
Global military spending fell for the first time since 1998 despite spending increases in Russia and China, according to the Stockholm International Peace Research Institute’s (SIPRI) annual report, which was released on Monday.

“Global military expenditure fell in 2012, to $1753 billion, equivalent to 2.5 percent of global gross domestic product (GDP). Although the fall was only 0.5 percent in real terms, this was the first decrease since 1998,” the report said.

SIPRI attributed the drop to a decline in military spending in North America, Western and Central Europe, and Australia. By contrast, Eastern Europe and Russia as well as China continued to see a rise in defense spending.

Of Russia’s defense budget, the third largest in the world after the U.S. and China, the think tank said, “Russian military expenditure rose 16 percent in real terms in 2012. Further large rises are planned in 2013–15.”

Asia also continued to see a rise in military spending, with China leading the way at an estimated 7.8 percent increase. Overall, SIPRI estimated China’s defense spending to be US$166 billion, a 175 percent increase since 2003.

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Five Asia-Pacific nations— China, Japan, India, South Korea and Australia— were among the top 15 nations in terms of defense spending, according to SIPRI. Russia, the U.S., and Canada were also among the nations that made the list.

SIPRI did note that Asia’s military spending rose at a slightly slower rate than in previous years. This may be attributable to the decline in China’s overall economic output growth rates. Some observers suspect that China quietly reduced its defense spending in 2012 to bring it in line with reduced economic growth rates.

Notably, Japan actually surpassed France as the fifth largest defense spender in 2012, although this took place despite a 0.6 percent decline in actual military spending. With defense spending at $US59.3 billion, Tokyo still only spent one percent of its GDP on the military.


On the other hand, SIPRI estimated that Saudi Arabia overtook India as the 7th largest defense spender in the world after Delhi’s military budget declined 0.8 percent while Saudi Arabia’s grew by 12 percent last year. Overall India’s military spending has grown 65 percent since 2003, although it has declined slightly as a percentage of GDP since that time.

At nearly 9 percent of GDP, Saudi Arabia by far spent the most of its total economic output on defense relative to the other 15 largest military spenders last year.

Perhaps the biggest change this year came from the United States, which saw its defense spending decline by 6 percent, although it was still 69 percent higher in real terms than in 2001 at the time of the 9/11 terrorist attacks. The report said that this drop in defense spending was mostly attributable to a decline in Overseas Contingency Operations (OCOs) funds, which pay for the wars in Afghanistan and Iraq. OCO funds dropped to just $115 billion from $159 billion in 2011. Even still, this mean just one country in the world, China, spent more on overall defense than the U.S. is spending on the wars it is currently fighting.

SIPRI also noted that Washington’s share of global defense spending fell below 40 percent for the first time since the end of the Cold War in 1991, although it still spent the same amount as the next 10 countries combined.