War, fear of war drive record global military spending: SIPRI report

Last year, the global expenditure on military forces reached an all-time high of $2.4 trillion, according to the Stockholm International Peace Research Institute (SIPRI).

SIPRI, which has been tracking military expenditures since 1949, determined in its annual report published on Monday that they increased from 2.2 percent to 2.3 percent of the global gross domestic product (GDP) in 2023.

Last year, the average tax on military expenditure per man, woman, and child worldwide was $306, the highest rate since the end of the Cold War.

The expenditure escalation was precisely equivalent to the worldwide inflation rate of 6.8 percent; therefore, it does not inherently equate to enhanced military effectiveness on a global scale.

However, as stated by SIPRI, “world military expenditure is extremely concentrated among a very small group of states,” which prevented the spending from being distributed evenly.

With $916 billion, the United States continued to be the largest spender, accounting for 37% of global military expenditures. China ranked second with an approximate sum of $296 billion.

SIPRI deems Russia’s third-place finish at $109 billion to be an underestimation “owing to the heightened secrecy exhibited by Russian financial authorities subsequent to the complete encroachment on Ukraine in 2022.”

India ranked fourth with $83.6 billion.

Additionally, the rate of increase in military expenditure was uneven, with European budgets soaring as a result of the Ukraine conflict.

The combatants

Ukraine’s defence expenditures rose by 51% to $64.8 billion, exclusive of $35 billion in allied military donations. SIPRI reported that this equated to the nation allocating nearly 60 percent of all government expenditure and 37 percent of its GDP to defence.

Despite receiving financial assistance from Europe, the United States, and the International Monetary Fund, this achievement was noteworthy considering Ukraine suffered a loss of seven million taxpayers and a fifth of its economic output in 2022, the initial year of the conflict, as reported by the World Bank.

The impact on Russian society was considerably diminished.

War, fear of war drive record global military spending: SIPRI report

Russia increased military expenditures by 24 percent to 16.9 percent of all government funds and 6.9 percent of GDP last year. Despite the fact that this was the most substantial defence budget since the dissolution of the Soviet Union thirty years ago, Russia’s economy also expanded by nearly 22 percent, bolstered by robust energy export revenues that contributed to the country’s economic resilience.

As of 2022, Russia had already augmented its military expenditures by 9 percent. Its subsequent budgeted expenditure increase of 21 percent for 2023, but actual expenditure growth of 24 percent, indicates that the organisation was perpetually taken aback by the duration of the conflict and the extent of Ukrainian resistance against its armed forces.

Its 2024 budget for defence and security expenditures is projected to increase by an even greater 70 percent, to $157 billion, according to Reuters.

As a result of Hamas’s October 7 attacks on southern Israel and Israel’s conflict in Gaza, the country’s defence budget increased by a staggering 24 percent to $27.5 billion, or 5.3 percent of its GDP, in the previous year.

In addition, Saudi Arabia substantially increased expenditures.

The two nations contributed to the largest annual increase in the Middle East’s defence budget in a decade, which was 9 percent, last year. As a proportion of GDP, the Middle East also endures the greatest military burden worldwide. Its rate of 4.2 percent is approximately double the global average.

An evolution throughout Europe

In response to Russia’s full-scale invasion of Ukraine, NATO members in Europe increased their military spending by 16% to $588 billion last year. This resulted in an average defence expenditure of 2. 8% of GDP, according to SIPRI, exceeding the 2% threshold that NATO established in 2014, although not all members contributed to this level of spending.

As stated by SIPRI Director Dan Smith to Al Jazeera, the increase was implemented in part to aid Ukraine and in part to bolster their stockpiles.

At this time, European decision-makers are “under triple pressure,” according to Smith.

“They consider their military reserves to be insufficient to confront the perceived threat from Russia,” he explained. This requires them to “restore the stockpiles to their previous levels… and continue to provide Ukraine with equipment.”

As a consequence, remarkable growth has occurred across the continent.

While investing 3.9 percent of its GDP in defence, Poland led the field with a 75 percent increase last year. This was done in part to finance a $2 billion defence modernization programme for its armed forces under the direction of the United States, but also to significantly expand and revamp its arsenal.

Poland has placed orders with Lockheed Martin for 500 HIMARS rocket launchers, General Dynamics for 250 Abrams tanks, and South Korea for rocket launchers, tanks, howitzers, and fighter aircraft, all since the Russian invasion of Ukraine. It contracted Lockheed Martin for F-35 multirole fighter aircraft for $4.6 billion in 2020.

Additionally, Finland, which shares the longest border with Russia and NATO, increased defence expenditure by a staggering 54 percent, to 2.4 percent of its GDP. It also purchased air defence systems and the F-35, an aircraft of the next generation, tripling its procurement expenditures within a single year.

Other states in Northern Europe and the Baltic Sea have increased their expenditures significantly over the past year, with the United Kingdom increasing its own by 7.9 percent.

German expenditures

In contrast to this image was Germany, which has had considerable difficulty meeting the 2 percent expenditure requirement for NATO.

Chancellor Angela Merkel increased defence expenditure to 1.33 percent of GDP prior to her resignation in December 2021, despite repeated pressure from the United States.

Two months subsequent to Russia’s invasion of Ukraine, German Chancellor Olaf Scholz declared that he would increase defence spending by 100 billion euros ($106 billion), surpassing the 2 percent threshold.

Germany spent only 1.5 percent of its GDP on defence in spite of a 9 percent increase in its budget to $66.8 billion last year. Smith did not anticipate Scholz’s pledge to surpass the 2 percent threshold this year through his statements.

“That would be an increase in military spending by more than one-third in a single year, which is not a very likely occurrence for a country like Germany,” Smith said, citing “the deficit ceiling, other demands placed on [Germany], the speed at which the major institutions can move.”

The German constitution prohibits governments from incurring annual deficits exceeding 0.35 percent of GDP, thereby mandating balanced budgets.

This rule was temporarily suspended by the Federal Constitutional Court for a duration of two years subsequent to the COVID-19 pandemic, which was designated a national emergency. However, rigorous enforcement of the rule was swiftly reinstated.

It prohibited Scholz’s administration from transferring 60 billion euros ($64 billion) in unused pandemic relief funds to accelerate Germany’s transition to renewable energy last year.

Smith stated, “This is not a straightforward problem to resolve.” “It is industrial, political, and legal.”

An “existential peril”

Different European governments have, according to SIPRI data, been less inclined to acknowledge Russia as a strategic concern at various points in time.

Following the annexation of Crimea by Russia in 2014, Latvia, a country that shares a border with Russia, initiated substantial yearly augmentations in its defence budget, which nearly tripled to $822 billion by 2022. A comparable situation unfolded in neighbouring Lithuania, which shares a frontier with the Russian territory of Kaliningrad and increased expenditures by nearly fourfold to $1.7 billion in 2022. Romania, which has a shared frontier with Ukraine, increased its defence expenditures by more than $5 billion during that time period.

Due to the proximity of the Russian threat, Eastern European defence expenditure increased by 31% in the past year, which is three times the rate of growth in Western and Central Europe.

Eastern European spending as a percentage of GDP has been generally higher than that of Western Europe due to the lesser economies and heightened threat perceptions in that region. As an illustration, Greece allocates 3.7 percent of its GDP towards defence expenditures due to a perceived threat emanating from its neighbouring country, Turkey.

However, apart from Germany, Western Europe has gradually begun to adopt the Eastern perspective. England and France consider Russia a menace.

The stance of the European Union is consistent with that of Eastern Europe. “EU security is also in jeopardy,” wrote EU foreign policy chief Josep Borrell on X following Thursday’s G7 meeting. “Russia poses a threat to our very existence.”

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