Global Policy Forum

By Mattias Karen

Global military spending in 2004 broke the $1 trillion barrier for the first time since the Cold War, boosted by the U.S. war against terror and the growing defense budgets of India and China, a European think tank said Tuesday.

Led by the United States, which accounted for almost half of all military expenditure, the world spent $1.035 trillion on defense, equal to 2.6% of global gross domestic product, the Stockholm International Peace Research Institute said. Besides its regular defense budget, the United States has allocated $238 billion since 2003 to fight terrorism, according to the report. "These appropriations are now assuming extraordinary proportions," said SIPRI researcher Elisabeth Skons, who co-authored the organization's annual report.

Adjusted for inflation, the figure for global military spending in 2004 is only 6% lower than its Cold War peak in 1987-1988, Skons said. Total military expenditure grew 6% in 2004 over the previous year, in line with an average annual increase since 2002, the institute said. South Asia, northern Africa and North America made the largest increases. In Western Europe and Central America, military spending fell.

But the report said the figures might be on the low side as countries are increasingly outsourcing services related to armed conflicts, such as military training and providing logistics in combat zones, without classifying them as military expenditures. Such outsourcing has more than doubled in the last 15 years, and was estimated to have reached $100 million during 2004, SIPRI researcher Caroline Holmqvist said. The researchers predicted it would double again from current levels by 2010. "This is a global phenomenon," Holmqvist said, adding it was difficult to provide exact figures. "This is an industry that is not largely regulated."

As a region, South Asia saw the biggest rise in military expenditure, largely because India boosted its defense budget by 19% in a move that could provide a "real setback" to the country's attempts at ending a decades-long conflict with neighbor Pakistan, Skons said. "Just a few years ago, it looked like they would be able to reach a peaceful settlement," she said. "Now India has increased (military spending) again." The report is based on official national budgets in most cases, and independent studies for countries like China, where, Skons said, "it's obvious that the official figures are very wrong."

The government-funded institute estimated that China increased it defense budget by about 10% in 2004, to $35.4 billion — a figure that is about 70% above the government's official figure, Skons said. Petter Stalenheim, co-author of the report, said India's large increase in military spending might be a way of challenging neighbor China as the supreme power in Asia but there was little sign of a growing arms race between the countries. "Objectively, you can see that both India and China are increasing their military expenses by a rather large percentage," Stalenheim said. "But at the same time, neither one says they're directed toward each other."

The report also said China, which traditionally imported military equipment from Russia, is increasingly turning to other countries. "(China) is very much dependent on Russia, and being dependent is not something that any country would like," SIPRI researcher Siemon Wezeman said. "What their wish would be is to become an independent producer of everything they need. "However, it may take as long as 50 years for China to catch up with the West in arms production, he said.

The United States accounted for 47% of all military expenditure while Britain and France each made up 5% of the total. In all, 15 countries accounted for 82% of the world's total military spending. The arms trade also grew sharply, with the top 100 makers of weapons increasing their combined sales by 25% between 2002 and 2003, the report said. Those companies sold weapons and arms worth $236 billion worldwide in 2003, compared to $188 billion a year earlier. The United States accounted for 63% of all arms sales in 2003, the report said.

While conflicts in the Middle East were responsible for much of military spending, the rest of the world is also laying out more on security, the report said. "It's hard to put the United States in the center, or blame everything on the U.S.," said Alyson J.K. Bailes, the think tank's director. "Despite all the ongoing problems, the state of world security is a great deal better than it was in the Cold War," Bailes said.