Sharing the budgetary straitjacket: defence spending, public debt, and the global arms economy

This study presents an analysis and quantitative summary of 18 NATO member country defense spending over the period 1953-2020. Using recently developed econometric techniques, we explore the time series properties of change, persistence and convergence in two indicators of NATO defense spending data typically used in the literature: real (2019) US dollars and Percent of GDP. Our two indicator variables display a mix of positive, negative and zero trends over the sample period. The only NATO countries with more than 2% defense spending after the 2006 and 2014 Summits are: Greece, Turkey, UK, USA and Poland. Using the fractional difference-based persistence tests of Martins and Rodrigues, we find only UK, Hungary and Poland dollar Defense Spending reject the null of a constant fractional difference (unit root) for the entire sample period; while seven NATO members reject the null of a constant fractional difference (unit root) for Percent of GDP. The mixed set of positive, negative and zero trends render the popular relative convergence test of Phillips and Sul inappropriate for our data. Using the more appropriate weak sigma-convergence test of Kong, Phillips and Sul, we find mixed evidence for convergence of our indicator variables. Our quantitative results present a mixed picture of statistical consistency and coherence for NATO defense spending. Our tests of persistence suggest major changes in the defense policies and spending of NATO members will have a lasting effect in most cases. The emergence and growth of serious threats and potential threats from Russia (and now potentially China as well) will require the NATO allies to address these issues.

A study of the impact of military expenditures on economic growth and development examines the differences in the results of previous studies which led to contradictory conclusions. The authors find that these differences are due to sample variations, specificational choices, and the different time periods examined. The data indicate that there is no consistent, statistically significant connection between military spending and economic growth. Augmentation of the models suggests that military expenditures neither help nor hurt economic growth to any significant extent. 2 tables.

The outcome of the conflict in Ukraine will bring fundamental political, military, economic and social consequences, and define global and regional balance of power and fate of number of international organizations, including European Union and NATO. The aim of this paper is to analyze political and military consequences of the first year of the conflict in Ukraine for countries of Central and Eastern Europe, including the Baltic States and further development of trans-Atlantic link for European security, including development of NATO Alliance until 2030. Fundamentally different threat perception in Russian Federation and in NATO, EU countries, and Ukraine led to the beginning of military action of Russian Federation against Ukraine in February 24, 2022. Since then, military conflict in Ukraine has evolved into full-scale war on terrain of Ukraine, and increasingly negative escalation of political, military and economic relationships between Russian Federation and NATO, EU and other actors, bringing parties to nuclear standoff. War in Ukraine has brought substantial political and military endurance test for NATO and European Union. The immediate political consequences of the first year of war in Ukraine have been outlined in NATO Summit in Madrid in summer of 2022 and in NATO Agenda 2030. Continuation of NATO Open Door Policy has led to invitation of Finland and Sweden to join the Alliance thus fundamentally changing security environment in Central and Eastern Europe and the Baltic Sea Region. The Summit also declared to strengthen military posture on the Eastern flank of the Alliance thus countering hypothetical military threat of Russian Federation to the Baltic States and Central and Eastern European states. From the pure military perspective- NATO has substantially increased military support of Ukraine via creation of decision-making platform of Ramstein format as well as increasing understanding of NATO members for need to spend more resources allocated to defense. On the other hand, European Union has granted status of candidate for Ukraine, as well as provided continuous economic and financial support for Ukraine. Moreover, European Union has staged continuous and increasing policy of economic sanctions towards Russian Federation. However, despite substantial increase of political and military coherence and coordination of efforts of NATO and EU countries after the first year of the war in Ukraine, there are mounting challenges and risks. Firstly, increasing economic challenges in EU and NATO member- states which, subsequently, can lead to fundamental political consequences thus leading to diminished political and military support to Ukraine. Secondly, potential challenges for further military support of Ukraine and NATO Open Door Policy. NATO members- Turkey and Hungary-have different point of view on the enlargement of the Alliance and support of Ukraine. Thirdly, global and regional attitudes towards war in Ukraine and, predominantly, Western coalition of support for Ukraine. People’s Republic of China, India, Africa, Central and Latin America, other global and regional actors are mostly neutral towards war in Ukraine thus avoiding political and economic confrontation with Russian Federation. Yet another fundamental challenge: NATO countries are continuing to provide Ukraine with increasingly effective and sophisticated weapon systems which can lead to direct military confrontation between Russian Federation and NATO/The United States in 2023. Taking into account previously mentioned risks and challenges, it is obvious that there are several scenarios of development of war in Ukraine ranging from complete military victory for Ukraine and, subsequently, for the West to complete military victory of Russian Federation in Ukraine via long-term warfare of attrition.

The Euro Crisis: Mission Accomplished?

As the war in Iraq drags into its sixth year and cumulative spending approved by the Congress for the global war on terrorism surpasses $850 billion, both the American public and security experts are becoming increasingly concerned about the present and future direction of US defense spending. One proposal under consideration to allocate the defense budget each year as specific percentage of America's gross domestic product (GDP). Advocates of this approach typically recommend pegging base Department of Defense (DOD) spending, which excludes both supplemental appropriations for ongoing military operations in Iraq and Afghanistan and Department of Energy-administered nuclear weapons activities, at four percent of GDP. In an April 2008 speech on Iraq, President George W. Bush compared current defense spending to higher levels sustained during the Truman, Eisenhower, and Reagan administrations. He concluded that four percent of GDP is large amount of money, but it modest fraction of our nation's wealth. (1) Republican presidential nominee Senator John McCain (R-Ariz.), top Pentagon officials, conservative security analysts, and several members of Congress have endorsed the four percent proposal. Media reports indicate that the proposal under consideration by high-level Pentagon officials and look very different by the time it reaches the White House or Capitol Hill. (2) This not the first time national leaders have suggested that economic growth should be used to calculate the appropriate level for defense spending. During World War I, the Navy's motto was a dollar's worth of Navy for every dollar spent. (3) National Security Council report 68 (NSC-68), released in 1950, stated that while the United States was spending only 6.5 percent of its GDP on defense, the Soviet Union was spending 14 percent. NSC-68 cited this higher Soviet percentage as incentive for the United States to push for increased economic activity capable of financing major military buildup without sacrificing America's domestic standard of living. (4) Calculating defense spending according to GDP resonates rhetorically and politically, which may be why proponents have adopted it as their preferred approach to accomplish loftier goal: sustaining higher levels of US defense spending into the future. Tying defense spending to GDP successfully brings debates about future US defense policy to the forefront. As legitimate policy option, however, the proposal should be rejected by budget experts and national security analysts alike. GDP an important metric for determining how much the United States could afford to spend on defense, but it provides no insight into how much the United States should spend. Keeping defense budgets arbitrarily high by pegging them to GDP, which has demonstrated long-term pattern of steady increase, avoids the difficult apportionment choices required in this age of unprecedented, diffuse, and dangerous threats. This article will begin by summarizing the arguments advanced by the principal advocates of spending four percent of GDP on Next, the fiscal year (FY) 2009 defense budget request will be analyzed in order to provide proper context for the GDP debate. Finally, substantive critiques will be made of the four percent proposal's methodology, analytical coherence, and overall utility for future defense planning and budgeting. The Advocates Near the end of 2007, Senator McCain wrote in Foreign Affairs that the United States could afford to spend four cents of every dollar, or more, on national defense in the future? In November 2007, Secretary of Defense Robert M. Gates said that four percent of GDP should be benchmark as rough floor of how much we should spend on defense. (6) Pentagon spokesman Geoff Morrell later reiterated Gates's commitment to the four percent benchmark: That what [Gates] believes to be reasonable price to stay free and protect our interests around the world. …

Dabrowka Smolny *IntroductionThe purpose of this article is to analyze NATO’s program for the development and production of ship-launched short-range missiles serving the direct defence of naval vessels, known as the NATO SeaSparrow Surface Missile Sy

In his presentation, the speaker focuses on the problems in relations between the United States and its European NATO allies. Firstly, he talks about the withdrawal of the US troops from Afghanistan, that Sergey M. Rogov considers the first serious defeat of the Western countries since the foundation of NATO. At the same time, he notes the significant military and economic contribution of the U.S. allies to the operation in Afghanistan, and the fact that the US did not take into account the opinion of its allies as well as the issues that may await European countries and the alliance as a whole in this regard. Second, the speaker notes the huge difference in military spending and military capabilities between the United States and the European allies, and concludes that NATO countries will continue to be militarily dependent on the United States. In nuclear sphere, despite the approval of the START III extension by the Biden administration, European countries did not actively resist the collapse of the INF Treaty and the U.S. withdrawal from the Open Skies Treaty. The forthcoming deployment of American missiles in Poland and the Baltic states will further exacerbate of the NATO-Russia crisis. J. Biden's support for the sole purpose concept, which to certain extent implies no first use of nuclear weapons, jeopardizes the U.S. security obligations towards its European allies. Fourth, there is the problem of "new" NATO members, which make minimal contribution to common security, but require economic support and protection from possible Russian aggression. In conclusion, the problem of the U.S.-China confrontation is considered, where the US is actively seeking to involve European countries.

Military expenditures represent an integral part of government fiscal policy and significantly impact government revenues, other expenditures, the deficit and public debt. This paper analyses the military expenditures of 21 EU-NATO Member States between 1995 and 2023, treating them as an endogenous fiscal variable that influences GDP, government revenues, other expenditures, government bond risk premiums, and debt. The estimated SVAR model indicates that, initially, increases in military expenditures are primarily financed by debt, but four years after the shock, approximately 96% of the expenditures are covered by higher tax revenues and cuts in other expenditures. The calculated fiscal multiplier for military expenditures is 0.68 at the point of impact and 0.79 at its maximum, whereas the fiscal multipliers for other government expenditures are significantly higher at 1.34 for both impact and maximum. Investment in military equipment and infrastructure has a significantly higher impact on GDP than current spending on personnel and operations and maintenance (O&M). Model simulations indicate that the projected growth in military spending resulting from the commitment made at the 2025 Hague NATO Summit to spend 3.5/5.0% of GDP will require substantial fiscal adjustment in the countries under study.

As a result of the 1999, 2004, 2009, 2017 and 2020 enlargements, the number of NATO members increased from 16 to 30, with the alliance including 14 new countries in Central and Eastern Europe as well as Southern and Eastern Europe. The different times at which individual countries joined the alliance allow assessing the effect of the accession process and the accession itself on the long- and short-run level of military expenditures of the countries involved. By using the difference in differences method in this article, it has been demonstrated that in a period of 1-3 years prior to the accession the military expenditures of countries applying for the alliance membership are significantly higher by approx. 0.1-0.2 percentage points of the GDP. In the years following the accession to the alliance, military expenditures level out as the increases of military expenditures are statistically insignificant. An increase in military expenditures prior to the accession is more pronounced in the Balkan states than in the countries of NATO’s Eastern Flank. Estimation results suggest that being a member of the alliance has a positive effect on the level of military expenditures, which constitutes an argument in favour of a lack of the free-riding among new NATO countries.

While the provision of global public goods generally suffers from free-riding, standard theory also predicts that countries with stronger preferences for the public good contribute more. We take the case of NATO countries’ military expenditures after Russia’s annexation of Crimea as a natural experiment to test the prediction within a synthetic control framework. We find that NATO members with a land border with Russia or Ukraine increased their military expenditures more than synthetically constructed control countries, confirming the prediction. Moreover, NATO countries without a land border to Russia or Ukraine did not decrease their military expenditures.

The article examines the legal regulation of criminal liability of military personnel in NATO member countries through a comprehensive comparative legal analysis. This research investigates the diverse approaches to military criminal legislation across the Alliance, identifying both common elements and distinctive features in the legal mechanisms for prosecuting military personnel. The study reveals that NATO member states have developed two primary models of military criminal legislation: countries with separate military criminal codes (such as the United States, United Kingdom, Poland, and Turkey) and countries where military criminal provisions are incorporated into general criminal codes (including Germany, France, Italy, and Belgium). The article analyzes the specificity of military offenses as defined in the legislation of various NATO countries. Despite significant differences in legal traditions, there are common elements in the criminalization of acts such as disobedience of orders, desertion, absence without leave, breach of combat duty rules, and improper handling of weapons. Special attention is given to the implementation of international humanitarian law standards into national legislation of Alliance members, particularly concerning war crimes and crimes against humanity. The research provides an in-depth analysis of military justice systems across NATO countries, revealing three primary models: countries with developed military court systems that function during both peacetime and wartime; countries where military courts operate only during wartime or under special circumstances; and countries where military courts are absent, with cases involving military personnel heard by civilian courts. The article examines the jurisdiction of military courts and the delimitation between civilian and military justice, particularly focusing on the legal framework established by the NATO Status of Forces Agreement (SOFA) for criminal jurisdiction over military personnel during international operations. A significant portion of the research is devoted to the specific punishments applicable to military personnel in NATO countries, which combine general criminal sanctions with specific military punishments such as demotion in rank, suspension from duties, service restrictions, and dismissal from military service with deprivation of military rank. The article notes a trend toward the humanization of punishments for military personnel across NATO countries and the gradual abolition of severe punishments such as the death penalty, except for particularly serious crimes committed during wartime. Based on the comprehensive analysis, the article formulates conclusions regarding the common and distinctive features of criminal liability of military personnel in NATO member countries and identifies promising directions for improving military criminal legislation, taking into account NATO standards and experience. These directions include in-depth analysis of military criminal legislation of individual NATO member countries, research on the implementation of international humanitarian law into the military criminal legislation of NATO countries, study of the practice of applying military criminal legislation during international operations involving NATO forces, and analysis of ways to harmonize national military criminal legislation with NATO standards.

TT IS widely believed among scholars that defense spending in A-merica is excessively high and has gained an undue influence in setting national priorities which adversely affect our welfare programs. Some writers maintain defense expenditures are excessive because our defense effort has required a reduction in more desirable social welfare programs.' Others argue that in recent years our military system has become economically non-productive and causes stagnation and therefore rising welfare costs in the civilian sector.2 Still others believe that excessive and wasteful defense expenditures are deliberately planned and necessary for a capitalist system to survive.3 Finally, a substantial number of analysts simply believe that the fear of an external threat upon which defense budgets are based is grossly exaggerated, and, conversely, that welfare needs have been underestimated. Both our pacifistic and Judaeo-Christian t-raditions support this position. Those who argue for these propositions usually do so on the basis of a single and quite broad definition of defense spending and a fairly narrow definition of welfare spending. Moreover, the basis of funding is almost always limited to the federal budget. This method, of course, includes virtually all defense-related expenditures, but excludes much of the thrust of state and local welfare-related programs which have been rising almost as fast as federal outlays. These studies also focus on recent years and do not examine long-term trends in either defense or welfare spending. This essay will attempt to expand the number of working definitions of both defense and welfare spending, and compare the spending patterns derived by those different methods since these data first became available. In addition, a method of measurement common to both welfare and defense spending will be developed for purposes of better comparison. It is hoped that, by using a variety of definitions and methods of measurement and a more extensive longitudinal focus, the reader may gain a much more comprehensive picture of the interrelationship between defense spending and welfare spending in the United States and thereby be better able to determine whether either or both are excessive. Finally, I shall argue that our rapidly rising social welfare expenditure trends are far more unsettling than our shrinking defense commitments.

This study investigates the dynamic relationship between Public Debt and Defence Spending in Malaysia, utilizing data spanning from 1991 to 2021 sourced from the World Bank. Employing the Fully Modified Ordinary Least Square (FMOLS) model, the analysis integrates Gross Domestic Saving and Exchange Rate as control variables to comprehensively explore the intricate nexus between these factors. The results reveal a robust positive association between Public Debt and Defence Spending, substantiated by the significant coefficient of 0.7601 (p < 0.01). This suggests that an increase in Public Debt corresponds to a substantial rise in Defence Spending. Additionally, the study underscores the influence of Gross Domestic Saving and Exchange Rate on Defence Spending, with coefficients of 1.5996 (p < 0.01) and 0.4703 (p < 0.05), respectively. These findings contribute valuable insights into the fiscal dynamics of Malaysia's defence budget, shedding light on the interplay between Public Debt and strategic resource allocation. The incorporation of control variables enhances the robustness of the analysis, providing a nuanced understanding of the factors shaping defence spending in the Malaysian context.

Correspondence: The Profitability of Primacy

This paper explores the dynamic relationship among defense and non-defense government spending, the government debt, and the output gap in the United States. We estimate structural vector auto-regression (SVAR) models for the full sample (1947:Q1 to 2021:Q1), as well as two sub-samples: (1947:Q1-1980:Q1), during which debt-to-GDP ratio was falling, and (1981:Q1- 2021:Q1), during which the debt-to-GDP ratio was rising. The impulse responses (IRF) and forecast error variance decomposition (FEVD) are computed to analyze the dynamics objectively and systematically. The impulse responses for the full sample and the second sub-sample indicate that non-defense spending responds to a shock to the output gap in a counter-cyclical fashion. Moreover, we find significant evidence of the impact of debt-to-GDP ratio on both defense and non-defense spending. A shock to a debt-to-GDP ratio causes non-defense spending to rise on impact and fall over the forecast horizon in all three time intervals. Defense spending, however, responds differently to this shock. While it is not significantly impacted in the full sample, it decreases in the first sub-sample and increases in the second sub-sample. The results from variance decomposition also show that a shock to debt-to-GDP ratio can explain most of variations in non-defense spending and part of the variations in defense spending. These results confirm that debt to GDP ratio is an important determinant of both defense and non-defense spending especially in the most recent years, as both categories tend to decline in response to a shock to debt to GDP ratio. This reinforces the idea that policy makers should focus mostly on reducing debt and therefore reducing interest payments associated with debt accumulation to have greater flexibility in spending on different categories.