Summary

Global military expenditure in 2008 is estimated to have totalled $1464 billion. This represents an increase of 4 per cent in real terms compared to 2007, and of 45 per cent since 1999. Military expenditure comprised approximately 2.4 per cent of global gross domestic product (GDP) in 2008. All regions and subregions have seen significant increases since 1999, except for Western and Central Europe.

During the eight-year presidency of George W. Bush, US military expenditure increased to the highest level in real terms since World War II, mostly due to the wars in Afghanistan and Iraq. This increase has contributed to soaring budget deficits. The conflicts in Afghanistan and Iraq have been funded primarily through emergency supplemental appropriations outside the regular budgetary process and have been financed through borrowing. The use of supplemental appropriations has raised concerns about transparency and congressional oversight. These conflicts will continue to require major budgetary resources in the near future, even supposing early withdrawal of US troops from Iraq.

In Western and Central Europe spending remained fairly flat in 2008, although some recent and prospective NATO members increased military spending substantially. In Eastern Europe, Russia continued to increase spending and is maintaining plans for further increases despite severe economic problems.

Spending increased across most of Asia. China, India, South Korea and Taiwan accounted for the bulk of the increase.

Algeria’s spending increased by 18 per cent in real terms to $5.2 billion, the highest in Africa, driven by strong economic growth and a growing insurgency.

In South America, Brazil continued to increase spending as it seeks greater regional power status.

Military spending in the Middle East fell slightly in 2008, although this is probably temporary, with many countries in the region planning major arms purchases. In contrast, there was a large rise in Iraq, whose 2008 military budget was 133 per cent higher in real terms than its 2007 spending. While previously most funding for the Iraqi security forces came from the United States, this has been increasingly replaced by domestic funding. Iraq remains highly dependent on the USA for arms supplies, with numerous major orders planned.

Dr Sam Perlo-Freeman (United Kingdom) is a Senior Researcher with the SIPRI Military Expenditure and Arms Production Programme.

Catalina Perdomo (Colombia) was a Researcher with the Senior Researcher with the SIPRI Military Expenditure and Arms Production Programme until March 2009.

Elisabeth Sköns (Sweden) is the Leader of the Senior Researcher with the SIPRI Military Expenditure and Arms Production Programme.

Petter Stålenheim (Sweden) was a Senior Researcher with the Senior Researcher with the SIPRI Military Expenditure and Arms Production Programme.