The arms race hots up: why are countries increasing their defence budgets?

The arms race hots up: The world is in a crisis state where every country appears to be in a mad rush for hoarding as many defence arsenals in its armoury as it had ever dreamt of in the last 3-4 years even before. The year 2020-22 had been dreadful due to Corona pandemic, but at the same time in recent years, every country has increased its defence budget substantially. A general perception that can be derived – when you feel insecure you buy more arms and ammunition for your safety. Is the multi-polar world of today suffering from fear-psychosis syndrome? Are the countries in a panic state?

Many countries including India have enhanced their Defence Budget in the last couple of years. Various analysts have shared their views and remarked that the Russian invasion of Ukraine is one of the major reasons for this mad rush. Before we ponder upon the reasons and delve on countries that have increased their defence budgets, let’s take a look at how countries have been spending on defence in the last few years.

SIPRI reported more than 2 trillion spending on arms globally in 2022

The Stockholm International Peace Research Institute (SIPRI) declared in its report that total global military expenditure rose to $1,981 billion in 2020, an increase of 2.6 per cent in real terms from 2019.

The SIPRI report also disclosed that the five top spenders in 2020 were the United States, China, India, Russia and the United Kingdom.

In 2020, US military expenditure reached an estimated $778 billion — 3.7 per cent of its GDP. The report revealed that China’s military expenditure, the second highest in the world, is estimated to have escalated to $252 billion in 2020. This represents an increase of 1.9 per cent over 2019.

India has also increased its defence spending

When it comes to India, the report revealed that India’s defence budget for 2020 was 2.9 per cent of its GDP. It also said that India remained the second highest importer, only behind Saudi Arabia.

The global trend continued in 2021 and 2022. In 2021 world military expenditure surpassed the two trillion US dollar mark for the first time, reaching $2113 billion. Global spending in 2021 was 0.7 per cent higher than in 2020 and 12 per cent higher than in 2012 The economic effects of the Covid-19 pandemic have not ended the continuous upward trend in world military expenditure seen since 2015.

Strong economic recovery after the pandemic helped in increasing defence spending

As a result of the strong economic recovery across the globe in 2021, world military spending as a share of world gross domestic product (GDP)—the global military burden—reached 2.2 per cent, down from 2.3 per cent in 2020. Average military spending as a share of government expenditure in 2021 remained the same as in 2020, at 5.9 per cent.

62% of the global military expenditure was from the top FIVE

SIPRI has further reported that the five largest spenders in 2021 were the United States, China, India, the United Kingdom and Russia, together accounting for 62 per cent of the global expenditure.

Besides, the enhanced military expenditures are not restricted to the top FIVE. In short, the world continues to arm itself at an alarming rate, perhaps more fervently than ever before. And in 2022, there does not appear to be any slowdown. Indeed, it is not just the usual big spenders that are boosting their military capabilities. 

Smaller countries also joining the arms race

A growing number of countries with defence capabilities that, up until very recently, could only be described as limited have even joined in on the burgeoning arms race. This is perhaps no more clearly evidenced than with the recent pledges to bolster defence spending provided by two nations that have explicitly pursued non-militarisation for several decades: Japan and Germany.

Country-to-Country Analysis

Germany: Early into the Russia-Ukraine conflict, Germany announced it was committing €100 billion ($113bn) in military spending.

Addressing the German Parliament in Berlin, Chancellor Olaf Scholz said, “It’s clear we need to invest significantly more in the security of our country, in order to protect our freedom and our democracy.”

Japan: Japan disclosed a record defence budget amid regional security fears from North Korea and China. The cabinet’s nod for 6.8 trillion yen ($55bn) a 20-per cent rise in military spending is a deviation from the WWII self-defence policy. The strategy aims to provide Japan with a “counterstrike capability” that can pre-empt enemy attacks and protect itself from growing risks from North Korea and China, which they fear may attempt to invade Taiwan.

On Friday, North Korea fired two short-range ballistic missiles, according to South Korea’s military, the latest in a recent flurry of weapons tests that took place days after a joint air drill by Seoul and Washington.

Australia: Between 2018 and 2022, Australian spending on defence acquisition and research and design increased from $8.2bn to $12.2bn, recording a compound annual growth rate (CAGR) of 10.3%. Australia is procuring Hunter-class frigates and Arafura-class patrol vessels to replace ageing Anzac-class frigates and the Armidale and Cape-class patrol boats. It also plans to procure nuclear-powered submarines to modernise its naval capabilities and replace the ageing fleet.

The South China Sea is one of the most important global shipping lanes for Australian iron ore, LNG, and coal exports. Australia considers China’s construction of artificial islands there to be one of its most pressing security threats and the desire to keep trade routes open has escalated tensions between the two countries.

With Chinese military assertiveness over the South China Sea and Indo-Pacific region, Hunter-class frigates will prove to be an asset for thwarting any Chinese aggression.

Singapore: Singapore is acquiring advanced military technologies and platforms. These include the F-35 Joint Strike Fighter, CH-47F Chinook and H225M helicopter, and Invincible-class (Type 218SG) submarines. The country is also procuring infantry technology to improve army security and mobility. SAF’s upgrades enhance the force posture of the country’s defence forces and provide an asymmetric advantage. The root cause is China’s bullying in the South-China Sea and in the adjoining ‘Strait of Malacca’.

Sweden: Within the European continent, Germany isn’t the only country to see a hike in defence spending. Swedish Prime Minister Magdalena Andersson declared on 1 March that Sweden would enhance its expenditure on defence.

Magdalena has reiterated Swedish security concerns and said “Sweden’s defensive capabilities need to be strengthened; the rearmament needs to be brought forward. We are not under a direct threat of an armed attack against us, but the general threat level has increased.”

After the end of the Cold War, Sweden slashed military spending. It was only after Russia annexed the Crimean peninsula in 2014 that the parliament agreed on a turnaround. 

Smaller countries like Romania, Denmark and Poland have pushed their defence spending in view of global insecurity concerns in a multi-polar world.

China: Beijing too has increased its defence spending in 2022 by 7.1 per cent to $229 billion, up from a 6.8 per cent increase the year before. Interestingly, the hike makes China’s defence budget over three times that of India’s defence budget of 5.25 lakh crore (about $70 billion) for 2022. China’s increased defence spending is mainly focused on external aggression, assertiveness and its expansionist objectives. China-US military competitiveness coupled with bitter rivalry is also one of the major reasons for the continuous hike.

US: As for the chief military spender itself—the United States—it would seem that a rapidly growing China represents just such a perceived threat to national security. “The China discourse lends itself to threat inflation because China is genuinely a new challenge. Never before in its modern history has America faced a rising power that threatened to surpass the United States in the size of its total economy and its role in global economic leadership.

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For this reason, China is often portrayed in US policy circles in a hyperbolic manner, as a vaguely defined but extreme and even existential threat to the United States. This is then used to justify ever greater levels of defence spending to prevent China’s global domination.

India: India is the 3rd largest military spending country in the world. India’s increased military spending is largely focused on thwarting the hawk eyes of China and Pakistan. In a multi-polar world, India has perhaps the least enemies in terms of numbers – Turkey is a distant foe.

India’s military spending of $76.6 billion ranked third highest in the world. This was up by 0.9 per cent from 2020 and by 33 per cent from 2012. In a push to strengthen the indigenous arms industry, SIPRI said, 64 per cent of capital outlays in the military budget of 2021 were earmarked for acquisitions of domestically produced arms.

As such, much of the world is charting a dangerous course of militarisation at a time when cooperation and multilateralism are perhaps needed more urgently than ever before. Is de-escalation still possible? It would require a sharp policy reversal among the chief military powers to do so, but that does not appear to be their plan for the foreseeable future.

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