Military states

The costs of militarisation

Global military expenditure continues to surge, and the great majority of this spending is done by Western countries. This often ignored disparity is confirmed in a new study by the Stockholm-based research institute SIPRI, published yesterday (Monday). The researchers report that, in 2023, around 37 per cent of the 2,443 trillion dollars in global military spending, i.e. 916 billion dollars, was attributable to the US alone. According to SIPRI’s calculations, the NATO member states together spent 1,341 trillion US dollars, which makes up a good 55 per cent of all military expenditure worldwide.[1] Europe, for its part, spent 24 per cent of the global total as the continent’s nations build up their respective national armed forces. The sub-region of Western and Central Europe alone accounted for 407 billion US dollars in military spending, up 43 per cent on 2014 and a good third more than the People’s Republic of China, for example, whose military expenditure SIPRI puts at a good 296 billion US dollars for 2023, a figure which takes into account funding sources not included in the country’s official armed forces budget. Other countries closely allied with the West include, for instance, Japan and South Korea, which occupy 10th and 11th place respectively in the world ranking, with military expenditures rising to 50.2 billion and 47.9 billion dollars, while Australia ranks 13th, with 32.3 billion dollars.

Surging expenditure

Germany is in seventh place in the current SIPRI ranking – behind the US, China, Russia (109 billion US dollars), India (83.6 billion), Saudi Arabia (75.8 billion) and the UK (74.9 billion). SIPRI calculates Germany’s military expenditure at around 66.8 billion US dollars, which is now more than France (61.3 billion). And it is already set to rise markedly in the future. According to the German Defence Ministry, this year’s official military budget allocation of 51.9 billion euros will be supplemented by 19.8 billion euros from the government’s so-called Special Fund, which the Federal Court of Auditors says amounts to a “special debt”.[2] Together, German military expenditure will officially reach 71.7 billion euros this year, although this still does not equate to the actual spending. The sum that Berlin reports to NATO each year includes expenditure beyond and typically higher than the official military budget. Calculated on the basis of current exchange rates, Germany’s total will amount to some 76.4 billion US dollars for this year alone, which would put Germany in fifth place in the current world rankings, ahead of Saudi Arabia.

Europe driving the arms build-up

The role of the West, and Europe in particular, as a driver of the global armaments surge has been clearly visible for some time. Thus US military spending increased by 9.9 per cent between 2014 and 2023, Germany's by around 48 per cent over the same period, and the whole of Europe’s spend by as much as 62 per cent, according to SIPRI’s data. European countries also occupy a significant position in the global arms trade. France was the second largest arms exporter worldwide in the five years from 2019 to 2023, followed in fifth to eighth places by Germany, Italy, the UK and Spain. In terms of arms imports, Europe was also the only major region to see an increase in volumes in the five-year period from 2019 to 2023. Indeed, it was a massive leap, climbing by a remarkable 94 per cent on the five-year period from 2014 to 2018.[3] Moreover, key allies of the political West have significantly increased their imports of military hardware in the years from 2019 to 2023: South Korea (up 6.5 per cent), the Philippines (up 105 per cent) and Japan (up 155 per cent). The SIPRI data also shows that US and European armourers are clearly ahead in terms of their order backlogs, a measure that effectively quantifies the arms trend for the next few years.[4]

The decline of the West

Western nations are expanding their arms programmes at a time when they notice their economic influence has long been shrinking and begins to translate into a loss of political influence. In 2000, the bloc still accounted for over 56 per cent of global economic output, calculated according to purchasing power parities (PPPs). But this metric has now fallen to just around 40 per cent. According to forecasts by the International Monetary Fund (IMF), it will continue to fall, while the share of the Global South is now at nearly 60 per cent and rising. The G7 group, which sees itself as the “steering committee of the free world”, showed a weaker economic performance – again calculated in terms of PPPs – than the BRICS for the first time in 2021 (30.7 per cent as against 31.5 per cent). It has been falling further behind ever since, especially since the BRICS expanded its membership on 1 January 2024. The Banque de France predicts that the BRICS+ group will account for around 37.6 per cent of global economic output in 2027, while the G7 will account for just 28.2 per cent.[5] The West’s loss of political clout is reflected in the fact that, despite exerting great pressure, it has still not succeeded in forcing the countries of the Global South to participate in the Russia sanctions. As influence steadily drains away, political leaders in the West increasingly wonder if the only way forward is to project greater military power.

Importance of the arms industry

The massive arms build-up that is required for this power play and, as the SIPRI figures demonstrate, is being resolutely pursued, will of course impact heavily the domestic affairs of Western countries. In Germany, for example, the defence industry was for decades not a particularly prominent sector in the overall national economy. This is now changing. In March last year, Rheinmetall became the first arms producer to be included in the DAX index of forty leading stocks, reflecting the growing influence of German arms manufacturers.[6] Rheinmetall was able to boost its sales to 7.2 billion euros in 2023 and expects to be able to achieve a turnover of 13 to 14 billion euros by 2026. True, this is still light years away from top corporate groups such as Volkswagen, with its annual sales of 322 billion euros. Yet there are real prospects of promotion to the elite league of German industry. For as the economic weight of the German arms industry gradually grows, so does its political weight.

Cannons without butter

As priorities in Germany shift, military expenditure will squeeze out other federal budget allocations. With a budgetary share of 10.9 per cent, defence is currently the second largest budget item after labour and social affairs.[7] Yet this major share does not even include the debt created for the government’s “Special Fund” for the Bundeswehr upgrade. Factoring in this allocation, the military share of spending comes to around 15 per cent. In the long term, this can only be at the expense of spending on healthcare, education and social welfare. As the President of the Ifo Institute, Clement Fuest, recently put it, “Guns and butter? That would be nice if it were possible. But that’s only in the land of milk and honey. It can’t happen.” Fuest puts it succinctly: it’s a future of “guns without butter”.[8]

[1] Figures taken here and below from: Nan Tian, Diego Lopes da Silva, Xiao Liang, Lorenzo Scarazzato: Trends in World Military Expenditure, 2023. SIPRI Fact Sheet. Solna, April 2024.

[2] Pistorius says “Security can’t be had for free” in the Bundestag: “Sicherheit gibt es nicht zum Nulltarif”. bmvg.de 01.02.2024. See also: „Deutschland kriegstauglich machen“.

[3], [4] See also: Rüstungstreiber Europa.

[5] Expansion of BRICS: what are the potential consequences for the global economy? banque-france.fr 13.02.2024.

[6] Rheinmetall joins the DAX. tagesschau.de 04.03.2023. See also: Kampfpanzer statt Dialyse.

[7] Bundeshaushalt digital. bundeshaushalt.de.

[8] Raphaël Schmeller: Ampel zerlegt Sozialstaat. junge Welt 24.02.2024. See also: The will to world war.