III. The military profile as a criterion for economic aid

If a government chooses to spend more on its army than on its people, it cannot be regarded as committed to human development, and this basis should certainly count against it in aid negotiations.' This statement of the Human Development Report 1991 rests on the assumption that governments which undertake to increase military expenditure must either decrease social expenditure and economic services or increase the budget. Increased military expenditures lead to crowding out other types of expenditure or to increases in the overall government budget. As Hewitt, in an IMF paper, argues, decreasing social expenditures are likely to cause the poorer segments of society to pay a higher cost since their benefits are reduced. Decreasing expenditures on productive economic activities will have negative effects on development and economic growth. Increasing the budget will lower private consumption as a result of needed tax increases (current or future).8

Opportunity costs are associated with high investments in military activities. Conversely, military expenditures are reactive to financial constraints; thus governments have a choice in setting priorities. How can this linkage be given operational shape in aid negotiations and agreements to give incentives for a policy of diverting resources from the military to other areas, such as development programmes?

It is suggested here to apply three criteria to establish government military/development profiles, which provide the framework for the rank of countries according to low, medium and high priority for aid:

1. The percentage share of health and education expenditure in GNP minus the percentage share of military expenditures in GDP: There are limits to what governments can spend. Given severe budget constraints and limited national incomes, social and development spending should have priority over the military. But the military profile of a government should not be the only criterion for the terms under which it receives aid; its development record is just as important. It is of immense interest whether governments really spend the resources on social and development programmes or not. This ratio takes the income constraint into consideration and indicates what priorities governments set and what part of the national income is spent on the military and thus not available for other purposes. Positive percentages indicate higher spending on health and education than on the military. Negative percentages indicate higher military than health and education expenditure.
2. The absolute amount of military expenditures: There are, of course, genuine security problems which governments are obliged to consider. To what extent military expenditures are needed and beyond what point they are excessive is objectively difficult, if not impossible, to judge. Justification for the resources spent on the military must be based on security needs. To use only the military expenditure/GDP ratio as a criterion for granting aid, as has been suggested and is being considered by several donor countries and organisations, discriminates against the small and low-income countries. Their spending both on the military and on development in absolute terms can never match that of the rich countries. Therefore, the total amount spent on the armed forces (expressed in US dollars) is used here as a corrective to compensate for the bias of the GDP ratio against small and low-income countries.

The percentage share of major conventional weapon imports in total merchandise imports: Investment in economic and social development requires imports of goods and services. Given the debt and international liquidity situation, financial resources (hard currency) to finance imports are scarce in many countries. Nevertheless, substantial amounts are channelled into importing weapon systems and are thus forgone for importation of badly needed non-military goods. This criterion purposely ignores whether the import of weapons is financed by the recipients' own resources or within military aid programmes, since the re-orientation of military aid programmes could potentially increase recipients' external assistance. This criterion discriminates against the countries with a high portion of their imports as weapon imports. (The countries giving priority to domestic arms production instead of imports of weapons are bound to rank high in criterion 2.)

There are basically two ways to operationalise this proposal in negotiations for external assistance:

 
1. The quantity of aid: Probably only in extreme cases is it justified and politically sensible to cut off external assistance totally. Aid cut-off is perhaps too drastic a suggestion. However, a gradual reduction seems realistic. It is suggested here to reduce aid by:

30% for the 10 countries with the lowest priority (rank 81–90),
20% reduction for the next 10 countries (rank 71–80) and
10% reduction for the next group of 10 countries (rank 61–70).

The freed resources should be given to those countries with high priority (rank 1–30), possibly also with gradual increases according to the rank order.

The medium-priority group should neither be penalised nor rewarded in the quantity of aid made available to them.

2. The terms of aid: High-priority aid recipients should receive not only more aid but also more favourable terms. This policy can be implemented by reducing interest rates and prolonging the repayment period or by increasing interest-free and non-repayable grants. Countries with low priority should be penalised and carry the heavier burden.

Technical note

1. There is certainly room for discussion of where the cut-off points between low, medium and high priority lie. The message, however, is clear. A linkage between external assistance and high investments in the armed forces can be established. Those countries with a high military profile should be penalised in external assistance negotiations and should not receive aid on favourable terms. On the other side of the coin: Governments with low investments in the military should be whole-heartedly rewarded by the grant of more aid at favourable terms.
2. The rank order does not clearly distinguish the differences in absolute values. More sophisticated statistical methods might lead to slight changes in the rank order; however, the results would not be significantly altered.
3. The three criteria chosen do not take the different security needs of countries into consideration. Countries that face outside aggression might feel obliged to invest more in their military than countries located in a more peaceful environment.

It is therefore suggested to consider not only the changes in rank from one year to the next but also the development in absolute terms. A government that did not shift its priorities away from spending on health and education should not lose favourable aid terms even if its military profile was not improved.

Once these criteria are established and implemented (either universally or by individual donor countries or organisations), recipients have an incentive to rethink their priorities and redirect their financial resources. Improvements of countries in the suggested rank order from one year to the next should immediately be rewarded by more external assistance or better terms of aid.

The following measures are suggested:

1. Using the suggested 'military/development profile' of countries as a criterion for aid negotiations.
2. Setting of priorities with existing aid programmes according to the 'military/development profile'.
3. Changing the quantity of aid and its terms accordingly.

The tragedy in the Gulf demonstrates the need for more effective methods of resolving Third World conflicts.' This statement of the Human Development Report 1991 should be underlined and, unfortunately, has to be extended also to Europe, as conflicts in the Soviet Union, Albania and Yugoslavia drastically demonstrated in 1991.

While old conflicts were settled, new major conflicts erupted; and numerous other protracted armed conflicts that have not reached the stage of 'major armed conflict' may quickly escalate.

A major armed conflict is defined as prolonged combat between the military forces of two or more governments or of one government and at least one organised armed group, involving the use of weapons and incurring battle-related deaths of at least 1000 persons.

Recent developments

Cooling down:

End of the cold war.

Reduction of arms imports and of military expenditures of most Third World countries.

Negotiations in several forums about the control of the arms trade.

Dissolution of the Warsaw Treaty Organisation.

Implementation of the INF Treaty, signing of the CFE and the START treaties.

Brazil and Argentina signed an agreement not to manufacture nuclear weapons.

Unification of North and South Yemen and East and West Germany.

North and South Korea join the United Nations.

Reduction of armed forces and weapons especially in Europe.

Stop of production of binary chemical weapons in the United States.

The 1974 Threshold Test Ban Treaty and the 1976 Peaceful Nuclear Explosions Treaty enter into force.

Willingness to join the NPT by France, China and South Africa.

Peace plan for Angola.

Namibia becomes an independent state.

End of war in Liberia.

End of conflict in Ethiopia.

Reduced tensions in Nicaragua.

Reduced tensions in the Lebanon.

Approved plan for settlement of West Sahara conflict.

UN peace plan for a solution of the conflict in Cambodia.

Heating up:

Attempted coup in the Soviet Union.

Armed conflicts in the Baltic states and other Soviet republics.

Iraqi invasion of Kuwait and the Gulf War.

Armed conflicts in Yugoslavia.

Intensification of military action against the Kurds in Turkey.

Intensification of the conflict in Sri Lanka.

Mass exodus of people from Albania.

Expansion of military forces of several Asia–Pacific countries.

Military expenditures of over US$500 billion in and for Europe.

Continued supplies of weapons to the troubled Middle East region.

Continued danger of nuclear proliferation.

Continued danger of chemical weapons proliferation.

Uninterrupted high investments in sophisticated new weaponry of the major military powers.

Most major armed conflicts of 1990 were fought in the Third World: In addition to 1 in Europe, there were 5 in the Middle East, 10 in Asia, 10 in Africa, and 5 in Central and South America (see figure 3). The number of major armed conflicts in the world has gradually dropped from 35 in 1986 and 36 in 1987 to 33 in 1989 and 31 in 1990, following agreements concluded between warring parties in several conflicts, especially due to the good services of the United Nations. This positive development, however, cannot let us rest assured. On the contrary, armed conflicts continue to plague our planet. In addition to the 33 major armed conflicts of 1989, 59 minor armed conflicts were registered, the vast majority of them (53) in the Third World (see appendix, table A9 for a full list of 'major' and 'minor' armed conflicts). There are three types of conflict: International conflicts between two governments using their military force against each other. State-formation conflicts involving at least one government and one non-governmental party demanding change in the constitutional status of a territory. Internal conflicts over the control of government involving at least one government and one non-governmental party. In only one location was an international major armed conflict fought in 1990. Most conflicts, namely 17, were state-formation conflicts, and 13 were internal.

Conflict resolution

With the end of the superpower bipolarity, a new vision of a post-cold war world and of a new concept of security has evolved. Hopes for a fundamental change in international relations have grown. The East–West competition that often dominated conflicts in the Third World or added an East–West dimension to conflicts in the South is no longer a cause for concern. The Third World is no longer the ideological battleground of superpower rivalry. The end of the East–West confrontation also signalled a new and expanded role for the United Nations, a role in peace prevention and peace settlement that had often been blocked during the previous four decades.

At the end of the era of bipolarity and superpower competition, the United States emerged as the dominant military power. This dominance was demonstrated in the war against Iraq. Iraq's aggression and the war against Iraq illustrated that military force is still the central means of foreign and security policy. It has been argued that the threshold for the use of military force in the numerous conflicts has been lowered. Since the end of the East–West rivalry it is no longer feared that conflicts might proliferate into a superpower confrontation. Intervention apparently is less risky today than during the cold war.

The Third World is, however, not just an object of great-power interests. The withdrawal of external actors does not necessarily lead to ending conflicts. The causes for many conflicts are not related to outside interest or interventions. Most conflicts did not disappear with the changed international climate since their causes were not removed. Internal conflicts, often fuelled by religious differences or ethnic strife, the renaissance of nationalism, existence of injustice, undemocratic and authoritarian regimes, territorial claims, artificially drawn borders, etc., continue to be fought; and the lack of institutionalised arms control forums and the non-existence of capable peace-settlement organs make conflict resolution difficult. Usually there are no military solutions to non-military conflicts. The drug problem will not be solved by a 'war on drugs', and social and economic injustice between rich and poor, between North and South, West and East and within countries, will continue to cause tension and conflicts. These problems must be resolved through political and economic means. Military programmes, especially in the northern hemisphere but also in the Third World, have not been adjusted to this reality. Too large a quantity of the scarce resources are still directed at strengthening military power instead of correcting economic imbalances.

A number of non-military measures are suggested to lessen tension and to prevent or resolve conflicts:

1. Mediation between conflicting parties: Past experience shows that, despite numerous failures, participation of the United Nations (the Secretary-General) might be helpful. Strengthening the role of existing peace-settlement organs (the UN Security Council) and creating additional ones within the United Nations could help settle conflicts. Recent experiences of the United Nations in Southern Africa, Cambodia and the Middle East suggest the possibility of a revival of the United Nation's original, far-reaching peace-keeping function.

2. Crisis management is important; crisis avoidance is more important: The United Nations could play a more active role in crisis prevention and avoidance if it establishes an early-warning system that registers areas of tension and takes an initiative to understand the nature of the conflict in order to be able to suggest solutions.

3. UN Military Staff Committee: Making the UN Military Staff Committee under UN Charter Article VII operational to enable the UN to enforce its peace-keeping operations.

4. Controlling the arms trade: (see recommendations in section II) First, establish a UN register of the arms trade to increase transparency in the flow of arms and, second, tighten restrictions on the transfer of arms by establishing an efficient multilateral arms transfer control mechanism to complement national controls.

5. Centres for conflict resolution: Reduction of tension, crisis management, mediation between conflicting parties, verification of peace settlements and disarmament agreements can actively be promoted through the establishment of regional centres for conflict resolution. After the end of the cold war, the institutionalisation of the CSCE process offers an alternative security concept in Europe based on co-operation instead of the traditional antagonism. The history of this process in Europe shows that the establishment of dialogue between belligerent countries pays off in the long term. Such processes are virtually absent in most other regions of the world. However, they are urgently required to stop wars, ease tension and facilitate disarmament.

6. Regional security arrangements: There is scope for regional security arrangements, disarmament agreements, agreements on territorial disputes etc. Initiatives from outside might assist the peace process. However, initiatives from within the region to prevent great-power involvement are more important. Especially in the Third World but also in Europe, forums are required at the regional level, preferably under the auspices of the United Nations, whose task should be to monitor and moderate tensions and crises in order to de-escalate emerging conflicts and search for peaceful settlements of ongoing armed conflicts. The United Nations should be authorised and equipped to initiate, monitor, and verify arms control and disarmament agreements.

7. Collective security system: Support for a system of collective security under the auspices of the United Nations, to guarantee territorial integrity, repel aggression and institutionalise a mechanism for conflict resolution, will not only help prevent conflict but also enhance reducing nationally based military power.
 

Footnotes

8 Hewitt, Daniel P., Military Expenditure: International Comparison of Trends, International Monetary Fund Working Paper WP/91/54, Washington, DC, 1991, p. 15. 

9 The statistics in this section are based on K. Lindgren (ed.), States in Armed Conflict 1989, Department of Peace and Conflict Research, Uppsala University, Report No. 32, 1991; and Lindgren, K., Heldt, B., Nordquist, K.–_ and Wallensteen, P., 'Major armed conflicts in 1990', SIPRI, SIPRI Yearbook 1991: World Armaments and Disarmament (Oxford University Press, 1991), pp. 345–380.