As indebted governments boost military spending, what about climate change and other pressing needs?

Defence binge means government debts will rise, funds for all other pressing needs are in jeopardy and rich-country promises to help developing countries will ring hollow

David Dodwell

Published: 9:30pm, 21 Jul 2023

Why you can trust SCMP

As Russia’s cynically named “special military operation” in Ukraine grinds ruinously on, the direct toll in lives, dollars and the dislocation of the global food trade continues to mount. The cost of military and humanitarian support to Ukraine, according to the Kiel Institute, had risen to US$185 billion by the end of May.

But of even greater concern, the indirect cost runs to trillions, in particular as governments boost defence budgets in the name of national security. For arms producers, their lobbying efforts have rarely been more effortless and rewarding. But few citizens can share their joy.

The depressing reality is that every extra dollar spent on defence and the military is a dollar not available for other pressing needs. It means dollars not available to fight climate change or build the renewable energy infrastructure needed to replace fossil fuels and halt global warming.

It means more procrastination across the “rich” world over unkept promises to provide US$100 billion a year in climate finance to developing economies struggling to keep their heads above water – sometimes literally.

It means dollars not available to rebuild healthcare after Covid-19, and protect us against the next pandemic. It is a major contributor to the big squeeze on government budgets across the world, with few political leaders clear on where new funds for defence will come from, and where spending will have to be cut. The challenges are made worse by the surge in inflation, which has sent debt-service costs soaring.

Among the first to boost military spending after Russia’s invasion of Ukraine was Germany, with Chancellor Olaf Scholz promising a €100 billion (US$112 billion) increase (over an unclear timeframe) in his speech about a Zeitenwende, or start of a new era. Since then, many European countries have followed, pledging increases in defence spending to levels not seen since the Cold War.

The launching of the Sarmat intercontinental ballistic missile at the Plesetsk testing field in Russia on April 20, 2022. The number of nuclear weapons in the world is set to rise in the coming decade after 35 years of decline, according to SIPRI. Photo: Russian Defence Ministry/ AFP

Most promise to lift their military budgets to at least 2 per cent of their gross domestic product. What used to be Nato’s target for military spending – historically ignored by most members – is becoming a spending floor. Defence spending increases in Europe recorded last year by the Stockholm International Peace Research Institute (SIPRI) were already significant – 13 per cent in Belgium, 12 per cent in the Netherlands and Sweden, and 11 per cent in Poland, for example.

Few European governments making clear where these extra funds will come from, but the 2 per cent of GDP measure is likely to be a firm target. In France, President Emmanuel Macron has just committed to a 40 per cent boost in military spending to €413 billion (US$460 billion) over the budget period from 2024 to 2030, with critics mocking him for building “a bonsai army” – with a range of capabilities but on a tiny scale.

How Macron and other European leaders finesse these commitments against massive government debt and huge political pressure over spending cuts (note France’s street riots over efforts to cut spending on pensions) remains unclear.

Ukraine, admittedly in a category of its own, saw military spending rise by 640 per cent last year to US$44 billion, obviously with no idea how to meet the ultimate cost of the war and rebuilding.

Outside Europe, and only partly driven by the Ukraine war, both Japan and Australia have committed to big increases in defence spending. In Japan, the Kishida government plans to lift defence spending from 1.1 per cent of its GDP to 2 per cent by 2027 – an increase of about US$36 billion a year.

01:46

Japan to offer military aid to ally nations in historic departure from post-WWII military pacifism

The Australian government, which is committed under the Aukus agreement to expand its military reach across Asia, will have to do so “unsupported by any additional funds for the next four years” due to a tight budget, according to the Australian Strategic Policy Institute. But from 2027, defence funding will begin rising: from 8.2 per cent of government spending today to 9.7 per cent in 2032.

With A$9 billion (US$6 billion) needed for new nuclear submarines, A$3.8 billion to strengthen its northern military bases, A$2.5 billion to develop long-range strike capability and A$924 million for “enhancing Pacific engagement”, the boost in military spending is likely to be permanent, and will come at a cost to other services.

The biggest single diversion of funding will, of course, come in the United States, whose military spending at US$877 billion last year dwarfed every other country’s. It accounted for 39 per cent of military spending worldwide, 12 per cent of US federal spending, and almost half of the US government’s discretionary spending.

25:48

China is ‘big winner’ in Ukraine-Russia war, says leading US political scientist

Notwithstanding this huge commitment, the US has been the biggest single supporter of Ukraine (US$19.9 billion last year), and the US Defence Department is pressing for an extra US$30 billion for munitions and US$315 billion for new weapons. With the US political obsession over “national security” only likely to grow in the run-up to the presidential elections next year, there is little doubt these demands for additional funding will be met.

Where the needed funds will come from is another matter: national debt sits at an eye-watering US$32 trillion, and Republicans and Democrats are at loggerheads over where spending can be cut to make additional defence spending possible.

Reviewing this global picture of a seemingly irresistible and long-term pressure for large increases in defence spending that is likely to amount to hundreds of billions of dollars a year, only one set of conclusions is clear. Government debts are set to continue rising, funds for all other pressing needs are in jeopardy and rich-country promises to help developing countries in the challenging decade ahead are cynically hollow. Germany’s Scholz is right to talk of a Zeitenwende.

David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades