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Thailand Defense Spending
Beginning in the 1950s, when the country undertook to build
up and modernize its armed forces to withstand perceived threats
from communist expansion in Southeast Asia, there was a
relatively steady increase in government expenditures for
defense. During that time, social and economic developments had
to compete with an expanding military establishment for limited
financial resources. The high cost of maintaining a credible
defense posture was compounded by a desire to stay abreast of
weaponry advances in a rapidly changing technological age as well
as by rising inflation rates and economic retrenchment.
During the three decades of Thai military modernization, the
amounts of money budgeted and expended for defense varied
somewhat according to whether or not a military regime controlled
the government. Predictably, defense expenditures tended to rise
moderately when military governments were in power, but even then
the percentages of total government outlays for the armed forces
were not inordinate when compared with defense expenditures in
some other countries, nor were they high when compared with
amounts spent on social needs, such as education and health.
In the mid-1980s, defense spending averaged about 30 percent
of the government's annual current expenditures and about 4.2
percent of the gross national product (GNP). Additional costs of
internal security, which were attributed in government statistics
to the Ministry of Interior rather than to the Ministry of
Defense, further increased the country's total current security
burden by an average of about 6 percent annually. But even with
internal security costs added, government statistics still did
not reflect the total defense bill. Reports of funds budgeted and
expended reflected only amounts covering current accounts and did
not include the cost of new equipment acquired to update the
armed forces' fighting capabilities.
Although the country's armed forces did not constitute a
large military establishment when compared with those of some
other Asian nations, the costs of maintaining combat readiness
began, by the late 1980s, to pose problems for the government
treasury. The country was experiencing many of the economic
problems common to developing countries undergoing rapid economic
change. Among these were a worrisome trade deficit inherited from
previous regimes and the continuing impact of rising oil prices
(see International Trade and Finance
, ch. 3). At the same time,
moreover, the government was still coping with a persistent
possibility of insurgency and with the threat from Vietnam.
During the era of American involvement in the war in Vietnam,
the United States met most of Thailand's military equipment needs
with a steady flow of hardware, mainly in the form of grant aid
(see Foreign Security Assistance
, this ch.). In the mid-1970s,
the United States Congress dramatically reduced the role of grant
military assistance, relying instead on foreign military sales
and direct commercial sales. To make up for the loss of United
States grants and to cover the costs of equipment needed in the
country's efforts to modernize its armed forces, the government
in 1976 authorized its Ministry of Finance to obtain US$1 billion
in loans from private banks in the United States and Western
Europe over the next 6 to 8 years. Approximately one-half of this
amount was devoted to hardware requirements of the army; air
force and navy needs were to be met by equal portions of the
remaining one-half. This approximate distribution of funds was
the pattern for defense expenditures followed by succeeding
governments.
Although it was not a common practice for private banks to
lend money to foreign governments for military purposes, banks in
the United States, Britain, Canada, and the Federal Republic of
Germany (West Germany) had loaned Thailand more than US$335
million by the late 1980s. Thailand's unconventional approach to
its defense needs was aided by its generally high credit rating
among the world's private banks and the judgment of most bankers
that the money would be used for the country's own defense rather
than for purposes of aggression.
Data as of September 1987
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