The week in which Pakistan narrowly failed to win the Asia Cup seems as appropriate as any to use one of the many phrases George Orwell contributed to the English language. Orwell described sport as ‘War, minus the shooting.’ He was using gentle humour to point out the absurdity of how people will passionately support a sports team, simply because it is wearing the right clothes and carrying the right flag. What connection do the 30 million inhabitants of Karachi have with the $ millionaires of the Pakistan cricket team? Why do we allow ourselves to become so invested in the really rather pointless activity of sport?
Why sport matters is not the subject of this blog. Orwell’s description of sport is used here as a metaphor for defence spending. Although defence spending might be geared towards the conduct of military operations, most of the time, in most states, most military forces are not actually doing any fighting. For the sake of clarity, I mean this in two ways:
First, the state in question may not be involved in any military operations. Most states in Europe fall into this category right now, with the exception being those states that contribute to multi-national security operations in Africa or the Middle-East.
Second, even for those states that are carrying out combat operations on an ongoing basis, most of their military is not actively engaged at any given time. There are obviously exceptions to this. The entire Ukrainian military is engaged right now and a large percentage of the Russian military too. But most of the US military is just doing what it normally does in peacetime: recruiting, training, repairing equipment, testing new equipment and complaining about the food.
Defence spending is an oddity in that it is the one part of a state’s budget that does not produce guaranteed results. Health spending makes people healthy, or at least, less unhealthy. Education spending, at least in theory, makes people more educated. Welfare spending keeps people alive. Defence spending is presumably designed to produce security for the state and its population. Yet defence spending may produce no meaningful results at all. If a state is not engaged in any form of military operations, then it is hard to measure the results that the spending produces. One might argue that a strong military acts a deterrent, providing an intangible but nonetheless real benefit to a state. But using the example of the United Kingdom (UK), this would only justify spending on the states nuclear weapons programme. All the other forms of defence spending are optional. There is also the argument that a strong military can provide Military Aid to the Civil Authority (MACA). An example would be something like flood disaster relief. But it is hard to see why the state should retain a military force for this, rather than just spending money on a civil contingency organisation. A single F35B Lightning II fighter costs the UK over $100 million. It has no utility in disaster relief.
Far from providing greater security, it may be that there is an inverse relationship between defence spending and security, in that those states that spend a lot on defence tend to be less secure than those that spend very little. In 2020, Ireland spent 0.3% of Gross Domestic Product (GDP) on defence. Its immediate neighbour, the UK, spent 2.2%. Yet it is the UK which faced the greater security threats. This is because a larger military encourages the state to use military force: it is more likely to use violence as a tool of international relations because it can. Thus, it gets into military conflicts because it can. This is a simple, yet troubling observation.
The fact that states do continue to spend large sums of money on defence has more to do with varied political reasons rather than strictly security concerns. Levels of defence expenditure are symbolic of a state’s intentions and sense of its place in the world. This is why the UK’s defence expenditure has always remained relatively stable: it is linked with the historical memory of the UK’s as the global superpower, before the rise of the Soviet Union (USSR) and the United States of America (USA). States may justify military expenditure on the basis that it provides a significant source of export revenue and influence over states that purchase their defence products. In the particular example of the USA, ‘pork-barrel’ politics drives up defence spending, when members of Congress campaign for weapons systems built in their constituencies. There is no doubt that corruption plays a role in pushing up defence spending in certain states. States that have historically been described as non-aligned, like India, tend to spend inefficiently because they do not want to be tied to a single arms provider. The fear is that a chill in relations will leave them with equipment they cannot maintain. They thus tend to buy the same capability from multiple suppliers and this inevitably costs more. States may be obligated to spend a certain amount on defence, either literally, as a result of an agreement or pledge, or morally, because of pressure from allies. NATO member states have pledged to spend 2% of GDP on defence. They do not all do so and there is some creative accounting in the ones that claim they do. Russia’s special military operation in Ukraine has touched on many of these motivations. Germany, which for obvious historical reasons has not spent a great deal on defence (1.4% in 2020), has suddenly announced massive increases.
The fact of defence spending is not in dispute, nor the fact that it may be higher or lower than is strictly ideal for purely security reasons within any particular state setting. I intend to address the effect that it has within international relations. To be clear, we are not concerned here with the use of violence, but only creating the capacity for its use, although one accepts that the two are often linked.
Military spending in the First Cold War (1945-90)
In 2020 Pakistan spent 4% of Gross Domestic Product (GDP) on defence. By comparison, India spent 2.9%. Both of these figures are on the higher end of the spectrum, with 2.4% being the global average in 2020. India’s much higher overall GDP means that the real-world figure for India is substantially higher than Pakistan spends. It is a common misconception that the USA spends a vast proportion of GDP on defence. There tends to be an over-focus on the headline figure of USA defence spending at around $800 billion, but this is because the US economy is so huge. The US figure is high at 3.7%, but this is still lower than Russia at 4.3%. NATO states made political commitments to achieve 2%, but few have reached this and some of those that have count things like pension payments to veterans as part of military expenditure. In 2019, President Trump singled out Germany, as the second largest economy in NATO and the fourth largest on Earth, for particular criticism for failure to meet the target. President Putin has thus achieved what President Trump could not.
The last leader of the Soviet Union, Mikhail Gorbachev (2 March 1931 – 30 August 2022), passed away last month. Gorbachev came to power in 1985. He was only 14 years old when the Second World War ended and was thus the first Soviet leader (and of course the last) not to be shaped by fighting in an existential conflict of some kind. Gorbachev was significantly younger than his predecessors had been upon taking office. His three immediate predecessors all died in office, with the last two, not managing three years in office between them. Gorbachev did not die in office, but the office died around him. Gorbachev had come to power as a reformer. In 1985 everyone knew the Soviet economy was a disaster but even Gorbachev was stunned to find out precisely how terrible it was and how high defence spending was – around 16% of GDP. This was clearly unsustainable.
The problem with Soviet defence spending was the same problem that afflicted the entire economy: spending was inefficient and did not encourage technological development. The Soviet system positively discouraged entrepreneurship, risk-taking and the kind of free thinking that could occur in the West. This meant that the large amount of Soviet defence spending did not produce the kind of civilian spin offs that Western defence spending could benefit from, which in turn made the relative gap between Western and Soviet spending even larger. As an example, the Global Positioning System (GPS) technology that is used in mobile phones and saves hundreds of lives every year was first developed to enable US Submarine Launched Ballistic Missiles (SLBM’s) to find their targets. This is an example of defence spending that eventually caused the entire US GDP to grow. Gorbachev reached the conclusion that not only could the Soviet Union not afford to carry on spending at these levels, but that it would actually fall further and further behind as Western technology advanced: even if defence spending was kept at 16%, it would not in real terms produce the same capabilities that it previously had achieved. Western technological advances would act as a kind of corrosive inflation, fatally undermining the Soviet defence budget.
Could the Soviet Union’s enemies take any specific credit for this? In 1981, Ronald Reagan became President of the United States. A hawkish anti-communist, he quickly increased defence expenditure on offensive systems. In 1983, he began the Strategic Defence Initiative (‘Star Wars’) which suggested billions more in additional spending on defensive systems. Gorbachev came to power facing a domestic economy that was tanking and an overseas enemy that seemed to be able to spend its way towards a military advantage. The poor performance of Soviet troops in Afghanistan suggested that even the Soviet Union’s superiority in conventional arms might not be as great as was once thought. Plenty of Washington hawks from the 1980’s took credit for the end of the ‘evil empire’.
Yet hindsight is a dangerous thing. President Reagan and other Western leaders never suggested that high military spending would destroy European Communism. Western intelligence agencies underestimated how much the Soviets were spending on defence as a percentage of GDP. Even as late as 1989, no serious military experts or political commentators in the West were predicting the end of the Soviet Union. Gorbachev himself was the one person best positioned to make the comparisons between East and West, yet even he did not conclude that the competition was over. He genuinely believed that Communism could be made to work. Gorbachev let the genie of reform out of the Marxist-Leninist bottle, not realising that giving people some freedom and democracy rarely works. Once they have a taste of it, they tend to rapidly develop an appetite.
However, an objective achieved unconsciously still has identifiable roots. One should also consider the observation often made by historians, that events tend to have multiple causes. President Reagan and other NATO leaders may not have known that Soviet Communism was about to collapse without any need for military conflict between the two sides. Gorbachev did not know it either. Yet he knew enough to realise that the Soviet Union could not keep up with the West in the arms race. This, together with brave actions by the peoples of the Soviet Union and the states it hitherto controlled, led to the collapse. President Reagan wanted to increase defence spending to both put pressure on the Soviet Union and prepare for a potential conflict. He probably thought they were equally valuable objectives. History has shown that the first was rather more important than the second.
Military spending in the Second Cold War (2014-)
The obvious question is why does any of this matter today, given that the security environment of 2022 is radically different to 1982? First, closer examination of the security environment of 2022 reveals it is not that radically different from 1982. In 1982 the Soviet Union was trying to occupy the neighbouring state of Afghanistan. This was both to secure Soviet strategic interests on its borders and to demonstrate its willingness to use its military to other World powers. It is easy to see the parallels with Russia’s special military operation in the Ukraine. The type of conflict is different: Afghanistan was a counter insurgency, whereas Ukraine is an international armed conflict with recognizable front lines. Russian military spending is significantly lower than its Soviet equivalent. Yet there is evidence that Russia is running low on supplies. Whereas Western leaders are flooding Ukraine with weapons, Russia seems to have underestimated how long the conflict would take and thus what munitions expenditure levels would be. The use of large short range ballistic and cruise missiles by the Russians has practically stopped, because they do not have many left and the sanctions regime makes getting more difficult. Domestic production is not really a solution, as sophisticated weapons take far longer to build than to use. As I write, Iran and North Korea have been implicated in sanctions busting. Iran is supplying drones to Russia, North Korea rockets and artillery shells. Far from being a source of concern in the West, this seems to be a source of celebration: proof that Russia is desperate. Iranian drones are of relatively low quality, whilst the artillery shells and rockets supplied by North Korea are probably the same ones that the Soviet Union supplied to the North Koreans during the First Cold War. Russia is likely to have to spend more of its GDP on its military this year, even allowing for the fact its GDP has risen due to the increase in oil and gas prices. Russia still has to find states that will buy its oil and gas. It is fine to suggest that, for example, Pakistan should buy cheap oil and gas from Russia. Yet from where will Pakistan get the money for this? And is the benefit really worth the cost of alienating the West? Right now Pakistan needs help dealing with floods. Russia is not equipped to provide it.
Second, statements by President Biden, US Congressional hawks and other Western leaders suggest an open-ended commitment to providing Ukraine with weapons. At least part of the motivation for this is to wear the Russians down by making the conflict economically impossible to pursue. This costs the West money, but not as much as the sticker price of the weapons suggests. The cost of military technology is driven by two related factors: its complexity and the volume of production. When a new weapons technology is developed there is a huge amount of money spent on research and development (R & D). This is a lump sum cost and it always ends up being more than was originally planned. To get the true purchase price of a weapon, you have to divide the R & D cost by the number of weapons manufactured. You then add on the costs of manufacturing each individual weapon. This means the cost of metals, other materials, electronic components etc. So the formula looks like this:
R & D Spending ÷ Number of Units manufactured + Costs of manufacturing each weapon = Price of each individual weapon
Here is a worked example, based around the costs involved in developing a typical modern combat aircraft:
- Example 1
$10 billion ÷ 100 + $70 million = $170 million
This is a lot of money, buts its actually less than the US F22 combat aircraft programme cost, which worked out at $334 per airframe. The US B2 Spirit stealth bomber worked out at $2 billion per airframe. Note that it’s hard to show all the working out because of secrecy laws, but these final figures are acknowledged by the US Government as broadly accurate. Even at $170 million, few states could afford to buy enough aircraft to be useful.
It should be immediately obvious that if you can increase N, then P will be lowered. But there is another advantage – increasing N also tends to decrease C. This is simply the principle of bulk-buying and economies of scale, that anyone who has ever been grocery shopping understands. If we use the same worked example, but this time increase N a lot, whilst assuming a modest decrease in C, we get the following:
- Example 2
$10 billion ÷ 1000 + $65 million = $75 million
This is a much more attractive figure. The next question is how do we increase N? By exporting the weapon system. Ideally it is exported by selling it in numbers to a friendly state at the full $75 million price per unit. Ukraine cannot afford to buy weapons, so relies on being gifted them. This still incurs a substantial cost to the gifting state, but since it lowers the Price of weapon systems for the gifting state, it is not actually as expensive as it first appears. It effectively makes it cheaper for the gifting state to buy the weapons the gifting state needs to defend itself. There is another benefit for the gifting state, beyond purely cost-saving, because weapons manufacture supports well-paid jobs at home.
This formula does not include life-cycle costs, which is basically how much it costs to maintain the weapon. This is heavily dependent on how long the weapon stays in service and also tends to benefit from economies of scale. For example, if a state can have the same helicopter in service with its Army, Navy and Air Force, then life cycle costs will be lower. None of this is meant to suggest that providing military assistance to allies is never altruistic, just that it is never purely altruistic.
Keeping up with the Ukrainians
The continued large-scale provision of weapons to Ukraine by Western states is a surprise. The conflict is 7 months old. Many observers, especially in Moscow, assumed that the West would have tired of this exercise by now, since it involves a significant financial commitment in the pursuit of what is a largely ideological goal. Who governs Ukraine is not a question that directly effects people in Paris, Pittsburgh or Portsmouth, whereas their higher energy bills and taxes caused by defence spending are. But support for Ukraine appears to be holding up, even if this is partially the result of some incredibly unbalanced media reporting. As I write, the US has announced another $2.7 billion of aid to Ukraine, of which $675 million is military. This brings total aid from the US alone to $50 billion of which $13 billion is military. The figure for total aid is more relevant than the smaller figure for military aid. When a state is fighting off an invasion, all aid could be described as militarily useful.
There is a danger here. It is possible that if Russia finds it impossible to keep up with the Ukrainians in conventional arms, they may resort to use of their nuclear arms instead. There have been hints and threats to this effect. It still seems unlikely because the risks involved for Russia far outweigh the potential rewards. Yet the fact that there is even a discussion about the use of nuclear weapons in a supposedly rational context is troubling. Since 1990, fears of nuclear use have focused on either terrorist groups or so called ‘rogue states’, like North Korea. These would probably only involve a single device and would, with luck, not lead to a wider conflict. Nuclear use by a nuclear power against the interests of other nuclear power involves what is called ‘nuclear escalation theory.’ For example, Russia might consciously escalate the conflict by using one nuclear device in Ukraine. NATO then becomes the other party in this escalation, if they decide to respond in kind. The NATO response would have to target Russian territory, since Ukrainians would not wish to be saved by being further irradiated. Russia would view this as a disproportionate response, since Russia’s initial nuclear use was not directed at NATO territory. This would mean Russia would have to respond by hitting NATO territory. You can fill in the rest yourself. NATO might opt to avoid responding to the initial Russian escalation by ignoring the initial nuclear use. It would not be directed at a NATO member state, so there is no issue of invocation of Article 5 of the NATO Charter (the collective defence clause). Yet this would surely encourage further nuclear use by Russia, to the point that Ukraine would have to surrender. This scenario is one that has been wargamed since the first Soviet nuclear test of 1949 which ended the US nuclear monopoly. The only difference was that during the First Cold War, when Ukraine was part of the Soviet Union, the most likely scenario was a dispute somewhere in the Middle East.
Asymmetric warfare, asymmetric cost
These Middle East scenarios often involved Israel under threat from one its neighbours. Surrounded by enemies, Israel has to spend a large amount on the Israeli Defence Force (IDF) : 5.6% of GDP in 2020. The main threat to Israel comes from relatively primitive missiles and now drones launched from Hamas and its affiliates in Gaza. These are supplied by Iran. The wider existential threat comes from the large Iranian missile force. Even if Iran does not have a nuclear capability, these missiles are large enough and numerous enough to do significant damage. It is not so much that they would kill a great many Israeli’s but more that they would cause significant economic and social instability. Israel has always relied on a forward defence strategy. This means using force outside of its borders in order to protect them. This requires a mobile force, ready to take the initiative in operations. In the context of missile attacks, this meant attacking the launch sites, usually using air power. This strategy is still formally in place, but it suffered from three weaknesses, First, Israeli commanders do not know where the launch sites are until the first salvo has arrived. Second, the systems employed by Hamas are small and highly mobile. The military use a concept known as the kill chain to explain how they respond to mobile and evolving threats. This is especially relevant for terrorist or asymmetric threats. Asymmetric warfare occurs between a technologically advanced and large belligerent and a less advanced and weaker belligerent. The weaker side has to break the traditional rules of warfare to even up the odds. In this context, a simplified version of the kill chain involves identifying the threat, launching forces, initiating the use of violence and then assessing the results. By the time this has been applied by IDF officers to a missile attack launched from Gaza by four Palestinians driving a truck, the target will have moved. Third, Gaza is a densely populated place and the missile units are often close to civilian infrastructure. Following the rule of distinction in International Humanitarian Law (IHL) becomes difficult. The rule on proportionality presents a similar problem: a handful of missiles launched from Gaza would not warrant much in the way of a response, but over time, it could be debilitating to Israeli morale
In recent years Israeli military thinking has undergone a marked change of approach, moving to a more static form of defence. This can be seen in the deployment of two technologies, one ancient, the other cutting edge. In 2002, Israel began construction of a large security barrier in the West Bank, to give Israel greater control over the movement of Palestinians. Disregarding the fact that the wall is clearly unlawful under Public International Law (PIL), it has been statistically effective in reducing terrorist attacks. Building defensive fortifications is a technique as old as warfare itself, although the biblical example of Jericho might have made the Israeli’s think twice.
At the cutting edge, Israel has developed the best missile defence systems in the world. The Arrow system protects against larger ballistic missile threats from nearby states. This has not been tested in combat because no nearby state has been stupid enough to launch such an attack. The Iron Dome system operates on a smaller scale and has been tested extensively against missile attacks launched by Hamas from Gaza. It has been proven to be very effective. Other systems are in development, with David’s Sling set to operate between Arrow and Iron Dome. This, together with their forward defence strategy, gives Israel a great deal of security, but the problem for them again comes back to cost. The missiles that are fired at Israel by Hamas cost about $300 a piece. The Tamir missiles fired from the Iron Dome cost between $20,000-100,000 (Israel won’t confirm any figures). Iron Dome deliberately ignores missiles that are not heading to populated area, but it is also reported that Iron Dome often fires two Tamir’s to each incoming missile. We can use a worked example to see the economics of this. Even using the lowest figure for the cost of a Tamir, assuming Hamas fires just 5 missiles into Israel and assuming only one of them is heading for a populated area, the costings works out as follows:
5 (missiles fired by Hamas) x $300 = $1500
2 (Tamir interceptors fired by Israel) x $20,000 = $40,000
$40,000 ÷ 1500 + 26.66
It is thus 27 times as expensive for Israel to defend against an attack as it is for Hamas to launch one. This is sustainable at low levels, but not if a really serious bombardment is launched over a long period of time. The IDF has resorted to forward defence in such circumstances, which raises questions about the wisdom of Israel building missile defences. They only seem to be effective or economic if Hamas cooperates with Israel in limiting the scale of the attacks, something it has no interest in doing.
This is an example of how defence spending can have a political effect that is slightly different to the Russian example. In the Russian example, the provision of sophisticated, expensive weapons systems places economic and political pressure onto a powerful state. In the Israeli example, low tech, cheap weapons systems supplied to a non-state actor (Hamas) make defence economically and politically difficult for a powerful state. Aside from the purely economic costs involved, there is a geo-political and propaganda downside for Israel – how much good could $40,000 do for the people of Gaza? This comparison of defence spending with welfare spending has of course always been present, but Iron Dome gives it greater weight. As the missiles fly, they makes the linkage physically and morally real.
Israel’s missile defence represents a micro-level example of asymmetric warfare. Its far easier to demonstrate it on a macro-level. A study from Brown University suggests that In the last 21 years the US has spent over $8 trillion in pursuing the war on terror. The global total for all states must be well over $10 trillion. The results have been unimpressive.
We must do something, this is something, therefore we must do this
Defence spending is clearly not always rational, transparent or predicated on publicly claimed grounds. Leaders make moral commitments to protect their own people or to assist other states that are not always directly linked to military efficacy. Defence spending emerges as a symbol of both the strength and weakness of states. Sometimes the symbolism completely obscures the efficacy. This is when we should question it most closely. The military will always argue for adding capability. Allies will always ask for more aid in defence spending. Since the Russian special military operation in Ukraine began, NATO has spent $ billions moving military equipment closer to Russia and increasing the frequency of combat maneuvers. These initiatives have very little military utility. They are an attempt to show resolve and solidarity with allies. But there may come a point where increasing defence spending or aid produces no real advantages. The West cannot fight Russia, but it must do something. Increasing aid to Ukraine is something, therefore it must be done. The evidence from the fall of Afghanistan in 2021 is instructive. The US and its allies continued to pour resources into propping up the elected regime, even as it was becoming increasingly obvious that it was going to fall: the spending was not being done for reasons of military utility, but because it was the only way to be seen to be doing something about a disastrous situation.
