Friday, January 15, 2016

Global threats will boost spending on defense

The global defence and aerospace industry are likely to rebound after being in the "doldrums" for some time. The accounting firm Deloitte claims the growth in global threats will cause increased defense spending.

The United States still spends by far the most on defense of any country. A chart based on figures from last November show that the U.S. spends over $609 billion yearly on defense. The next highest spending was a mere $216.4 billion by China. In third place was Russia with $84.5 billion. Saudi Arabia, which buys many weapons from the US ,and has a large contract with Canada as well, comes in fourth at 80.8 billion, not far behind Russia. Even the smaller United Arab Emirates spends $22.8 billion enriching many western arms producers. Canada spends $17.5 billion and Israel $15.9 billion.
The war on terror in the Middle East, tensions in Eastern Europe and in the South China sea are expected to result in more spending on aerospace and the military. While the US scaled down military involvement in Iraq and Afghanistan, it is now picking up again in Iraq and to some extent even in Afghanistan. The Islamic State and its actions may provide a bonanza for the arms industry as countries become more and more concerned about security and intervene in Syria and Iraq and possibly soon in Libya to fight against it. Many countries in eastern Europe bordering Russia will also boost military spending to counter Russian influence in the Ukraine.
As well as increased demand for armored vehicles, munitions, maritime patrol ships and aircraft, cyber-threats will increase markets for companies selling monitoring equipment and security protection. In the US programs likely to start soon or reach full production include the Ohio Class Submarine replacement, the F-35 fighter jet, and Long Range Strike Bomber.
Mike Rogers, former House Intelligence Committee chair, formed a new pressure group "Americans for Peace, Prosperity and Security." The group is already active in the Iowa and New Hampshire primaries. It hopes to serve as " the premiere national security and foreign policy organization during the 2016 debate". It also wants to help elect a US president who favors more engagement globally and a strong foreign policy. The group hosts candidate events and later this year hopes to host a candidates forum. Business executives with ties to defense contractors are supporting the group. At candidate events the group pushes candidates on national security issues. Apparently they have already convinced many of the more libertarian Republicans to take a more hawkish stance on foreign policy. The United States appears ready to continue its role as global cop with the American taxpayer apparently unable or unwilling to put up much resistance.


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