Sovereign debt Crisis: re-alignment of global military power from West to East

Geopoliticalmonitor

FORECAST

The sovereign debt crisis in Europe, and soon America, will exert
tremendous pressure on national defense budgets, resulting in a
re-alignment of global military power from West to East.

David Cameron’s warnings of ‘tough’ and ‘painful’ spending
cuts ahead of an emergency budget in the UK have become somewhat of a
common refrain in Europe of late. As national governments scramble to
rein in spending and ward off speculative bond vigilantes from driving
up bond prices, defense spending has emerged as a natural target for
austerity cuts.

The British government is currently conducting a strategic defense
review that will decide the fate of several wasteful procurement
programs in the British defense establishment. All told, 14 programs
at the British Ministry of Defense have been allowed to run over
budget, costing the government an additional £4.5 billion. In the case
of the UK, it’s not a question of whether there will be cuts, but
rather when they’ll come and what they’ll target.

While Britain’s legacy as a maritime power should serve as a drag
against comprehensive cuts, the extent of the current fiscal malaise
ensures that big cuts will be forthcoming. According to Prime Minister
Cameron, if substantial government spending cuts aren’t implemented
immediately, Britain will be paying £70 billion annually in interest
payments within five years. Given the enormity of the problem, expect
a double-digit cut in defense spending over the next five years. The
new aircraft carrier program will survive due to its symbolic potency;
however it’s quite likely that doubts will once again come to the
surface over the viability of the long-term, $32 billion Trident
replacement program.

While one can only examine Britain and conclude the inevitability of
defense cuts, the process of slashing military budgets has already
begun in Germany. Encumbered by the ever-widening Euro Financial
Crisis and the necessity of maintaining its own AAA credit rating, the
German government has pledged to implement annual cuts of $1.3 billion
to its $38.5 defense budget. Berlin is also considering a series of
drastic military reform proposals such as reducing the standing army
by more than a third and doing away with conscription.

France has already embarked on a program to cut over 50,000 military
and civilian personnel over the next few years, and an announcement on
wide-ranging cuts to its $40 billion defense budget (2009) is expected
in the near future.

And finally, Italy’s defense budget will be cut by 10 percent in
2011 as part of the austerity package announced by the Italian
government on May 26th.

What we are witnessing in Europe follows a fairly simple dynamic:
states are paying out way more than they’re taking in, and this
problem is being compounded by the ever-increasing amount of state
revenue that must be put towards servicing national debt. There’s no
reason to believe that this very same pressure won’t eventually
extend to the United States- a state that is predicted to be devoting
$700 billion to federal debt payments by 2018.

All of this is occurring against the backdrop of global increases in
military spending, mainly in the Americas and Asia. As the United
States eventually scales back its military spending and Asian
countries ramp theirs up, the global balance of military power will
begin to shift towards a more equitable distribution.