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By Bill Robinson and Peter Ibbott

03-1

About this PaperThis report compares the current level of Canadian military spending to historical levels; to alliedand in particular US spending; and to potential threats to Canadian, allied, and global security. Its purpose is to place Canada’s current level of military spending in accurate context.

About the AuthorsBill Robinson has been writing about defence and security policy issues since 1982. From 1986 to 2001 he was a member of the staff of Project Ploughshares. Dr. Peter Ibbott is an AssistantProfessor of Economics and a member of the Connections Project at King’s College in London, Ontario.

Project Ploughshares Working Papers are published to contribute to public discussion and debateof peace and security issues. Opinions expressed in these papers are those of the authors, and donot necessarily reflect the policy of Project Ploughshares.

First printed March 2003

ISSN 1188-6811ISBN 1-895722-37-3

Canadian military spending:How does the current level compare to historical levels?

… to allied spending? … to potential threats?


How much money should Canada spend on its

military? The answer to that question may seem

straightforward: Canada should spend whatever

amount of money is required to properly fund

the military capabilities deemed necessary or

desirable for Canada by the Canadian

government and the Canadian people. No more

and no less.

But what military capabilities are necessary or

desirable? The occasional issuance of defence

white papers notwithstanding, it is extremely

difficult, perhaps impossible, to forge a lasting

consensus on this question. In practice, the size

of the military budget has more often determined

defence policy than been determined by it.

The real determinants of military spending are

such factors as historical levels of military

spending; the spending level of allies (and the

degree of pressure they apply on Canada with

respect to Canada’s military spending);

institutional (departmental and military industry)

pressures; regional economic policy and

industrial policy considerations; competition with

funding priorities in other policy areas; and

changes in the level of perceived military threat

to Canada, its allies, and the global community.

It is commonly believed that the current level of

Canadian military spending is much lower than it

has been in the past, that Canada has fallen

behind its allies in providing funding for its

military, and that the Canadian military no longer

has the funds to respond adequately to the

threats facing Canadian security.

This report compares the current level of

Canadian military spending to historical levels; to

allied and in particular US spending; and to

potential threats to Canadian, allied, and global

security. It does not seek to answer the question

of what the appropriate level of funding of the

Canadian military ought to be. Its purpose, rather,

is to place Canada’s current level of military

spending in accurate context.

Canadian military spending:How does the current level compare to historical levels?

… to allied spending? … to potential threats?


CONTENTSChart I: Canadian military spending, 1946-2001

Chart II: US & Canadian military spending, 1946-2001

Chart III: US & Canadian military spending, 1946-2001 (Vietnam War expenditures excluded)

Chart IV: Canadian military spending (% GDP), 1946-2001

Chart V: US & Canadian military spending (% GDP), 1946-2001

Chart VI: US & Canadian military spending/GDP gap, 1946-2001

Chart VII: NATO military spending 2001

Chart VIII: NATO military spending 2001 (US excluded)

Chart IX: NATO vs non-NATO countries (military spending 1999)

Chart X: Canadian arms customers vs non-customers (military spending 1999)

Chart XI: Canadian agencies with counter-terror role (total agency budgets 2002)

Endnotes

Chart I

This chart shows the level of Canadian military spending during the post-Second World War period (all figuresconverted to 2002 dollars). The current level of Canadian military spending is lower than the levels it reachedduring the Korean War-era and Reagan-era buildups. But it remains higher than Canada’s average level ofmilitary spending during the post-war period ($10.2 billion in 2002 dollars).

C A N A D I A N M I L I T A R Y S P E N D I N G 6 P L O U G H S H A R E S W O R K I N G P A P E R 0 3 – 1

Chart II

This chart compares the relative changes in US and Canadian military spending during the post-World War IIperiod. With the exception of the Vietnam War era, percentage increases (and decreases) in Canadian spendinghave tracked US changes very closely throughout the post-war period. (Note that Canadian and US spendingare plotted on different scales; the chart compares the relative evolution, not the absolute levels, of Canadianand US spending.) The post-2001 military buildup by the United States is likely to move the US spending line backabove the Canadian line, although probably not as significantly as during the Vietnam War.


Chart III

Like Chart II, this chart compares US and Canadian military spending during the post-World War II period, butwith estimated Vietnam War-related expenditures excluded. The current level of Canadian military spendingrelative to US spending may be inadequate, as many people have argued. But Charts II and III demonstrate thatan extraordinarily consistent level of relative spending (inadequate or not) has been maintained throughout thepost-war period.


US & Canadian military spending(Vietnam War expenditures excluded)

1946 - 2001

Chart IV

Measurements of military spending as a percentage of Gross Domestic Product (GDP) can be highly misleading,suggesting, for example, that Turkey spends more than the United States (see Chart VII for the actual levels ofspending). Nonetheless, GDP comparisons can be useful for examining the relative economic burden of militaryspending. In Canada’s case, military spending has declined as a percentage of GDP since 1952. As Chart Idemonstrates, however, the primary explanation for this pattern is not a decline in military spending; rather, it isthe result of growth in GDP over this period.


Chart V

This chart compares Canadian and US military spending as a percentage of GDP during the post-World War IIperiod. While the United States has devoted a larger share of its GDP to military spending during almost all of this period, that share also has been in decline since the early 1950s, again primarily as a result of growth in GDP.


Chart VI

\

This chart shows the gap between the percentage of GDP spent on the military by the United States and thepercentage of GDP spent on the military by Canada. Not surprisingly, given the pattern recorded in Chart V, thisgap also has been in decline since the late 1960s. It now stands below 2 percentage points, its lowest levelsince 1951, down significantly from the average post-World War II level of 3.7 points. The post-2001 militarybuildup by the United States may have the effect of reversing this trend, at least temporarily.


US & Canadian military spending/GDP gap1946 - 2001

Chart VII

This chart shows the military budgets (actual number of dollars spent) of NATO member states. It shows thatCanada is the sixth largest spender among the 19 members of NATO. Turkey, which spends the largestpercentage of GDP of the NATO members, is ninth on the list. No NATO member comes close to matching the USlevel of military spending, which alone accounts for roughly 40 percent of the world’s total military spending.


Chart VIII

This chart compares the military spending of NATO members excluding the United States. Canadian militaryspending is well below that of the second-tier NATO spenders (all of which have much larger populations andeconomies, and two of which are Permanent Members of the Security Council). But it remains in the position ithas held throughout most of the post-World War II period: at or near the top of the third tier of military spenders.Canadian spending would have to double for Canada to join the ranks of the second-tier spenders.


Chart IX

In 1999, NATO Secretary General George Robertson said, “if NATO is to do its job … we can no longer expect tohave security on the cheap.” As this chart demonstrates, the NATO states accounted for more than 60 percentof global military spending in that year – more than 1.5 times the rest of the world’s spending combined. (Notethat this statistic should not be misread to suggest that the non-NATO world is or is likely someday to becomeunited in hostility to NATO. In fact, the vast majority of other states have good relations, and in some casesformal alliances, with NATO states.)


Chart X

The list of states to which Canada sells military goods may provide a better guide to the perceived potential forhostilities. This chart compares the combined 1999 military budgets of the states that have been Canadian armscustomers during the past ten years to those of non-customers. Presumably, most if not all of the countries thatCanada helps arm are not considered to be hostile or likely to become hostile to Canada. These states accountfor 96 percent of global military spending. The average military budget of the approximately 100 non-customerstates (with most of which Canada also has good relations) is about $250 million. Most of these states have littleor no capability to conduct military operations beyond their borders, with the possible exception of terrorist-likeactivities.


Canadian arms customers vs non-customersMilitary spending 1999

Chart XI

Shown in black: Department of National Defence (DND) intelligence organizations (INT), Office of Critical Infrastructure andEmergency Preparedness (OCIPEP), Joint Task Force Two (JTF2), and remainder of the DND budget (Other). Shown in grey: CanadianSecurity Intelligence Service (CSIS), Canadian Coast Guard, Canada Customs, and Royal Canadian Mounted Police (RCMP). Shown inwhite: estimated budget of all non-federal (i.e., provincial and municipal) police forces in Canada.

Canada faces no conventional military threat to its own territory and is part of the largest and most powerfulalliance system in the world. This does not guarantee, however, that Canada is able to respond adequately tothe possibility of terrorist attack. This chart shows the current budgets of a number of agencies andorganizations that play a role in the prevention of or response to terror attack, among other responsibilities.Broader (and longer-term) efforts to address the roots of terrorism are not listed. Any or all of the above mightbe considered appropriate candidates for additional counter-terror-related funding if it is available.


Canadian agencies with counter-terror roleTotal agency budgets 2002

Endnotes

Years recorded on charts represent the first part

of the fiscal year (i.e., 1946 = fiscal year 1946-1947).

Chart I: Military spending 1961-2001: Statistics

Canada CANSIM II Table 380-0034, “defence”

column, quarterly data converted to fiscal year

totals. Military spending pre-1961: Statistics

Canada Historical Data Series H19-34, “defence”

column. Spending figures converted to 2002

dollars using Gross Domestic Product implicit

price index (IPI). GDP IPI 1961-2001: Statistics

Canada CANSIM II Table 380-0003, “Gross

Domestic Product (GDP) at market prices” column

(final 2002 inflation is authors’ estimate); pre-1961

IPI calculated from Statistics Canada CANSIM I

Series Label Number D14442 and D11000,

recalibrated to the value of the 1961 GDP IPI.

Chart II: Canadian statistics as in Chart I.

US military spending 1946-2001: National

Defense Budget Estimates for FY 2002, Table 6-11,

“Department of Defense Outlays by Title.” US

figures converted to 2002 dollars using Composite

Outlay Deflator: FY 2003 Budget, Historical Table

10-1, “Total Defense” column. US and Canadian

spending are plotted on separate scales, calibrated

so that the same line represents both the average

level of Canadian spending ($10.2 billion) and the

average level of US spending (US$296 billion).

Chart III: US and Canadian statistics as in Charts

I and II. US spending excluding Vietnam War-

related expenditures estimated from “Comparison

of US Defense Outlays with Estimated Dollar Cost

of Soviet Defense Activities,” US Department of

Defense, January 1982 (available on-line at

http://www.d-n-i.net/charts_data/reagan_

weinberger_ussr_comp_1981.htm [downloaded 3

January 2003]).

Chart IV: Military spending figures as in Chart I.

GDP figures 1961-2001: Statistics Canada CANSIM

II Table 380-0017, “Gross Domestic Product

(GDP) at market prices” column; pre-1961:

Statistics Canada CANSIM I Series Label Number

D11000.

Chart V: Military spending figures as in Charts I

and II. Canadian GDP figures as in Chart IV. US

GDP figures: FY 2003 Budget, Historical Table 10-1,

“GDP (in billions of dollars)” column.

Chart VI: Figures derived from Chart V.

Chart VII: Budget, “NATO Defence Expenditures

(2001)” table, Department of National Defence

(available on-line at http://www.forces.gc.ca/site/

about/budget_e.asp [downloaded 4 January 2003]).

Chart VIII: Figures as in Chart VII. US spending

excluded.

Chart IX: NATO and world spending totals:

Conversion Survey 2001, “Military expenditures,

1989-1999” table, Bonn International Center for

Conversion (available on-line at http://www.bicc.

de/budget/data/milex_survey2001.html).

Spending figures for Czech Republic, Hungary,

and Poland added to NATO total. Non-NATO

spending derived by subtracting NATO total from

world total. Robertson quotation: “NATO Secretary

General calls for increased defense spending,”

Defense Systems Daily, 3 December 1999.

Chart X: Recipients of Canadian military exports

1992-2001: Export of Military Goods from Canada,

Department of Foreign Affairs and International

Trade (DFAIT), annual report, 1993 to 2002

editions. Among other provisions, Canadian

military export guidelines call for the “close

control” of military exports to countries that

“pose a threat to Canada and its allies.” DFAIT

statistics do not include countries whose military

forces have received Canadian goods classified as

“civilian,” such as transport helicopters. Military


spending totals calculated from Conversion Survey

2001, “Military expenditures, 1989-1999” table,

Bonn International Center for Conversion.

Chart XI: Budget figures from separate 2002-

2003 Estimates, Part III: Report on Plans and

Priorities for Canada Customs and Revenue

Agency, Fisheries and Oceans, National Defence,

Royal Canadian Mounted Police, and Solicitor

General Canada. Budgets of non-federal police

forces, Joint Task Force Two, and DND intelligence

organizations (Communications Security

Establishment, the Canadian Forces Information

Operations Group, and other DND intelligence

organizations) are authors’ estimates. Other

agencies and organizations also play roles in the

prevention of or response to terrorist attack.


Project Ploughshares is an ecumenical agency of the Canadian

Council of Churches with a mandate to carry out research, analysis,

dialogue, and public education on peace and security issues in

Canada and the world. It is affiliated with the Institute of Peace

and Conflict Studies at Conrad Grebel University College,

University of Waterloo.

… and they shall beat their swords into ploughshares and spears

into pruning hooks; natiion shall not lift up sword against nation;

neither shall they learn war any more. (Isaiah 2:4)

Project Ploughshares

57 Erb Street West

Waterloo, Ontario N2L 6C2 Canada

519-888-6541

Fax: 519-888-0018

[email protected]

www.ploughshares.ca

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