Finger on the trigger

Russia has provoked a new arms race: now, even its ‘allies’ want to protect themselves from it. Novaya-Europe’s analysis

Russia’s invasion of Ukraine has led to the biggest growth of the worldwide military-industrial complex in the last 20 years. All of the states bordering Russia — from Norway to Mongolia — are building up their military capacity, Finland and Sweden are planning to join NATO, Latvia is bringing back compulsory conscription, and Georgia is increasing its defence expenditure with the purpose of deterring “aggressive forces”. It is expected that the worldwide defence budget will reach a record high in 2023 and will then continue increasing. Novaya-Europe’s data department has studied the new arms race and its developments.

In 2021, the worldwide defence spending reached $2 trillion (complete data for 2022 has not yet been shared publicly) — which is six times more than what governments spend on fighting climate change. Only in the last ten years, according to the Stockholm International Peace Research Institute, the worldwide defence budget has gone up by 9% in real terms.

Half of the expenses belong to just two countries — the US and China: in 2021, the States spent $800 billion, while China shelled out $265 billion. Furthermore, back in the beginning of this century, China amounted for 2% of the worldwide defence budget, but in 2021, the number went up to 14%. In the next five years, Beijing plans to increase its military expenditure by 7% each year, which would be at least twice as fast as the growth rate of the US military-industrial complex.

In 2022, the entire world has become involved in the arms race. A war on European territory has led to unprecedented expenses on arms and increasing the size of armies, especially in the countries bordering Russia. According to analysts, the worldwide military-industrial complex will break records in the coming years: the Pentagon’s budget will grow by 10% already in 2023, while defence spending in Europe will increase by half by 2026.

This will inescapably lead to a tax increase or cuts to other state programmes: “Every euro spent on defence is an euro not spent on health care, accommodation, pensions, education,” military analyst for the Stockholm International Peace Research Institute Alexandra Markshteiner thinks.

The neighbours are scared the most

In 2022, 35 out of the 40 countries responsible for over 60% of all worldwide military expenses increased their defence budgets. Among the leaders when it comes to growing the military-industrial complex is Kazakhstan: financial contributions to the republic’s defence have jumped by 75%. In July, Wall Street Journal published a story on the government’s plan to reform the army and strengthen the relations with the US, China, and Turkey following the start of the war in Ukraine.

In 2023, the growth of the military-industrial complex will speed up. Poland is one of the leading countries planning to grow their military capacity. Its defence expenditure will almost triple — from $13 billion to $31 billion.

“The best strategy is to deter the opponent with the power of one’s own army and through cooperation with others,” Poland’s Prime Minister said during military exercises in November. In 2023, the budget of the country’s Defence Ministry will be higher than the military budgets of Ukraine, Turkey, and almost all European countries.

In November, two missiles fell on the territory of Poland, near the Ukrainian border. A week later, a shell ended up on the territory of Moldova. “This once again proves that Russian missile terror poses a huge threat not only to the safety of Ukraine, but also to the safety of neighbouring countries,” the spokesman of the Ministry of Foreign Affairs of Ukraine Oleh Nikolenko said.

In 2023, Moldova plans to increase its defence budget by 75%. “We need to develop our defence sector, including air defence, or join different associations that were created at the EU level,” Moldova’s Minister of Defence Anatolie Nosatîi stated during the Moldova-Europe Integration Forum.

Armenia ranks third when it comes to the growth of the military-industrial complex. Amid the conflict with Azerbaijan, the government plans to increase defence expenses by 50%. After the recent clashes on the border, Yerevan’s officials lamented Armenia’s lack of modern arms. The country’s Prime Minister Nikol Pashinyan said that Russia failed%252520in%252520military%252520expenditures.) to supply weapons and lost control over the Lachin corridor that connected Nagorno-Karabakh with Armenia.

Our methodology

To analyse the worldwide defence spending, we used the data provided by the Stockholm International Peace Research Institute that covers the period from 1949 to 2021. To estimate the defence expenditure in 2022 and the corresponding plans for 2023, we limited the sampling to 40 countries (Europe, the US, Canada, Central Asia, South Caucasus, Japan, Mongolia, Turkey) and used the data provided by NATO and open sources.

To estimate the size of the armies, we compared the number of servicemen in Europe, Asia, the US, and Canada based on the reports by Military Balance in 2018 and 2022. The data on the amount of military aid provided to Ukraine was taken from the Kiel Institute for the World Economy.

The new leader in the arms race is Turkey. Last year, Turkey’s government increased the army’s financing by 30%, and in 2023, it went up by 50%. “As a result of increased threats in the world and in our neighbourhood, we are increasing our defence budget for 2023 to a high enough level, 469 billion liras [$25 billion]”, President of Turkey Recep Tayyip Erdoğan said in October. Meanwhile, Turkey’s Defence Minister called on Greece and Cyprus to refrain from further arms procurement, so as not to “end up in a deadlock situation”.

“China and Turkey armed themselves 20 years ago, and today they’ve started on rearmament, to be able to move towards more developed systems,” military analyst Pavel Luzin says. “China can spend bigger amounts of money on this goal: inside the country, a solid industrial complex has had the time to develop. The neighbours feel the threat and also begin to invest in defence.”

The growing military potential of China and Russia’s aggressive actions made Japan rethink its pacifist policy: by 2027, the country will have doubled its military expenses — for the first time since the Second World War.

NATO’s second life

The worldwide military-industrial complex was growing steadily up until the end of the 2000s. In 2010, the biggest economies led by the US and UK paused the increase of military spending. The growth of military financing resumed after Crimea’s annexation. Back then, NATO member states held a summit in Wales to discuss “Russia’s actions against Ukraine which challenged the fundamental principles of a united, free, and peaceful Europe”.

Following the meeting, it was decided to “reverse the trend of declining defence budgets”: the Alliance members pledged to spend no less than 2% of GDP on their defence budget by 2024. In 2014, this was only being done by the US, UK, and Greece. By 2022, the Baltic states, Turkey, Poland, Slovakia, and Croatia had joined them, however, this is still not even half of the Alliance’s 30 members.

Western Europe countries — Luxemburg, Spain, and Belgium — spend the least on their defence, while all of the Baltic states and Poland, located near the Russian border, have exceeded the threshold set by NATO.

“All of the Alliance members won’t be able to reach 2%,” military expert Pavel Luzin says. “But the key countries have already either done it or will achieve the goal in the next couple of years, seeing as the Russian threat is quite real.”

On 5 July, NATO member states signed protocols on Finland and Sweden joining the North Atlantic Treaty. Both countries will be able to join the Alliance as soon as all of the existing members ratify the protocols. Out of the 30 members, only Turkey and Hungary are yet to do so.

“De facto, Sweden and Finland are already members of the Alliance,” Luzin says. “De jure, they will become members even if Turkey continues throwing a spanner in the works, seeing as for these countries a direct Russian threat exists. NATO is their guarantee of strengthening defence.”

From 1994, Sweden and Finland held the status of NATO partners. “It was clear after the 24th of February when Russia made this full-scale invasion of Ukraine that there was a difference between partnership and membership. Ukraine was also partner to NATO. Yeah, it didn’t help,” Sweden’s Minister of Defence Pal Jonson declared.

In its turn, Sweden promised to increase defence spending — up to 2% of GDP, just like NATO has been asking from its members since 2014. Finland reached this target in 2021. Sixteen member states pledged to reach it by 2024.

The main reason for the invasion of Ukraine announced by the Kremlin is NATO’s expansion to the east. But as of now, Russia’s foreign policy has been backfiring:

as Novaya-Europe reported last year, following the annexation of Crimea, the Alliance deployed its soldiers in Eastern Europe, and following the beginning of the full-scale war, it increased its military contingent in Poland and the Baltic states 3.5 times — from 5,000 to 18,200 people.

Return of compulsory conscription

In the 21st century, almost all of Europe got rid of compulsory conscription. Many were considering getting rid of conscription in the near future: Kazakhstan declared its plans to cancel conscription by 2016, Moldova — by 2020. Even Vladimir Putin talked about the necessity for only contract service to remain in the future.

However, many countries had to rethink their decisions and bring back compulsory conscription (for example, Latvia and Sweden). In the last five years, the number of troops did not decrease in Europe, Asia, the US, and Canada, while many European countries saw an increase in the number of servicemen. The military contingent was increased by the Baltic countries, Montenegro, Croatia, Bosnia and Herzegovina, Czechia, Bulgaria, and other Eastern Europe countries.

The best defence is aiding Ukraine

Lithuania approved a record military budget for 2023 — 2.5% of the country’s GDP — and if necessary, it is ready to increase it to 3%. Out of NATO member states, only Greece and the US spend more on defence. According to Lithuania’s Defence Minister, that is necessary if the country intends to continue further rendering military assistance to Ukraine.

During the ten months of combat, the military aid to Ukraine reached $40 billion (Ukraine also receives humanitarian and financial aid, but we did not count it in our calculations). The main donor is the US: 60% of the money transferred to the needs of Ukraine’s Armed Forces was given by the Pentagon.

However, for the US economy, these expenses are less noticeable than for European countries: the US allocated 3% of its defence budget and 0.001% of its GDP to the support of Ukraine, while Estonia and Latvia gave Kyiv 40% of its national defence spending.

Estonia’s Defence Minister Hanno Pevkur explains that “the decisions to support Ukraine today reduce the Russian strength to behave irrationally” in the Baltic region, which means that “Ukraine winning the war will also increase Estonian security”.

Europe and the US have no plans to decrease the amount of military assistance provided to Ukraine in 2023. UK Prime Minister Rishi Sunak has promised to increase the military aid to the Ukrainian Armed Forces in 2023 compared to the 2022’s $2.8 billion and has called upon the countries of Northern Europe to do the same: “We know that their security is our security. We will continue to stand with Ukraine.”