Brad Lendon, CNN
Tue, April 29, 2025
The F-35 fighter jet program accounted for more than $60 billion of US military spending in 2024, according to a new report from the Stockholm International Peace Research Institute. - Clement Mahoudeau/AFP/Getty ImagesMore
The world is arming itself at the fastest rate since near the end of the Cold War, according to a new report, as major wars rage in Ukraine and Gaza and military tensions spike from Europe to Asia.
The 9.4% year-on-year rise to $2.718 trillion in global military spending in 2024 is the highest figure ever recorded by the authoritative Stockholm International Peace Research Institute (SIPRI) in its annual report – which warned there’s no end in sight to the spiraling global arms race. That is the highest rise since 1988, the year before the Berlin Wall fell.
“Many countries have also committed to raising military spending, which will lead to further global increases in the coming years,” the report said.
The United States remains by far the world’s biggest military spender – almost a trillion dollars in 2024, the report said.
Big ticket items in the US budget included F-35 stealth fighters and their combat systems ($61.1 billion), new ships for the US Navy ($48.1 billion), modernizing the US nuclear arsenal ($37.7 billion) and missile defense ($29.8 billion).
The US budget included $48.4 billion in aid for Ukraine, almost three-quarters of Kyiv’s own defense budget of $64.8 billion.
China followed the US in overall military spending with an estimated $314 billion, just under a third of the US total, the report said.
It did not break down Beijing’s spending by weapons or command, but noted China “unveiled several improved capabilities in 2024, including new stealth combat aircraft, uncrewed aerial vehicles (UAVs) and uncrewed underwater vehicles.”
“China also continued to rapidly expand its nuclear arsenal in 2024,” the report said.
Together, Washington and Beijing accounted for almost half of the world’s military spending in 2024, the report said.
But countries involved in – or wary of – regional conflicts showed the biggest increases in spending year over year.
Israel, which launched an invasion of the Palestinian territory of Gaza in 2023, showed a whopping 65% increase in military spending in 2024.
Heavy bombs from the US arrive in Port Ashdod, Israel, on February 16, 2025. The US provided Israel with $10.6 billion in supplemental military aid in 2024, the Stockholm International Peace Research Institute says. - Israeli Ministry of DefenseMore
Meanwhile, Russia, which invaded Ukraine in 2022, showed an estimated increase of at least 38%, but the SIPRI noted that figure was likely higher as Moscow augments military coffers with money from regional and other sources.
The more than three-year-long conflict in Ukraine has seen NATO countries significantly boost their military budgets in response to Russia’s belligerence and as US President Donald Trump presses Europe and the US-led alliance to be more responsible for their defense, saying they’ve been taking advantage of the United States for too long.
Germany, with the world’s fourth-largest defense budget, upped its spending by 28%. Romania (43%), the Netherlands (35%), Sweden (34%), the Czech Republic (32%), Poland (31%), Denmark (20%), Norway (17%), Finland (16%), Turkey (12%) and Greece (11%), were the other NATO members among the top 40 defense spenders worldwide who showed double-digit increases in 2024.
“The rapid spending increases among European NATO members were driven mainly by the ongoing Russian threat and concerns about possible US disengagement within the alliance,’ said Jade Guiberteau Ricard, researcher with the SIPRI Military Expenditure and Arms Production Programme.
But analysts said it may take more than money for US allies in Europe to become militarily self-sufficient.
“It is worth saying that boosting spending alone will not necessarily translate into significantly greater military capability or independence from the USA. Those are far more complex tasks,” Guiberteau Ricard said in a press release.
In the Indo-Pacific, the SIPRI said China’s 7% increase in 2024 marked the 30th consecutive year-over-year rise in spending for the People’s Liberation Army, “the largest unbroken streak recorded” in the institute’s database, the report said.
“China’s military build-up has also influenced the military policies of its neighbors, prompting many of them to increase spending,” it said.
Japan’s military budget rose 21% in 2024 – Tokyo’s largest increase since 1952. That brought military spending to 1.4% of gross domestic product, the biggest chunk of Japan’s economy devoted to the military since 1958.
The Philippines, embroiled with China in territorial disputes in the South China Sea, increased its defense spending 19%.
Philippine marines board a ship during a joint visit, board and seizure exercise with their US and South Korean counterparts with members of Japan's Self-Defense Forces as observers, during training in Ternate town, Cavite province, west of Manila, on October 22, 2024. - Ted Aljibe/AFP/Getty ImagesMore
And though spending in South Korea went up only 1.4% in 2024, Seoul has the “highest military burden in East Asia,” at 2.6% of GDP, the institute said.
Taiwan, an island democracy of some 23 million people that the Chinese Communist Party claims as its own and has vowed to seize by force if necessary, increased its defense budget by only 1.8% last year, but Taipei’s military spending is up 48% since 2015, the report said.
India, meanwhile, had the world’s fifth-largest defense budget ($86.1 billion) in 2024. New Delhi’s increase over 2023 was only 1.6%, but the country’s defense spending is up 42% over the past decade, indicative of a troubling trend, researchers said.
“Major military spenders in the Asia–Pacific region are investing increasing resources into advanced military capabilities,” Nan Tian, director of the SIPRI Military Expenditure and Arms Production Programme, said. “With several unresolved disputes and mounting tensions, these investments risk sending the region into a dangerous arms-race spiral.”
Also in Asia, Myanmar, which has seen internal conflict since a military coup in 2021, increased spending by 66% in 2024. At 6.8% of its GDP, Myanmar maintains the largest military burden in the Asia-Pacific, the report said.
Military expenditures in Africa were up 3% overall in 2024. Algeria is the continent’s biggest spender, while ranking 20th worldwide.
In the Americas, Mexico showed a 39% surge in military spending in 2024, “reflecting the government’s increasingly militarized response to organized crime,” the report said.
CNN.com
Europe Is Racing to Build Its Own Version of the U.S. Military-Industrial Complex
Europe Is Racing to Build Its Own Version of the U.S. Military-Industrial Complex
Jon Sindreu
Thu, May 1, 2025
WALL STREET JOURNAL
Spotters take pictures of a Dutch Air Force Lockheed Martin F-35 Lightning II jet fighter. - JOHN THYS/AFP/GETTY IMAGES
America’s vast military-industrial complex has many critics. For Europe, it is now something to aspire to.
This week, Germany asked the European Union to invoke an emergency clause exempting defense investment from spending rules, as part of the bloc’s five-year rearmament plan. Global defense expenditure experienced the highest year-over-year rise since at least the end of the Cold War in 2024, Stockholm International Peace Research Institute data showed this week, with Europe as the main contributor. Analysts estimate NATO members could add €700 billion ($798 billion) to €2 trillion in extra military spending by 2030.
Of course, much of the windfall will flow to prime U.S. contractors such as Lockheed Martin, Northrop Grumman and General Dynamics. But Brussels wants at least 50% of European military procurement to go to domestic firms. Achieving that requires major industrial reform—something investors are eager to capitalize on as the U.S. growth story loses its shine.
Because European countries slashed military budgets a lot more than the U.S. after the Cold War, their domestic defense suppliers became niche, low-volume producers with high unit costs. Airbus’s military arm was the highest-grossing one in 2024 with €12 billion in revenue—barring BAE Systems, which gets half its sales from the U.S. By contrast, Lockheed grossed $71 billion.
This has created a negative feedback loop, with NATO members increasingly channeling off-the-shelf purchases toward American contractors, which remain capable of large-scale production. Following Russia’s invasion of Ukraine, only 22% of the EU’s procurement boost remained in Europe, according to the European Commission.
The clear, first step to fix this is producing more of what Europe already makes: ammunition. After the EU failed to deliver one million artillery shells to Ukraine by March 2023—it took until November—officials in the bloc allocated €500 million to scale output. A quarter went to Rheinmetall, which targets output of 1.1 million 155mm shells a year by 2027, and tripling annual revenue to €30 billion by 2030.
Rheinmetall wants to evolve into an American-style, all-purpose contractor. It recently acquired U.S. vehicle maker Loc Performance, ammo recovery firm Stascheit, and software developer blackned, and bid for Thyssenkrupp’s warship arm, which was rejected in favor of a spinoff.
However, investor enthusiasm has pushed its forward price-earnings ratio to 43, from 17 six months ago. Such extreme valuations argue for diversification, but it is hard to spot other clear winners in an industrial base wastefully fragmented across national lines.
Germany is a leading manufacturer of tanks but, where the U.S. fields the Abrams main battle tank, the Bradley infantry vehicle and the Stryker personnel carrier, Europe has several competing models for each tank class. Ditto for frigates, submarines and planes.
In jet fighters, the Eurofighter Typhoon, backed by Germany, Italy, Spain and the U.K., competes with France’s Rafale and Sweden’s Gripen. But the most popular choice among European NATO members is the F-35, which boasts stealth capabilities and triple the production rate. This locks countries into U.S. systems for two decades. Next-generation fighter development is split too, between a Dassault-Airbus program and a BAE Systems-Leonardo-Mitsubishi team.
Ideally, these firms would merge into two giants, each bidding for a unified contract, with only one aircraft ultimately developed, just as Boeing and Lockheed did with the U.S. Air Force’s F-47 project.
In practice, top-tier mergers remain unlikely. National governments retain stakes in most defense firms and are reluctant to cede control.
A more realistic model is missile maker MBDA. Jointly owned by Airbus, BAE and Leonardo, it functions as one company while retaining national subsidiaries. This allowed simplification: The Aster missile family—Europe’s closest equivalent to the U.S. PAC-3 MSE, used in the Patriot systems that have proven vital in Ukraine—has replaced legacy systems such as the Crotale, Masurca, Spada, Aspide and Sea Dart. MBDA plans to double production this year from 2023.
Eurofighter Typhoon jet fighters are backed by Germany, Italy, Spain and the U.K. - JOHN THYS/AFP/Getty Images
This model could extend to other sectors. Rheinmetall is developing the Panther KF51 tank, aimed at replacing the Leopard 2, and has now joined forces with Leonardo to build a variant for Italy. Naval capabilities could be consolidated across BAE, France’s Naval Group, Germany’s Thyssenkrupp, Italy’s Fincantieri and the Netherlands’s Damen.
Investors could spread bets across listed players, hoping to reap the benefits of their networks of specialized subsidiaries.
Still, the MBDA blueprint remains vulnerable to national divergence. MBDA Germany and France, for example, make competing land-attack cruise missiles: The Taurus KEPD 350, now restarting production after a five-year pause, and the SCALP EG. This reflects premerger legacies, but highlights the challenge of scaling with stale, legacy lines. University of Oslo’s Fabian Hoffmann estimates combined annual capacity is just 100 units, which is far below Lockheed’s 700 JASSM-ERs.
Meanwhile, Europe lacks a high-altitude missile defense like the U.S. THAAD or Israel’s Arrow 3, which can take 20 years to build. It also depends on the U.S. for software and satellite intelligence.
Lockheed Martin jet fighters being manufactured in West Fort Worth. - Fort Worth Star-Telegram/Getty Images
“It is best to first fix the procurement system, then have these companies compete with each other and then see which winners are emerging and drive consolidation. It is what happened with Rheinmetall,” said Hoffmann.
Indeed, the EU seeks to replicate the Pentagon’s power as a centralized buyer. It will make €150 billion in loans available for joint defense procurement and has set up a target for 40% of purchases to be collaborative by 2030. That may not be enough.
With many countries still reluctant to spend even under the auspices of Brussels, though, there will still be a lot of capital stepping in to finance smaller defense deals, usually involving assets owned by unlisted companies.
Private-equity firms such as London-based Tikehau Capital and Paris-based Weinberg Capital Partners are now focusing on security-related small and medium companies, and larger players such as CVC Capital Partners are perfectly positioned to do even more.
Then there is venture capital, which should help address some of the “capability gaps” that EU officials have identified, including drones, artificial intelligence and cyberwarfare. The models are the many Silicon Valley upstarts currently vying for Pentagon contracts, such as Anduril Industries, Palantir and Shield AI.
According to a recent report by NATO Innovation Fund, a €1 billion vehicle launched by NATO in 2023 to provide early support to strategic military technology, European VC funding in this area was at a record high last year. The success of Ukrainian producers of small drones, sprouted out of necessity, have also pointed the way.
There is another straightforward way to play the trend: The top European investment banks, such as BNP Paribas and Deutsche Bank, are set to receive a fee windfall in the form of advisory services for mergers and restructurings, as well as equity and debt issuance to fund expansions.
The European military-industrial complex won’t rival the U.S.’s anytime soon, but there is money to be made as it wakes up from a long slumber.
Spotters take pictures of a Dutch Air Force Lockheed Martin F-35 Lightning II jet fighter. - JOHN THYS/AFP/GETTY IMAGES
America’s vast military-industrial complex has many critics. For Europe, it is now something to aspire to.
This week, Germany asked the European Union to invoke an emergency clause exempting defense investment from spending rules, as part of the bloc’s five-year rearmament plan. Global defense expenditure experienced the highest year-over-year rise since at least the end of the Cold War in 2024, Stockholm International Peace Research Institute data showed this week, with Europe as the main contributor. Analysts estimate NATO members could add €700 billion ($798 billion) to €2 trillion in extra military spending by 2030.
Of course, much of the windfall will flow to prime U.S. contractors such as Lockheed Martin, Northrop Grumman and General Dynamics. But Brussels wants at least 50% of European military procurement to go to domestic firms. Achieving that requires major industrial reform—something investors are eager to capitalize on as the U.S. growth story loses its shine.
Because European countries slashed military budgets a lot more than the U.S. after the Cold War, their domestic defense suppliers became niche, low-volume producers with high unit costs. Airbus’s military arm was the highest-grossing one in 2024 with €12 billion in revenue—barring BAE Systems, which gets half its sales from the U.S. By contrast, Lockheed grossed $71 billion.
This has created a negative feedback loop, with NATO members increasingly channeling off-the-shelf purchases toward American contractors, which remain capable of large-scale production. Following Russia’s invasion of Ukraine, only 22% of the EU’s procurement boost remained in Europe, according to the European Commission.
The clear, first step to fix this is producing more of what Europe already makes: ammunition. After the EU failed to deliver one million artillery shells to Ukraine by March 2023—it took until November—officials in the bloc allocated €500 million to scale output. A quarter went to Rheinmetall, which targets output of 1.1 million 155mm shells a year by 2027, and tripling annual revenue to €30 billion by 2030.
Rheinmetall wants to evolve into an American-style, all-purpose contractor. It recently acquired U.S. vehicle maker Loc Performance, ammo recovery firm Stascheit, and software developer blackned, and bid for Thyssenkrupp’s warship arm, which was rejected in favor of a spinoff.
However, investor enthusiasm has pushed its forward price-earnings ratio to 43, from 17 six months ago. Such extreme valuations argue for diversification, but it is hard to spot other clear winners in an industrial base wastefully fragmented across national lines.
Germany is a leading manufacturer of tanks but, where the U.S. fields the Abrams main battle tank, the Bradley infantry vehicle and the Stryker personnel carrier, Europe has several competing models for each tank class. Ditto for frigates, submarines and planes.
In jet fighters, the Eurofighter Typhoon, backed by Germany, Italy, Spain and the U.K., competes with France’s Rafale and Sweden’s Gripen. But the most popular choice among European NATO members is the F-35, which boasts stealth capabilities and triple the production rate. This locks countries into U.S. systems for two decades. Next-generation fighter development is split too, between a Dassault-Airbus program and a BAE Systems-Leonardo-Mitsubishi team.
Ideally, these firms would merge into two giants, each bidding for a unified contract, with only one aircraft ultimately developed, just as Boeing and Lockheed did with the U.S. Air Force’s F-47 project.
In practice, top-tier mergers remain unlikely. National governments retain stakes in most defense firms and are reluctant to cede control.
A more realistic model is missile maker MBDA. Jointly owned by Airbus, BAE and Leonardo, it functions as one company while retaining national subsidiaries. This allowed simplification: The Aster missile family—Europe’s closest equivalent to the U.S. PAC-3 MSE, used in the Patriot systems that have proven vital in Ukraine—has replaced legacy systems such as the Crotale, Masurca, Spada, Aspide and Sea Dart. MBDA plans to double production this year from 2023.
Eurofighter Typhoon jet fighters are backed by Germany, Italy, Spain and the U.K. - JOHN THYS/AFP/Getty Images
This model could extend to other sectors. Rheinmetall is developing the Panther KF51 tank, aimed at replacing the Leopard 2, and has now joined forces with Leonardo to build a variant for Italy. Naval capabilities could be consolidated across BAE, France’s Naval Group, Germany’s Thyssenkrupp, Italy’s Fincantieri and the Netherlands’s Damen.
Investors could spread bets across listed players, hoping to reap the benefits of their networks of specialized subsidiaries.
Still, the MBDA blueprint remains vulnerable to national divergence. MBDA Germany and France, for example, make competing land-attack cruise missiles: The Taurus KEPD 350, now restarting production after a five-year pause, and the SCALP EG. This reflects premerger legacies, but highlights the challenge of scaling with stale, legacy lines. University of Oslo’s Fabian Hoffmann estimates combined annual capacity is just 100 units, which is far below Lockheed’s 700 JASSM-ERs.
Meanwhile, Europe lacks a high-altitude missile defense like the U.S. THAAD or Israel’s Arrow 3, which can take 20 years to build. It also depends on the U.S. for software and satellite intelligence.
Lockheed Martin jet fighters being manufactured in West Fort Worth. - Fort Worth Star-Telegram/Getty Images
“It is best to first fix the procurement system, then have these companies compete with each other and then see which winners are emerging and drive consolidation. It is what happened with Rheinmetall,” said Hoffmann.
Indeed, the EU seeks to replicate the Pentagon’s power as a centralized buyer. It will make €150 billion in loans available for joint defense procurement and has set up a target for 40% of purchases to be collaborative by 2030. That may not be enough.
With many countries still reluctant to spend even under the auspices of Brussels, though, there will still be a lot of capital stepping in to finance smaller defense deals, usually involving assets owned by unlisted companies.
Private-equity firms such as London-based Tikehau Capital and Paris-based Weinberg Capital Partners are now focusing on security-related small and medium companies, and larger players such as CVC Capital Partners are perfectly positioned to do even more.
Then there is venture capital, which should help address some of the “capability gaps” that EU officials have identified, including drones, artificial intelligence and cyberwarfare. The models are the many Silicon Valley upstarts currently vying for Pentagon contracts, such as Anduril Industries, Palantir and Shield AI.
According to a recent report by NATO Innovation Fund, a €1 billion vehicle launched by NATO in 2023 to provide early support to strategic military technology, European VC funding in this area was at a record high last year. The success of Ukrainian producers of small drones, sprouted out of necessity, have also pointed the way.
There is another straightforward way to play the trend: The top European investment banks, such as BNP Paribas and Deutsche Bank, are set to receive a fee windfall in the form of advisory services for mergers and restructurings, as well as equity and debt issuance to fund expansions.
The European military-industrial complex won’t rival the U.S.’s anytime soon, but there is money to be made as it wakes up from a long slumber.
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