Ukraine and the Dangerous Rise in Military Spending
In the days after Russia’s invasion of Ukraine, a host of countries announced momentous hikes in military spending. Canada and the United States both released plans for new military expenditures. So did Australia. So far, 29 European states have pledged more than a combined $209 billion in new defense funding—a figure that will almost certainly rise. The European Commission has declared that “investments will be needed to replenish the depleted stocks of military equipment,” and Josep Borrell, the EU’s top foreign policy official, has called for the bloc “to spend together, more, and better” on its armed forces.
These recent increases have been spurred by the war, but they build on an existing trend. Beginning in 1999, global military spending started to rise as the world left behind the optimistic outlook that characterized the years following the end of the Cold War. Starting in 2000, for instance, Russia spent heavily in an attempt to recover the Soviet Union’s lost military might. The United States gradually increased defense expenditures after September 11. Europe’s military spending stayed stagnant for longer, but many of the continent’s countries began modernization and expansion campaigns after Moscow annexed Crimea. And over the past 30 years, China has increased military spending more than any other country. Before Russia invaded Ukraine, global military spending had already reached what is at least a post-Cold War high of $2.1 trillion, up from $1.2 trillion in 1999 and $1.7 trillion in 1989. (There is not reliable data on global military expenditures from before 1989.) Today, with the various announced spending hikes, it likely to surpass $2.3 trillion.
In the wake of Russia’s invasion, it is easy to see these increases as necessary. But the belief that expanding defense budgets will necessarily help safeguard the world is both flawed and dangerous. Rather than deterring violence, rising military spending can contribute to a more fraught and explosive international system. It does this while diverting resources from other critical priorities, such as improving health care, preventing starvation, and fighting the climate crisis. These issues are just as important to the world’s security as is stopping Russian aggression. But states must better balance the short-term military security crisis with long-term human security challenges if they have any hope of addressing the latter.
MAD MONEY
A considerable proportion of the world’s wealth is allocated to militaries. In 2021, 2.2 percent of the planet’s GDP was spent on armed forces, or $268 per capita—more than double the $118 per capita in 1999. After Russia’s invasion of Ukraine, that cost is set to rise even more.
The surge in spending has been particularly pronounced in Europe. The continent slashed defense expenditures after the Soviet Union collapsed, and spending remained stagnant for decades after, but once Russia annexed Crimea in 2014, it began steadily rearming. That year, NATO allies endorsed the Defense Investment Pledge, which called on each member to dedicate two percent of its GDP to the military, and European military spending increased by 25 percent over the following seven years. Since then, the number of European NATO allies that met the two percent threshold rose from two to eight.
Now, spending is growing further. Denmark currently spends 1.4 percent of its GDP on the military, but it is expected to increase spending to two percent of GDP by 2033. In the words of Danish Prime Minister Mette Frederiksen, “historic times call for historic decisions.” Belgium, too, intends to fulfill NATO’s two percent of GDP guideline by roughly doubling its current figure of $5.9 billion. The Netherlands, which allocates 1.4 percent of its GDP to the military, plans to almost immediately reach NATO’s two percent target by adding $5.2 billion to the armed forces this year.
Poland is dramatically raising military spending, in part to double the number of its troops.
The increases are so expansive that they include even countries that have long been wary of military power. On February 27, for example, Germany announced plans to create a special fund worth $104 billion to strengthen its military, which it will use to finance several large-scale procurement projects (including the acquisition of F-35 combat aircraft from the United States). Sweden has long been neutral, but it is now poised to join NATO and boost armed forces spending to two percent of its GDP. To do so, the Swedish government will raise military expenditures by almost 60 percent.
Even the few states that have already fulfilled NATO’s Defense Investment Pledge are in the process of further arming. Poland plans to raise military spending from 2.1 percent to three percent, starting in 2023. The hike is expected to cover a major expansion of the Polish military, including doubling the number of its troops. Fellow NATO ally Romania currently spends two percent of its GDP on the armed forces, but starting next year, the military budget will balloon to 2.5 percent of GDP. And since February, Washington has increased its spending by a staggering $90 billion, both to send military aid to Ukraine (which it has offered in greater quantities than has any other donor) and to bolster its own armed forces.
The United States’ new expenditures are especially notable. The country has long been the world’s largest military spender, and the extra appropriations build on years of increased funding. U.S. military expenditures have risen by approximately 40 percent over the past two decades, driven first by the war on terrorism and now by growing geopolitical competition with China and Russia. The new money is partially going to troops, but it largely consists of costly and lengthy arms acquisition projects and research and development efforts. The Obama administration, for instance, launched a $1.2 trillion initiative to modernize U.S. nuclear weapons. The initiative, which was unveiled in 2010, is expected to continue until 2046.
UP THE ANTE
The United States and its allies aren’t the only countries ramping up military spending. One of Vladimir Putin’s main political goals has been to reverse the post–Cold War cuts to Moscow’s forces, and since his election in 2000, Russia has initiated three state armament programs. As a result, the country’s military spending has risen almost nonstop. Indeed, Russia was one of the few European countries that did not cut military spending in the aftermath of the 2008 financial crisis. Instead, after waging a 12-day war against Georgia, it set up new funding to modernize 70 percent of its military equipment by the end of 2020.
Ultimately, Russia didn’t meet this ambitious timeline. A combination of harsh Western sanctions (implemented after Moscow annexed Crimea) and falling oil prices forced the Kremlin to trim the military budget in 2017 and 2018. But as the economy stabilized, Russia again began increasing defense spending. In 2021 alone, as Russia amassed troops along the Ukrainian border, the country’s military spending increased by 2.9 percent and reached $65.9 billion—equivalent to 4.1 percent of the country’s GDP.
But even Russia’s expenditures look small when compared with China’s. After the 1995–96 Taiwan Strait crisis—when China lobbed missiles at the strait but was forced to stop when the U.S. Navy sailed powerful ships through the area—Beijing began an extensive military modernization program. Chinese defense spending increased by ten percent on average every year for the next two decades, and the country’s now 27 uninterrupted years of increased military spending make for the longest such stretch for any state in the world. Chinese military expenditures reached $293 billion last year.
Even Russia’s military expenditures look small when compared with China’s.
Beijing shows no signs of stopping. Chinese President Xi Jinping has stated that his long-term ambition is to narrow the gap between the People’s Liberation Army and what Beijing calls “the world’s leading militaries”—a phrase widely assumed to refer to the U.S. armed forces. Xi’s objective is to achieve the “complete modernization” of the PLA by 2035 and to make China’s armed forces into a “world-class military” by 2049.
China’s buildup has, in turn, prompted nearby countries to spend more on their own forces. Despite a deep reluctance to seriously finance its armed forces, Japan increased its military spending by 7.3 percent last year, the highest annual increase since 1972. Australia recently entered into the AUKUS trilateral security agreement with the United Kingdom and the United States, a deal that will supply Canberra with eight nuclear-powered submarines at an estimated cost of over $100 billion. It is just one of many upgrades that Australia is making to its military in response to China’s growing assertiveness.
BUYER BEWARE
In the West, one of the main justifications for increased military spending is deterrence. As Russian troops slowly take more Ukrainian territory, and as China continues to threaten its neighbors, policymakers in the United States, Asia, and Europe have all argued that they need to credibly deter Beijing and Moscow from starting new conflicts or fueling tensions. “You have to be able to fight to not have to fight,” Christian Lindner, Germany’s finance minister and an architect of the country’s new military fund, said in 2022.
Undoubtedly, governments are responsible for providing security to their people, but deterrence is tricky and can have an unintended consequence. When one state rearms, it leads rival states to feel less secure, and the result can be an upward spiral of military spending, modernization, and expansion—in short, an arms race. The AUKUS arrangement is perhaps the clearest example of how armament can beget more armament. Had China not worked to expand its military’s reach, which it may be doing to challenge the United States’ presence in the region, it’s unlikely that Australia would have sought nuclear-powered submarines.
But even without an action-reaction arms race, rising military spending has costs. Blunting and bracing for climate change and fixing food instability will not be cheap, and the more money countries spend on their forces, the more difficult it will be to solve these human security challenges. On June 30, for instance, the United Kingdom’s Department for Business, Energy and Industrial Strategy announced that to finance military aid to Ukraine, it was “surrendering” some climate and foreign aid funds. The opportunity costs are especially frustrating given that, in some cases, funding a human welfare initiative would require a fraction of current military spending. A joint analysis by the UN Food and Agriculture Organization, the International Fund for Agricultural Development, and the World Food Program estimated that it would take $265 billion per year between now and 2030 to successfully end world hunger. This may seem like a lot, but it’s just 12 percent of the world’s 2021 military spending.
To finance military assistance to Ukraine, the United Kingdom is redirecting some climate and foreign aid funds.
Countries can, of course, spend on initiatives while still spending on their armed forces. But treasuries are not bottomless. Governments have accumulated unprecedented levels of debt to weather the pandemic and to cover the costs of Russia’s invasion. Although the benefits of both military and social expenditures are immediate, states must be aware that high and rising debt could ultimately crowd out other future expenditures. The International Monetary Fund has already warned about this dangerous potential, stating that “highly indebted governments will be hardest hit” by interest rate increases and that “in the end, the impact will be most sharply felt by those households that can least afford it.”
That means there are real tradeoffs, ones that states will need to weigh wisely as they address the world’s problems. They are facing two great crises: a security crisis amplified by the war in Ukraine, and an anthropogenic environmental disaster. They are also reckoning with myriad other challenges, such as income inequality, food insecurity, and a global lack of access to health care. These problems all compete for the same finite pot of financial resources, and the war in Ukraine, catastrophic as it is, cannot obscure them. That’s especially true for the climate crisis, which poses the most critical challenge humankind has ever faced and demands increasing attention. States may need to bolster their forces to address the threat posed by Russia, but excessive arming can worsen a cycle of insecurity while taking resources that could instead be better spent elsewhere. Governments, then, should think long and hard before enacting packages that would increase military spending.
NB: NAN TIAN is a Senior Researcher with the Military Expenditure and Arms Production Programme at the Stockholm International Peace Research Institute.
