Incredible: Saudi Arabia’s 2015 Military Spending Was Second Only to That of US, China
The nation of 30 million has poured $87 billion into its military
This is pretty incredible.
Stockholm International Peace Research Institute estimates that in 2015 Saudi Arabia was the third biggest military spender in the world.
Saudi Arabia is a country of just 30 million people that no one would mistake for a major military power.
This places it ahead of powers such as Britain, France, India and Russia.
One reason why Saudi spending expressed in dollar terms rose above that of Russia is the exchange rate.
At the onset of the oil prices crash in 2014 Russia floated the ruble allowing it to depeciate against the dollar by nearly 50%.
So the Russians are spending the same or increased number of rubles, but in dollar terms their spending has shrunk considerably.
Saudi Arabia, however, continues its peg to the dollar so that is not the case. Furthermore unlike Russia, which is a major arms manufacturer, Riyadh spends dollars rather than its own currency to procure military hardware anyway.
However, this is the truly amazing thing. Saudia Arabia has been, if anything, even more affected by the oil price crash than Russia, which nonetheless has industries besides oil – yet Riyadh is pouring more money into arms and wars than ever before.
And here is the catch; this is burning a giant hole in Saudi reserves.
Just before the oil price crash in 2014 the kingdom had accumulated over $750 billion in foreign currency. This is now down to less than $600 billion.
At the present pace the country is spending $20 billion of its reserves per month and will be completely bankrupt in less than three years.
No wonder Riyadh is eager to drive the oil price back up even if it means losing market share to hated rival, Iran.