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

["Y. K." <ykleftis@xxxxxxxxxxx>]

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

FEATURE

Date Posted: 03-May-2005

JANE'S DEFENCE INDUSTRY - JUNE 01, 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
contractors.

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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