Austerity in Europe? Tighten the military belt

Five years into the economic crisis in Europe and the elephant in the room is the role of military spending in causing and perpetuating the economic crisis. As social infrastructure is slashed, spending on weapon systems has hardly been reduced. Part one of two essays on military spending and the EU crisis.


HMS Astute arrives in the port of Faslane, Scotland. LA(Phot) J Massey/Royal Navy. Crown Copyright.

Since the economic and financial crisis broke in Europe in 2008, most analysis on the causes of the current crisis have focused on the core role of the financial sector. The effect of sustained high military spending in this context has barely been a subject of discussion, even though it has clearly contributed to fiscal problems, especially in countries such as Greece, Portugal and Spain.

Between 2002 and 2009 Greek military expenditure rose 50 per cent, only to be cut in 2010. In contrast, perceived arch rival Turkey cut its defence budget 15 per cent over that period. 

Similarly, Spain increased its military expenditure by 29 per cent between 2000 and 2008, largely due to the purchase of new weaponry. With current spending levels down - 18 per cent between 2008 and 2011 - it is now facing huge problems in fixing its budget and repaying the debt for unnecessary military programmes. 

Lower military spending over the past decade could have mitigated the severity of the current fiscal and socio-economic problems. Hardest-hit countries have had to cut military budgets significantly, but often only after many years of excessive spending.

Even the most recent casualty of the crisis, Cyprus, owes some of its debt problems to a 50 per cent increase in military spending over the past decade; the majority of which came after 2007. 

In other EU countries where military spending has barely been affected over the past five years - despite general austerity programmes - there is a strong case for slashing budgets for arms rather than education, health or other social expenditure. Overall military spending in Europe is higher today than in 2001.

Europe still overspends on military and arms

According to new data released last week by the Stockholm International Peace Research Institute (SIPRI), in 2012 world military expenditure fell for the first time since 1998 – by a miniscule 0.5 per cent. It is estimated to amount to a staggering $1.75 trillion. Corrected for inflation, global military spending today is higher than at its peak near the end of the cold war. The United States is by far the largest spender, accounting for some 40 per cent of the global total – more than the next fourteen main spenders combined.

SIPRI noted the relative rise of military spending by Russia, China and other emerging economies, whose high economic growth have been translated into similar boosts of their armed forces. This has led EU and NATO leaders to claim that this loss of dominance on the world stage will harm Europe.

Indeed, ever since Anders Fogh Rasmussen became NATO chief in 2009, his warnings of Europe losing relevance due to budgetary pressures have become a mantra. In February 2013, at the trans-Atlantic security conference in Munich, he said: "Security challenges won’t wait while we fix our finances. And more cuts now will lead to greater insecurity in the future, at a cost we simply can't afford". He has been echoed by figures such as Gen Patrick de Rousiers, the French chairman of the EU Military Committee, who at a recent hearing in the European Parliament (EP), asked: “What place can a Europe of 500 million inhabitants have if it doesn’t have credible capacity to ensure its security?”

Such unrelenting repetition of alarmist language in the media – and the absence of critical response - has led many people to believe that indeed armed forces have been cut back to their bare bones. 

But Europe, with only 7 per cent of the world’s population and 20 per cent of global military expenditure, has no reason to fear that military spending is too low. The UK, France, Germany and Italy all belong to the world’s ten largest military spenders.

Adding up national defence budgets, the EU is second to the US, but far ahead of China or Russia. De Rousier's military-obsessed perspective banishes the more pressing security problems many Europeans face today: rather than new fighter aircraft or submarines, they want decent jobs, an adequate income and proper access to social and health infrastructure.

New weapons

Where there have been defence cuts they have almost entirely fallen on people - reductions in personnel, lower wages and pensions – rather than on arms purchases.

The combined EU budget for arms purchases actually rose from €38.8 billion in 2006 to €42.9 billion in 2010 – up more than 10 per cent - while personnel costs went down from €110.0 billion in 2006 to €98,7 billion in 2010, a 10 per cent decrease that took largely place between 2008 and 2009. Operational costs, such as maintenance and fuel, largely stayed constant at €44 billion.

Despite the crisis, major new weapons programmes still dominate military planning, be they nuclear weapons, fighter aircraft, armed drones, or NATO’s missile defence plans. In January 2013, UK defence secretary Philip Hammond outlined plans to spend almost £160 billion (€190bn) on new defence equipment by 2022. The programme includes £35.8 billion (€42.6bn) for submarines, including a replacement for the Trident nuclear system.

According to a recent report by Royal United Services Institute (RUSI), “submarine and deterrent spending” - the Successor programme to replace Trident – is alone set to account for around 35 per cent of the total procurement budget by 2021/22. “The MoD may need to find around £11 billion (€13bn) in savings over ten years as a result of the [recent] decisions”, warns Prof Malcolm Chalmers, RUSI's research director.

Abolishing nuclear weapons in Europe could save several billions of euros every year for France and the UK – Europe’s sole possessors of such weapons. It would fulfil a major pledge made by these countries under the nuclear non-proliferation treaty to finally eliminate nuclear weapons. 

As UN Secretary-General Ban Ki-moon wrote in an opinion piece in August 2012:

“Let us dramatically cut spending on nuclear weapons, and invest instead in social and economic development, which serves the interests of all by expanding markets, reducing motivations for armed conflicts, and in giving citizens a stake in their common futures. (…) [N]ational budget priorities still tend to reflect the old paradigms. Massive military spending and new investments in modernizing nuclear weapons have left the world over-armed - and peace under-funded.”

Less jobs

It cannot be argued that investment in military and arms is at least a good job-creator. Many research studies show that investment in the military is the least effective way of creating jobs, regardless of the other costs of military spending. According to a University of Massachusetts study, defence spending per US$ one billion creates the fewest number of jobs, less than half of what it could generate if invested in education and public transport. 

The reality is that, at a time when the European Commission's agenda of permanent austerity faces ever-escalating challenges, there is one area where Europe could do much more to impose austerity. And that is the arena of military spending and the arms industry.

Reductions of all the EU nations' military spending to Ireland's levels - 0.6 per cent of GDP (one of the few crisis countries for which military spending did not play a role) - would save many more billions. 

Perversely, the voices that are protesting the loudest in Brussels are the siren calls of military lobbyists, warning of 'disaster' if any further cuts are made to military spending. But the real disaster has emerged from years of high military spending and corrupt arms deals. This dynamic contributed substantially to the debt crisis in countries such as Greece and Portugal, and continues to weigh heavily on future budgets in all of the crisis countries.

Read part 2 of Frank's essays on military spending and the EU crisis here.

About the author

Frank Slijper is a senior researcher at the Campagne tegen Wapenhandel (Dutch Campaign against arms trade) and a research associate with the Transnational Institute (TNI). His study ‘Guns, debt and corruption – Military spending and the EU crisis was published in April, 2013.