Will the corona-crisis and its impact on economies worldwide lead to a reduction in military spending?
Increased internal travel and trade has led to a greater likelihood of the spread of local epidemics.
A good number of individuals and organisations, such as the International Campaign to Abolish Nuclear Weapons (ICAN) have called for a reassessment of current military spending. This makes sense for two reasons. One is a change in perceptions of risk that the current crisis might bring about. The second is a reduced ability to pay for military activities. But will these incentives be sufficient to change the current trend of globally rising military expenditures?
Let’s turn to the issue of changes in risk perceptions first. The current corona crisis is a stark reminder of the potentially devastating economic and non-economic effects of non-traditional security threats, particular if they are non-localized. The list of non-traditional security risks is quite long. In addition to virus pandemics harming humans, there are other biological threats such as plant and animal pathogens leading to large-scale reductions in agricultural production.
Relative new dangers are major nuclear radiation incidents as well as widespread and lasting breakdowns of interconnected/interconnecting infrastructure, for instance in the cyber-space. Disasters of major scale can also result from asteroid collisions with our planet, and the effects of major geophysical events, such as volcano eruption. Above all is climate change, with the looming dangers of weather-related disasters, sea-level rise and climate tipping points, such as a major change in ocean circulation.
These threats have often been considered as high impact/low probability events. But the current crisis leads to questions particularly with respect to pandemics. While data is somewhat unclear, earlier estimates were that pandemics occurred on average every 30 years. However, we have had two pandemics during the last two decades (Swine flu H1N1 and COVID-19) and several epidemics that threatened to become pandemics (SARS, Avian flu, MERS, Ebola). Obviously, despite much progress in medical science, the rate of new virus infections has grown. Increased internal travel and trade has led to a greater likelihood of the spread of local epidemics.
The latter aspect, the greater global interconnectedness of production, finance, communication and personal interaction also increases other non-traditional security risks. This leads to questions about the allocation of resources, not least between traditional and non-traditional security risks, including funding of military activities. Non-traditional security risks require, if possible, investments into their mitigation, but also in reducing the negative consequences if one or more of the extreme events mentioned above occurs as well as capacities to rebound, preferably with better prospects to meet future risks. The current crisis primarily points to more investments into health systems. It also indicates that redundancy in logistic chains for essential goods are important as one way to increase resilience to major shocks. Risk reduction for other security threats, such as those emanating from climate change, requires other types of investment.
All of these investment requirements add to social and political pressure on military budgets, which can at best address a small segment of security threats. The current crisis has made it harder to argue for the share of government spending that the military receives, for instance compared to health spending.
In addition to the reallocation of resources away from the military to institutions which can better deal with non-traditional threats, there is the reduction in economic activity in the wake of the corona crisis. Current estimates are still very preliminary but point to a global recession beyond the first half of 2020. Not all countries are affected equally by the corona crisis and its economic consequences. Furthermore, not all governments have the resources to fund large-scale stimuli packages and the willingness of rich states to support poorer ones has been limited. For the long run it is important to also consider the increase in debt that results from stimuli. Even where Keynesian-type policies succeed in limiting recession to 2020, increased government debt will burden future government spending.
Smaller budgets for discretionary government spending increase the competition among ministries that represent various state functions. When austerity measures are taken, military budgets are often more affected than others as their share of projects which can be cut or stretched is comparatively high. This at least was the experience of the financial crisis beginning in 2008. The share of global military spending in global government spending slightly fell from 7.1 percent to 6.9 percent. Depending on the depth of the post-corona depression and the extent of rethinking on the priority of major security threats, social and political pressure to reduce military spending is likely to grow.
However, while it makes more sense to expect such pressure to lead to actual reductions, there are also counterforces at work.
One is related to the argument that armed forces are very versatile and helpful in crisis beyond those resulting from traditional security threats. Militaries are extensively used in disaster management, and are expected, in many countries, to become even more important in this role with more and more intense weather-related disasters. Likewise, during the corona crisis, armed forces performed a range of functions, from logistics to health care, to support civilian authorities in many countries. Increasing military capabilities for such non-military functions requires additional resources – and thus allows proponents to argue against cuts in military spending.
Another argument is that it would be a mistake to reduce military spending at times when traditional security threats are not receding. Military expenditures, the basis of this argument, should be determined by what is needed to meet such threats, and neither the existence of other threats nor economic means. While flying in the face of any empirical inspection of the data – financial means are the overall best predictor of national military spending – it is a powerful political argument.
What is often overlooked by proponents of this arguments is that reductions in military expenditures can contribute to a reduction in traditional security threats. This is the core of the classical Richardson arms race model, which, while very simple, is a good abstraction of traditional security thinking. In the current situation, it has particular importance for Europe. If European NATO members chose to reduce their military expenditures, instead of raising them as earlier planned, this would provide an incentive to the Russian leadership not to increase its military spending. Even better would be to negotiate an agreement on limitations, on conventional arms or military spending, in order to make this an explicitly cooperative endeavor.
A reduction of military spending beyond a few countries in particular economic distress is therefore no foregone conclusion. In the end, it is a political decision on how much of the available resources is given to the military, albeit one in a world changed by the current crisis.
 ICAN, ‘Nuclear spending vs healthcare’, https://www.icanw.org/healthcare_costs.
 On research about the competition between various government functions see e.g. HongLi Fan, Wei Liu & Peter C. Coyte (2018) Do Military Expenditures Crowdout Health Expenditures? Evidence from around the World, 2000–2013, Defence and Peace Economics, 29:7, 766-779
 Own calculation, data taken from https://www.sipri.org/databases/milex
 See e.g. Michael Brzoska and Matt McDonald, Climate Change, Natural Disasters and the Military, Toda Peace Institute Policy Brief 77, Tokyo June 2020, https://toda.org/policy-briefs-and-resources/policy-briefs/climate-change-natural-disasters-and-the-military.html
 See e.g. recent data on European defense spending https://dgap.org/en/research/publications/deterrence-and-defense-times-covid-19