Too many guns and too little butter

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Jordi Calvo, Centre for Peace Studies (DELAS)

The most recent figures on global military spending are discouraging. According to SIPRI, in 2022 the world’s military budget grew by 3.75% to $2.24 trillion, higher than the GDP of Italy. This report reveals that the Asia-Pacific region, identified some time ago as the scene of all future tension with China in everyone’s gaze, has increased its military spending by 45% over the last decade. This region has become the world leader in terms of developing its military muscle. But the United States is still number one in military spending; $877 billion (39%), three times more than second ranked China and ten times more than Russia which ranks third.

Military spending is on the rise in Europe, making it, taken all together, the world’s number two region after the US. This means that, for another year running, NATO and its closest allies (Japan, Australia, South Korea, Saudi Arabia…) account for the largest percentage of the world’s military spending. And this is not expected to change any time soon judging from announcements by the main European countries of larger military budgets. At the NATO summit in Madrid, France, Germany, Italy, UK, Spain, Poland, Hungary and nearly all of Europe promised to reach 2% of GDP in military spending within the next few years. The European Union is on board with this militaristic trend and has budgeted over €5 billion, appearing for the first time in the international analysis on military spending because of the funds that Borrell injected into the European External Action Service in the midst of the war in Ukraine.

The Middle East is another region that is remilitarizing. Saudi Arabia has risen to fifth place in the ranking, returning to levels of military spending that characterized it in the past. It should be noted that Spanish arms companies benefit considerably from that country’s military expenditure, the lion’s share going to Navantia which is building warships on their way to the Arabian Sea. The positive note this year comes from South America which has reduced military spending over the last decade by 5.4%, taking a different approach to regional security. Sub-Saharan Africa has also significantly reduced military budgets over the past year, although the region’s numerous unresolved conflicts point to an unstable future.

Any discussion on military spending deserves a historical perspective ranging beyond the data from this last year. More than three decades ago, with the end of the Cold War, an encouraging dialogue was established on what to do with the economic resources that would be freed up by reducing defence spending. The billions of dollars that would no longer be spent on armies, weapons, and other military endeavours inherent to the show of strength between the United States and the Soviet Union, were known as the dividends of peace. Many proposals emerged at that time and most envisaged increased spending on development cooperation.

In 1988, world military spending reached a peak of $1.6 trillion. The end of the Cold War alone freed up $5 trillion that were no longer spent on militarization, more than Germany’s current GDP and close to the GDP of all of Latin America and the Caribbean combined. It took 18 years to reach the levels of military spending prevalent before the fall of the Berlin Wall.

It is safe to say that today the dividends of peace have melted away. We have earmarked more for the arms race than was saved by the short-lived paradigm shift in the 1990’s. Dividends for peace are directly related to the dilemma first described by economist Paul Samuelson, guns or butter, which describes the economy as the management of scarcity where we constantly have to choose how to allocate countries’ resources. Samuelson referred to this choice as opportunity cost. Thus, for every euro we spend on guns we have one euro less to spend on butter. This means that the decision of what to spend public money on has an immediate effect on public policies and on the security model we are building.

The military-industrial complex is once again at the centre of the world economy as missiles are raining down on Ukraine. Every day 10,000 are launched by the Russians and 7,000 by the Ukrainian army. The industry cannot keep pace with demand. They simply do not have the capacity to produce that amount of munition. Companies make new investments with a view to increasing production, but they demand assurances from governments before they do. What better assurance for their investments than a world at war? The neo-con hawks in the US led their country and convinced much of the world to choose the military route to fight terrorism in costly wars in Afghanistan and Iraq. Today, the enemy justifying military investment is China and, for the time being, Russia. Ukraine is a good example of this militaristic trend. Both sides have chosen the path of force to resolve a conflict that is certainly more complex than they would have us believe. In Europe, despite years of exacerbated remilitarization, no one could see war on the horizon. Will we have the same regrets in the Asia-Pacific region in a few years’ time? Good times for the arms business mean bad times for peace and security.

As our mentor Arcadi Oliveres reminds us, despite the prevailing pessimism, we must remain hopeful. While it is true that many countries, although no more than 30 or 40, have opted for militarization, they are no safer than the 31 states that have no army or the 100 and some whose military capacity cannot be considered a threat to anyone. They prove that security without guns is both possible and desirable.

Too many guns and too little butter

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@ Indico 2023