Procurement: Patterns Of Global Defense Spending

Archives

January 30, 2017: While global defense spending has been basically static since 2011, stuck between $1.7 trillion and $1.8 trillion a year what has been changing dramatically is what is being spent by nations in some regions. For example there continues to be cuts in the West (especially the Americas and Europe). Actually if you exclude the United States, defense spending went up every year since 2011. That’s because there’s an arms race going on in the Persian Gulf and East Asia even as the Americans scale back their spending. One side effect of this is the emergence of Saudi Arabia as the third highest spender (after the U.S. and China) in 2016, displacing Russia. Ironically both Russia and Saudi Arabia depend heavily on oil exports to maintain defense spending. Despite the sharp (more than 50 percent) drop in oil prices since 2013 the Saudis were better able to continue their high spending while Russia was forced to cut back. The Saudis are feeling the fiscal pressure from lower oil prices and will soon have to make cuts. Russia has other problems, like international sanctions because of threats to neighbors. This has crippled the Russian economy, which was already in trouble because of corruption and foreigners reluctant to do business with them.

A lot of that spending in the wealthier “developing” nations like Saudi Arabia is for modern weapons they cannot produce themselves. Since 2008 deliveries of such weapons to these nations have averaged about $48 billion a year and most of this has gone to the oil-rich Arab states buying the latest and most expensive military tech in an effort to deal with increasing aggressiveness by Iran. While the United States and China produce nearly all their own weapons Saudi Arabia imports nearly all of its weapons, mostly from the U.S. and Europe. Thus Saudi Arabia accounts for about two-thirds of the annual foreign weapons imports for developing nations.

In the last decade the United States has cut spending about four percent (to the current $595 billion) while China’s more than doubled (to the current $214 billion). Russian spending nearly doubled (to $66 billion) after dropping sharply in the 1990s and rebounding slowly. In the meantime Saudi Arabia moved past Russia and is now spending $87 billion a year. India is spending more each year and at its current $54 billion has passed France ($51 billion) and is about to surpass Britain ($55 billion.) After more than a decade of cuts European spending went up over one percent in 2015, mainly because East European nations are spending a lot more to deal with a growing threat from Russia. Even Germany is now increasing spending to deal with the Russian threat.

A major factor in the static global spending is that by 2010 a decade of heavy defense spending, to replace a lot of the elderly Cold War era equipment was largely completed. Also ending, especially for the United States, were expensive war on terror operations in Iraq and Afghanistan. The U.S. military, especially the army and marines, used the demand for new weapons and equipment in Iraq and Afghanistan as an opportunity to replace a lot of aging Cold War gear. The air force and navy did not do as well and now, with American defense spending shrinking, there will be fewer American warplanes and warships because the money and popular support for replacing a lot of the Cold War era warships and aircraft is not there. That trend may be reversed because of the growing Chinese threat.

Most Western nations deliberately shrank their armed forces after the Cold War ended. This included China and Russia, although both of these nations are still buying a lot of modern gear. Russia does it now because it was too broke in the 1990s to buy much and the Chinese because they didn’t have a modern force at the end of the Cold War and are determined to take the lead in this area. Since 2014 a growing number of European have started increasing defense spending to deal with the Russian threats.

Since September 11, 2001, global defense spending increased nearly 50 percent and is now about 2.5 percent of global GDP. After the Cold War ended in 1991, defense spending declined for a few years to under a trillion dollars a year. But by the end of the 1990s it was on the rise again. The region with the greatest growth has been the Middle East, where spending has increased over 60 percent in the last decade. The region with the lowest growth (six percent) was Western Europe. Five years of world-wide recession and the decline in spending by most Western nations has helped stall global defense spending at $1.7-1.8 trillion a year. Western defense firms are feeling this the most, as their sales have been flat from 2011 to 2014 but are now picking up.

 


Article Archive

Procurement: Current 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 


X

ad
0
20

Help Keep Us Soaring

We need your help! Our subscription base has slowly been dwindling. We need your help in reversing that trend. We would like to add 20 new subscribers this month.

Each month we count on your subscriptions or contributions. You can support us in the following ways:

  1. Make sure you spread the word about us. Two ways to do that are to like us on Facebook and follow us on Twitter.
  2. Subscribe to our daily newsletter. We’ll send the news to your email box, and you don’t have to come to the site unless you want to read columns or see photos.
  3. You can contribute to the health of StrategyPage. A contribution is not a donation that you can deduct at tax time, but a form of crowdfunding. We store none of your information when you contribute..
Subscribe   Contribute   Close