DEFENCE SPENDING SHOOTS UP AS CONFLICTS RISE GLOBALLY: WHAT IT MEANS FOR INDIA AND ITS SECURITY

As Ukraine and West Asia remain in active conflict and countries in Europe, East Asia, and also South Asia continue to feel threatened, global military expenditure is expected to continue to rise. Many states announced record military expenditure increases in the last year. The significant increases reflect high security concerns and the need for improving military strength and deterrence. The Stockholm International Peace Research Institute (SIPRI) has begun releasing data for the year gone by.

India remains among the highly threatened nations. It has two nuclear-armed neighbours, and with both, it has had serious boundary disputes and fought wars. Yet, the emerging global power has maintained a balance between military spending and developmental expenditure. The figures showcase global tensions and hotspots.

Global defence expenditure 2023

Total global military expenditure reached an all-time high of $2443 billion in 2023, an increase of 6.8 per cent in real terms from 2022. This was the steepest year-on-year increase since 2009. The 10 largest spenders in 2023 were led by the United States, China, and Russia, all of whom increased their military spending.

It was the ninth consecutive year of a rise in military spending. Also, it was the first time since 2009 that military expenditure went up in all five of the geographical regions. Particularly large increases were seen in Europe, Asia, Oceania, and West Asia. Clearly, there is a deterioration in peace and security. As the states prioritise military expenditure and strength, there is a risk of a spiral effect in the neighbourhood.

Russia-Ukraine dynamics

Russia’s military spending increased by 24 per cent to an estimated $109 billion in 2023, marking a 57 per cent rise since 2014, the year that Russia annexed Crimea. The Russian 2023 military expenditure was 16 per cent of total government spending and 5.9 per cent of GDP.

Russia’s military and war-related spending is set to rise sharply in 2024 under new federal budget plans for 2024–26 signed into law by President Vladimir Putin in November 2023. The plans suggest that the Russian government is committed to pursuing the war to a successful conclusion. Some have questioned the economic assumptions, though. Russia’s rising debt burden has also meant reduced allocations to some key social spending, including housing, education, and healthcare.

Ukraine was the 8th largest military spender in 2023. Yearly spending surged 51 per cent to reach $64.8 billion. It represented 58 per cent of total government annual spending. Interestingly, this spending was 59 per cent of Russia’s defence expenditure. Ukraine also received at least $35 billion in military aid during the year, including $25.4 billion from the USA. When combining the two, it became 91 per cent of Russian spending.

NATO defence expenditure

The US remains NATO’s major spender, but European members have increased their share. In 2023, the 31 NATO members accounted for $1,341 billion, equal to 55 per cent of the global military expenditure. The US' military spending rose by 2.3 per cent and reached $916 billion in 2023. This was 68 per cent of NATO’s total military spending. European NATO members increased their military expenditure, and their combined share was now 28 per cent of NATO, the highest in a decade. The remaining 4 per cent was from Canada and Turkey.

The perception in Europe is that Putin is strong, autocratic, and ambitious, and the war in Ukraine has brought the Russian threat closer to NATO. The US has been asking Europeans to take greater charge of their security. After all, the US has to concentrate a little more on Chinese expansion and bolster security in the Indo-Pacific.

Nearly a decade ago, European NATO members had formally committed to target spending 2 per cent of GDP on the military. As many as 11 out of 31 NATO members actually hit or crossed the 2 per cent level in 2023, the highest number since the commitment was made. Another target set by NATO was that at least 20 per cent of military spending be towards ‘Capital’ expenditure for new equipment. This was met by 28 NATO members in 2023, up from 7 in 2014.

China and its threatened neighbours

China’s military rise is the most watched and analysed subject globally. The US and China’s neighbourhood, especially India, Japan, South Korea, and the Philippines, monitor all military power projection-related activities in China.

There is a general belief that China spends around 40 per cent outside the formal military budget under other code-heads that directly contribute to military power. All the neighbouring countries increased their defence budgets to reduce the growing military power gap with China.

China continues to be the world’s second-largest military spender. The official military budget was estimated at $296 billion for the military in 2023. It was an increase of 6 per cent from 2022. It was 29th consecutive year-on-year rise. China’s was half of the total military spending across the Asia and Oceania region.

Japan’s 2023 defence budget was $50.2 billion, an 11 per cent increase over 2022. Japan shed its pacifist approach last year. It is re-looking at Article 9 (enacted in 1947) of their constitution that forbids offensive weapons. It plans to increase its defence budget further and bring it up to 2 per cent of GDP by 2027. Taiwan’s military expenditure also grew by 11 per cent, reaching $16.6 billion.

During the same period, Pakistan's military spending dropped to $8.5 billion in 2023, relegating it to the 30th position globally. While it represented a nominal 19.5 per cent increase over the revised allocation for 2022–23, the gains were offset by severe economic challenges, including the falling value of Pakistan's currency and high inflation, which was close to 21 per cent.

Conflict-ridden West Asia

War and tensions in West Asia for decades have kept defence budgets rising. Military expenditure in the region increased by 9 per cent to $200 billion in 2023. They saw the highest percentage increase in the last decade. Saudi Arabia was the fifth-largest spender in the world and the highest in the region, with spending increasing 4.3 per cent from the year prior to $75.8 billion in 2023.

Iran was the 4th largest military spender in the region in 2023, with $10.3 billion. The share of military allocation to the Islamic Revolutionary Guard Corps (defenders of the faith and the regime) grew from 27 per cent to 37 per cent between 2019 and 2023.

Israel’s military spending was the second-largest in the region after Saudi Arabia. It grew by 24 per cent to $27.5 billion in 2023. It was driven by Israel’s large-scale offensive in Gaza in response to the October 2023 Hamas attack. From the warming of diplomatic relations between Israel and several Arab countries in recent years to the new hostilities with Iran-backed three ‘H’, Hamas, Hezbollah and Houthis brought in new dynamics.

Miscellaneous defence budget increases

The largest percentage increase in military spending by any country in 2023 was by the Democratic Republic of the Congo (105 per cent), due protracted internal strife. South Sudan recorded the second-largest percentage increase (78 per cent) amid the Sudanese civil war. Poland’s military spending, the 14th highest in the world, was $31.6 billion and grew 75 per cent in one year, the largest annual increase by any European country. The spillover of the Ukrainian war threat was the cause.

Algeria’s military spending grew by 76 per cent to reach $18.3 billion, the highest ever, largely due to a sharp rise in revenue from gas exports to Europe, which lost Russian supplies. Mexico's military expenditure was $11.8 billion in 2023, a 1.5 per cent decrease from 2022. In 2023, Brazil’s military spending increased by 3.1 per cent to $22.9 billion and stood at 1.1 per cent of GDP. Brazil is considering a constitutional amendment to mandate a minimum of 2 per cent of GDP defence budgeting.

Weapons demand grows, but production lags

The US continues to dominate the top defence manufacturing companies. There are six American, three Chinese, and one British among the top 10 defence contractors. China accounted for the second-largest share of combined Top 100 arms revenues by country, at 18 per cent. The Ukraine and West Asian conflicts have greatly increased weapon systems and munitions demands.

However, despite receiving new orders, many US and European arms companies could not significantly ramp up production capacity because of labour shortages, soaring costs, and supply chain disruptions that were exacerbated by the ongoing wars. Relatively smaller suppliers like Germany, Norway, Iran, Turkey, Poland, and North Korea had to step in. Of course, countries like Israel and South Korea are known to maintain high stocks and surge production capacities.

European arms imports nearly doubled, US and French exports rose, and Russian exports fell sharply. Around 55 per cent of arms imports by European states in 2019–23 were supplied by the US, up from 35 per cent in 2014–18.

The US’ share of total global arms exports rose from 34 per cent to 42 per cent. France’s arms exports increased by 47 per cent between 2014–18 and 2019–23, and for the first time, it was the second biggest arms exporter, just ahead of Russia.

The largest share of global arms transfers goes to Asia, with India among the world’s top arms importers. For the first time in 25 years, the US was the largest arms supplier to Asia and Oceania. The US accounted for 34 per cent of arms imports by states in the region, compared with Russia’s 19 per cent and China’s 13 per cent. The USA accounted for 69 per cent and Germany for 30 per cent of arms imports by Israel. Pakistan was the fifth largest arms importer in 2019–23, and China became even more dominant as its main supplier, providing 82 per cent of its arms imports.

Interestingly, India's defence exports have reached a level of ₹21,083 crore ($2.6 billion) in the financial year 2023–24, which is a spectacular growth of 32.5 per cent over the previous fiscal.

India’s defence budgeting and way ahead

Chinese and Indian troops, the two largest armies by numbers, have been facing eyeball-to-eyeball on the Line of Actual Control (LAC) for nearly four years now.

The negotiations are on to ease border tensions. The two sides have held 21 rounds of military talks to resolve outstanding problems, but more ground needs to be covered.

India is the fourth most powerful military force. India is also the fourth largest military spender in 2023. The defence budget for 2024–25 is only an interim one due to ongoing elections. In February 2024, India’s interim budget gave a very marginal 4.72 per cent increase over last year’s budget estimates, and it amounted to only a 0.37 per cent increase over revised estimates. The figures may go up when the full budget is presented later in the year.

At $83.6 billion, its 2023 military expenditure was just 4.2 per cent higher than in 2022. It constituted 13.18 per cent of the central government's expenditure. It was 1.46 per cent of GDP. Capital allocations for modernisation and infrastructure development were 27 per cent of the total and saw an increase of 6.7 per cent.

Nearly 75 per cent of Capital purchases have to 'Made-in-India'. There was a 43 per cent increase in the capital budget of the Border Roads Organisation (BRO) to build up infrastructure along LAC. The DRDO saw an increase of 9 per cent for defence Research & Development (R&D).

India needs to spend much more on R&D to have intellectual property of its own. Aero-engine, hypersonic, electronic warfare, directed energy weapons, AI, uncrewed systems, drones, robotics, quantum, long-range missiles, cyber, and space are some of the major areas. Jump-starting may not be easy. Partnerships with friendly foreign countries are perhaps the best way. Prime Minister Narendra Modi has had one-on-one meetings with CEOs of all the top technology companies and has invited them to work with India.

Ongoing conflict has clearly brought out the fact that wars will not be short and swift. Despite being the fourth-most powerful nation, the power index gap with China remains very significant. India has a numbers and modernisation backlog.

India, which is short of 11 fighter squadrons, needs much more helicopters, especially attack variants. India needs more submarines, warships, tanks, artillery guns, and unmanned systems. India must also take the call on the next aircraft carrier. The importance of air defence systems has been underscored. It has to build up ammunition stocks. Clearly, the Indian military has to grow, and allocations must increase according to threat perception.

The writer is Director General, Centre for Air Power Studies. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.

2024-04-24T08:34:42Z dg43tfdfdgfd