International military spending drops slightly


World military expenditure totalled US$1,75 trillion in 2012, a fall of half a percent in real terms since 2011, according to figures released by the Stockholm International Peace Research Institute (SIPRI).

The fall, the first since 1998, was driven by major spending cuts in the United States and Western and Central Europe, as well as in Australia, Canada and Japan. The reductions were substantially offset by increased spending in Asia, Eastern Europe, the Middle East, North Africa and Latin America.

China, the second largest spender in 2012, increased its expenditure by 7,8 percent ($11,5 billion). Russia, the third largest spender, increased its expenditure by 16 percent ($12,3 billion).

Despite the drop the global total was still higher in real terms than the peak near the end of the cold war.
“We are seeing what may be the beginning of a shift in the balance of world military spending from rich Western countries to emerging regions, as austerity policies and the drawdown in Afghanistan reduce spending in the former, while economic growth funds continuing increases elsewhere,” said Dr Sam Perlo-Freeman, director of SIPRI’s military expenditure and arms production programme.
“However the US and its allies are still responsible for the great majority of world military spending. NATO members together spent a trillion dollars.”

The US: wars ending, cuts biting

In 2012 the United States’ share of world military spending went below 40 percent for the first time since the collapse of the Soviet Union. A declining trend that began in 2011 accelerated in 2012, with a drop in US military spending of six percent in real terms to $682 billion.

The decline is mostly the result of reduced war spending, which fell from $159 billion in the 2011 financial year to $115 billion in 2012 and is set to continue its downward course, with only $87 billion requested for 2013.

US military spending in 2012 was also projected to be $15 billion lower than previously planned as a result of cuts to the Department of Defence linked to the 2011 Budget Control Act. The bulk of cuts under this legislation will begin this year.

A wider slowdown

Austerity policies also caused falls in military spending in most of Europe last year. Since the 2008 global financial crisis, 18 of the 31 countries in the EU or European NATO have cut military spending by more than 10 percent in real terms.

Even in parts of the world where spending has increased, the effects of the economic crisis can still be seen: slowing economic growth in emerging regions has led to slower rates of growth in military spending. Only the Middle East and North Africa increased the rate of military spending between 2003/09 and 2009/12.

The average annual rate of military spending increase in Asia, for instance, has halved from seven percent per year in 2003/09, to 3,4 percent per year in 2009/12. The slow-down was most dramatic in Central and South Asia, where military spending was growing by an average of eight percent per year in 2003/09, but by only 0,7 percent a year since 2009 and actually fell in 2012 by 1,6 percent.
“All indications are that world military spending is likely to keep falling for the next two to three years at least until NATO completes its withdrawal from Afghanistan at the end of 2014. Spending in emerging regions will probably go on rising so the world total will probably bottom out after that,” Perlo-Freeman said.

Regional developments

Military expenditure in Asia and Oceania rose by 3,3 percent in 2012. Large increases were seen in Vietnam, where tensions with China are prompting major naval purchases, and in Indonesia. Military spending in India decreased by 2,8 percent.

Military spending increased sharply across North Africa, by 7,8 percent in real terms, the result of ongoing military modernisation and concern over terrorist groups in the Sahel. Military spending in sub-Saharan Africa fell by 3,2 percent.

Military spending in the Middle East rose by 8,4 percent in 2012. The largest percentage increase worldwide in 2012 was by Oman (a 51 percent rise). Saudi Arabia increased spending by 12 percent. Spending by Iran, Qatar, Syria and the United Arab Emirates is unknown.

In Latin America military spending increased by 4,2 percent in 2012. The largest increases were Paraguay (43 percent) and Venezuela (42 percent). The increasing role of the military in combating drug cartels pushed Mexico’s spending up by 9,7 percent.

Military spending in Eastern Europe increased by 15,3 percent in 2012, the largest regional increase. Besides Russia, Ukraine also increased its spending substantially – by 24 per cent.

Sipri notes all percentage increases and decreases are expressed in real terms at constant 2011 prices.