Israel's military spending soars amid sharpest rise in global expenditure since end of Cold War

Israel's military spending soared last year amid its war in Gaza and attacks on Lebanon, with expenditure in the wider Middle East and Europe helping to fuel the steepest rise in global levels since the end of the Cold War.

Israel spent 8.8 per cent of its gross domestic product on defence in 2024, the second highest rate globally after Ukraine, according to the latest data by the Stockholm International Peace Research Institute.

Military expenditure as a percentage of GDP, known as the military burden, is a measure of the relative economic cost of defence for a country.

Israel's military expenditure jumped 65 per cent to $46.5 billion last year, the steepest annual increase since the Arab-Israeli War in 1967. Gaza has been devastated by the Israeli bombardment and ground offensive launched in response to attacks led by Hamas in October 2023. Israel resumed attacks on the enclave in March, after a brief ceasefire collapsed. The Palestinian death toll in the conflict has risen to more than 52,200, Gaza's health authorities say.

Lebanon, which has faced repeated attacks by Israel, recorded a 58 per cent rise in military spending in 2024 to $635 million, after several years of lower spending due to economic crises and political turmoil, the institute's data showed.

"Despite widespread expectations that many Middle Eastern countries would increase their military spending in 2024, major rises were limited to Israel and Lebanon," said Zubaida Karim, a researcher at the institute's military expenditure and arms production programme. "Elsewhere, countries either did not significantly increase spending in response to the war in Gaza or were prevented from doing so by economic constraints."

Iran’s military spending fell by 10 per cent in real terms to $7.9 billion in 2024, despite its involvement in regional conflicts and its support for regional proxies. "The impact of sanctions on Iran severely limited its capacity to increase spending," the institute added.

Saudi Arabia recorded the highest military spending in the Middle East in 2024 and was the seventh biggest globally, the report shows. The kingdom's military spending rose 1.5 per cent to an estimated $80.3 billion, but was still 20 per cent lower than in 2015 when its oil revenue peaked, the institute said.

Military expenditure in the wider Middle East reached an estimated $243 billion in 2024, an increase of 15 per cent from 2023, the data showed.

Surge in global military spending

As Russia's war in Ukraine continues and Israel's assault on Gaza rages on with no sign of relenting, the world's total military spending increased for the 10th consecutive year in 2024.

Last year, it rose 9.4 per cent to $2.718 trillion compared with the previous year, according to the institute's data. That is the steepest annual increase since at least the end of the Cold War, as military spending increased in all regions of the world, with particularly rapid growth in Europe and the Middle East, the report said.

The top five military spenders – the US, China, Russia, Germany and India – accounted for 60 per cent of the global total, with combined spending of $1.635 trillion.

"Over 100 countries around the world raised their military spending in 2024. As governments increasingly prioritise military security, often at the expense of other budget areas, the economic and social trade-offs could have significant effects on societies for years to come," said Xiao Liang, a researcher with the institute's military expenditure and arms production programme.

Military spending in Europe, including Russia, rose 17 per cent to $693 billion and was the main contributor to the global increase last year.

After three years of war in Ukraine, military expenditure kept rising across the continent, pushing the total in Europe beyond the level recorded at the end of the Cold War, the institute said. All European countries, except Malta, increased military spending in 2024.

Russia's military expenditure reached an estimated $149 billion in 2024, a 38 per cent increase from 2023. This represented 7.1 per cent of Russia’s GDP and 19 per cent of all Russian government spending.

Ukraine’s total military expenditure grew by 2.9 per cent to reach $64.7 billion, which was equal to 43 per cent of Russia’s spending. At 34 per cent of GDP, Ukraine had the largest military burden of any country in 2024.

Meanwhile, the US remained by far the biggest military spender in the world, allocating 3.2 times more than the second-largest spender, China.

US military expenditure rose by 5.7 per cent to reach $997 billion, which was 66 per cent of total Nato spending and 37 per cent of world military spending in 2024. "A significant portion of the US budget for 2024 was dedicated to modernising military capabilities and the US nuclear arsenal in order to maintain a strategic advantage over Russia and China," the institute said.

European Nato members spent $454 billion in total, representing 30 per cent of total spending across the alliance.

"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, a researcher with the institute's military expenditure and arms production programme.

"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."

China increased its military expenditure by 7 per cent to an estimated $314 billion, marking three decades of consecutive growth, investing in the continued modernisation of its military and expansion of its cyber warfare capabilities and nuclear arsenal.