Chronicle of the Middle East and North Africa

Excessive Defense Spending Drains Arab Economies

Excessive defense spending primarily serves Arab regimes' political interests and security, at the expense of the welfare issues of populations.

Excessive Defense Spending
US and Saudi tanks take part in the “Eager Lion” multinational military maneuver. Khalil MAZRAAWI / AFP

Ali Noureddine

This article was translated from Arabic to English

World Bank estimates indicate that defense spending in the Arab region between 1999 and 2018 reached $2.03 trillion, a substantial amount that is equivalent to 5.6 per cent of the gross domestic product of Arab countries during the same period.

In 2022, defense spending in the Middle East region alone surged to $184 billion, a 3.2 per cent increase compared to the previous year that can be attributed to the sizeable records set by Qatar and Saudi Arabia in terms of their defense expenditures.

Massive spending on defense

These figures are significant compared to the size of local economies in the Arab region, especially when compared to other regions worldwide.

According to World Bank data, the average global defense spending remains below 2.2 per cent of the GDP, significantly lower than the 5.6 per cent observed in Arab countries, and only around 39 per cent of defense spending in the Arab region relative to GDP.

In fact, in countries of the Organization for Economic Cooperation and Development, the percentage of defense spending does not exceed 2.37 per cent of their GDP, a mere 42 per cent of the amount of military spending in the Arab countries relative to their GDP.

Even in the United States, despite the increases anticipated by 2033, defense spending is not expected to exceed 2.8 per cent of GDP, around half of the proportion seen in the Arab region.

More ironic is the fact that on average Arab countries account for more than 7.4 per cent of the total global defense spending, while their combined contribution to the global economy comprises no more than 3.2 per cent of the total. This in particular indicates the sizeable burden defense spending poses on the state budgets of countries in the Arab region compared to the size of their economies.

The primary consequence of excessive defense spending is a reduction in the proportion of financial resources allocated to various public expenditures.

According to UNESCO data, global average for public spending on education stands at 4.3 per cent of the GDP. However, in Jordan and Qatar, this percentage is just 3.2 per cent, and a mere 2.5 per cent in Egypt. In fact, the general average for the entire Middle East and North Africa region does not exceed 3.8 per cent of the GDP.

In the same vein, the proportion of public health spending in the Middle East and North Africa countries declines to around 5.93 per cent of the GDP, compared to a global average of 10.89 per cent, according to the World Health Organization. Annual per capita government spending on health in the Middle East and North Africa is less than $470, whereas the global average exceeds $1,177.

Simply put, increased defense spending in countries of the Arab region comes at the expense of public expenditures related to social security and protection networks for the most vulnerable groups. This includes spending on education, public health, retirement programs, social benefits and others, as indicated by the size of the Arab countries’ spending on most items related to social security.

This situation warrants a look at the Arab countries that allocate the largest portion of their public resources to defense, as well as an examination of the political, social and economic repercussions. Also crucial is an investigation into the factors driving the increase in defense spending by Arab states which surpasses even those of countries engaged in extensive military operations worldwide, such as the United States.

The Arab countries that spend the most on defense

The Kingdom of Saudi Arabia is the undisputed leader among Arab countries in terms of defense spending as it ranked second in the world in 2022 with a defense spending-to-GDP ratio of 7.4 per cent. The top spot was held by Ukraine due to its war with Russia. In terms of total defense spending, Saudi Arabia ranked fifth globally, with a budget of approximately $75 billion.

Qatar takes the second spot among Arab nations, ranking third worldwide with a defense spending-to-GDP ratio of around 7 per cent. Its total defense spending amounted to nearly $15.4 billion, placing it in 20th place globally.

Algeria ranks third in the Arab world, spending about $9.1 billion on defense in 2022, roughly 4.8 per cent of its GDP. Kuwait holds the fourth position, with $8.2 billion spent on defense, equivalent to about 4.5 per cent of its GDP. The Sultanate of Oman comes in fifth, spending $5.8 billion on defense, which represents 5.2 per cent of its GDP.

Apart from these five countries with significantly high defense expenditures, Morocco, the United Arab Emirates, Bahrain and Tunisia also record high defense spending rates compared to their respective GDPs, exceeding the global averages.

Many and varied reasons

The surge in defense spending in Arab countries is influenced by various regional and internal conditions.

In countries like Algeria and Tunisia, the political regimes put a heavy emphasis on police and security measures to guard against potential attempts to overthrow them. This prompts these regimes to allocate sizeable portions of their budgets toward armaments and security for the purpose safeguarding themselves against any potential threats.

As a result, these regimes are compelled to appease the influential military centers within their structures by consistently increasing their budgetary allocations in a bid to ensure their continued support for the political system in the face of any potential political or popular opposition.

In the cases of Algeria and Morocco, tensions along their shared border and historical disputes have contributed to an arms race between the two countries. The objective of this arms race is to prevent any perceived power imbalance between the two sides. Despite the current lack of an open or declared war between them, the ongoing arms race reflects a lack of mutual trust, with each party seeking to fortify its border control against unwanted interference from the other side.

For Saudi Arabia and Kuwait, the arms race is driven by the constant fear of external interference and the growing military power of Iran. Saudi Arabia, in particular, experienced a surge in defense spending due to its involvement in the armed conflict in Yemen.

In recent years, Saudi Crown Prince Mohammed bin Salman has made use of defense contracts to cultivate relationships and secure political interests with foreign entities. Notable examples include the arms deals concluded in 2018 during then-U.S. President Donald Trump’s visit to Saudi Arabia and the substantial arms deals established with China in 2022.

Overall, it is evident that the increase in defense spending in recent years is primarily motivated by political factors and serves the interests and security of Arab regimes. However, this heightened spending has come at the expense of the Arab populations and their issues directly related to their welfare.

Consequently, a significant portion of tax revenues and income generated from the export of Arab energy resources is diverted to major foreign defense contractors, rather than being allocated toward local development priorities.

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