When geopolitical stability is at its worst, countries begin to redirect spending to rearming their defence forces. But how much are they spending?
We all know that the United States has had the largest defence budget (some of it unaccounted for) on the planet for many years. Spending a whopping 3.5% of GDP, or almost one trillion dollars per year (latest figure was 997 billion USD), figures from the Stockholm International Peace Research Institute (SIPRI) point to an upswing in recent times.
And while China’s defence spending was a paltry 314 billion USD in 2024, slightly more than the combined budget for the EU’s member states, one must consider the literal bang for buck that China is getting. Given lower manufacturing costs, availability of the steel and rare earths required for newer complex systems, China is likely getting as much value for its defence budget as the US is for its one trillion dollars spend.
The EU’s recent surge in military spending is a direct result of the perceived threat from Russia and the unwavering support that the EU has lavished on Ukraine under the leadership of President Zelensky, who has an ongoing need for military support in his campaign against Russia. With the EU nations clearing out their warehouses of shells, tanks and anti-aircraft defence systems, its arsenal is now looking quite bare. This has led to a sudden increase in spending, brought about by US President Donald Trump’s America First policy and a dislike for NATO. Having accused NATO members of mooching on the US he has threated to walk away from the military block, prompting members to realize they would be on their own if a major European war were to ignite.
But who else is joining the arms race? India and Pakistan, recently clashing over terrorist attacks in the Kashmir area, are spending healthy amounts on defence too. In 2024 Pakistan shelled out over 4% of its GDP (or 21.8 billion USD) on defence, mostly due to their decades-long rivalry with India. India, on the other hand spent 86.1 billion USD (amounting to 2.4% of their GDP) over the same period.
Without doubt it is China that is getting the best value for money, while North Korea, spending a whopping 20-30% of its GDP (up to around 1.4 billion USD, it is believed) is prioritizing military spending over other internal needs.
Within Europe, Germany has recently stepped on the gas, spending around 86 billion USD (1.9% of GDP), with France just behind at 64 billion USD, Spain at 23.6 billion, and Poland, who is literally on the front lines, spending 29.1 billion USD.
So where does this leave us? It seems around 1.686 trillion USD were spent on defence in 2024. With the countries list above having populations that total around 3.93 billion, if we split the bill, or just paid this money to the citizens, each one would receive around 428 dollars, which, in the greater scheme of things is not a lot to pay for the defence of your home nation.
When one looks at the number of raw materials, wealth and labour that is invested, and the vast wealth generated by the military and defence companies, one can plainly see that war is good for business. As geopolitical pundit Gerald Celente is known to quip, when all else fails, they take you to war. It’s true. Nothing gets an economy stirring like the threat of a major conflict. Given the current state of geopolitical affairs, we are on borrowed time. The dominoes are stacked, and it could take just one push to bring the whole house of cards down. Let’s hope that sense prevails.