Military Budgets Fall in the West, Rise in China, Russia, Middle East

The United States still is by far the world’s largest military spender, with a budget of $640 billion in 2013. But U.S. defense spending is down from a a year ago, while the next three largest military powers — China, Russia and Saudi Arabia — have made substantial increases, according tonew data by the Stockholm International Peace Research Institute.

SIPRI estimates China’s military budget at $188 billion, Russia’s at $87.9 billion and Saudi Arabia’s at $67 billion. Saudi Arabia leapfrogs the United Kingdom, Japan and France to become the world’s fourth largest military spender, said SIPRI. China, Russia and Saudi Arabia are among the 23 countries around the world that have more than doubled military budgets since 2004.

China’s spending increased by 7.4 percent in real terms since a year ago, said Sam Perlo-Freeman, director of SIPRI’s military expenditure program. “While China has been behaving more assertively in recent years in territorial disputes with Japan in the East China Sea, and with the Philippines and Vietnam in the South China Sea, these heightened tensions do not seem to have changed the trend in Chinese military spending, which represents a long-term policy of rising military spending in line with economic growth,” he said.

Russia upped defense spending by 4.8 percent. Its share of defense as a percentage of gross domestic product (4.1 percent) exceeded that of the United States (3.8 percent) for the first time since 2003, SIPRI noted. Russia’s spending is fueled by its so-called “state armaments plan” that calls for investment of 20.7 trillion rubles ($705 billion) on new and upgraded armaments, the report said. The goal is to replace 70 percent of equipment with modern weapons by 2020.

For U.S. defense contractors that are eyeing new markets, there are good and bad news in SIPRI’s military-spending rankings. Rising powers’ China and Russia defense defense markets are not accessible to U.S. suppliers, although their expansionist policies are fueling regional military spending by countries that are U.S. allies.

Saudi Arabia has become a key customer for U.S. arms suppliers. Its projected expenditures on Boeing-made F-15 SA fighters could total $10.6 billion through 2019, according to the consulting firm Avascent. “It is the largest ongoing procurement initiative and also the largest foreign military sales transfer to Saudi Arabia,” said Avascent analyst Sebastian Sobolev. Sales of munitions for the F-15 SA could mean an additional $6.8 billion in sales. The Saudi Air Force is also expected to begin taking deliveries of the Lockheed Martin-made C-130J and KC-130 cargo aircraft, a $6.7 billion deal announced in 2012. “Though much of the recent investment has focused on airborne and ground platforms, Saudi Arabia seems set to shift focus to naval modernization,” Sobolev said. “Though requirements remain ill-defined, this program could include the procurement of large surface combatants and submarines.”

Saudi Arabia and Iraq dominate arms spending in the Middle East, which increased by 4 percent in 2013, to about $150 billion, SIPRI estimated. Saudi Arabia’s spending alone soared by 14 percent, to reach $67 billion, said Perlo-Freeman, “possibly due to tensions with Iran but also the desire to maintain strong and loyal security forces to insure against potential Arab Spring type protests.”

SIPRI analysts said 2013 saw falling defense budgets in Western countries, led by the United States, while military spending in the rest of the world, excluding the United States, increased by 1.8 percent. Global military expenditures reached $1.75 trillion in 2013, a drop of 1.9 percent in real terms since 2012.

A 7.8 percent slide in U.S. spending in 2013 is the result of the end of the war in Iraq, the beginning of the drawdown from Afghanistan, and the effects of automatic budget cuts passed by the U.S. Congress in 2011, Perlo-Freeman noted. “Meanwhile, austerity policies continued to determine trends in Western and Central Europe and in other Western countries.”

Topics: Aviation, Tactical Aircraft, Business Trends, International, Procurement