The United States remained by far the world’s biggest spender in 2015, despite its expenditure falling by 2.4 per cent to $596 billion. Among the other top spenders, China’s expenditure rose by 7.4 per cent to $215 billion, Saudi Arabia’s grew by 5.7 per cent to $87.2 billion—making it the world’s third-largest spender—and Russia’s increased by 7.5 per cent to $66.4 billion.

Falling oil prices signal cuts to military expenditure

A combination of high oil prices and new oil discoveries and exploitation has contributed to a surge in military spending in many countries around the world in the past decade. However, the crash in oil prices that started in 2014 has begun to reverse this trend in many oil revenue-dependent countries. Further cuts in spending are expected in 2016.

The most dramatic oil revenue-related reductions in spending in 2015 were in Venezuela (–64 per cent) and Angola (–42 per cent). Decreases were also recorded in, among others, Bahrain, Brunei, Chad, Ecuador, Kazakhstan, Oman and South Sudan.

Despite declining oil revenues, several other oil-exporting countries continued to increase military spending in 2015. Many of these countries—notably Algeria, Azerbaijan, Russia, Saudi Arabia and Viet Nam—were involved in conflict or faced with heightening regional tensions. However, Russia’s expenditure was lower than projected in its budget, and Saudi Arabia’s spending would have fallen but for the additional $5.3 billion cost of its military intervention in Yemen. Russia and Saudi Arabia are planning cuts in 2016.

Decline in Western military spending coming to an end?

Military spending in North America and Western and Central Europe has been decreasing since 2009, largely as a result of the global economic crisis, as well as the withdrawal of most US and allied troops from Afghanistan and Iraq. There were signs in 2015, however, that this decline was coming to an end.

US military spending was down by 2.4 per cent in 2015, a much slower rate of decline than in recent years. This was the result of measures passed by the US Congress to partially protect military spending from previously agreed budget deficit-reduction measures. US military spending is projected to remain roughly level in real terms in 2016.

Taken together, spending in Western and Central Europe was down by just 0.2 per cent in 2015. However, in Central Europe alone spending was up 13 per cent. There were particularly large increases in countries bordering Russia and Ukraine—namely Estonia, Latvia, Lithuania, Poland, Romania and Slovakia—which are those most concerned about Russia’s intentions following the crisis in Ukraine. In contrast, Western European expenditure was down 1.3 per cent but this was the lowest rate of annual decline since the start of the recent fall in spending, which began in 2010. The United Kingdom, France and Germany have all announced plans for modest spending increases in the coming years sparked by concerns about Russia and the threat posed by the Islamic State.

‘Military spending in 2015 presents contrasting trends’, said Dr Sam Perlo-Freeman, head of SIPRI’s military expenditure project. ‘On the one hand, spending trends reflect the escalating conflict and tension in many parts of the world; on the other hand, they show a clear break from the oil-fuelled surge in military spending of the past decade. This volatile economic and political situation creates an uncertain picture for the years to come.’

Other notable developments

• Military spending in Asia and Oceania rose by 5.4 per cent in 2015 and was heavily influenced by China. Heightening tensions between China and various countries in the region contributed to substantial increases in expenditure by Indonesia, the Philippines and Viet Nam, and triggered the start of a reversal of the long-term downward trend in Japan’s military spending.

•  SIPRI is not publishing an estimate for the Middle East for 2015 as data is unavailable for several countries. For those countries for which data is available, spending increased by 4.1 per cent in 2015. Iraq’s military expenditure rose by 536 per cent between 2006 and 2015—the largest increase by any country in the world during that period.

• Military expenditure in Latin America and the Caribbean decreased by 2.9 per cent, largely explained by the huge fall in spending in Venezuela. Brazil’s military expenditure also declined slightly as a result of its economic crisis. Spending continued to increase in Central America due to the growing militarization of the anti-drug war.

• Military expenditure in Africa fell by 5.3 per cent, following 11 years of continuously rising spending. This was mainly due to the large cut by Angola, the largest spender in sub-Saharan Africa, in the wake of the sharp fall in oil prices.