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Group: Defense Budgets Immune to Recession

The overall amount of money invested in soldiers, weapons and war has been largely unaffected by the global economic downturn, a think tank said in a report published Wednesday.

The London-based International Institute for Strategic Studies said the total amount of money spent on world defense budgets rose from $1.3 trillion to $1.55 trillion between 2006 and 2008, and likely continued to climb further in 2009.

The rise, however, may not be as significant as the figures suggest because they reflect the effects of the fluctuating dollar, the think tank said.

"The economic crisis hasn't had a dramatic impact on defense spending in the past 18 months," the institute's defense economist Mark Stoker said ahead of the report's launch.

Calculated in terms of its proportion to global GDP, defense spending has remained steady in the past few years - 2.56 percent of global GDP in 2008, compared to 2.6 percent in 2004, Stoker said.

Key countries accounting for the biggest share of global military spending - China, U.S., France and Japan - have, in general, increased spending or kept their budgets unchanged, he said, with Russia the only leading country making a small reduction in spending. In the Middle East, most countries also increased their defense budgets in 2009, if only modestly.

But the rate of increase in defense spending around the world - particularly in Europe and the U.S. - is expected to slow in the next few years after a decade of significant growth, Stoker said.

European nations are struggling with deep and structural deficits, while the defense budget in the U.S. has likely reached a ceiling after climbing over 75 percent between 2000 and 2009, Stoker said.

The expected U.S. troop withdrawals from Iraq this summer and from Afghanistan next year will also have a negative effect on global defense spending, he said.

Spending "will probably flatten out a bit moving forward," Stoker said. "The NATO countries face quite difficult budget environments, and countries like France and the U.K. may need to take drastic action" in defense budgeting in the coming year, he said.

Emerging economies like Brazil, India and China, meanwhile, are expected to increase military spending to continue with their military modernization programs, Stoker predicted.

Sam Perlo-Freeman of the Stockholm International Peace Research Institute, which also tracks global military expenditure, agreed that defense budgets had largely been immune to the recession.

Still, he cautioned that the rise in defense spending had to be seen in the context of massive banking bailouts and economic stimulus plans which were ringing up big deficits across the globe.

"When countries start thinking of how to cut these deficits, then it's a different question," he said. "I wouldn't want to make forecasts."

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