China, Russia, Saudi Arabia Boosted Defense Most as U.S. Cut

Chinese, Russian and Saudi Arabian defense spending increased the most last year, while U.S. expenditures declined, according to a report by the Stockholm International Peace Research Institute.

China’s defense spending rose 9.7 percent from a year earlier to $216 billion, and Russia’s increased 8.1 percent to $84.5 billion, the research group said in its annual report on global defense spending adjusted for inflation. Saudi Arabia had the biggest percentage increase among the top 15 spenders worldwide, rising 17 percent to $80.8 billion.

While the U.S. remains by far the world’s largest military spender, its expenditures in 2014 dropped 6.5 percent to $610 billion, reflecting a 20 percent decrease since 2010, according to the report.

The figures reflect intensifying global turmoil. Russia’s March 2014 annexation of Crimea sparked a conflict in Ukraine, and tensions simmer over territorial disputes in the East China Sea and South China Sea. Saudi Arabia continues to arm militants in Syria, joined a U.S.-led coalition against Islamic State, and last month launched airstrikes against Iranian-backed rebels in Yemen.

The data don’t reflect the sharp fall in oil prices in late 2014, and it’s unclear what effect that may have, the institute said in the report.

Many oil-producing countries in the Middle East such as Saudi Arabia are expected to be able to withstand any impact thanks to the “strong financial reserves” they accumulated during several years of high oil prices, according to the report.

Russian Economy

That’s not the case for Russia, which planned its spending boost before the start of the crisis in Ukraine. The Kremlin already has cut its planned expenditures for this year in consideration of its battered economy, the institute said.

“Falling oil and gas prices and economic sanctions have reduced state income dramatically and led to a major devaluation of the ruble,” the group said in a fact sheet on the impact of the Ukraine crisis on defense expenditures in Europe. “As a result, the initial defense budget for 2015, which was 4.2 trillion rubles ($69 billion), was cut by around 5 percent in the revised budget presented in March 2015, which made cuts to almost all budget lines.”

NATO Versus Russia

Russia still expects to have a substantial increase in total military spending for 2015 —- about 15 percent in real terms —- to 4 trillion rubles, according to the fact sheet. It said that almost all of the boost “is earmarked for procurement, which is set to increase by over 60 percent in 2015 and to remain at this higher level in 2016 and 2017.”

By contrast, North Atlantic Treaty Organization nations are unlikely to increase their spending to meet the required target of 2 percent of GDP, according to the fact sheet. Most of Western and Central Europe will see a downward trend from continued austerity policies while Baltic, Nordic and Eastern European countries that border Russia boost expenditures to withstand the Russian threat.

China’s military spending has generally kept pace with its economic growth rate, remaining a fairly steady share of GDP of 2 percent to 2.2 percent over the past decade, Sipri said.

Sipri’s estimate for China was about 66 percent above the official Chinese number of 808.2 billion yuan ($130.2 billion) for the year. Sipri has said in the past its figures take into account items including military research and development, arms imports, military construction and People’s Liberation Army pension costs that aren’t included in the official budget.

Japan spent about the same amount it did in 2013, dropping in rank to the world’s ninth-largest spender, according to the report. India took Japan’s place last year as the seventh-largest.

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