Who are the biggest military spenders, really?

Dhaka,  Sun,  24 September 2017
Published : 18 May 2017, 21:22:38

Who are the biggest military spenders, really?

The more countries focus on economic growth and the less they exhaust monies in military spending, the more they may enjoy rapid economic growth - and vice versa. Living standards seldom rise fast in countries that favour geopolitics, writes Dan Steinbock
The conventional military narratives highlight aggregate expenditures and downplay per capita spending. Realities are more nuanced, both globally and in Southeast Asia.

The conventional narrative is that China has become assertive, while the West is ignoring its defence needs. According to Stockholm International Peace Research Institute (SIPRI) research, in the past decade military spending in China and Russia increased 118 per cent and 87 per cent, respectively, while US spending plunged almost 5.0 per cent.  

Yet, the list of top-10 military spenders includes the US ($611 billion), China ($215 billion), Russia ($69 billion), followed by Saudi Arabia, India, major EU economies, Japan and South Korea. Together, they account for three-fourths of the total. Washington spends more dollars a year on its military than the next seven biggest spenders combined - which penalises US living standards and stability abroad. 

Moreover, the US is escalating. The Trump administration is planning a huge Reagan-style rearmament and requesting $54 billion; an almost 10 per cent increase in a single year - even as its public debt amounts to $20 trillion (105 per cent of US gross domestic product or GDP). 

Indeed, military spending should also be assessed in per capita terms. In this view, Saudi Arabia and the US lead, with $2,000 and $1,900 per person, respectively. The two are followed by Europeans, South Korea, Russia and Japan. In contrast, China and India come last (with just 8.0 per cent and 2.0 per cent of the US level, respectively). 

In the past decade, increases in military budget in per capita terms have soared in Saudi Arabia (40 per cent), but been slower in China and India (less than 15 per cent each); and even less in Russia (6.0 per cent). Moreover, in the past decade, per capita incomes in China and India increased strongly (10.8 per cent and 8.0 per cent, respectively). In both, military spending has increased faster but after a very low starting point. 

There is a deep gap between current realities and perceptions of military spending.  ASEAN (Association for South East Asian Nations) countries are not an exception to the rule.

ASEAN'S MILITARY SPENDERS: In Southeast Asia, the largest military spenders are the tiny Singapore ($10 billion) and Indonesia ($8.2 billion), followed by Thailand and Vietnam (about $5-6 billion), and Malaysia and Philippines (around $4.0 billion) (Figure 1). 

The per capita picture is very different. In this view, Singapore ($1,750) and Brunei ($940) are ASEAN's big spenders, far ahead of Malaysia ($136).  What this means is that, in per capita terms, Singaporeans spend on average 46 times more than the Filipinos in their military.  Myanmar puts almost as much money into the military as Vietnam ($53) and more than the Philippines ($38), whereas Indonesia is a more moderate player ($31) (Figure 2).

So if Singapore is ASEAN's Uncle Sam in per capita big spending, then Brunei is comparable to France, Malaysia to China and Philippines to India. 

In effect, until 2010, the Philippines' military expenditures decreased two decades from 1.6 per cent to 0.8 per cent as share of GDP. During the Aquino era, Washington initiated its pivot to Asia and Manila executed its pivot toward the US. In the process, the Philippine military expenditures soared to almost 1.4 per cent of GDP. In this view geopolitics rather than economic development motivated the Aquino priorities. 

ECONOMIC DEVELOPMENT OR MILITARY NEEDS: If per capita incomes rise fast, then relative increases in military budgets are to be expected, and vice versa. In the past decade, per capita incomes rose by 4.2 per cent in Singapore; but military expenditures even faster. In Brunei, the gap was worse as per capita incomes shrank by more than 0.4 per cent, but military spending grew by 2.8 per cent.

In per capita terms, such gaps between incomes and military spending are not sustainable over time. And as newly-industrialized economies are now stagnating and high prices do not favor oil exporters, policymakers must consider reassessments in the future or prepare for popular resentment.

Indeed, where gains in per capita incomes exceed those in military expenditures, economic development tends to prevail over defence. In Southeast Asia, these countries include Malaysia, Myanmar and Laos. 

Conversely, where gains in per capita military spending exceed those in per capita incomes, defence needs tend to prevail over economic development.  In addition to Singapore and Brunei, these countries include Cambodia, Indonesia, and Philippines in the past decade.

With scarce resources, there are always priorities. If nations truly seek economic development, they must often make difficult choices. The more countries focus on economic growth and the less they exhaust monies in military spending, the more they may enjoy rapid economic growth - and vice versa. 

If ASEAN countries that still have relatively low per capita incomes seek rapid economic development, excessive military spending is the best way not to achieve the targeted economic objectives and an even better way to undermine social goals. 

Living standards seldom rise fast in countries that favour geopolitics.

Dr Dan Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institute for International Studies (China) and the EU Center (Singapore). [The original version of the article was released by the  Manila Times on May, 15, 2017]

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