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Introduction

Firstly, it will be argued from a theoretical perspective why a high spending in Defence is necessary and the dire consequences that not doing it may have. Not surprisingly, national defence must be considered a priority in any society.

Secondly, there will be discussed some economic issues, exemplified in specific cases by how is the Defence portfolio given its budgetary allocation. All this in accordance with the current budget.

Finally, there will be addressed the current debate in Europe on the need to share capabilities and the criteria that must rule the investment in Defence. On this occasion, the analysis will focus on the initiatives undertaken in this matter in some European countries and on deciding whether it is possible to carry out this “sharing” without damaging national interests.

Relevance of Defence spending from a theoretical perspective

One of the great authors of the twentieth century, Hans Morgenthau, pointed out in his book Politics Among Nations that the struggle for power would constitute the main leitmotif on the international stage. In a world dominated by the unstoppable will to obtain and increase power, where is the solution to avoid this escalation? Morgenthau himself mentioned two possible “barriers”: international law and public opinion.

Despite not being as effective as national legal systems, international law may be interpreted as a “primitive law” [1] that tries to formalise minimum behaviours that are valid for relations between countries. However, Morgenthau points out major weaknesses of this barrier. Most importantly, the need to exceed national interests, which ultimately means shifting sovereignty to a supranational level.

A good example of this process is found in the European Union. The great debate that divides European societies is about the transfer of sovereignty. If it already seems complicated for a group of countries that share the same civilization (values, culture, history, etc.) to be able to transfer it to a regional entity, the convergence of interests among nearly 200 nations seems impossible.

Given the inefficiency of international law, the remaining “barrier” is public opinion. At this point, the author makes an interesting point. While it is true that, thanks to technology, the world has become what we know as a “global village” [2], it has also granted the State an unimaginable degree of control over society. Furthermore, the existence of global public opinion is limited by nationalism. Once again, the European project serves as a paradigmatic example.

However, Morgenthau undervalued the ability of this barrier to influence international politics: “Modern history has not recorded one instance of a government having been deterred from a certain international policy by the spontaneous reaction of a supranational public opinion” [3].

In the author’s defense, the date of the publication of his book (1948) should be pointed out. Today, there are plenty of cases in which public opinion has managed to influence, and even modify, the foreign policy of a State. A recent example happened in Spain in 2004. After the terrorist attacks of March 11, the citizenry mobilised and, with the election of a new Executive, radically changed the country’s international policy. The manipulation of public opinion is precisely the main goal of terrorist groups. Yet another argument that supports the importance of this “barrier”.

Therefore, we find ourselves at a difficult crossroads. We live in a world dominated by the desire for power, whose main actors are States that, on more than a few occasions, move away from defending their citizens (their raison d’être) to undertake other spurious objectives. And it seems a contradiction to entrust them with the defense of our societies. This led to the moral debate that Morgenthau had to face, along with many others before him.

However, and despite the criticism of some authors [4], it is possible that the State assumes the protection of citizens without thereby increasing its size. This theory is defended especially by Robert Nozick in his work Anarchy, State and Utopia. In this book, he postulates the existence of a minimal State (gendarme State), whose only function would be to protect individuals within its territory through a monopoly on violence [5]. Thus, the existence of said State justifies it in the following way [6]:

“In a State of Lockean nature, where individuals have natural rights, some of them associate to face the violations that some of them suffer. These are known as mutual protection associations. Due to efficiency and the advantages of specialisation and division of labour, it is logical that several agencies appear. Each one offers different prices, policies, etc. Over time, and always through a process of agreement and associations in a free market, and given the nature of the service they offer, the multitude of protection agencies in a given territory begin to reduce their number so that one begins to consolidate in said territory to the detriment of the others. It is the ‘Dominant Protection Agency’”.

At the time of the process in which the dominant Protection Agency has a quasi-monopoly on the use of force in a territory, some may still remain independent, preferring, despite difficulties, to do justice themselves. For this reason, Nozick calls the dominant Protection Agency an “ultra-minimal” state. This author states an un ultra-minimal state could be born unintentionally, as a consequence of the interaction of different individuals; emergence that, in addition, is lawful to the extent that it does not violate the rights of anyone. However, the persistence of independent agents prevents one from speaking of a minimal state.

To move from an ‘ultra-minimal’ state to a ‘minimal state, Nozick uses the principle of compensation. Basically, it is defined as the prohibition set on independent individuals to exercise their right to punish in exchange for free protection (compensation) from the dominant Protection Agency. As a result, finally, it is possible to build the minimum State.

This line of thought is the foundation of the argument of classical liberalism. Some contemporary authors have even quantified the desirable size that such State should have. But, beyond figures, it seems evident that the best argument to defend the need for it to lies in the protection of its inhabitants, either against another citizens (Justice), or against an external threat (Defence). Any activity that exceeds both functions will constitute a dangerous State expansion. It should not be forgotten that the greatest atrocities in History have been committed in the name of the State.

On the other hand, we must also echo the criticisms of this theory and be aware of the permanent danger that underlies it: the excessive growth of the State. Or what is the same, the old dilemma between security and freedom.

Economic issues

As every year, the presentation of the General State Budgets (PGE, in Spanish) marks the beginning of numerous debates. And this year was not an exception. Regarding Defence spending, it seems that Spain continues to carry certain prejudices that prevent it from providing the country with an adequate level of security.

In a strategic environment dominated by uncertainty and volatility, the Spanish Government has spent decades without providing the Ministry of Defence with the necessary resources to fulfill its primary obligation, national defense. In the 2019 Budgets, it had 8,537 million euros, 1.6 percent more than in the previous year. This means that the budget allocated to Defence represents 2.3% of the PGE.

Despite this slight increase, the budget for this year does not resolve the question marks that hang over it and that we describe below:

Do we spend a lot on Defence?

First, of the 8,537 million, more than half of it (almost 54 percent) goes to personnel expenses. All this together with 897 million in credits dedicated to operational expenses for the professionalisation of the Armed Forces. This data highlights the importance of the human factor within the Armed Forces. However, this leverage in such a small budget leaves little room for other items. To mitigate it, there are two possible solutions: either the cost of personnel is reduced (that is, there is a decrease in the Armed Forces personnel), or the Ministry is provided with more funds. The first solution is not feasible, as human capital has generally declined in the last decade. The second is however, the one Spain needs. For many reasons.

If we compare the Defence spending per capita of some neighbouring countries [7], Spain is at the bottom. In fact, despite the differences between the two tables (currencies, what is included under the Defence budget, etc.) what they show is our backwardness compared to our European partners. The large gap between the states with the highest spending per inhabitant (France and the United Kingdom) and the lowest (Spain) highlights the different roles they want to play on the world stage. However, although our nation does not have the necessary characteristics to become a first-rate power (population, nuclear capacity, size of the economy), it does have considerable room for maneuver that can place it close to those who are. All this, according to your strategic needs.

According to the latest report by NATO Secretary General Jens Stoltenberg, Spain is the third NATO member with the lowest percentage of GDP allocated to Defence (0.92 percent in 2017), only ahead of Belgium and Luxembourg. In addition, the Government already confirmed last year that it will not comply with what was agreed at the 2014 Cardiff Summit, that is, to reach 2 percent in 2024. According to the Ministry’s own calculations, Spain will remain at 1.53 percent, very far from the goal we agreed and thus damaging our image. The Executive, in the words of Minister Josep Borrell, argues that we are the only country in the European Union that has participated in all its missions. However, according to data from SIPRI (Stockholm International Peace Research Institute), the Spanish Defence budget (in percentage of GDP) has not stopped decreasing since 1988. This continuous downward trend leads to the second question mark.

Is the Defence budget enough?

With 2,795 million euros dedicated to Defence spending, we are taking a step back compared to previous budgets. Last year, this item was endowed with 2,841 million, 30 percent more than in 2017, and 6.9 percent more than the figure proposed for 2019. This has meant that what was branded as “the opening of a new investment cycle” has meant nothing.

However, a layman might think that the aforementioned spending budget is excessive. Hardly so. Here too there is enormous leverage. This is the case of the Special Armament Programs (PEA in Spanish), which were devised to avoid short-term decisions in a matter as sensitive as Defence. Their objective was to pay for the big projects that were erected in the backbone of the Armed Forces. This funding would go beyond the electoral periods, in order to ensure stability. However, and despite meeting their goal, PEAs currently represent 75 percent of the total spending budget. This does not mean that it is destined to new projects, but that a substantial part is dedicated to the pending payments of the programs of the past decade. Therefore, despite being the tool that has allowed Spain to eliminate the technological disadvantage from which it started, PEAs are becoming, due to lack of funding, a huge liability within the Defence budget. Let us illustrate the reader with an example: the Eurofighter Typhoon 2000.

This fighter was devised in late 1985 and entered service in 2003. Well, there are still outstanding payments. In addition, despite still being a magnificent fighter today, there are already much better models, such as the F-35 or the F-22 Raptor, both American. But not only the USA owns ultramodern planes. China or Russia also advance in their fifth-generation fighter models, with the Su-57 (Russia) and the J-20 (China), while the Eurofighter belongs to the 4.5 generation if its latest modifications are included. Therefore, Spain finds itself in the position of continuing to pay for a project that, shortly, will become obsolete, and without having yet begun another to replace it.

But the Eurofighter is not the most compromising program. There are others in a really critical situation, and where the margin to reverse it no longer exists. The Air Force, for example, has the Orion P-3s. These fantastic American-made gadgets have maritime surveillance as their primary mission. They made their first flight in 1959 and entered service in Spain in 1973. This gives an idea of ​​their longevity thanks to many modernisations that have been incorporated it. In the case of the Navy, it has the Harrier II Plus aircraft, which was introduced in 1996. Despite not being as old as the P-3s, it is a version of the original model, which dates from 1970.

These challenges must be addressed urgently, as they will affect national security in a far-reaching way. Both political actors and society as a whole must be aware of the reality in which our Armed Forces live. The situation in which its equipment is found, and the dire consequences that a lack of investment can bring. As Adam Smith himself said, defence is of greater importance than opulence, since, through deterrence, peaceful relations are maintained between nations under a free trade system. It would therefore be a matter of preserving opulence through security. Or as Professor Antonio Fonfría says, “sometimes, cannons are a preservative for butter.”

Capacity sharing and investment criteria

In the previous sections, we explained the need for a greater defence budget, highlighting some specific cases in which we are already late. However, this increase must be supported by several premises.

First, effectiveness. According to the Royal Spanish Academy (RAE in Spanish), effectiveness is the “ability to achieve the desired or expected effect”. To reach this, we must first identify the threats we face. In Spain, the key document in this regard is the National Security Strategy report. The next stage involves specifying the best tools for the Armed Forces to fulfil their mission, which is none other than defending national sovereignty.

The second premise, efficiency. Like all public entities, funded by taxpayers, the Ministry of Defence must maximise its results with the available resources [8]. Because of it, it seems that some of our neighbours have found the solution. The so-called Smart Defence or Pool & Sharing, that is, the distribution of military capabilities, consists of an initiative that is already being carried out by several countries around us. The best example is the Franco-British agreement of November 2, 2010. Some of the measures it contains are:

– Budget of 100 million euros for military R&D.

– Greater integration of the Franco-British branch of the European company MBDA.

– Creation of a Combined Rapid Reaction Force.

– Harmonisation of the arms purchase processes (in order to strengthen the ties of the industry of both countries).

As Bernardo Navazo points out, the problem European governments face is the “defence trilemma”. In his opinion, “no European State today can defray the expenses that maintain all military capabilities in response to the wide spectrum of conventional and unconventional threats … nor provide for their total security and defence.” Therefore, “the choice is no longer between maintaining capacities or sharing them and losing autonomy in their use; the real choice is between sharing capacities, even assuming a certain loss of autonomy, or not being able to use them”[9].

Therefore, the underlying question is not so much whether to spend more (something necessary), but to spend better. However, this approach has its disadvantages.

On the one hand, in the Defence framework, there is equilibrium point between supply and demand. It is a very restricted market. On the demand side, we can define Defence as a public and intangible good, in which there is no exclusion (available to everyone, regardless of who is disappointed) and no rivalry (its use does not diminish that of another person). These characteristics lead to the problem of the free rider, or the “stowaway”. This term refers to those consumers of indivisible goods or services, especially public, as in this case, and who benefit from them without paying any consideration. NATO is the paradigmatic case. Of its total budget, the United States contributes almost 72 percent. This means that the rest of the member countries (28), and especially those that do not even contribute what has been agreed (the famous 2 percent of GDP), act as true free riders. Thus, the free rider State takes advantage of the spending that other countries make and enjoys the benefits without paying for them [10]. As we see in the graph, only seven countries comply. And that, counting on those with an asterisk (Poland, Latvia, Lithuania and Romania), who have laws that oblige them to do so, do so.

This phenomenon would be one of the main drawbacks facing the thesis of sharing military capabilities. Another of its failures is found in its starting hypothesis: the inability of the European economies to afford (and maintain) the Defence programs necessary for their national interests. The weakness of this statement is that it does not contemplate a scenario of general lowering of taxes. In fact, it is refuted with the US case, which stands at record growth and collection figures.

If the government carries out a true tax “revolution”, it will have sufficient resources to dedicate a part of them to Defence spending [11]. With this, two objectives would be achieved: increase this item, and reduce the tax wedge that taxpayers bear. However, and despite the notable efforts of the Ministry of Defence [12], the prevailing mentality regarding these issues cast doubt on the fact that our leaders would allocate this “surplus” of resources to Defence, rather than to other more electoral interests.

A final obstacle to this theory, and perhaps the most important one, is the lack of communion of interests. As Hayek points out:

“There must be few difficulties in planning the economic life of a family, and relatively few for a small community. But when the scale grows, the level of agreement on the gradation of the ends decreases and the need to resort to force and coercion increases” [13].

This difficulty highlights the magnitude of the company that the theory of sharing implies. And more, if it is an area like Defence. Despite all these objections, it has a good foundation, and as Navazo emphasises, there is room to cooperate in certain tasks, especially those furthest from the front line of combat. However, the loss of sovereignty that such collaboration implies should not be ignored. This, added to the variability of the strategic environment and the generalised refusal of societies to globalism, augurs an unflattering start.

In summary, Spain, as a State, not only has to spend more on Defence, but better. The theory of sharing constitutes an advance in this objective, but it must be understood as a complementary policy, which is not exclusive, of the increase in Defence spending. For this to be possible without increasing the Spanish tax effort, the government that takes office must read Laffer carefully.

Conclusion

In this situation we find ourselves. After the signing of the agreement between PSOE and Unidas Podemos, it seems that the country’s political future remains in the hands of both parties. However, the only remaining question to be solved is which other parliamentary groups are going to be part of this agreement, since the sum of these two formations is insufficient for Pedro Sánchez to be elected president.

One of the top candidates to support them, either tacitly (abstention), or explicitly (in favour), is Esquerra Republicana de Catalunya (ERC). If so, Defence budgets will suffer, and a lot. In fact, its spokesman in the Congress of Deputies, Gabriel Rufián, proposed that they be reduced by 40 percent during a television electoral debate.

This type of approach, together with the few initiatives of the PSOE and Unidas Podemos [14], condemn Defence to wait for the crumbs left by the rest of the Ministries when the General State Budgets are written. This leads to several conclusions:

On the one hand, that the enemies of the State want to weaken it. A decrease in the Defence budget would mean a lesser capacity to react to any violent event. However, there is also the case of parties whose main leitmotiv has been concern for social policies, but which, when it comes to forming a government, demand the portfolios of those known as “Force ministries”, such as Defence. Or even, the CNI leadership. We will know the final distribution very soon.

On the other hand, this assumption (less Defence spending) leads to a loss of autonomy. Those who rant against imperialism must know that the best way to gain independence internationally is to have a strong Defence. The higher the spending, the lower the dependency on other actors.

Although everything seems to be playing against it, there is still some hope that our political representatives have the lucidity to put aside their partisan struggles and put the national interest above all else. Because, of course, hope is the last thing to be lost. And, above all, because Spain deserves it.


[1] MORGENTHAU, Hans J. “Politics among Nations: the struggle for power and peace”, Alfred A. Knopf, 1948, New York, p. 211.

[2] Term coined by Canadian sociologist Herbert Marshall MacLuhan.

[3] MORGENTHAU … op. cit. p. 198.

[4] See: HUERTA DE SOTO, Jesús: “Classical liberalism versus anarcho-capitalism”, Misses Daily Articles- Misses Institute: Austrian Economics, Freedom and Peace, [online] <https://mises.org/es/library/liberalismo -cl% C3% A1sico-versus-anarcocapitalismo> (Consulted: July 15, 2019).

[5] In Nozick’s work, the natural right to punish.

[6] Excerpted from NOZICK, Robert. Anarchy, State and Utopia, p. 23-39.

[7] Mainly, countries that share many of our strategic commitments (NATO) and threats.

[8] At this point, it is imperative to emphasise the lack of incentives that the State has when it comes to managing public resources. And in the case of the Spanish Defence, even more. In fact, the main incentive that the public decision maker may have is to be re-elected. Therefore, it will allocate the resources available to those items from which it can obtain a greater immediate return. For example, a rise in wages and/or pensions. Economists like Kenneth J. Arrow or James Buchanan developed the theory of public choice. This school supports the premise that the behaviour of political representatives is not different from that of other economic actors, since they seek their own interests.

[9] NAVAZO LÓPEZ, Bernardo “The impact of the economic crisis on Defence: autonomous irrelevance or combined action”, Working Document nº72 / 2013, OPEX, 2013, Madrid.

[10] In economics, a free rider is an individual who has an interest in benefiting from a public good, the army, for example, but is not willing to pay for it. For a more detailed explanation of the “stowaway problem” or free rider, see: MANKIW, Gregory. Principles of Economics, Chapter 11 “Public goods and common resources”, Mc Graw Hill / Interamericana de España, 2004, Madrid.

[11] This statement (lower taxes = higher collection) has been the main contribution of the economist Arthur Laffer and his famous curve. However, many economists have questioned it (GalbraitH, 1984 or Samuelson, 2001). Even so, the cases in which Laffer’s premise is corroborated proliferate, and allow us to validate his postulate. A good example of this is the tax reform carried out by President Trump. After applying a quasi-general tax reduction, tax revenue grew 7.4% in 2018, and 5.8% in 2019, according to the Tax Policy Center.

[12] In particular, the Spanish Institute for Strategic Studies (IEEE) and the Higher School of the Armed Forces (ESFAS), both belonging to the Higher Center for National Defense Studies (CESEDEN). These organizations carry out a commendable job of spreading the Defence culture, promoting activities with the National Defense Courses for Youth, which this year celebrates its sixth edition.

[13] HAYEK, Friedrich A. “The Road to Serfdom”, Alianza Editorial, 2011, Madrid, p. 326.
[14] TORRES SOSPEDRA, Jorge. “The proposals in defence, insufficient”, Fundación Civismo, (online): https://civismo.org/en/the-proposals-in-defense-insufficient/


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