Latest news with #defenseexpenditure
Arab News
29-06-2025
- Business
- Arab News
Germany and the balance of power in Europe
The 2025 NATO Summit, which took place in The Hague last week, brought together representatives of all 32 member nations of the alliance. Top of the agenda was an agreement to increase national security expenditure, with a target for each country to spend 5 percent of gross domestic product on defense by 2035. The shift comes as Germany embarks on its biggest military rearmament since the Second World War, signaling its intent to assume a more assertive role within NATO and across Europe. Given that a highly militarized Germany twice brought the world to war, this latest iteration has drawn great interest. It also follows repeated criticism from US President Donald Trump, who has long accused European allies of relying too heavily for their security on Washington, which he argues bears a disproportionate share of NATO's military burden. In 2024, the US spent $935 billion on defense, more than double the combined total of all other NATO members. When Russia launched its full-scale invasion of Ukraine in 2022, this imbalance became clear, as Europe was exposed as being critically reliant on the US for its security. No country reflects the shift toward increased military investment more clearly than Germany. Under the leadership of Chancellor Friedrich Merz, it has embraced rearmament with a boldness unseen since the end of the Second World War. For much of the second half of the 20th century, Germany was characterized by its rejection of military might as an instrument of state power. Under the auspices of the European project, a reunified Germany sought to establish its role through multilateral diplomacy, economic stability and the rule of law. Its military, the Bundeswehr, remained fragmented and poorly equipped, with a defense budget that rarely exceeded 1.1 percent of GDP. Strict controls were placed on arms exports and strategic leadership was largely left to the country's NATO allies, led by the US. This was the established trend in postwar Germany. Even the faintest hint of rearmament was met with public resistance, shaped by memories of the nation's painful past. The Bundeswehr, established in 1955, was intentionally built with no projection of offensive power. For decades, as Germany became Europe's economic powerhouse, its security policies remained largely reactive and rooted within NATO's strategic architecture. However, those days now seem to be firmly behind it, with Berlin emerging as a prominent defense hub for Europe. This year, the Merz government passed a defense budget worth 2.4 percent of GDP, the highest level of military expenditure in Germany's postwar history, and announced long-term aspirations to raise it to 5 percent. At the transatlantic level, Germany's evolving strategy reflects growing uncertainty about Washington's role in NATO. Zaid M. Belbagi The goal is to ramp up annual defense spending from €95 billion ($111 billion) in 2025 to €162 billion by 2029. To enable this shift, Berlin has introduced legal changes allowing it to bypass its constitutional debt brake, a departure from a long-standing tradition of fiscal restraint. The transformation goes beyond budgets and legislation. Merz has pledged to build the Bundeswehr into 'the strongest conventional army in Europe' by 2031. The plan includes an expansion of its active forces from 182,000 troops to 203,000 by 2031, with a long-term target of 240,000. The military's role is expanding beyond Germany's borders as well. In May, Berlin announced that an armored brigade would be permanently stationed in Lithuania, the first long-term deployment of a German force beyond its own borders since the Second World War. This shift aims to support NATO's eastern flank amid growing concerns about Russian aggression. Modernization is proceeding at a rapid pace. Under a new rearmament directive issued by Chief of Defense Gen. Carsten Breuer, the Bundeswehr is acquiring advanced weapons and equipment, including air defense and precision-strike capabilities, space assets, advanced electronic warfare tools and munitions reserves. The procurement program includes Patriot missile systems, Eurofighter and F-35 fighter jets, Leopard 2 tanks, PzH 2000 howitzers and sophisticated military drones. This shift by Germany marks a pivotal moment for NATO and for Europe: the emergence of a post-American mindset in defense policy, with Berlin increasingly taking on responsibilities long championed by the US. At the transatlantic level, Germany's evolving strategy also reflects growing uncertainty about Washington's role in NATO, especially amid the decisions of Trump and his administration during his second term. The result is a more assertive and autonomous German military posture, one that is reshaping the security architecture of Europe. For the Middle East and North Africa, the rearmament of Germany and the revitalization of its defense industry present significant opportunities for deeper cooperation. The country has long been a key supplier of advanced machinery, equipment, motor vehicles and military aircraft components across the region. Amid the ongoing tensions between Iran, Israel and the US, Middle Eastern nations might increasingly look to Berlin as a vital partner, one whose expanding defense capabilities and industrial expertise could help shape their own security and military strategies for years to come.
Arab News
10-06-2025
- Business
- Arab News
Pakistan announces $62 billion budget 2025-26, raises defense spending by 20 percent to $9 billion
KARACHI: Pakistan on Tuesday announced its federal budget for fiscal year 2025-26 with a total outlay of Rs7.57 trillion ($62 billion), an overall decrease in spending by 7 percent, but hiked the defense expenditure by 20 percent following a recent military conflict with nuclear-armed neighbor India. Finance minister Muhammad Aurangzeb presented a budget that allocated Rs2.55 trillion ($9 billion) for defense spending in FY26, compared to Rs2.12 trillion in the fiscal year ending this month. 'This budget is being presented at a very important and historic moment when the nation in recent days showed extraordinary unity, determination and strength,' Aurangzeb said, referring to the recent military confrontation with India, in which the militaries of the two nations exchanged drone, missile and artillery attacks, with a combined 70 people killed on both sides. 'With this same national unity and determination, we should turn our focus to our economic strength, growth and welfare,' the finance minister said. 'The spirit with which we protected and strengthened our national sovereignty, we need to ensure our financial security and the welfare of the people with the same unity and strength.' The military clash between India and Pakistan was sparked by an April attack by assailants who targeted Hindu tourists in Indian Kashmir in April, killing 26 men. New Delhi blamed the attack on militants backed by Pakistan, a charge denied by Islamabad. The two sides used fighter jets, missiles, drones and artillery against each other before agreeing to a ceasefire on May 10 after four days of fighting, their worst in nearly three decades. Here are some of the key highlights from the country's 2025-26 budget: GDP/DEFICIT * GDP growth projected to be 4.2 percent * Nominal GDP seen at 129.57 trillion rupees * Fiscal deficit expected to be 3.9 percent of GDP * Targets primary surplus of 2.4 percent of GDP INFLATION * Targets inflation at 7.5 percent EXPENDITURE * Total spending seen at 17.57 trillion rupees * Defense expenditure of 2.55 trillion rupees targeted * Interest payments projected at 8.21 trillion rupees REVENUE * Total gross revenue of 19.28 trillion rupees targeted * Targets total tax revenue of 14.1 trillion rupees * Aiming for net external receipts of 106 billion rupees ($1 = 282.0000 Pakistani rupees) - With inputs from Reuters
Arab News
10-06-2025
- Business
- Arab News
Pakistan shares range bound amid uncertainty over budget announcement
ISLAMABAD: The Pakistan Stock Market witnessed a range-bound session today, Tuesday, with the index fluctuating within a narrow band amid uncertainty surrounding the budget announcement. Pakistan will unveil its annual federal budget for the coming fiscal year on Tuesday evening, seeking to kickstart growth while finding resources for an expected hike in defense expenditure following a military conflict with India last month, the worst between the nuclear-armed neighbors in decades. Islamabad will also have to contend with remaining within the discipline of its International Monetary Fund program and the uncertainty from new trade tariffs being imposed by the United States, its biggest export market. 'The index recorded an intraday high of 970 points and a low of 51 points, eventually closing at 122,024 — gaining 383 points or 0.32 percent,' brokerage house Topline Securities said in its daily market review. 'Market participation remained healthy, with total traded volume reaching 591 million shares and a traded value of PKR 21 billion.' Media reports say the government is likely to present a 17.6 trillion rupee ($62.45 billion) budget for the fiscal year beginning July 1, down 6.7 percent from this fiscal year. It has projected a fiscal deficit of 4.8 percent of GDP, against a targeted 5.9 percent deficit in 2024-25, the reports say. Analysts said they expect an increase of around 20 percent in the defense budget, likely offset by cuts in development spending. Pakistan allocated 2.1 trillion Pakistani rupees($7.45 billion) for defense in the outgoing fiscal year, including $2 billion for equipment and other assets. An additional 563 billion rupees ($1.99 billion) was set aside for military pensions, which are not counted within the official defense budget. The government of Pakistani Prime Minister Shehbaz Sharif has projected 4.2 percent economic growth in 2025-26, saying it has steadied the economy, which had looked at risk of defaulting on its debts as recently as 2023. Growth this fiscal year is likely to be 2.7 percent, against an initial target of 3.6 percent set in the budget last year. Pakistan's growth lags far behind the region. In 2024, South Asian countries grew by an average of 5.8 percent and 6.0 percent growth is expected in 2025, according to the Asian Development Bank. With inputs from Reuters
