China, Russia Boost Spending; Western Budgets Decline

From: Defense News

Emerging military superpowers China and Russia sharply increased military expenditures in 2012 while spending by the US and most NATO-aligned European countries contracted, according to the “Arms Expenditure Report” released by think tank Stockholm International Peace Research Institute (SIPRI). The dip in military spending by Western nations, the first in real terms since 1998, comes against a backdrop where the global spend dropped by 0.5 percent to US $1.75 trillion, states the report, released April 15.

“Despite the overall fall in spending, the global total was still higher in real terms than the peak near the end of the Cold War,” the report noted, adding that the $1.75 trillion spend equated to 2.5 percent of global gross domestic product.

According to Sam Perlo-Freeman, director of SIPRI’s Military Expenditure and Arms Production Program, the combination of austerity policies and the drawdown in Afghanistan helped shrink expenditure levels by the US and its senior NATO partners Britain and France in 2012.

“We are seeing what may be the beginning of a shift in the balance of world military spending from the rich Western countries to emerging regions,” Perlo-Freeman said.

The US share of world military spending in 2012 dropped below the 40 percent mark for the first time since the collapse of the Soviet Union in 1991.

By contrast, China raised its spending by 7.8 percent, or $7.8 billion, to $166 billion in 2012. This made China the world’s second biggest military spender ahead of Russia, which boosted its spending by 16 percent, or $12.3 billion, to $90.7 billion.

US expenditure declined by 6 percent to $682 billion but easily remained No. 1 in the world, spending almost four times that of second-ranked China.

“The US remains dominant,” Perlo-Freeman said. “Along with its allies, it is still responsible for the great majority of world military spending. The US and its NATO allies together spent $1 trillion on their militaries.”

While military spending fell in Western Europe, Australia, Canada and Japan, the impact of the decline was offset by higher expenditures in Asia, the Middle East, Latin America and Eastern Europe, where spending was largely driven by rearmament programs or increasing regional tensions.

Military spending in the Middle East rose by 8.4 percent to around $100 billion in 2012, accounting for 8 percent of global expenditure. Saudi Arabia was responsible for the biggest capital outlay in the region, raising spending in 2012 to $56.7 billion, an increase of 12 percent over 2011.

The expectation is that military spending by the US and its allies in NATO will continue to decline in 2013, Perlo-Freeman said.

On the other hand, military spending by emerging nations will continue rising.

The anticipated shift in the global balance of spending will accelerate given that austerity programs in Europe show little sign of abating, said Tomas Lehmann, a Brussels-based economic analyst.

Norway’s military per-capita spending will be the highest of any of the 27 EU states in 2013. Twenty-one EU nations have reduced military spending by more than 9.5 percent in real terms since 2008, Lehmann said.

Military spending in Latin America rose by 4.2 percent, increasing by 43 percent in Paraguay and 42 percent in Venezuela. Mexico’s heightened role in combating drug cartels pushed its spending up by 9.7 percent.