Peace dividend

Source: Wikipedia, the free encyclopedia.

Peace dividend was a political slogan popularized by US President

guns versus butter theory
.

In theory

While economies do undergo a recession after the end of a major conflict as the economy is forced to adjust and retool, a "peace dividend" refers to a potential long-term benefit as budgets for defense spending are assumed to be at least partially redirected to social programs and/or a decrease in taxation rates. The existence of a peace dividend in real economies is still debated, but some research points to its reality.[2]

A political discussion about the peace dividend resulting from the end of the

War in Iraq
.

US intellectual Noam Chomsky has argued that US military spending was not due to security reasons, but rather a politically consensual mechanism to subsidize technological innovation via massive public military spending to benefit defense corporations and their partners.[4] There is therefore, asserts Chomsky, no interest in the US toward a peace dividend when peace arrives. On contrary, the fall of the USSR allowed the US to look for new external wars[5] to justify the desired military spending at home.

In practice

Over time from the beginning of the cold war to the present defense aspect has played a smaller or larger part of society, fluctuated according to different conditions.[6]

Europe

European nations were sharply criticized by a December 2023

Russia's invasion of Ukraine in 2022. Examples it gave were Denmark having no heavy artillery or air defence, France only having 90 howitzers and Germany only having 2 days of ammunition stored. Noting that West Germany used to have 7,000 tanks, the article pointed out that now-unified Germany has only 200. Not only that but also military production is low in volume.[7]
EU countries like
Washington Post described Germany as having the most "stunning" turnaround after 2022.[9] The peace dividend also affected the structure of Europe's militaries. Many European countries abolished conscription and moved to professional armies.[10] The peace dividend does not only show in the military sphere, but also in the economic. When the Russian 2022 invasion of Ukraine began, it was laid bare how unprepared and dependent some European countries were on Russian energy and raw materials. Germany had to scramble to build new LNG terminals.[11] Another vulnerability is pipelines and other infrastructure running on the seabed, evidenced by the Nord Stream explosions.[12] The Nord Stream incidents have highlighted similar threats to "critical infrastructure", such as against the energy network or the information network, like undersea cabels.[13]

While some countries in Europe, such as

the Netherlands.[14][15] Thus Finland is amongst the better armed nations in Europe today,[16] while the Netherlands receive criticism for not having tanks any longer.[17] Although, even though these aspects, Finland too had its defense budget go under 2% in the post-cold war period.[18] While Sweden abolished its conscription and re-established
it again after Russian annexation in Crimea and has since the 2022 invasion reinforced it further.

Bruegel estimates that the peace dividend has benefited Europe by 4,200 billion € over a 30-year period.[19]

The logic behind not spending money on threats like these outlined, is thought to spur economic growth, by freeing up the spending onto other things.[20] The Conversation states that the peace dividend helped finance the British welfare state, stating; "The UK currently spends slightly over 2% of GDP on defence each year, amounting to some £45 billion in 2021, or about £660 per person. This has fallen substantially over time. In the mid-1950s, the UK spent almost 8% of GDP on defence. That fell to about 4% in 1980, 3% in 1990, and around 2% today. At the same time, spending on the health service has grown from around 3% of GDP in the mid-1950s to more than 7% on the eve of the pandemic."[21] While the peace dividend was somewhat criticized earlier in the 1990s, with a war launched by Russia the peace dividend came to the fore of societal discussion and countries' spending on preventing threats started to increase.[22][23][24] Not everyone has criticized the peace dividend as a negative; "This study found that the results varied according to national characteristics and regional environmental characteristics. However, peace dividends generally had a significant impact on national productivity." - according to one research paper[25]

NATO spending

According to a 2023 Econpol report, NATO defense spending increased as a result of Russia's invasion, from an overall pre-war level of 1.7% of GDP to 1.9% in 2023, and 11 nations out of the 30 members (plus Sweden) above the 2% level. Poland became the biggest spender per capita and issued the biggest increase to its budget as well. The report noted there is an East to West divide, countries closest to Russia increasing spending the most in general. While some countries reduced their spending during the same 2021-2023 per capita such as Portugal, the United States and Croatia.[26]

Explaining that "Protection against external threats is a public good—and one of the core tasks of a state" ... "Maintaining an armed force, however, is expensive. Many NATO members must consolidate their budgets and have hardly any leeway for significant increases in expenditure." ... "If higher defense spending means making spending cuts elsewhere or raising taxes or public debt, it will be difficult for them to achieve a majority in parliament and elections, which may tempt some of them to simply announce that the 2% target will be reached sometime in the future." Though also stating in its conclusions that however; "Clearly, Europe’s peace dividend has come to an end."[27]

Role of Conscription in the debate

In 2024 some countries in Europe, such as Germany and United Kingdom have started to debate conscription. Should they remain on a 'career' army path or go to some form of conscription. In Germany there is debate on emulating the "Swedish Model" of limited conscription mentioned above. While the UK is considering an "citizen army" of either conscription or national service. [28][29] While in 2017 when Sweden re-introduced conscription, they modelled their initial model on that of Norway.[30]

North America

According to Forbes, the US helped win the Cold War with a high defense spending. Defense spending has decreased since the end of the cold war, in comparison with total federal spending. Stating: "This assessment proved to be accurate, as defense outlays as a share of total federal spending declined thereafter. The decade of the 1990s, in turn, was marked by above-average economic growth of more than 3.5% per annum, low inflation and a federal budget surplus by the end of the decade."[31]

In an article based on an opinion piece of Marco Rubio. Highlighting that the US military lacks 41,000 new recruits. Critizising the US for peace dividend not looking good in the US.[32][33]

Canada needs to spend an additional $18.2 billion to meet the NATO two percent of GDP spending goal, this in addition of the already planned increases. Commenting that Canadas spending where among the lower spenders on defence in the Alliance.[34]

Oceania

In Australia the term has been linked to the

ADF" and highlighting the changing times and that Australia should do more in the defense space.[37]

Africa

The

TPLF and that peace trieaties would allow African countries to reap peace dividends, such as from good governance.[38]

Latin America

While Viviana García Pinzón highlights the mixed results of peace dividend in Colombia following the Farc peace agreement. Saying that there has been some advances in democracy and shift of public debate to corruption, but that violence has still not ended despite the agreement. That in this way Colombia is in a middle state between fully gaining a dividends from peace and the previous levels in violence.[39]

Notes

  1. ^ "U.S.-Soviet Nuclear Forces Reduction". C-SPAN. 27 September 1991.
  2. ^ Sanjeev Gupta, Benedict Clements, Rina Bhattacharya, and Shamit Chakravarti (2002), "The Elusive Peace Dividend" at Finance & Development, a quarterly magazine of the IMF.
  3. ^ "U.S. military spending". National Priorities Project. Archived from the original on 2009-08-05. Retrieved 2009-07-27.
  4. ^ "Chomsky on Global Myths and Realities | Issue 39 | Philosophy Now". philosophynow.org. Retrieved 2023-05-05.
  5. ISBN 978-2-8218-7628-6
    , retrieved 2023-05-05
  6. ^ https://www.dw.com/en/75-years-of-nato-how-is-the-military-alliance-faring/a-68725646
  7. ^ https://www.wsj.com/world/europe/alarm-nato-weak-military-empty-arsenals-europe-a72b23f4?st=4x3gm04eimw5nqw&reflink=desktopwebshare_permalink
  8. ^ Hubertus, Bardt (2021-03-11). "High Peace Dividend and Missed NATO Quota". Bardt IW-Trends (1).
  9. ISSN 0190-8286
    . Retrieved 2023-08-02.
  10. ^ "Europe: Is compulsory military service coming back? – DW – 06/11/2023". Deutsche Welle. Retrieved 2023-08-02.
  11. ^ "Germany Announces It Will Rearm". National Review. 2022-02-27. Retrieved 2023-08-07.
  12. ^ "Nord Stream: Report puts Russian navy ships near pipeline blast site". BBC News. 2023-05-03. Retrieved 2023-08-07.
  13. ^ "Supo: Kriittiseen infrastruktuuriin kohdistunut uhka kohonnut Suomessa – Venäjä siirtää vakoiluaan verkkoon". mtvuutiset.fi (in Finnish). 2022-09-29. Retrieved 2023-08-07.
  14. ^ "Yhdysvaltain ulkoministeriö hyväksyi asejärjestelmän päivityksen myynnin Suomeen – kauppa kiinnitti huomion myös Venäjällä". Ilta-Sanomat (in Finnish). 2023-08-02. Retrieved 2023-08-02.
  15. ^ Turunen, Petri (2014-01-20). "Miksi Suomi ostaa sata Leopardia, vaikka toiset maat luopuvat panssareista?". Ilta-Sanomat (in Finnish). Retrieved 2023-08-02.
  16. ^ https://www.reuters.com/world/europe/what-can-finlands-armed-forces-arsenal-offer-nato-2023-04-04/
  17. ^ https://www.wsj.com/world/europe/alarm-nato-weak-military-empty-arsenals-europe-a72b23f4?st=4x3gm04eimw5nqw&reflink=desktopwebshare_permalink
  18. ^ "Valtion talousarvioesitykset". budjetti.vm.fi. Retrieved 2023-08-07.
  19. ^ "Repurposing the peace dividend". Bruegel | The Brussels-based economic think tank. 2023-07-20. Retrieved 2023-08-02.
  20. ^ "Peace Dividend". Corporate Finance Institute. Retrieved 2023-08-07.
  21. ^ Zaranko, Ben (2022-03-07). "Defence cuts effectively paid for UK welfare state for 60 years – but that looks impossible after Ukraine". The Conversation. Retrieved 2023-08-07.
  22. ^ "What happened to the peace dividend?: The end of the Cold War cost". The Independent. 1993-01-03. Retrieved 2023-08-07.
  23. ISSN 0190-8286
    . Retrieved 2023-08-07.
  24. ^ "The end of the peace dividend". Financial Times. 2023-03-26. Retrieved 2023-08-07.
  25. ISSN 1572-9338
    .
  26. ^ https://www.econpol.eu/sites/default/files/2023-05/EconPol-PolicyBrief_50.pdf
  27. ^ https://www.econpol.eu/sites/default/files/2023-05/EconPol-PolicyBrief_50.pdf
  28. ^ https://news.sky.com/story/is-conscription-coming-back-how-its-been-used-in-previous-wars-and-what-a-uk-citizen-army-would-involve-in-future-13056698
  29. ^ https://www.dw.com/en/germany-debates-how-to-boost-bundeswehr-recruitment/a-68350994
  30. ^ https://svenska.yle.fi/a/7-1170120
  31. ^ Sargen, Nick. "What The End Of The 'Peace Dividend' Will Mean for Americans". Forbes. Retrieved 2023-08-07.
  32. ^ "Florida Sen. Marco Rubio: So-Called 'Peace Dividend' Not Looking Good For America".
  33. ^ "DOD Addresses Recruiting Shortfall Challenges".
  34. ^ https://www.cbc.ca/news/politics/nato-military-spending-canada-trudeau-1.6817309
  35. ^ "Pearson contrasts 'peace dividend' from Voice with war from No side".
  36. ^ "Peace dividend blow puts philanthropy in peril".
  37. ^ "Time is of the essence: The need to wake from our 'Peace Dividend' slumber".
  38. ^ "AU FACILITATES ETHIOPIA PEACE AGREEMENT" (PDF).
  39. ^ "Colombia: Between the Dividends of Peace and the Shadow of Violence".
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