[Marxism] (reported) US military budget will equal the rest of the world combined by 2006

Y. K. ykleftis at hotmail.com
Fri May 6 14:04:08 MDT 2005

Not news for us in the so-called "ROW" (but perhaps news for the 4% of 
world's population living in the US)!


Date Posted: 03-May-2005

BUSINESS - US defence budget will equal ROW combined "within 12 months", 
says report

Key points:
*The US defence budget in 2006 will equal that of the rest of the world 
combined, according to a report by PriceWaterhouseCoopers.
*European contractors need to work closely with the US as currently just two 
per cent of the US defence budget is spent outside its home market.

DEFENCE expenditure in the US will equal that of the rest of the world 
combined within 12 months, making it "increasingly pressing" for European 
contractors to develop a "closer association" with the US, corporate finance 
group PriceWaterhouseCoopers (PWC) says.

Its report - 'The Defence Industry in the 21st Century' by PWC's global 
aerospace and defence leader Richard Hooke - adds that "the US is in the 
driving seat", raising the prospect of a future scenario in which it could 
"dominate the supply of the world's arms completely".

The US defence budget reached US$417.4 billion in 2003 - 46 per cent of the 
global total.

The US Congress "overwhelmingly approved" a US$25 billion increase in the 
Pentagon's defence budget for 2005, reports Hooke. US President George Bush 
sent his Fiscal Year 2006 budget request to Congress on 7 February, asking 
for US$419.3 billion: a five per cent increase taken together with a 
supplemental spending bill providing for a further US$80 billion.

Less than two per cent of the US defence budget is spent outside its home 
market, the report notes, and of this around one per cent goes to UK 

Hooke says: "Since it [the US] is by far the biggest spender - by 2006, its 
military expenditure is expected to equal that of the whole of the rest of 
the world put together - the US is in the driving seat.

"The message for management teams in all this - apart from the obvious for 
US contractors to monopolise the industry - is that they will fail to 
maximise value if they fail to define accurately the business segment in 
which they operate.

"For Europe and the UK in particular, it means, right now, an increasingly 
pressing need to develop a closer association with the US market."

The report concludes that the post-Cold War decline in the defence industry 
has been replaced by new threats from international terrorism, which will 
present new challenges to business. "In 2005, the world has changed again, 
with regional conflict joined by international terrorism as dominant factors 
in security planning. Defence spending is being adjusted to focus on more 
flexible, responsive and mobile force structures."

Hooke says that contractors need to "maximise the value of the domestic 
national market" as well as developing international markets and investing 
in the right capabilities and partners.

© 2005 Jane's Information Group

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