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Ariel Center for Policy Research (ACPR)

ACPR Research


Why Defense Expenditures Should be Linked
to the GDP

The ACPR Steering Committee
Policy Paper No. 2, 1997


The purpose of defense expenditures is to supply and answer to the potential strategic danger. With a rise in the level of potential danger, a parallel rise must take place in defense expenditures.

The basic rule was expressed with the collapse of the Soviet empire and the dismantling of the Warsaw Pact. The defense expenditures of most NATO member states dropped by tens of percentage points in a short time and stabilized at 1% to 3% of their GDP.

States that are not careful to keep this iron rule invite war. The extreme examples are France and Britain before the Second World War. While the scope of the German rearmament had reached about 15% of its GDP in 1938, the defense expenditures of these two powers dropped in that year to about 2-3% of their GDP. The result was two years of defeat on the battlefield. The turning point began only after the entry of the USSR and the USA into the war, when the military balance of the Allies against the Axis powers had risen to a ratio of 1:3.

Close examination of the escalation of potential danger to Israel in the last decade, on one hand, and the erosion of the response that Israel presents to this threat in terms of its defense expenditures, on the other hand, is reminiscent of the behavior of France and Britain facing Hitler, although, it ought to be admitted, for the meanwhile at least, not to the same degree of gravity.

Nevertheless, in contrast to the Allies in the Second World War, Israel cannot allow itself the luxury of continuing defeat until the coming of aid from a third party, because there is no third party. When war breaks out, Israel must defeat its enemies in the shortest possible time, and for that reason, it must stand on the maximum level of preparedness at any given moment. Any deviation from these rules might bring about the extinction of the Jewish state.

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