Global military spending has reached a record high, according to the leading arms-tracking group, the Stockholm International Peace Research Institute (SIPRI). Countries around the world spent a combined $2.24 trillion on their militaries last year — a 3.7% increase on last year’s previous record high.
The US, China and Russia accounted for 56% of the global total in 2022. Also noteworthy has been Europe’s military build-up in the wake of Russia’s aggression in Ukraine. SIPRI wrote: “Military expenditure by states in Central and Western Europe totalled $345 billion in 2022. In real terms, spending by these states for the first time surpassed that in 1989, as the cold war was ending, and was 30% higher than in 2013.”
Some of the sharpest increases were seen in Eastern Europe: Finland (+36%), Lithuania (+27%), Sweden (+12%) and Poland (+11%).
As the chart below shows, the US still dominates, accounting for the next 10 countries added together. US military spending reached $877 billion in 2022, which was 39% of total global military spending and three times more than the amount spent by China, the second largest spender. China allocated an estimated $292 billion in 2022, 4.2% more than in 2021 and 63% more than in 2013. China’s military expenditure has increased for 28 consecutive years.
Source: Axios, SIPRI
Unsurprisingly, Australia is examining its defence policy amidst rising global tensions, the Defence Strategic Review. The Albanese government has put forward a radical shakeup of its defense spending, probably the most significant review of our military preparedness since World War II. Apart from the adoption of nuclear-powered submarines as the key platform, emphasis has shifted to include long-range strike capabilities and building munitions at home.
PM Albanese said his government’s strategy was designed to make Australia more self-reliant, more prepared and more secure. The Review examined billions of dollars committed by the previous government and reassessed their value against perceived threats, including from an increasingly aggressive China under Xi Jinping. “China’s assertion of sovereignty over the South China Sea threatens the global rules-based order in the Indo-Pacific in a way that adversely impacts Australia’s national interests,” the Review said.
The highest level of strategic risk that Australia now faces is the prospect of a major conflict in the region, the Review added, suggesting a strategy of greater self-sufficiency combined with stronger relationships with its allies and key powers in the region, including Japan and India.
Treasurer Jim Chalmers has warned that Australia could not escape the impact of global turbulence. Last year’s Budget papers show consolidated defence funding rises to $52 billion in 2023-24, with forward estimates of $54 billion in 2024-25 and $56 billion in 2025-26, but I expect these numbers will ratchet up in the next Budget in May.
Because of the rise in GDP, defence funding as a percentage of GDP has actually gone backwards, falling to 1.96% now. It is expected to rise, perhaps to as high as 2.5% over the medium term.
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