SIPRI Update, June 2008
Country and regional studies on military expenditure
SIPRI has commissioned a series of studies by external experts on long term trends in military expenditure. These include studies to produce estimates of military expenditure, according to the SIPRI definition, in China and in Russia and studies to explain the long term trends in military expenditure in for Africa and in the United States. Abstracts of these studies are provided below.
- Cooper, J., Russian military expenditure and arms production, in SIPRI Yearbook 2001, pp. 313-22.
Since Vladimir Putin became President of Russia the budgetary situation of the Russian armed forces has improved. In 2000 actual allocations to national defence exceeded those planned and their share of GDP reached 2.75 per cent, higher than budgeted. The federal budget for 2001 includes increased allocations to defence. For the period up to 2005, spending on national defence is to be kept below 3 per cent of GDP. Within the total, there will be more emphasis on R&D and equipment modernization. The defence industry experienced a strong growth in 2000, but this recovery was from an extremely low level and is unlikely to be maintained at that pace. Serious problems remain: frequent administrative reorganization, debts, and the lack of a coherent policy for restructuring the industry. The non-competitive nature of much of the defence industry is increasingly recognized by the Russian Government and there is mounting evidence of preparations for a concerted effort to accelerate the process of restructuring within the framework of a new programme for the period 2001-2005. - Cooper, J., The military expenditure of the USSR and the Russian Federation, 1987-97, in SIPRI Yearbook 1998, pp. 243-59.
By detailed critical analysis of the component parts of military expenditure, it is possible to create an acceptable extended time series for the estimated military expenditure of Russia and the former USSR. The problems involved in estimating true military expenditure include lack of transparency (particularly before 1992), inflation, changes to the budget after its adoption, and 'military' items under other budget heads—the paramilitary forces, housing for servicemen, military research and development and expenditure on the 'closed cities' among them—and wide divergence between the budget and actual outlays. Estimates of the total military expenditure of the Soviet Union and Russia are presented in current roubles, as a proportion of gross national product (GNP) and in US dollars using purchasing-power parity rates. The conclusion is that military expenditure has fallen from $257 billion in the USSR in 1987 to $24.1 billion in Russia in 1997, and as a proportion of GNP from 16.6% in 1987 to 3.8% in 1997.
- Gold, D., US military expenditure and the 2001 Quadrennial Defense Review, in SIPRI Yearbook 2002, pp. 309-322.
The US has begun a major military build up, its fourth since the end of World War II. Build ups reflect major changes in the security environment, but also reflect pressures from within the Department of Defense (DOD), primarily the military services, and from outside the DOD, as contractors, members of Congress and political coalitions push their pecuniary, ideological and political agendas. At the same time, there are pressures to limit the growth of military spending from groups that 'prefer butter to guns', including those who seek to restrain the DOD in the interests of macroeconomic stability. In the pre-11 September context, the Bush Administration appeared to accept limits to the growth of defence spending. Between January and September 2001, the administration conducted a series of major reviews of defence policy, leading to the Quadrennial Defense Review (QDR) at the end of September. President Bush and Defense Secretary Rumsfeld promised a major reorientation of the US military emphasizing mobility, new technology, improved readiness and morale, and the possible termination of some cold war-era 'legacy' weapons systems. The QDR, however, was non-specific. It stated that US military policy should build on capabilities, not specific threats, and it expanded the scope for missions, adding homeland defence to the two-major-theatre wars of previous policy, and treating a 'global war against terrorism' as one of the two conflicts the US should be prepared to wage. When the fiscal year 2003 budget was released in February 2002, it contained a major increase in spending, and no major legacy system was terminated.
- Gold, D., Military expenditure in Africa, in SIPRI Yearbook 2000, pp. 281-98.
Military expenditure in Africa has been increasing since 1997, after a relatively long period of decline. The increase is due primarily to the involvement of many countries in the region in armed conflict, either directly or indirectly. The costs and methods of financing armed conflict vary but usually include resource absorption outside the official defence budget, making it difficult to accurately report on the amount of economic resources committed to military activities. While African military expenditure represents a small share of the world total, it constitutes a heavy economic burden in many African countries where social needs are competing for scarce economic resources.
- Omitoogun, W., The processes of budgeting for the military sector in Africa, in SIPRI Yearbook 2003, pp. 261-78.
The emerging process approach to defence management holds some prospect for solving the controversy between donors and recipient countries over the appropriate level of military spending. Its advocacy of applying sound public expenditure management principles to the military sector has the potential of ensuring accountability and transparency in the process of military budgeting. However, there are a number of challenges that must be overcome if the new approach is to achieve these objectives in Africa. Chief among these is the building of local capacities to respond to the demands of the new approach.
- Wang, S., The military expenditure in China, 1989-98, in SIPRI Yearbook 1999, pp. 334-49.
A surprising amount of information is available from open sources on the costs of supporting the Chinese military establishment. Using the SIPRI definition of military expenditure, that is, including the costs of the People's Armed Police, subsidies to military R&D and the arms industry, pensions of retired military, earnings from exports and funding from unknown sources for arms imports—total Chinese military expenditure in 1998 amounted to 141.1 billion yuan in constant 1995 prices. Interestingly, the assumption that arms exports have been used to pay for imports of military technology is not supported by the information available about their respective values.
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