* North Africa, Middle East have most corrupt militaries
* Revolts put heat on states to purge graft -Transparency
* Israel, Kuwait, Lebanon, UAE perform best in region
* Algeria, Egypt, Libya, Syria, Yemen come out worst
By Sylvia Westall
KUWAIT, Feb 6 (Reuters) - Governments in North Africa and the Middle East rocked by Arab Spring revolts must listen to citizen demands for accountability by cracking down on corruption in the armed forces, an anti-graft watchdog said on Wednesday.
Defence and security bodies had a significant role in the regional upheaval and should use the momentum of the changes to reform from within, a Transparency International report said.
It found that the risk of military corruption was "high" to "critical" for all 19 governments assessed in North Africa and the Middle East (MENA).
"As the military is a dominant feature of many MENA nations and has a significant stake in political leadership, the issue of corruption in defence is ever more pressing," it said in a regional version of an anti-graft index focused on armed forces.
It judged the 19 governments on a global scale of A to F, with A being the lowest risk and F the highest.
Israel, Kuwait, Lebanon and the United Arab Emirates scored top marks in MENA with their graft risk level judged as "high", or a D+ on the global scale.
Algeria, Egypt, Libya, Syria and Yemen came bottom of the list, with a "critical" level of corruption risk and score of F.
In these countries "citizens perceive defence institutions as corrupt or indifferent to corruption and consider them to lack the political will to counter it", Transparency said.
It said organised crime had penetrated the military and security services in some of the countries in this group, that bribery payments were rampant and procurement of military equipment was an opaque process.
Other countries, including regional heavyweights Saudi Arabia and Iran, scored a middling grade, meaning that they had a "high" to "very high" risk of military graft.
Transparency found that in all states but Kuwait there was no legislative committee to scrutinise the defence budget or, if such a panel existed, it received no detailed information.
No country in the region had strong or even moderate parliamentary oversight of the intelligence services, the report said, while in over 60 percent the defence budget was not available at all, or it was difficult to obtain a breakdown.
The Transparency report included a detailed action plan for governments to tackle military corruption and said they should heed popular calls for reform. "Demands for accountable governments that protect and serve their citizens, rather than themselves, have arisen throughout the region."
Resource-rich countries in the region were more at risk of military corruption than their poorer counterparts.
"Perhaps such wealth maintains and develops patronage networks and elites who in turn limit the openness and accountability of defence and security establishments," it said in its Government Defence Anti-Corruption Index 2013.
The report was carried out by independent assessors who answered 77 questions for each country in the risk areas of politics, finance, personnel, operations and procurement. Governments were given the chance to comment on the findings.
Following are Transparency's defence sector rankings:
"High" corruption risk
D+ : Israel, Kuwait, Lebanon, United Arab Emirates
D- : Jordan, Palestinian National Authority*
"Very high" corruption risk
E : Bahrain, Iran, Iraq, Morocco, Oman, Qatar, Saudi Arabia, Tunisia
"Critical" corruption risk
F : Algeria, Egypt, Libya, Syria, Yemen
* The report used the generic term "country" to cover 18 countries and the Palestinian Territories in the assessment.
(Editing by Mark Heinrich)