10. Military expenditure

Summary

World military spending in 2003 increased by about 11 per cent in real terms. This is a remarkable rate of increase, even more so given that it was preceded by an increase of 6.5 per cent in 2002. Over two years world military spending increased by 18 per cent in real terms, to reach $956 billion (in current dollars) in 2003. High-income countries account for about 75 per cent of world military spending but only 16 per cent of world population. The combined military spending of these countries was slightly higher than the aggregate foreign debt of all low-income countries and 10 times higher than their combined levels of official development assistance in 2001. While it is not possible, because of a lack of data, to make the same comparison for 2003, it is clear that these gaps have widened owing to the stark rise in world military expenditure since 2001. Thus, there is a large gap between what countries are prepared to allocate for military means to provide security and maintain their global and regional power status, on the one hand, and to alleviate poverty and promote economic development, on the other.

The main reason for the increase in world military spending is the massive increase in the United States, which accounts for almost half of the world total. After a decade of reductions in military expenditure in the period 1987–98 and moderate increases in 1998–2001, the changes in US military doctrine and strategy after the terrorist attacks of 11 September 2001 unleashed huge increases in US military spending in 2002 and 2003. Much of the rise is accounted for by the large supplementary appropriations to cover the costs of the military operations in Afghanistan and Iraq and of anti-terrorist activities. In the absence of these appropriations, US military expenditure would still show a significant increase, but at a much slower rate, and world military spending would show a rise of 4 per cent rather than 11 per cent in 2003.

While military expenditure is also rising in several other major countries, these increases are much smaller, and there is little indication that the strong increase in US military spending is resulting in an equally strong tendency for other countries to follow suit. It is difficult to assess the importance of US influence relative to more basic drivers of military spending, such as changing threat perceptions, increased global responsibilities and force projection, and the dynamics of military technology—in particular, since these factors are often strongly interlinked with the relevant countries’ relations with the USA. While all countries accept that no nation is currently able to match the USA in military power, there are other types of response that could impact on their military spending.

A review of military expenditure trends in seven other major spenders shows that military expenditure has risen in most years of the five-year period 1999–2003 in all seven countries. India and Japan have raised their military spending in line with their GDP growth. Apart from the two years 2001 and 2002, the same is true for China. In France and the UK, the military burden declined slightly in recent years, but in France it began to rise in 2003 and the burden is planned to increase in the UK. Brazil, unlike other medium-rank powers, is pursuing global influence using a model of ‘soft power’ rather than increased military expenditure. Its comfortable strategic position and enhanced trading relations have allowed a reallocation of scarce resources to economic and social development.

During most of 2003, much of the focus in national military spending debates continued to be on the need to increase military spending to meet increasing dangers and risks in an increasingly complex and globalized world. However, towards the end of the year and in early 2004, there were several indications that other factors, related to the economic burden of the military sector and to ethical considerations, tended to increase in importance in several countries. In particular, the US doctrine of pre-emptive wars was being challenged on both ethical and international law grounds, as well as because of the large costs and dubious successes associated with it. Thus, while US military expenditure is set to continue to grow and will continue to propel world military spending, the pace is likely to fall back somewhat in the next few years. In the longer term it is doubtful whether current levels will be economically and politically sustainable.

Appendix 10A. Tables of military expenditure

PETTER STÅLENHEIM, CATALLINA PERDOMO, WUYI OMITOOGUN AND ELISABETH SKÖNS

 

Appendix 10B. Tables of NATO military expenditure by category

PETTER STÅLENHEIM

 

Appendix 10C. Sources and methods for military expenditure data

PETTER STÅLENHEIM

Full text Appendix 10A, 10B, 10C [PDF].

Appendix 10D. The reporting of military expenditure data

ELISABETH SKÖNS AND NATASZA NAZET

Full text Appendix 10D [PDF].

Appendix 10E. Military expenditure in the Middle East after the Iraq war

WUYI OMITOOGUN

Full text Appendix 10E [PDF]. 

Summary

Military expenditure in the Middle East increased by almost 10 per cent in 2003. The increase was caused mainly by two countries that share contiguous borders with Iraq: Iran and Kuwait. Saudi Arabia, the region’s biggest spender, increased its military expenditure only marginally. Israel, the region’s strongest military power, made a major policy decision in the light of events in Iraq to cut its military spending. Factors accounting for the limited impact of the war on military expenditure in the region include the non-participation of many of the states in the war, the unpopularity of the war among the populations in the region, and their limited absorptive capacities for additional military equipment. Internal security is increasingly becoming a preoccupation of many states in the region because of the restiveness of their populations.

Elisabeth Sköns (Sweden) is the Leader of the SIPRI Military Expenditure and Arms Production Project. Her most recent publications outside SIPRI include a chapter on military expenditure in New Millennium, New Perspectives: The United Nations, Security and Governance (UN University, 2000), The European Defence Industry, a case study for Columbia International Affairs On-line (CIAO, Columbia University, New York, June 2002), and a chapter on defence offsets in Arms Trade and Economic Development: Theory and Policy in Offsets (Routledge, 2004), edited by J. Brauer and J. P. Dunne. She is also the author of a chapter on the internationalization of the arms industry for the SIPRI volume Arms Industry Limited (1993). She has contributed to most editions of the SIPRI Yearbook since 1983.

Catalina Perdomo (Colombia) is a Research Assistant on the SIPRI Military Expenditure and Arms Production Project. She is responsible for monitoring military expenditure in Latin America and Asia. Before joining SIPRI she worked at the Inter-American Development Bank in Washington, D.C. in the Environmental Division on Argentina, Bolivia, Brazil and Chile. She also worked as a research assistant at the Washington, D.C. office of the Ideas para la Paz Foundation of Colombia.

Dr Sam Perlo-Freeman (United Kingdom) is a Lecturer in Economics at the University of the West of England, Bristol, specializing in Defence and Peace Economics. He worked on the SIPRI Military Expenditure and Arms Production Project from November 2002 to June 2003, and was a contributor to Armament and Disarmament in the Caucasus and Central Asia, SIPRI Policy Paper No. 3 (July 2003). He is the co-author of several papers on military expenditure in Defence and Peace Economics and the International Review of Applied Economics. He contributed to the SIPRI Yearbook in 2003.

Petter Stålenheim (Sweden) is a Researcher on the SIPRI Military Expenditure and Arms Production Project. He is responsible for monitoring data on military expenditure in Europe and Central Asia and for the maintenance of the SIPRI Military Expenditure Database. He has also been a consultant to the International Institute for Democracy and Electoral Assistance in Stockholm and lectured at the George C. Marshall Center in Germany. He is a co-author of Armament and Disarmament in the Caucasus and Central Asia, SIPRI Policy Paper No. 3 (July 2003), and has contributed to the SIPRI Yearbook since 1998.

Natasza Nazet (France/Poland) joined SIPRI in January 2003 and is Project Secretary for the Military Expenditure and Arms Production Project and the Arms Transfers Project. She maintains the Arms Transfers Project’s archives and its Internet site, and the SIPRI reporting system for military expenditure. She contributed to the SIPRI Yearbook in 2003.

Wuyi Omitoogun (Nigeria) is a Researcher on the SIPRI Military Expenditure and Arms Production Project and is the coordinator of a new SIPRI project on the Defence Budgeting Process in Africa. He is the author of ‘Arms control and conflict in Africa’ in Arms Control and Disarmament: A New Conceptual Approach (UN Department for Disarmament Affairs, 2000) and SIPRI Research Report No. 17, Military Expenditure Data in Africa: A Survey of Cameroon, Ethiopia, Ghana, Kenya, Nigeria and Uganda. He has contributed to the SIPRI Yearbook since 2000.