNP--see Glossary)
in 1987
(down from 2.0 percent in 1981) and 2.9 percent of total
central
government expenditures (down from 7.0 percent in 1981).
Budgeted
military expenditures amounted to US$51 per capita
annually.
Although total defense outlays were considered
classified
information, Aloneftis said in a 1990 interview that they
would
total US$325 million in 1990 and that similar amounts
would be
spent annually for the following three to five years. This
was
triple 1986 defense spending. According to Aloneftis, the
arms
buildup was being financed through supplier credits and
loans from
France, Greece, Italy, Singapore, Yugoslavia, and
Switzerland.
During the five-year period of 1983-87, total arms imports
had been
US$320 million, and most of these shipments had occurred
in 1987,
according to ACDA. France had been the dominant supplier
(US$290
million) and most of the rest had come from Brazil.
Data as of January 1991
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