Outside In | It’s goodbye to ‘peace dividend’, hello to wars and defence binges

While the wars in Ukraine and Gaza hold us spellbound in horror, a more tragic reality sits just out of sight: 59 military conflicts are being waged across the world, more than at any time since the second world war.

As a result, defence budgets are rising relentlessly, which not only augurs ill for peace, but has created the worst possible squeeze for governments as they face a long and intimidating queue of spending demands – from post-Covid healthcare costs and subsidies on household energy bills, to the daunting costs of arresting global warming – and no obvious evidence of where the needed funds will come from.

Most governments are already wrestling with record debt. The International Monetary Fund expects global public debt to pass US$100 trillion this year. As governments wring their hands over rising defence spending squeezing the bread-and-butter parts of the budget, the irony is that military hawks in the United States are anguished that spending on debt service is set to rise to US$870 billion this year, surpassing for the first time the defence budget (US$822 billion).

While we pray the conflicts in Gaza and Ukraine are soon resolved, the reality is that the huge economic costs are likely to burden us for decades.

A recent Atlantic Council report on the cost of the Gaza war, drawing on an interim assessment from the World Bank, United Nations and European Union, puts the damage to infrastructure alone at nearly US$18.5 billion. Clearing up the 37.4 million tonnes of debris could take up to 14 years. Restoring the economy may take seven decades.

Amid the tragic human losses, Gaza’s economy in the first quarter has shrunk to just 14 per cent of what it was a year ago, with the combined economy of the Palestinian Territories down by 35 per cent. Even Israel saw its economic activity fall by 21 per cent in the fourth quarter last year.