Israel leads global surge in military spending, with steepest increase since 1967

Worldwide military expenditure saw its steepest rise in 2024 since the end of the Cold War, reaching $2.7 trillion as wars and rising tensions drove up spending, researchers said Monday.

Military spending rose worldwide, with particularly large increases in Europe and the Middle East, according to a new report by the Stockholm International Peace Research Institute (SIPRI).

Israel’s spending increase was the largest jump of all, and its portion of the GDP was the second greatest, behind only Ukraine.

In general, military budgets drastically grew in the Middle East to an estimated $243 billion, an increase of 15% from 2023, the report found.

Israel has faced multi-front conflicts since October 7, 2023, when the Palestinian terror group Hamas led an invasion in the south, killing 1,200 people, abducting 251 others, and triggering a still-ongoing war in the Gaza Strip.

As Israel continued its offensive in Gaza, its military expenditure surged by 65 percent to $46.5 billion in 2024, of which $5.7 billion was spent in December alone. SIPRI noted that this represented “the steepest annual increase since the Six Day War in 1967.” It accounted for 8.8% of GDP, and marked a steady rise that has seen the share balloon by 135%, from 5.4% of GDP in 2015.

Israel is among the top 15 countries in the world for military expenditure, accounting for 1.7%. The three largest are the US (37%,) China (12%) and Russia (5.5%). Together, the 15 nations account for 80% of expenditure around the world.

In contrast, Iran’s fell by 10% to $7.9 billion in 2024, “despite its involvement in regional conflicts and its support for regional proxies,” the report added.

“The impact of sanctions on Iran severely limited its capacity to increase spending,” said SIPRI.

Iranian proxies in Lebanon, Iraq, and Yemen have all fired missiles and drones at Israel in support of Gaza. Israel pounded Lebanon’s Hezbollah terror group until a ceasefire was reached in November last year. Houthi rebels in Yemen, however, are still firing ballistic missiles at Israel.

Last month Israel passed its 2025 budget — the largest in Israeli history — which will be NIS 756 billion ($203.5 billion), or NIS 620 billion excluding debt servicing, for a 21 percent rise in spending over 2024.

The Defense Ministry’s budget alone will be a record NIS 110 billion ($29 billion) out of a total defense budget of NIS​ 136 billion ($36.9 billion), while the deficit is set at 4.9% of gross domestic product.

Several European countries had seen “unprecedented” rises in their military spending, the report noted.

In real terms, spending rose by 9.4% globally compared to 2023, with 2024 marking the 10th year of consecutive spending increases.

“This was really unprecedented,” Xiao Liang, a researcher with the SIPRI Military Expenditure and Arms Production Programme, told AFP.

“It was the highest year-on-year increase since the end of the Cold War.”

While there may have been steeper increases during the Cold War, data for the Soviet Union is not available, Liang added.

More than 100 countries, including all of the 15 largest spenders, increased their military budgets last year, said the report.

Profound impact

“This really speaks to the heightened geopolitical tensions,” Liang said. The spending increase was likely to have “a very profound socio-economic and political impact,” he added.

“Countries have to make trade-offs in their budgetary decisions,” he said.

“For example, we’ve seen many European countries cutting other spending like international aid to fund the increase in military spending, and… trying to raise taxes or rely on loans or debt to fund the spending,” Liang said.

The main contributor to the rise in expenditure was the European region including Russia, where spending rose by 17% to $693 billion.

All European countries, except Malta, expanded their budgets, “pushing European military spending beyond the level recorded at the end of the Cold War,” SIPRI said.

Russia’s military expenditure reached $149 billion in 2024: a 38%increase on the previous year and a doubling since 2015.

Ukraine’s military spending grew by 2.9% to reach $64.7 billion.

While that sum only corresponds to 43% of Russia’s arms spending, for Ukraine it is the equivalent of 34% of its GDP. That means it is carrying the highest military burden of any country.

Germany rearming

Germany’s spending increased by 28%, reaching $88.5 billion, overtaking India as the fourth largest in the world.

“Germany became the biggest spender in Central and Western Europe for the first time since its reunification,” Liang noted.

The world’s largest spender, the United States, increased expenditure by 5.7%, reaching $997 billion. That alone accounts for 37% of worldwide spending and 66% of the military spending among NATO countries.

Total military spending by the 32 members of the US-led alliance rose to 1.5 trillion as all members increased their spending.

“We’ve seen in 2024 that 18 out of the 32 NATO countries reached the two-percent GDP spending target, which is the highest since the founding of the alliance,” Liang said.

While some of the increases have been a result of European military aid to Ukraine, it has also been fueled by concerns of potential US disengagement with the alliance.

“There has really been a shift in European defense policies, where we will see large-scale procurement plans into the arms industry in the years to come,” Liang explained.

The world’s second-largest spender, China, increased its military budget by 7% to an estimated $314 billion, “marking three decades of consecutive growth.”

China — which has been investing in modernizing its military and expansion of cyberwarfare capabilities and nuclear arsenal — accounted for half of all military spending in Asia and Oceania.