Chinese-US defence spending projections

MB13 China–US Defence Spending Projections
By Giri Rajendran, Research Associate for Defence and Economics

In preparing the latest edition of the Military Balance, launched last week in London and this week in the United States, the IISS team behind the book decided to try an experiment. Since the United States and China are the world’s biggest spenders on defence, and China a distant second, we wanted to see when both countries’ defence spending might converge.

We based our projections on several hypothetical scenarios, including one in which the trend rates of defence-spending growth over the past decade in the US and China were to continue, and another in which Chinese defence-spending growth was constrained by an economic slowdown. (Looking at past examples, particularly the 1980s Latin American debt crisis, we assumed that China’s economy would start booming again by 2031.) The US budget sequester was another variable we had to factor in.

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Debating regional missile defence

A StanA Standard Missile - 3 (SM-3) is launched from the USS Hopper (DDG 70) (Photo: US Missile Defense Agency)dard Missile - 3 (SM-3) is launched from the USS Hopper (DDG 70) (Photo: US MIssile Defense Agency)

A Standard Missile – 3 (SM-3) is launched from the USS Hopper (DDG 70) (Photo: US Missile Defense Agency)

By James Hackett, Editor of the Military Balance

Much press attention at this year’s Manama Dialogue will focus inevitably on the conflict in Syria and other consequences of the Arab Spring. But a set of other core issues also remain, including the threat perceptions of regional states, and Iran’s place in these calculations. Regional states, and international partners such as the US, remain concerned by Iran’s continuing drive to improve its ballistic missile capabilities, amidst  international preoccupation with Tehran’s nuclear programme. Given these uncertainties,  the development of regional military capabilities will likely figure high in delegates’ conversations Read the rest of this entry »


A defence dream born out of necessity

Copyright Eurofighter/Eurofighter Image Library

Alexander Nicoll, Director of Editorial, wrote an opinion piece in the Financial Times on the possible merger of aerospace companies EADS and BAE Systems.

EADS and BAE Systems are currently in talks to join forces – a deal Nicoll says is driven by a decline in western defence spending. In Europe, future production runs for aircraft are likely to be small. EADS and BAE both have business interests in other defence areas, but they can get a better ‘global market clout’ by making a combined attack on remaining budgets. The US market will remain an important source of business, and the Asia and Middle East will also be key markets in which the merger will help. But as Nicoll points out, there will be challenges for the resulting body – both from declining defence budgets (including potential additional cuts to the US armed forces), and from the merger itself, which will need to meld two different corporate cultures. ‘EADS is itself a case study in how difficult and time-consuming such a process can be,’ says Nicoll.

Read the full article here.


Grim watch at Farnborough: How far will defence spending fall

Farnborough International Airshow

By Douglas Barrie, Senior Fellow for Senior Fellow for Military Aerospace

The ebb and flood of transatlantic defense relations has long been in evidence at the Farnborough air show, at the political and industrial level both. A question on the minds of many of the more than 100,000 daily attendees will be just how low the spending tide could eventually drop, as Washington’s interest is now focused firmly on another ocean while Europe flounders in debt.

The 2012 show is the aerospace and defence industry’s first full opportunity to come together since the U.S. administration’s revised strategic guidance outlined ‘re-balancing’ toward the Asia Pacific, while sustaining its commitment in the Middle East. Europe, for more than half a century the preoccupation of US defence interest, also became the subject of a “strategic opportunity to re-balance.” In keeping with the general tenor of the defence debate in Europe this is certain to be in terms of a withdrawal. Read the rest of this entry »


Buying into Smart Defence

Chicago Nato Summit (Chicago Nato Summit Committee, photo by Will Knight

IISS’s Alexander Nicoll says a weak point at the recent NATO summit in Chicago was the failure so far to involve the defence industry more closely in the Smart Defence project. This is a topic that also interests Bastian Giegerich, IISS Consulting Senior Fellow for European Security. ‘Smart Defence will not blow over and go away as earlier capability initiatives have,’ Giegerich says in an article co-authored by Henrik Breitenbauch, from the University of Copenhagen’s Centre for Military Studies. Rather, this is ‘the beginning of a new way of thinking about how NATO does defence, including procurement’.

So instead of being influenced by past attempts into thinking of international cooperation in terms of delays and market-distorting principles, industry should seize the opportunity to ‘sell products that would not otherwise be sold’.

‘While earlier doctrinal revolutions have been about creating joint and combined forces, smart defence adds a third essential leg: internationalisation,’ the authors write. … ‘Each new capability development project will from the outset be designed with at least one allied nation.’ Indeed, Giegerich and Breitenbauch suggest, some new spending will probably only get green-lit if it is international.

It is easy to criticise Smart Defence, Giegerich admits in another article in the latest issue of Survival. ‘Some will say it is a fancy new term for old ideas. Others might argue that it will not work, for a whole host of reasons, or suggest that projects long under way or lacking ambition have been repackaged to create the illusion of progress.’ Yet, while acknowledging the validity of these criticisms, he insists that the challenge remains to make better use of scarce resources in an era of uncertainty. ‘This, after all, is the core business of strategy,’ Giegerich says.

Read more in Survival: NATO’s Smart Defence: Who’s Buying?



Charting the shift in defence spending

Much of the press coverage of yesterday’s launch of the Military Balance 2012 has focused on the continuing shift in relative military strength away from the West and towards Asia. Many reporters have understandably honed in on the fact that Asian defence spending is set to overtake Europe’s this year, for the first time in modern history. Here are some of  last year’s raw figures.

Figure: Comparative Defence Statistics (click for larger view)


A signal of ongoing cooperation

By Douglas Barrie Senior Fellow for Military Aerospace

Intelligence and nuclear collaboration are two pillars of the long-term defence relationship between London and Washington. Recent cuts in the UK military have raised questions about whether London can uphold up its end of the bargain. But US budget documents released last month show that the US and UK continue to collaborate in the particularly sensitive area of electronic signals intelligence, or SIGINT.

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