Military Power vs Economic Power in History (Part 2)

by James Graham

As the Soviet Union collapsed Russia was faced with the task of converting its military industries to civilian production. Mikhail Malei, President Yeltsin's then chief adviser on conversion estimated in 1992 the task would take 15 years and cost 150 billion dollars. One method Russia has chosen to fund this conversion is international arm's sales. However this option comes with its own problems not least that many of Russia's traditional customers like Iraq can not pay in hard currency. The true benefit of conversion may only come when a large proportion of Russia's 1500 arm's factories go bankrupt. This would release the industry's highly skilled personnel to find employment in other sectors. The physical conversion of military power to economic power is horrendously expensive and difficult to achieve.

Iraq is a country that was able to transfer much of its economic wealth earned largely from oil revenues into building its military power. However Iraq's attempt to use this military power to further increase its economic power was a complete diaster. Its invasion and incorporation of Kuwait were swiftly condemned by the nations of the world who defeated Iraq and threw its forces out of Kuwait. Apart from the obvious material loss and infrastructure damage severe economic sanctions were placed on Iraq. These sanctions continue to this day and include oil, Iraq's main foreign currency earner. The result has been a near collapse in the Iraqi economy. Iraq's blatant use of its military power in an attempt to gain additional economic power backfired dramatically placing its economy in ruins.

North Korea is another state that has pursued military power at the expense of economic power. In North Korea's case it has almost completely failed to convert its military power into economic power. According to Lee Ki-Tak, an expert on North Korean affairs the North's development of heavy industry for military purposes has ensured the agriculture and consumer products industries are virtually non existent. This lopsided development has forced thousands in the country to die of starvation. The northern government has also had to approach its previously sworn enemies, South Korea and the U.S. for humanitarian aid. North Korea's military build up and subsequent military power has been of no use in curing the countries economic woes.

Japan has taken the opposite path since World War Two. Using its growing economic power to build the second most advanced military force in the world. Throughout this period Japan has been able to keep its defence expenditure around or below one percent of gross national product. In comparison the U.S. spends upwards of six percent of its G.N.P. on defence and most European countries around three to four percent. Remarkably during this period Japan has also been able to increase total defence expenditure by an average of six percent per year. Hence Japan's increasing economic power has allowed it to rapidly increase its military power without causing cut backs in other areas. Japan is now in the enviable position of spending a larger amount on defence than every other state bar the U.S. with a relatively smaller drain on its economy.

For years China has maintained the world's largest standing army but has had relatively little military power. For as the size of its military has been large the quality and technology of its equipment has been low. In the last two decades as the expansion of the Chinese economy has grown pace the government has begun to modernise its military forces. Modern fighter aircraft, submarines, air-to-air missiles, ground attack missiles and supersonic anti-ship missiles are being added to the Chinese military arsenal. These advanced weapons are costly and China purchasing them would have been unthinkable before its economic resurgence. China is using its growing economic power to increase its military power.

While it is possible to convert military power back into economic power peacefully, the cost is largely prohibitive. Forceful use of military power to build economic power is extremely risky and can have counter productive side effects in the form of economic sanctions. Military power is also extremely difficult to sustain without corresponding levels of economic power. For it is economic power that allows military power to be built up in the first place.


Interview with Lee KiTak Business Korea January 1998

Bobrow, Davis 'Eating your cake and having it too: the Japanese case', in Steve Chan and Alex Mintz (eds) Defense Welfare and Growth. London Routledge 1992 p. 81-99

Edgar, Alistair and David Haglund 'Japanese Defence Industrialisation', in Ron Matthews and Keisuke Matsuyama (eds) Japan's Military Renaissance?. London The MacMillan Press Ltd 1993 p. 137-163

Fisher, Richard 'How America's Friends are Building China's Military Power' The Heritage Foundation November 5 1997,

Hoadley, Steve 'From Military Conflict to Economic Rivalry' Lecture 13 April 12 2000

Hoadley, Steve 'The Theory of Sovereignty, Power and the Balance of Power' Lecture 2 March 1 2000

Nelan, Bruce 'The New Russia: The Military' Time Magazine December 7 1992

Papp, Daniel. Contemporary International Relations. Needham Heights, Allyn and Bacon, 1997 p.309-398

Van Voorst, Bruce 'The Ploy that Fell to Earth' Time Magazine August 30 1993

Military Power vs Economic Power in History

Military Power vs Economic Power (Part 1)