History doesn’t repeat itself, but it often rhymes, as Mark Twain is reputed to have said. With European economies promising to up their defence expenditure to
5 per cent of GDP, are we repeating the 1930s, when some powers used defence spending to pull themselves out of the Great Depression?
The interwar years were dominated by Western powers and Japan, with the rest of the world under
the colonial yoke. World War I took place largely between the European powers and did not settle old scores. It left Germany bitter about war reparations, which caused hyperinflation that devastated German society.
After the Roaring Twenties, which ended in the stock market crash of 1929, the 1930s were years of global slowdown. In 1932, Franklin D. Roosevelt was elected US president on the promise of his New Deal for reviving the American economy. In Japan and Germany, right-wing factions rose
on the back of militarism. In Germany, Adolf Hitler came to power on a Nazi nationalist platform to avenge German humiliation over World War I.
German military spending went from around 2 per cent of gross domestic product in 1933 to nearly 100 per cent by 1945. Japan went from around 4 per cent of GDP to more than 10 per cent by 1937, when the Sino-Japanese War broke out. The United States was slow to react, with an average spending of 1-2 per cent of GDP between 1930 and 1938, but it rapidly ramped up to as much as 40 per cent of GDP by 1945.
The US has been the guarantor of European security since World War II, but that is changing as the second Trump administration has decided Europe should
bear more of the burden for its own security. After February’s Munich Security Conference, during which Trump officials essentially told Europeans they were on their own, incoming German Chancellor
Friedrich Merz announced a doubling of military spending by 2029 in a sign that Europe is beginning to rearm.
The Stockholm International Peace Research Institute estimated global military spending rose by 6.8 per cent in 2023 to more than US$2.4 trillion, equivalent to 2.3 per cent of world GDP. On average, military spending was 6.9 per cent of fiscal budgets, having increased across all five geographical regions. African countries saw the highest increase at 22 per cent, while the Americas saw the smallest at 2.2 per cent.
