US Defense Budget to Equal Rest of World

Jane's has an interesting excerpt of one of their paid articles based on a PricewaterhouseCoopers (PwC) report (hat tip: xThreats.com - more on that later). 

"Defence expenditure in the US will equal that of the rest of the world combined within 12 months, making it 'increasingly pressing' for European contractors to develop a 'closer association' with the US, corporate finance group PricewaterhouseCoopers (PwC) says.

Its report - 'The Defence Industry in the 21st Century' by PwC's global aerospace and defence leader Richard Hooke - adds that 'the US is in the driving seat', raising the prospect of a future scenario in which it could 'dominate the supply of the world's arms completely'.

The US defence budget reached US$417.4 billion in 2003 - 46 per cent of the global total.

Less than two per cent of the US defence budget is spent outside its home market, the report notes, and of this around one per cent goes to UK contractors.

Hooke says: 'The message for management teams in all this - apart from the obvious for US contractors to monopolise the industry - is that they will fail to maximise value if they fail to define accurately the business segment in which they operate.

'For Europe and the UK in particular, it means, right now, an increasingly pressing need to develop a closer association with the US market.'"

How long until the WTO steps in about unfair monopoly practices?  I don't really envision that, but the Jane's piece does point out information that has global foreign policy implications:

• Emerging democratic powers such as India and Brazil may be better served by building military relationships with the US instead of Europe.
• The European Union nations will continue to fall behind the US in technology and military readiness as they continue to spend small amounts of their GPD on defense. (And a large portion of that goes not to R&D but to keeping standing aging armies)
• The US will likely keep, for the foreseeable future, its military supremacy, which will drive alliances and politics well into the 21st century.

Comments

[Dan]

If the European states are smart, they will focus on low-tech 4GW techniques and abandoned any big-army type dreams.

Blair courageously is doing just that, which is very hard for a British leader.

As for France? heh

[Bruce Chang]

There you have it, then. For the Europeans, especially the French, it's all about protecting domestic businesses. In this case, "how can we force the US Armed Forces to give us more of their business?". Whereas developing nations that actually have (albeit slowly receding) national interest concerns are thinking, "How can we best get a hold of that technology?"

[The Redhunter]

The left and other assorted anti-American types love to use the "US military budget equals the rest of the world put together" line against us. But the reality is not that our budget is so high, it's that everyone else's is so low.

Such is our fate, perhaps. On the one hand so many complain whenever the US intervenes militarily. On the other they know they could't do anything themselves. Thus they are frustrated by their impotence but unwilling to do anything about it.

What's really amazing is that although we spend about as much as everyone else put together, as a percentage of GDP we are spending less than at any time since the Korean War (I go on memory here. I'm close if not spot-on).

Of course, "dollars and cents" do not necessarily equate directly to "bullets and bombs". "Bullets" must cost less in less developed parts of the world. Kind of like looking at income without cost-of-living. Bill, do you know if this was taken into account?

[Bill Rice]

Redhunter,

The excerpt from Jane's didn't reveal any more information. From other research I have done on European armies, they are larger than they need to be, have high benefit costs and generally eat up a good portion (often well over 50%) of the countries defense budgets. This mean less into long term improvements in logistics, weapon systems, training and research.

I think Britain has the most effective (cost wise) European force and has not gutted the force post cold war.

Kind regards,

Bill Rice
Dawn's Early Light