World battles new security threats and recession

By Luke Baker

LONDON (Reuters) - In 1943, at the height of World War Two, Britain had little left in the bank but still spent 50 percent of gross domestic product on defense. To win the war, there was little other choice.

If only the sums were as straightforward for today's military planners and suppliers.

Amid the worst economic crisis in 80 years, the watchword for any government looking to keep its budget under control is austerity, meaning less spending on everything and a much tighter focus on what is critical for long-term defense.

But knowing what is critical in the 21st century is no easy task. And the recession could speed up a rethink about what threats the world is arming itself against.

Since 2001, global military spending has risen steadily and still rose last year despite economic problems, climbing 4 percent to $1.464 trillion, according to the Stockholm International Peace Research Institute. But the economic picture is shifting and spending priorities with it.

"There's going to be tremendous pressure on budgets and the question is, where will the cuts come?" said Alex Nicoll, a defense and economics expert at the International Institute for Strategic Studies in London.

"We're still very much in an era where each country has a different view of what its security priorities are and what role it wants to play in the world."

CHANGING THREAT

While major powers still need big ticket items such as ships and aircraft to defend their territory and trade routes, the U.S. projection of its power globally means its military also needs a much greater airlift and logistics capability.

Since September 2001, the growing impact of terrorist groups and non-state actors has made defense priorities complex.

The attacks in Mumbai last November showed a small group of lightly men armed could have a impact far beyond their numbers.

The ongoing insurgencies in Afghanistan and Iraq also illustrates how a relatively small force can tie up large numbers of troops armed with billions of dollars worth of equipment in what has come to be known as "asymmetric war."

While fighting for the credibility of the alliance in Afghanistan, NATO states are also worried about the impact of unrest everywhere from Georgia to Pakistan and then also have to strengthen security at home in case of terrorist attacks.

Latin America and Africa are also plagued by insurgencies, but states have border conflicts or heavily armed drug gangs to contend with as well.

In the Middle East, Israel frets about Iran's nuclear ambitions, while battling non-state actors such as Hamas and Hezbollah.