Austerity ends 13-year rise in global military spending

STOCKHOLM Mon Apr 16, 2012 11:19pm BST

STOCKHOLM (Reuters) - Budget cuts by wealthy western countries has ended a 13-year run of rising military spending in the world, despite big increases by China and Russia, a study released on Tuesday said.

"The after-effects of the global economic crisis, especially deficit-reduction measures in the USA and Europe, have finally brought the decade-long rise in military spending to a halt - at least for now," said one of the report's authors, Sam Perlo-Freeman of the Stockholm International Peace Research Institute SIPRI.

The world spent $1.74 trillion (1.09 trillion pounds) on the military in 2011, up from 1.63 trillion the previous year but unchanged in real terms taking exchange rates and inflation into account, the report said.

The virtually flat military spending ended a run of 13 straight years of increases and was in marked contrast to a 4.5 percent average annual rise from 2001 to 2009.

"It is too early to say whether the flattening of military spending in 2011 represents a long-term change of trend," said Perlo-Freeman.

"While we are likely to see some further falls in the USA and Europe in the next few years, trends in Asia, Africa and the Middle East continue to be upward for now, and any major new war would change the picture dramatically."

As a percentage of global gross domestic product (GDP), military spending actually declined marginally to 2.5 percent from 2.6 percent, the independent researcher on international security, armaments and disarmament said.

Military spending in the United States, the world's biggest spender by far, fell 1.2 percent in real terms last year and totalled $711 billion, in part due to a long delay in agreeing a fiscal budget for 2011.

The trend of lower U.S. spending is likely to continue as deficit-fighting measures approved by Congress constrain the military budget. The withdrawal of troops from Iraq and a pull-back in Afghanistan could also lower expenditure, SIPRI said.

In Europe, the big three - Britain, France and Germany - also scaled back as they focused on balancing fiscal budgets amid a euro zone sovereign debt crisis.

CHINESE ARMS

By contrast, countries less affected by a need for fiscal austerity increased military spending last year, Russia by 9.3 percent to $71.9 billion, meaning it surpassed Britain and France to become the world's third biggest spender.

China, the world number two, has raised military spending by 170 percent in real terms since 2002, in step with its rise to economic prominence as the world's manufacturing powerhouse, raising concerns among its neighbours and other great powers.

"At the same time, China's military spending has remained extremely stable as a share of GDP, at approximately 2 percent since 2001," the institute said. U.S. military spending was estimated at 4.7 percent of GDP in 2011.

Last year, China's military expenditure rose 6.7 percent to $143 billion but Sipri said its military technology remained one or two generations behind that of the United States and that talk of an arms race in the region might be premature.

China's rise did appear to have spurred an arms build-up in recent years in two of its neighbours, India and Vietnam, while the likes of Taiwan and the Philippines had responded with only modest increases in military spending, the institute said.

(Reporting by Niklas Pollard; Editing by Robin Pomeroy)

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