Pentagon Budget Is Down, But U.S. Remains the World’s Biggest Military Spender

By Sandra I. Erwin
The United States' share of global military spending dipped below 40 percent for the first time since the end of the Cold War, according to new data from the Stockholm International Peace Research Institute.
The United States and its allies are still responsible for the majority of world military spending. NATO members alone spent a trillion dollars out of a total of $1.75 trillion in global military spending in 2012 — the equivalent to 2.5 percent of global gross domestic product, SIPRI figures show. U.S. defense spending dropped by 6 percent in real terms to $682 billion between 2011 and 2012. The decline is mostly the result of reduced war spending, which fell from $159 billion to $115 billion. 
Austerity policies put pressure on defense budgets in the United States and most of Europe in 2012. Since the 2008 global financial crisis, 18 of the 31 countries in the European Union or European NATO have slashed military spending by more than 10 percent in real terms, according to SIPRI. Only the Middle East and North Africa increased their rate of military spending between 2003–2009 and 2009–2012.
“All the indications are that world military spending is likely to keep falling for the next two to three years — at least until NATO completes its withdrawal from Afghanistan at the end of 2014,” said Sam Perlo-Freeman, director of SIPRI’s military expenditure and arms production program. “Spending in emerging regions will probably go on rising, so the world total will probably bottom out after that.”
Although U.S. military expenditures fell by 6 percent in 2012, it was still 69 percent higher than in 2001, The United States is by far the world’s largest military spender, with 39 percent of global military spending, compared to 40 percent a year ago. The U.S. defense budget is larger than the combined spending of the next 10 countries.
While Western powers are cutting back on purchases of new weapons, emerging nations are picking up the slack. "We are seeing what may be the beginning of a shift in the balance of world military spending from the rich Western countries to emerging regions, as austerity policies and the drawdown in Afghanistan reduce spending in the former, while economic growth funds continuing increases elsewhere," said Perlo-Freeman. 
Nations that saw reduced military spending in 2012, besides the United States and countries in Western and Central Europe, include Australia, Canada and Japan. Although these nations collectively cut defense outlays by just 0.5 percent, this was the first decrease since 1998. 
Countries in Asia, Eastern Europe, the Middle East, North Africa and Latin America increased their arms purchases. China was the second largest spender in 2012, increasing its expenditures by 7.8 percent, to $166 billion. Its military budget rose by 175 percent between 2003 and 2012, the largest increase for the period among the top 15 spenders. Other countries with notable increases in military spending during the period 2003–12 were Vietnam (130 percent) and Indonesia (73 percent). Both are investing heavily in naval equipment.
SIPRI noted there were significant hikes in military spending in 2012 in the Middle East and North Africa. The Middle Eastern countries with the largest increases were Oman (51 percent), Saudi Arabia (12 percent) and Kuwait (10 percent). There was no data available for Iran, Qatar, Syria and the United Arab Emirates. In North Africa, Algeria is the dominant player, and grew its military spending by 5.2 percent.

Topics: Defense Department, DOD Budget, International