A report on global defense spending in 2014 by leading Swedish think-tank Stockholm International Peace Research Institute (SIPRI) has revealed a 0.4 percent decrease in comparison to the previous year.
According to the SIPRI report, released Monday, the total amount spent on defense last year was calculated at approximately $1.776 billion, which is equivalent to around 2.3 percent of the average figure for global Gross Domestic Product.
The figure indicates a drop in global defence spending for the third consecutive year since it peaked in 2011, but the mere 1.7 percent decrease in expenditure since then means the figure still remains significantly high compared to rates in the 1980s.
However, the drop in the overall sum has mainly been affected by a 6.5 percent cut in defense spending by the U.S., which still remains by far the biggest spender at $610 billion - accounting for 34 percent of total expenditure last year.
The U.S., which has decreased spending by 20 percent since its peak in 2010, is still spending 45 percent more on defense than it did it 2001, at a rate equivalent to levels at its previous peak in the late 1980s, the SIPRI report said.
Despite U.S. cuts bringing the overall figure down, global military spending excluding the U.S. actually increased by 3.1 percent, as it has continued to do so since 1998.
Eastern Europe on the edge
Last year’s annexation of Crimea by Russia in particular spurred an 8.4 percent increase in military expenditure in eastern Europe, with a grand total of $93.9 billion being spent. The report also noted spending in the region had increased 98 percent since 2005.
Ukraine, which is at loggerheads with Russia over the activities of Moscow-backed rebels in the east of the country, recorded a 20 percent increase in spending last year to $3.8 billion.
Other countries in eastern Europe including Lithuania, Poland, Latvia and Estonia are also increasing their defense budget, particularly for arms. According to the report, Lithuania has upped its weapons budget by 50 percent, Poland by 20 percent, and Latvia by 15 percent.
While the increase in spending has brought figures to a little over 1 percent of the GDP in Latvia and Lithuania, Poland plans to increase its expenditure to $9.9 billion - about 2.1 percent of its projected GDP for 2015.
Noting the significant increase in spending around the Russian border, SIPRI's military expenditures project head Dr. Sam Perlo-Freeman said in a statement released Monday the Ukraine crisis has “fundamentally altered the security situation in Europe.”
Russia and NATO gearing up
Meanwhile, Russia is planning to increase its defense budget by 15 percent in 2015, with a 60 percent increase planned for the purchase of arms, including Su-34 long-range combat aircraft as well as Verba and S-400 surface-to-air missile systems.
In 2014, Russian came in third-place accounting for 4.8 percent of global spending with $84.5 billion. The increase of 8.1 percent, amounting to 4.5 percent of its GDP, came despite the country being affected by falling oil prices and the devaluation of the ruble as a result of Western economic sanctions.
Dr. Perlo-Freeman put down the increase in Russian spending to Moscow “feeling very vulnerable to NATO,” which in a summit in Wales last September received a pledge from its 28 members to increase defense spending to 2 percent of their GDP.
However, NATO member Germany only spent $37 billion on defense in 2014, or 1.2 percent of its GDP - even lower than the 1.4 percent they spent in 2012 - finishing in eighth-place after India but ahead of Japan.
“Germany of course is a considerably big economy, but they have less interest in military involvement because of historical reasons,” Dr. Perlo-Freeman told The Local, referring to Germany’s pacifist policy since World War II.
Calling the NATO target “unrealistic,” Dr. Perlo-Freeman further explained: "For Germany it would involve major tax increases or cuts to social spending, of which I don't think German people would approve."
France was the biggest spender in Europe and fifth in the world, with a budget of $63.2 billion, followed immediately by the U.K. which spent $60.5 billion.
"France and the UK are two of the biggest economies in Europe and are also former imperial and nuclear powers. They've had this sort of global role for a long time and have seen themselves as powers beyond their immediate area. They see that they have more of a share of things than most other countries who do not have that historical position," Dr. Perlo-Freeman explained.
"Their spending has fallen since the economic crisis. The extent to which they have had this global role has diminished vastly, but they are still relatively high spenders."
He also said that despite being concerned by the situation with Russia, Western European countries are more concerned with economic austerity, adding they are further away from Russia.
On the other hand, cash-strapped Greece spent 0.2 percent over the NATO requirement of 2 percent GDP despite a 52 percent drop in military spending to $5.6 billion last year, way below its 2009 peak of $11.5 billion (3.3 percent of the GDP) in 2009.
Of the countries surveyed, 20 had a military budget over 4 percent of their GDP, with 10 of them spending over 5 percent.
China, which came second after the U.S. with a military budget that increased 9.7 percent to $216 billion in 2014, amounting to 12 percent of global expenditure, saw the continuation of a long trend of defense spending increases in proportion to the growth of its GDP.
"What countries spend has a lot to do with the overall size of their economy, like with the U.S. and China. However, of course it's also how much of a priority the military is in the country, what the security threats are and historical factors," Dr. Perlo-Freeman said.
Oil-fueled arms race
Plummeting oil prices have been spurring a worldwide race for arms, while those benefiting provided with a “very easy, quick source of revenue for governments for such acquisitions,” the expert also said
Algeria and Angola recorded the biggest increase in military spending in north Africa last year with 12 percent and 7 percent respectively, based on their oil revenues, even though they are currently not experiencing an armed conflict.
“While total world military spending is almost unchanged, some regions, such as the Middle East and much of Africa, are continuing to see rapid build-ups that are placing an increasingly high burden on many economies,” Dr. Perlo-Freeman explained.
“These increases partly reflect worsening security situations, but in many cases they are also the product of corruption, vested interests and autocratic governance.”
The most significant increase in spending last year, however, was registered by Saudi Arabia, which increased its budget by 17 percent to $80.8 billion. This amount accounts for 4.5 percent of worldwide expenditure and 10 percent of the oil-rich kingdom’s GDP, making them the fourth biggest spender.
According to the report, only Oman spent more than Saudi Arabia of its GDP in 2014.
In total, $196 billion was spent on defense in the Middle-East, marking a 5.2 percent increase since 2013 and a 57 percent increase since 2005.
This dramatic increase in the past 10 years has mainly been shouldered Iraq, which increased its spending by 286 percent during that period, the UAE with a 135 percent increase, Bahrain with 126 percent and Saudi Arabia with 112 percent. Kuwait likewise increased its spending 112 percent between 2005 and 2013.
Meanwhile, Turkey’s military spending since 2005 has only grown 15 percent, while Israel’s budget has remained largely unchanged during this period.
The SIPRI report put this increase down to "the continuing conflict and instability in the surrounding region and of the revenues available to the government from the high price of oil that prevailed."
In a separate report published by SIPRI last month, data presented by the Center for International Policy’s Security Assistance Monitor (SAM) program said the U.S. sold $20.5 billion worth of weapons to Middle-Eastern countries in 2013 - almost triple the amount it sold it 2007- with Saudi Arabia, Israel, the UAE and Turkey being the main customers.