The Militarization of the Middle East in Numbers
The global arms trade is huge.
While it’s hard to pin down an exact value of arms transfers, the Stockholm International Peace Research Institute estimates that the number was at least $76 billion in 2013, with the caveat that it is likely higher.
The volume of transfers have been trending upwards now for roughly 15 years now.
Volume of Arms Transfers
Courtesy of: SIPRI
But where are these arms going?
The answer is that they are increasingly going to militarize the Middle East, which has increased imports of arms by 61% in 2011-2015, compared to the previous five year period.
The Syrian Civil War now entering its sixth year, and it’s clear that conflict is stopping no time soon in the Middle East. As a result of this and the various proxy wars, complicated relationships, and a continuing threat from ISIS, neighboring countries in the region have loaded up on arms.
That’s why Saudi Arabia, Qatar, and the UAE have increased imports of arms by 275%, 279%, and 35% respectively compared to the 2006-2010 time period. Saudi Arabia is now the second largest importer of arms in the world.
Rounding out the Top 20 largest arms importers are other countries in the general region, such as the UAE, Turkey, Pakistan, Algeria, Egypt, India, and Iraq:
Courtesy of: SIPRI
How are these arms flowing to these countries?
Here’s a diagram showing the top three suppliers to each of the biggest arm importers:
Comparing Recent U.S. Presidents: New Debt Added vs. Precious Metals Production
While gold and silver coin production during U.S. presidencies has declined, public debt continues to climb to historically high levels.
Recent U.S. Presidents: Debt vs. Coins Added
While precious metals can’t be produced out of thin air, U.S. debt can be financed through central bank money creation. In fact, U.S. debt has skyrocketed in recent years under both Democrat and Republican administrations.
This infographic from Texas Precious Metals compares the increase in public debt to the value of gold and silver coin production during U.S. presidencies.
Total Production by Presidential Term
We used U.S. public debt in our calculations, a measure of debt owed to third parties such as foreign governments, corporations, and individuals, while excluding intragovernmental holdings. To derive the value of U.S. minted gold and silver coins, we multiplied new ounces produced by the average closing price of gold or silver in each respective year.
Here’s how debt growth stacks up against gold and silver coin production during recent U.S. presidencies:
|Obama's 1st term (2009-2012)||Obama's Second Term (2013-2016)||Trump's term (2017-Oct 26 2020)|
|U.S. Silver Coins Minted||$3.7B||$3.3B||$1.4B|
|U.S. Gold Coins Minted||$6.7B||$5.1B||$2.9B|
|U.S. Public Debt Added||$5.2T||$2.9T||$6.6T|
Over each consecutive term, gold and silver coin production decreased. In Trump’s term so far, the value of public debt added to the system is almost 1,600 times higher than minted gold and silver coins combined.
During Obama’s first term and Trump’s term, debt saw a marked increase as the administrations provided fiscal stimulus in response to the global financial crisis and the COVID-19 pandemic. As we begin to recover from COVID-19, what might debt growth look like going forward?
U.S. Public Debt Projections
As of September 30, 2020, the end of the federal government’s fiscal year, debt had reached $21 trillion. According to estimates from the Congressional Budget Office, it’s projected to rise steadily in the future.
|U.S. Public Debt||21.9T||23.3T||24.5T||25.7T||26.8T||27.9T||29.0T||30.4T||31.8T||33.5T|
By 2030, debt will have risen by over $12 trillion from 2020 levels and the debt-to-GDP ratio will be almost 109%.
It’s worth noting that debt will likely grow substantially regardless of who is elected in the 2020 U.S. election. Central estimates by the Committee for a Responsible Federal Budget show debt rising by $5 trillion under Trump and $5.6 trillion under Biden through 2030. These estimates exclude any COVID-19 relief policies.
What Could This Mean for Investors?
As the U.S. Federal Reserve creates more money to finance rising government debt, inflation could eventually be pushed higher. This could affect the value of the U.S. dollar.
On the flip side, gold and silver have a limited supply and coin production has decreased over the last three presidential terms. Both can act as an inflation hedge, while playing a role in wealth preservation.
Mapped: The Countries With the Most Military Spending
Global military spending surpassed $1.9 trillion in 2019, but nearly 75% of this total can be traced to just 10 countries.
Mapped: The Countries With the Most Military Spending
Whether it’s fight or flight, there’s a natural tendency of humans to want to protect themselves.
In this day and age, this base instinct takes the form of a nation’s expenditures on armies and armaments, towards an end goal of global security and peacekeeping.
This graphic from the Stockholm International Peace Research Institute (SIPRI) delves into the top military spenders as of 2019.
Top 10 Biggest Military Spenders
Let’s first take a look at the overall growth trends. The world’s military spending grew by 3.6% year-over-year (YoY)—currently the highest rate this decade—to surpass $1.9 trillion in 2019.
While just 10 countries are responsible for nearly 75% of this amount, the U.S. alone made up the lion’s share with 38% of the global total. In fact, its YoY rise in spending alone of $49.2 billion rivals Germany’s entire spending for the same year.
Naturally, many questions rise about where this money goes, including the inevitable surplus of military equipment, from night vision goggles to armored vehicles, that trickles down to law enforcement around the nation.
Here’s how world’s top 10 military spenders compare against each other:
|Country||Military Spending ('19)||YoY % change||Military Spending as % of GDP ('19)|
|Saudi Arabia 🇸🇦||$61.2B||-16.0%||8.0%|
|South Korea 🇰🇷||$43.9B||+7.5%||2.7%|
China and India, currently embroiled in a border dispute, have upped the ante for military spending in Asia. India is also involved in clashes with its neighbor Pakistan for territorial claim over Kashmir—one of the most contested borders in the world.
India’s tensions and rivalry with both Pakistan and China are among the major drivers for its increased military spending.
—Siemon T. Wezeman, SIPRI Senior Researcher
Germany leads among the top spenders in terms of highest YoY military spending increases. According to SIPRI, this is a preemptive measure in the face of perceived growing Russian threats.
These concerns may not be unfounded, considering that Russia comes in fourth for defense expenditures on the global stage—and budgets more towards military spending than any country in Europe, at 3.9% of its total GDP.
Military Spending as a Share of GDP
Looking more closely at the numbers, it’s clear that some nations place a higher value on defense than others. A country’s military expenses as a share of GDP is the most straightforward expression of this.
How do the biggest spenders change when this measure is taken into consideration?
Eight of the 15 countries with the highest military spending as a percentage of GDP are concentrated in the Middle East, with an average allocation of 4.5% of a nation’s GDP.
It’s worth noting that data is missing for various countries in the Middle East, such as Yemen, which has been mired in a civil war since 2011. While SIPRI estimates that combined military spending in the region fell by 7.5% in 2019, these significant data gaps mean that such estimates may not in fact line up with the reality.
Explore the full data set of all available countries below.
|Country||2019 Spending, US$B||2019 Share of GDP|
|Republic of Congo||$0.30||2.7%|
|Trinidad & Tobago||$0.17||0.7%|
|Papua New Guinea||$0.08||0.4%|
|Central African Republic||$0.03||1.5%|
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