Last week the Stockholm International Peace Research Institute released its latest figures on world military expenditure, confirming that global defence spending is once again on the rise. Although a real terms increase of 1 per cent appears modest, underneath the headline figure lies a more striking trend: alongside dynamic economic growth in many emerging powers has come a massive expansion in military expenditure over the past decade.
The Brics have led the pack. China’s military spending increased by 169 per cent in the past decade, Russia’s by 112 per cent, India’s by 44 per cent, and Brazil’s by 43 per cent. But others in the G20 are investing at a similarly rapid pace. Saudi Arabia has increased its defence budget by an astonishing 125 per cent over the past decade, and now ranks third on the table of top spenders, despite resorting to international money markets to plug a growing budget deficit. Read more
Bulgaria must bolster defence spending in response to the Russian invasion of Ukraine and war in the Middle East, the country’s defence minister has told beyondbrics in exclusive comments. Velizar Shalamanov (pictured), a member of the caretaker government that will step down after elections next month, reiterated Bulgaria’s commitment to Nato at a time when some of the alliance’s members have been accused of backing away from their obligations.
However, a long-term shift towards higher defence spending and a break with Russia will be hard to implement. Read more
It has become one of Brazil’s longest-running soap operas, or ‘telenovelas’: where is the country going to buy its new fighter jets?
Brazil has been talking about refurbishing its air force for more than a decade now, flaunting around a contract for 36 fighter jets that is seen as one of the most coveted deals in the global defence industry. While the contract itself is estimated to be worth at least $4bn, maintenance and follow-on deals would be worth even more. Read more
India’s policy makers have dealt a surprise one-two, as they attempt to stem the depreciation of the rupee, finance the country’s unsustainable current account deficit and prop up the economy all at once.
The Reserve Bank of India announced a slew of monetary tightening measures on Monday that immediately propped up the rupee but raised concerns around their impact on India’s already slowing economy. Another announcement late on Tuesday provided a counterweight, as limits on foreign direct investment were further relaxed.
But are these reforms all they’re cracked up to be? Read more
By Justin Vela in Istanbul
Turkey is moving up in defence manufacturing with the commercial development of the ANKA, its first domestically-made drone (pictured).
It’s the product of an industry that’s largely state-owned but one that is expanding its $14bn-a-year revenues, and creating investment opportunities through privatisation. First for a likely stock market launch is ANKA’s maker, Turkish Aerospace Industries (TAI), the second largest company in the sector. Read more
Abu Dhabi is pressing hard to build a homegrown arms industry, part of a push by Gulf governments to use their status as leading international weapons buyers to create domestic jobs and diversify away from oil.
Tawazun, Abu Dhabi’s state-owned defence company, has this month announced a flurry of deals to supply components to big western businesses, in what analysts see as part of a quid pro quo for contracts multinationals hope to win in the Gulf. Read more
Algeria’s powerful armed forces, which already run Africa’s biggest defence budget, have requested a 14 per cent spending increase for next year, as the country prepares for security threats on its southern border.
The Algerian defence ministry, still mostly run by the ageing generals who fought for the country’s liberation from France 50 years ago, has requested a $10.3bn budget for 2012, according to the South African news outlet, DefenceWeb. So what’s on the shopping list – and from whom? Read more
Is Vladimir Putin finally getting serious about corruption? The president on Tuesday dismissed defence minister Anatoly Serdyukov following an investigation into an alleged $95m fraud at his ministry.
The televised announcement was clearly designed to send a strong message about Putin’s intentions. Even if he limits his attentions to the defence ministry – as opposed to launching a wider clean-up campaign – it would be a huge undertaking. The military-industrial complex is among the least transparent and most inefficient sectors of the Russian economy. But Putin’s real intentions aren’t clear. Read more
Even when Apple’s new mapping software gets it right, people are not happy.
The latest complaints come from Taiwan’s defence ministry. Apple’s maps are too accurate, they say, in showing images of a top-secret long-range radar installation in the north of the island. Read more
The ‘Ahrlac’ jet may not be an aircraft that you have heard of, but it has its place in aerospace history: it’s the first defence aircraft to be completely designed and manufactured in Africa.
Ivor Ichikowitz, founder and chief executive of its maker, Paramount Group, says proudly: “It’s 100-per-cent homegrown – it’s a big story for Africa, for realising that we don’t have to rely on the west to do things.” Read more
With tensions rising in the South China sea, gung-ho investors may be looking to add a bit of firepower to their portfolio.
Nomura, the Japanese investment bank, says an “Asian arms race” is sweeping nations from China to Australia, a structural theme that could provide a lucrative opportunity for investors. Read more
India is no stranger to corruption allegations when it comes to defence – see, for example, the 1980s Bofors scandal.
But on Monday, the army chief, General VK Singh (pictured), told The Hindu newspaper that he was shocked when, two years ago, he was offered a $2.73m bribe to approve the purchase of 600 “sub-standard vehicles”, though he did not give the name of the defence lobbyist, an ex-army officer, who made the offer, or of the company allegedly involved. Read more
It was once the norm in the US to casually brand any equatorial Latin American country as a banana republic. But now it is the US that through its erratic decision-making is displaying the tendencies of a banana republic. At least that is the view from Brazil.
What else could explain the fiasco of the Super Tucano contract this week? Read more
Another week, another alleged scandal in Indian public life. On Monday, Reuters reported that Indian defence minister AK Antony had ordered an investigation into a $720m purchase of 12 helicopters from AgustaWestland, a part of Italy’s Finmeccanica group, over alleged irregularities.
Finmeccanica’s shares fell sharply on the news and the company denied any wrongdoing. Analysts said the investigation could be a result of paralysis in defence procurement caused by the trauma of previous scandals. Read more
Revolutions across the Middle East have been accompanied by a surge in defence spending.
At this week’s Dubai air-show, all manner of fast jets and attack helicopters were on display as international manufacturers sought to tap into the region’s insatiable appetite for military jets and passenger airliners.
But given the domestic nature of threats to regimes triggered by this year’s popular uprisings, one segment is booming more than most: armoured vehicles. Read more
By Nicholas Watson of business new europe
With many countries making cuts to defence budgets, a series of planned fighter jet purchases in emerging Europe over the next few years is a welcome boost to the beleaguered defence industry.
Up to eight countries are looking at new aircraft over the next decade, which the defence industry expects to generate sales of up to 250 jets. According to industry sources, Bulgaria is looking for 16 aircraft, Romania 24-48, Serbia 18-22, Croatia 12-24, Slovakia 12-15, Poland 32, and Turkey 40-80. Read more
If you are tech-savvy and interested in Chinese military affairs, chances are that you learned of the sea trial of the country’s first aircraft carrier, the Varyag, on your iPhone this morning.
Just in time for Wednesday’s big moment, China’s ministry of defence launched an app in the iPhone app store last Sunday. The app would help users “understand the military hot topics of the day,” said the ministry. Read more
Another Russian London IPO has flown into trouble – state-controlled Russian Helicopters on Wednesday cancelled its planned $500 million offering.
Once again the controlling shareholder – in this case the Russian government – sought too high a price. The offering wasn’t ultra-expensive in valuation terms, but some investors were wary of co-investing with the state and others may have been hit by the recent sell-off in emerging markets and a desire to set aside funds for the huge Glencore IPO. Read more
It’s probably not an arms race, at least not yet, but south-east Asian governments seem to be out shopping for some very expensive military toys.
Submarines seem to be the flavour of the month, sparked perhaps by China’s decision to build a submarine base on Hainan island. Vietnam is buying six fast attack submarines from Russia, Malaysia has controversially bought two French subs, and Burma has been renewing its naval power. The latest entrant to this underwater build up is Thailand. Read more
Pakistan’s decision this week to begin negotiations with China to buy six submarines coincided with confirmation of figures showing that foreign direct investment is down 21 per cent to just $1bn in the first eight months of the financial year ending in June.
Clearly, worsening economic realities have been ignored by ruling politicians and powerful generals who seem convinced that the threat to Pakistan’s shipping lanes is greater than the multiple economic, social and political challenges faced on land. Read more