08 July 2019

On how to decode the defence budget

Laurenţiu Sfinteş

Some auxiliary elements• The numbers-military power relationship• How does the 2020, 2030 or even 2045 prognosis look like• Some simple truths

Image source: Mediafax

Some auxiliary elements

How much does a war cost? But how much does peace? Can one discuss about cause-effect terms when it comes to military budgets? These are just some of the questions that emerge when talking about GDP’s rate, percentage, the national military spending justification. These are questions whose answers are not simple, because it is not only about numbers, budgetary chapters, but, first of all, about the military threats, political decisions, strategic commitment and, particularly, about the national portfolio.
Some states are spending a lot on defense because they have the money to do it. Others, because they have no other choice. For the first option, military spending contributes to economic stability. In the other case, it is worsening it. Paradoxically, democracies spend more when it comes to investments, however, more clearly, and autocracies, are more economic in terms of the budget, still, more wasteful with what they already have.

Global wealth is growing and the military spending as well. Although there are now more and more powerful international security bodies that should provide prevention or, at least, dialogue for conflicts’ avoidance, dollars are printed in increasing quantities. According to a study conducted by the European Union, the global military spending was about $ 1.7 trillion, annually, over the past 10 years. In 2017, it reached $ 1.74 trillion, a 1.1 % increase over 2016, particularly coming from China, India and some of Middle East countries’ military budget overage.

Asia and Oceania have consistently increased their military spending over the past 29 years. China's average was 5.6%, India's 5.5%. China was spending, 10 years ago, 5.8% of all international military allocations. Today it reached 13%.

According to Stockholm International Peace Research Institute / SIPRI, in 2018, global military spending reached $ 1,822 trillion. An even greater increase comparing to the previous year, this time and as a result of US’s budget increase. Globally, the military spending represents 2.1% of GDP, $ 239 per person. And US and China are the main "engines" of these increases.

Is money we invest in soldiers and armaments keeping us safer? Of course, we are not always talking about a direct relationship, and the rapport between budgetary allocations’ rate and military’s deterrence one depend on many factors, mostly political, historical, geostrategic, but also circumstantial ones. Iceland is five time bigger than Israel. Iceland’s security spending, given that is does not have its own army, is 0.1% (according to statistics, often with 0.0%) of the GDP provided by country’s 300,000 inhabitants, somewhere between 15 and 20 million dollars. Israel spent, in 2018, $ 15.69 billion for the army, a few hundred million more than in previous years, but 3 billion less than 2014-2015, during the Gaza Strip conflict. Normally, the GDP percentage is somewhere between 4.5% and 5% of GDP. The example is an extreme one, but it reveals both states’ different situation, which are leading to different approaches on how each is keeping its people safe. This it is also revealed in how national budget is set up.

The numbers-military power relationship

Setting up military budgets is not some sort of a sport with unique rules, and comparisons between the size and effectiveness that money is spent on, between how to build and maintain military power itself are, often, misleading and irrelevant.

There are some benchmarks that allow decoding military budgets, given their relation with the national military power, but there are only circumstantial:

- Military spending’s gross rate is, probably, the most relevant in terms of a nation's commitment to national security, which is related with its economic capacity. Here, the United States is, by far, the world leader, with $ 686.1 billion, according to the 2019 draft budget, signed by President Donald Trump;

- The GDP percentage shows the internal effort, strongly dependent security threats’ perceived level. It may be also an indicator of state’s condition or the political system. According to not so recent media sources, North Korea spends 22% of its national GDP for military needs. This makes its military budget to be half of the national one;

- spending on active, in reserve or retreat military personnel, as weight of the total military budget. These are showing military budget’s “good" condition. This military budget spending’s large percentage may reveal many things: a good salary for military personnel, however, in line with the rest of society, or a high income level for soldiers, to get their loyalty, even if the rest of the employees do not have the same rights . It may also indicate an oversized, inherited or created military body. In some Middle East or Africa states, military structures are reserved for certain categories of the population and are recruiting, within a controlled environment, tens or hundreds of thousands of people.

- spending for new technique procurement, for investments, for new armament systems. Major arms-producing states are also those who are endowing their armies with the latest technology. They are also the ones that are normally following the life cycles of different equipment and technologies. Also these are the ones that have a certain constancy in equipment and endowment. The other, get what the budget gives: if there is a national emergency, a political opportunity or a great lobby, someone will find the money for new equipment. To pay them back, they are asking for loans or are imposing taxes. Some of the "high-tech" weapon systems are reserved only for those whose money are smelling like oil. Few states have long-term endowment strategies that they are actually following. Quite rare are also the cases wherein there is a political consensus on army’s endowment. In Denmark, the 2018-2023 Defense Agreement is signed by representatives of all parties represented in parliament and it is religiously followed, regardless of executive’s political power in the next five years. It is a procedure used for decades to ensure political continuity and consensus in terms of the Danish defence issues. For others, the military equipment acquisitions are "freely imposed" and buyer’s political and military dependence on the supplier creates conditionality and subordination relations. The biggest number of army systems and equipment belongs to states who, in theory, can afford less than they have.

- National military industry’s procurement rate. National products are, indeed, cheaper than imported ones. That just in theory. Some not so relevant military states, like Sweden, continue to have a national defense industry with outstanding results. The relationship between the military and the defense industry is symbiotic, the performance of one can be measured by the other. But a national defence industry is too expensive for many states and, sometimes, encouraging it does not have the technological results they hoped for. The national military budget is the most important lever for this industry’s existence and, sometimes, the only one.

- the percentage for new military technology research. In strong, economically developed, market economy states, military research is not exactly military structures’ monopoly, but it is closely related to them. This competitive flexibility reduces the one-direction spending, but it is also asking for multiple directions’ effort. The result, however, is a positive one for specialists’ maintenance and for giving militaries different choices. There is also a disadvantage: efforts are not focused on one or only a few major projects, which is a handicap when China seats at the other end of the chessboard. When all the efforts, funds, methods are focusing on a small number of areas and projects, but with great strategic impact, the results are highly important. The condition is for all the objectives to be chosen following the international technological evolutions. The 5G technology example is quite relevant here. And, most likely, it is just the beginning.

- The training and instruction activities’ spending, particularly important for basic army structures, reaction forces, land, aviation, and naval units’ personnel, who are also the ones to start the fire first. Today's wars are no longer similar to what was happening a few years ago, a few decades ago. These are won in the early hours, in the early days, by those forces ready to act quickly and efficiently. There are few countries that can afford having forces permanently deployed abroad. And fewer are trained directly, through intervention operations on globe’s different meridians. Remote dislocations are expensive, are involving expeditionary logistics, flexible and very well-equipped structures. Combat spirit can only be earned after this kind of deployments and operations, which are as close as possible to reality. This is Russia's intervention case in Syria. As well as France’s case given its almost permanent dislocations in Maghreb Africa. This is not the case, however, of most of the European states, whether are NATO members or not, whose fluctuating military training are being developed in polygons which have many restrictions and circumstantial political laths.

- The amounts spent on maintenance, servicing and improvement of defence infrastructure, military units and bases, internal or, possibly, deployed abroad. For "traditionalist" budgetary military systems, barracks’ network and all types of military targets are a labyrinth that can swallow all budget resources. The western military model is that of a company, with national and foreign subsidiaries, wherein there is great internal mobility, wherein civilians and military employees are valued by the products they make. The eastern model was (in some states still working) that of an amorphous set, wherein it mattered the attitude and commitment. Even if the methods are not that appropriate. And wherein careers are following parallel lines. These descriptions are, indeed, extremely general, and Russian forces’ evolutions are, for example, showing western model’s sophisticated adaptation to Moscow's needs. As for foreign infrastructure, US spends around $ 150 billion only on military bases deployed outside the borders. Something less than China's entire budget. These spending’s benefits are directly seen on national security’ level. As Russia builds its buffer zone in former Soviet states, in some East European countries, US is doing the same in Middle East. That's why competitors are showing up now. Some even recently. The Chinese Djibouti military base, the Indian one from Tadjikistan (Farkhor Air Base), Italian (Djibouti), Japanese (Djibouti - it seems you are not a relevant military power if you do not have a military dislocation in Djibouti!). Are these are only few of the examples;

- Foreign allocations as consequence of bilateral or alliance agreements, for renting national military facilities. For the military budget, money comes, sometimes, from abroad. Not necessarily from renting infrastructure objectives that might lead to other chapters. Strategic partnerships are those setting out common interests and, of course, that need budgetary support. A study on US spending to support foreign partners has revealed that Washington supports many states’ military structures with about $ 50 billion. Even for US’s military budget is an important amount. This support has multiple assets: balance the states that are a confrontational regional logic, to keep alive bilateral or multilateral agreements where US has been the main political and diplomatic sponsor, to support local structures adaptation processes, not only military, to international standards. Most of the times, this support is the precursor to military contracts for military equipment and technology. What is happening with US’s money, with high military equipment purchased thanks to advantageous clauses, is not always following Washington’s logic. Neither Egypt gets better in Sinai Peninsula, nor is Saudi Arabia in Yemen, nor does the Afghan authorities in ending the Taliban insurgency;

- Military budget growth constancy and rate, their evolution tendency. Due to the near-generalized economic growth, as well as the Euro-Atlantic and Euro-Asian spheres developments, the percentages most military expenditure states granted has decreased, regardless of the fact that the total amount has, in fact, increased. But recent developments and statistics seem to change this trend. With Ukraine’s conflicts and Crimea’s annexation, Europe feels vulnerable, and some eastern continent countries are even abandoned against threats that powerful Western allies seem not to pay attention to. But it's not the only element. In 2003, China's GDP was eight times lower than the US. In just 15 years, the rapport has balanced. Beijing has even afforded not to increase its military budget alike the economy, so the nominal gap between China's and US military budgets continues. By eliminating or reducing the chapters related to costs for foreign military bases and staff, there is almost a parity between both budgets. And the tendency is not favoring US.

There are other defence budget aspects to be mentioned, but they have to be linked and interpreted also given our national traditions, the popular commitment to defending the country. Social cohesion, popular solidarity are also factors, even decisive ones that contribute to state’s power.

How does the 2020, 2030 or even 2045 prognosis look like;

By 2030, world's armies will spend twice 2016’s amount. Almost $ 4 trillion. The US will exceed one trillion (compared to $611 billion in 2016), and China will reach more than 700 billion (compared to $215 billion). They will be followed by India, with more than $200 billion (compared to $56 billion).

East Asia - The Pacific Area will be, starting with 2020, equal to US in terms of military spending. Then, in 2045, India will be equal to all EU's national budgets.

Reaching and keeping the 2% level for the military spending of all NATO member states should give, by 2030, a 40% total increase.
As much as we would like to believe so, market economy and democracy do not necessarily bring society’s political and social cohesion strengthening. Without cohesion, defence funds can hardly transform into military power. We need more than just a political speech in order to ensure national security’s consistency.

 Even given these conditions, what the military budget offers, when being satisfactory as rate, well organized as structure, implemented in appropriate conditions, is only providing a basis for security’s construction. The rest depends on long-term strategies and public consensus for their application.

International developments are not always what we, our allies and friends, would like to witness. Technologies overtake forecasts, and power balances become more uncertain.

And forecasts are showing that these challenges are only a few years away.

Translated by Andreea Soare