The challenge of setting defence spending levels

The coming and much needed review of Canadian defence policy will no doubt prompt frequent calls on Canada to honor NATO’s 2006 proposal that member states lift defence expenditures to a minimum of 2 percent of gross domestic product. For Canada that would be a 100 percent increase – the current $20 billion budget amounting to only 1 percent of GDP.

A parallel spending target is the UN’s 1970 proposal that the world’s more prosperous states raise their official development assistance (ODA) to at least .7 percent of GDP. That would mean a 200 percent increase for Canada – the current $5 billion per year amounting to but .25 percent of GDP.

Linking defence and ODA spending levels to national wealth or income obviously invokes an ability-to-pay principle, and while that makes good sense when it comes to development assistance, there is little logic in linking defence spending to national wealth.

Inasmuch as development assistance is a wealth transfer mechanism analogous to Canada’s inter-provincial equalization payments, the link to GDP makes eminent sense. Relative national wealth is a credible, concrete way to measure a state’s financial obligations to the rest of the world. With the enormous benefits of wealth come obligations, and the UN General Assembly action in 1970 confirmed a broad global consensus around the .7 percent ODA target.

But national defence spending obligations are logically tied to security requirements, not to wealth and the ability to pay. No state’s national defence requirements rise because their GDP has risen. There is of course an obligation on all states to contribute to international peace and security, and high income states should be more forthcoming than those with more limited means, but for most states levels of military spending are based primarily on national defence requirements, for which the link to GDP is largely irrelevant.

Canada has a range of enduring defence responsibilities, but these are in no way conditioned by the size of our GDP. Monitoring Canadian frontiers and approaches to Canadian air, sea, and land spaces for unauthorized intrusions is an ongoing obligation, but the job doesn’t get bigger or smaller, or more or less expensive, just because our GDP rises or, very occasionally, declines. The same goes for the military’s responsibility to aid civil authorities in search and rescue and disaster response.

In Canada the near universally accepted threat assessment is that we face no — or very little — military threat. In the Arctic, where much remains to be decided about continental shelf boundaries and thus access to sea resources, all Arctic states formally and informally agree that none of those issues will be mediated through military force.

So, just as surely as the presence of imminent military threats is expected to affect military planning and preparedness, so should the absence of threat. Why would states not facing significant threats choose to spend as much on defence as those under credible threat?

Counting other contributions

Peace and security obligations beyond national borders might arguably be linked to a state’s ability to pay, but, in addition to failing to correlate spending to threat levels, a direct link between military expenditures and GDP is illogical on two further counts. First, only a small portion of a state’s military capacity is intended and available for meeting international obligations. Second, direct military engagement is not the only, and often not the most effective, way to contribute to international peace and security.

Two inescapable realities point toward greater concentration of spending on security measures that reach beyond fixations on military capacity: the increasing acknowledgement of the need to address and ameliorate the roots of armed conflict; and an almost universal acknowledgement that deeply rooted political conflicts like those now devastating Iraq and Syria and other parts of the Middle East and North Africa do not ultimately have military solutions.

While there will inevitably be military dimensions to confronting the kind of extremism manifest by ISIS, the economic, social, and political drivers of conflict and non-military dimensions of conflict resolution and prevention demand the kinds of peace building and war prevention initiatives that have been sorely neglected and chronically underfunded in comparison with military preparedness. Heightened attention to economic development (the focus of ODA), diplomacy, good governance, and arms controls is key to ending and preventing armed conflict – so if peace and security spending was to be guided by the ability-to-pay principle, those four dimensions should obviously be prominently included in the calculations.

When the Cold War ended there was genuine hope that the world would be paid significant peace dividends. And, indeed, there have been some. Military spending relative to GDP has certainly declined in Canada and some wealthy European countries in response to reduced threats and tensions. And to their credit, countries like the Netherlands, Belgium, Denmark, and Germany, continue to ignore NATO’s 2 percent formula and set their defence spending at around .9 to 1.2 percent of GDP – with Canada toward the middle of that range at 1 percent. Norway is slightly above that range, but well below the NATO target, at 1.5 percent of GDP.

Notably, some of those countries have put their peace dividend to good use – especially Norway, with foreign aid contributions raised to just over 1 percent of GDP and well above the UN development assistance target. The Netherlands and Denmark both meet the .7 percent development assistance target, as has, the United Kingdom (the only permanent member of the Security Council to do so). Canada is a laggard. We have demonstrably not steered any of our peace dividend toward increased development assistance – which languishes at .25 percent of GDP. Put another way, we’re not making those legitimately expected global equalization payments.

So let’s have that thorough review of Canadian defence policy. Let‘s insist that any changes to spending be justified by clear assessments of defence needs. And, especially, let’s not get side-tracked by military spending formulas that not only ignore threat levels and actual defence needs, but neglect the myriad of proven non-military ways of building international peace and security.