Saturday, 18 June 2016

The Price of War

The recent publication of the Defence White paper, with its announcement of an extra $20 billion to be spent on the military over the next fifteen years, has not raised a huge amount of controversy. With the exception of a small number of critical commentators, the reception of this massive funding increase has been on the whole fairly positive. None of the major political parties have come out against the major thrust of the paper. Phil Goff, the Labour Defence spokesman, has criticised the paper for its lack of specifics, but clearly supports the idea that our military forces need much more money. Ron Mark from New Zealand First complains that $20 billion is not enough, and worries about the military effectiveness of the spending decisions to be made. No one questions the received wisdom: New Zealand spends a pittance on its military forces, they are well over due for some extra funding.

The statistic that gets trotted out repeatedly is the (supposed) fact that New Zealand spends just 1% of its GDP on defence. Compared to other countries this is very small. Our nearest neighbour and ally Australia spends closer to 2%, the United States spends around 3.5%. As an ally and trading partner, New Zealand should ‘pull its weight’ and share a proportional military burden. Putting to one side the important and controversial question of whether New Zealand should ally itself with these or other much bigger international players, is it true that we spend just 1% of our GDP on defence?  Is this the most appropriate way to measure our military spending?

The claim is almost true for the past decade. Following an international trend beginning at the end of the cold war, New Zealand decreased its military spending over the course of the 1990s. Whereas the United States drastically increased its military spending in the wake of 9/11, New Zealand’s spending (as a % of GDP) decreased gradually to a level of around 1.1 – 1.3% of GDP, where it has floated steadily since around 2005. Two points need to be made about this statistic. First, it doesn’t mean that New Zealand has been spending roughly the same amount of money each year on defence. As the economy grows, even tiny looking percentages grow proportionally. In 2012 for example, New Zealand spent 1.2% of its GDP on defence, just under $2.586 billion dollars. In 2015 it spent the same 1.2%, which was then worth $2.956 billion. That’s an increase of $370 million. Inflation accounts for some of this, but we are looking at huge increases over and above basic inflation rates year by year nevertheless. Secondly, tiny looking increases in percentage figures are huge when they are taken from gigantic sums such as national GDP figures. According to Statistics New Zealand, New Zealand’s GDP for the 2015 year was $245 billion. One percent of this sum is $2.45 billion. Each 0.1% increase is worth $245 million. It is not pedantic or obsessive to look closely at these apparently minor differences, these hundreds of millions of dollars would have a massive impact in any area of New Zealand’s small economy.

The claim that New Zealand spends just 1% of its GDP is absolutely false for the year 2016. According to the official budget statistics, New Zealand will spend a total of $3,695,573,000 on defence in 2016. This figure does not contain any of the $20 billion mentioned in the white paper, so the true total will be much higher. Even if we ignore the extra $20 billion, this amount works out to 1.46% of GDP. Not too far behind Australia’s figure for 2015, 1.92% of its GDP. If we try to take the extra $20 billion over fifteen years into account, we get a much bigger figure. No details about when and exactly what the $20 billion will be used for have been released, so we don’t know how much, if any, will actually be spent in 2016. Although assumptions can be dangerous, if past history is anything to go by the safest assumption to make here would be that the planned $20 billion will in reality blow out to a much larger sum. I’ll make the conservative assumption that it doesn’t, and also that it will be evenly spread out over the fifteen years. That results in an additional $1.333 billion for 2016, bringing the grand total military expenditure to over $5 billion. As a percentage of GDP, that is 1.99%.

Should we focus on military spending as a proportion of GDP? Although this statistic is useful when you are comparing different countries with each other, it does not help us understand the impact military spending has on our domestic economy. A much more relevant statistic for this purpose would be military spending as a proportion of total government expenditure. Five billion dollars is a chunky 5.59% of total government expenditure. Comparing this to what we spend on health and education, the impact of preparing for war is very apparent: defence spending is almost one third of the entire health budget, and just under a half of the entire education budget.

Now that we have a sense of the scale and impact of the massively increased military budget, we can turn to the question of why it has been so drastically increased. The Defence white paper itself lists a number of ‘strategic challenges’ for New Zealand in the years ahead up to 2040:

  •          The rising sophistication, range and number of actors operating within New      Zealand's EEZ, Southern Ocean and South Pacific
  •          The increasing likelihood of a terrorist attack in New Zealand since 2010
  •          A more rapid evolution and spread of cyber attacks than anticipated
  •          Heightened tensions in the East and South China Seas
  •          Increases in military spending across South East Asia
  •          Intensifying turmoil in the Middle East and North Africa
  •          Degraded relations between Russia and the West

There are two types of justifications used by the legions of media commentators who heartily approve of New Zealand’s increased military budget. The first is a liberal- humanitarian green tinted justification, which emphasises local responsibilities in the Pacific region. We need bigger and better planes for disaster relief, better boats to defend against illegal fishing in the Southern Ocean. In a recent Stuff article, Stacey Kirk writes about the need for New Zealand’s Defence Force to “target sights closer to home”. The picture just below the headline shows a group of Adelie penguins on an iceberg in Antarctica, with the caption “If it's not scientific research and conservation, then New Zealand has to play a part in looking out for these little guys”.

The second approach emphasises the dangers facing New Zealand in the international arena, and the need to protect ourselves from a wide range of threats. In a recent interview  with Paul Henry, a visibly excited and somewhat swivel-eyed Patrick Gower declares that “New Zealand has a new enemy”. China has developed a 100,000 strong army of cyber soldiers, who regularly attempt to hack the computers of the New Zealand government. To play its part in the “global war games” New Zealand must spend a “small fortune” on something called “cryptographic infrastructure”. Neither Paul Henry nor Patrick Gower know what this is exactly, but speculate that it is “some kind of software”.

A more sober and serious example of this right wing imperialism can be found in Nevil Gibson’s recent piece for NBR, in which he downplays the importance of cute penguins and tropical tornadoes, and emphasises instead the dangerous and violent world of 21st century power politics: “the White Paper outlines the new dangers that have emerged since 2010 – China’s expansion into the East and South China Seas, increased military spending in Southeast Asia, ‘degraded’ relations between Russia and the West; and, of course, the threat of terrorism (still rated as low-risk) and “intensifying turmoil” in the Middle East and North Africa.”

Gibson’s article also contains this very insightful sentence: “This will be welcomed by New Zealand’s allies, such as Australia and the US, who may detect a stronger commitment to defending this country’s wider interests than just the immediate maritime environment.”

Underneath all of the spin, this is the most significant and convincing reason for New Zealand’s increased military budget. Cute penguins, illegal fishing, tropical cyclones and even Gower’s army of Chinese cyber warriors provide comfortable and predictable click-bait for the superficial observer of New Zealand’s military spending. The real reason has to do with the New Zealand state’s relationship to its much bigger imperial partners, Australia and the United States. The crucial and complex question of how these historical loyalties relate to the overall geo-political situation, in particular the question of how New Zealand has an ambiguous and contradictory stance regarding China, I will put to one side and refer to Gordon Campbell’s excellent recent article.

Returning instead to those percentage-of-GDP statistics discussed above, there is something apparently quite magical about that 2% of GDP figure New Zealand is now so incredibly close to. Australia’s recent Defence white paper also heralded a massive increase to its military spending, on a scale far more vast and lethal. Nuclear submarines, drones, helicopters, satellites, planes and a list of other new military items will be purchased by the Australian military in the coming years. These billions of dollars of increased spending are partly the result of intense and vigorous lobbying by people such as Tony Abbott, who pushed for a 2% of GDP target for military spending. Although consistently higher, Australia’s military spending has been hovering around 1.7 – 1.9% of GDP since the mid 1990s. The same considerations I outlined above apply even more so to Australia, as its economy is more than seven times the size of New Zealand’s, the effect of small percentage increases will be even more massive. Interestingly, Australia has actually de-coupled its projected military budget from any constraint to do with a % of GDP target. This is to ensure against the possibility that Australia’s economy might shrink, and with it the 2% of GDP military allowance. As Ben Eltham observes in a recent New Matilda article, “the White Paper sets out a concrete timeline of spending, committing to the budget no matter the external economic circumstances.

The 2% of GDP target is also a political hot potato for the European countries in the NATO coalition. Only five of NATO’s 28 countries spend more than 2% of their GDP on military expenses: United States, Britain, Poland, Estonia and Greece. In 2006 all of the NATO countries agreed to a 2% target, with the United States pushing the hardest for member countries to increase their military spending. In more recent years, especially since the conflict between Russia and the Ukraine, pressure from the US has increased. Obama has been particularly vocal on this issue, which has managed to strain even the ‘special relationship’ between Britain and the US. Hillary Clinton, Bernie Sanders and Donald Trump all agree with Obama on this issue, and urge NATO countries to spend more money on their military forces.

This pressure to spend more and more money on 'defence' is part of a broad international pattern of increasing military expenditure. Although there is no explicit publicly announced pressure on New Zealand to meet a 2% of GDP target, with Australia striving for and surpassing that goal, and the US putting pressure on European countries to meet that same goal, it is easy to imagine New Zealand political leaders worrying about what Obama thinks of their military contribution. When the government of the day is one which clearly could not care less about things like the housing crisis, refugees or paid parental leave, and slavishly fails to depart from its allegiance to US imperial interests and entanglements, it is not surprising that New Zealand is following the crowd in spending more money on its military. 

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