The New Global Aid-Defense Standard

Is there an emerging global standard linking aid and defense spending levels?

March 19, 2002

Is there an emerging global standard linking aid and defense spending levels?

Through defense spending and foreign aid a nation expresses not just policy priorities, but world views.

At the core, the ratio between defense spending and foreign aid signals whether a nation is guided more by charity and community — or by defensiveness.

Without making light of the defense challenges facing the United States, it begs the question: While it is important to spend money to prepare for war, isn’t it also important to spend enough money to make a better peace?

The U.S. world view is remarkably weighted towards the military — and is set to become ever more so.

 Ratio of Military Spending to Development Aid

There is an emerging global standard set by industrialized countries, which spend $1 on aid for every $7 they spend on defense. If the United States were to follow this standard, it would have to commit about $48 billion to foreign aid each year.
Source: The Globalist
Based on 1999 data from the Stockholm International Peace Research Institute and the OECD.

1. Highly industrialized countries on average spend about one dollar on aid for every seven dollars they spend on their militaries.

2. This defines an emerging global standard on how to balance military expenditures with development aid. France actually is the country that comes closest to this standard — spending roughly $6.90 on its military for every dollar it spends on aid.

3.In sharp contrast to this standard, figures show that this ratio is increasing for the United States. In 2002, for example, the United States will spend $33 on its military for every $1 it spends on aid.

$333 billion defense / $10 billion aid = 33:1

And if President Bush’s 2003 defense budget is accepted, that ratio will rise to $38 spent on the military for every $1 spent on foreign aid.

4.At a minimum, this creates a perception problem for the United States: Based on the 2002 numbers, it appears as if the United States spends 33 times more on defense (and potential destruction) than on help (and construction).

5.While questions remain about aid absorption abilities of poor countries, the key question for the global community is: How much should industrialized countries reckon to spend?

6. If the United States were to follow the lead of other industrialized countries and spend $1 on aid for every $7 it spends on defense, it would have to commit about $48 billion in foreign aid each year.

Coincidentally, that is the same amount of the defense spending increase that U.S. President Bush has proposed for FY2003 alone.

7. That would be an almost five-fold rise over the present U.S. ODA level. It would also double the total amount of development assistance available to the world’s poor countries, to $100 billion.

8. Coincidentally, those $48 billion are almost exactly what the World Bank has been requesting in additional funding to reach its Millennium Development Goals.

9. Moreover, a U.S. foreign aid budget of $48 billion — about 0.5% of GDP — is close to the 0.7% of GDP contribution level that the U.N. has requested developed countries to devote to aid.

 Linking Military and Development Aid Spending
  Country
Development Aid
as % of GDP
Military Spending as % of GDP

Military/Aid
Ratio

1. Greece
0.2
4.8
32.0
2. United States
0.1
3.0
30.0
3. Italy
0.2
2.0
13.3
4. United Kingdom
0.2
2.5
10.4
5. Portugal
0.3
2.2
8.5
6. Australia
0.3
2.2
8.5
7. France
0.4
2.7
6.9
8. Germany
0.3
1.5
5.8
9. Spain
0.2
1.3
5.7
10. Belgium
0.3
1.4
4.7
11. Canada
0.3
1.3
4.6
12. New Zealand
0.3
1.1
4.1
13. Finland
0.3
1.2
3.6
14. Austria
0.3
0.9
3.5
15. Switzerland
0.4
1.1
3.1
16. Sweden
0.7
2.1
3.0
17. Japan
0.3
1.0
2.9
18. Ireland
0.3
0.8
2.6
19. Norway
0.9
2.2
2.4
20. Netherlands
0.8
1.8
2.3
21. Denmark
1.0
1.6
1.6
22. Luxembourg
0.7
0.8
1.2
  Average
0.39
1.78
7.3
 
Memo:
Country closest to average
Switzerland and France
Netherlands
France

Concept and copyright: TheGlobalist.com.
Based on data from the Stockholm International Peace Research Institute and 1999 data from the OECD. Countries listed are all 22 members of the OECD Development Assistance Committee.

Yes. If the United States were to follow the lead set by industrialized nations, it would have to increase development aid to $48 billion. While that is a lot of money, that amount is equal to the increase in the U.S. defense budget proposed for FY2003 alone.

No. But increasing development aid — while putting the money into escrow — would provide a powerful incentive for developing countries to institute reforms to ensure the effectiveness of aid.

For two reasons: First, to show developing countries that the United States is serious about development — and not just using its “reforms” mantra to rationalize low contributions.

Second, to send a signal to the U.S. public — and the world about the U.S. commitment to responsible global leadership: a kind of leadership that promotes development and opportunity, while fighting repression and fear.

There have been many calls for increased development spending. This analysis, however, establishes a truly rational rationale for global prosperity sharing — and thus lays the groundwork for a domestic consensus on global prosperity sharing.