Governments face increased borrowing, taxes and public sector cuts to finance their soaring military budgets. European NATO members are set to spend a record $380 billion on defense this year — a tough sell to voters.
If you want a reminder of the security threats faced by the world today, take a look at how much governments have hiked defense spending. Global military budgets reached $2.44 trillion (€2.25 trillion) last year, nearly 7% higher than in 2022. It was the steepest year-on-year rise since 2009, recorded during the second year of Russia’s full-scale invasion of Ukraine. For every man, woman and child, world military spending is now at its highest since the end ofthe Cold War — at $306 per person.With Kyiv unprepared to fight such a large-scale conflict, Western countries ramped up military aid to Ukraine, while other escalating tensions with Russia and in the Middle East and Asia also prompted governments to shore up their defenses, unlike any time since World War II.
In 2024, the United States has allocated $886 billion for defense, a rise of more than 8% over two years. For the first time, NATO’s European partners are projected to meet the target set by the military alliance of spending 2% of gross domestic product (GDP) — a major bugbear of former US President Donald Trump, as many weren’t. This year alone, they’ve budgeted a collective $380 billion on defense, NATO chief Jens Stoltenberg said in February.
Poland leads the way (measured by GDP)
While Germany is still playing catch up with other NATO members — helped by Chancellor Olaf Scholz’s special €100 billion ($109 billion) fund to upgrade the Bundeswehr armed forces — Poland is due to spend 4.2% of GDP on defense this year, the highest in the military alliance. Others on NATO’s eastern flank also far exceed or will soon surpass the 2% target, due to the heightened security threat on their borders.
As a result, governments are facing an increasingly tough choice over how to pay for those new defense commitments, just as many economies weaken due to the effects of the ongoing global geopolitical tensions and lingering inflation. Many countries are already fiscally stretched.
“Short-term commitments for military equipment for Ukraine should be financed with additional debt. That’s the way wars have historically been funded,” Guntram Wolff, a senior fellow at the Brussels-based think tank Bruegel, told DW. “But for longer-term increased defense spending, either taxes need to go up or you cut other spending.”
“Is it painful politically? Sure! But if you spread it across the various government departments, it will be less so.”
Germany cuts ministry budgets, apart from defense
Germany, which faces the prospect of lower tax revenues due to weaker growth, has slashed spending across most government departments and has singled out international development aid for an almost €2 billion cut this year.
“Germany has some very significant trade-offs to make,” Jeffrey Rathke, president of the American-German Institute at the Johns Hopkins University in Washington D.C., told DW. “They need to be managed politically so that they don’t erode public support for strengthened security and defense.”
Leftist political parties in several countries have led calls for peace between Russia and Ukraine and have stoked the debate over whether the new military spending could be better spent on health care or social programs.
Rathke noted how Germany’s debt brake, which limits the government’s ability to borrow money to cover gaps in the budget, meant that Scholz’s coalition has less wiggle room compared to, say, France.
While Poland’s finances are in much better shape than many Western European countries, Prime Minister Donald Tusk, who ousted the right-wing populist government last October, is struggling to deliver on election promises, including raising the limit before income taxes are levied, due to the much higher defense budget.
Other EU states struggle with NATO target
Other countries, such as those hit worst by the 2011 European debt crisis, have already faced deep austerity measures and any further cuts could affect the quality of public services.
Italy, for example, is expected to spend just 1.46% of GDP on defense this year and warned that meeting NATO’s 2% target by 2028 would be tricky. The country’s debt-to-GDP ratio is forecast to hit 137.8% this year.
Other countries in similar fiscal tight spots, like Spain, could find limits on any additional deficits needed to fund new military spending, which could be anything from 0.5% to 1.5% of GDP. Last year, Madrid hiked its defense budget by 26%.
“The European debt crisis forced budgetary adjustments of 5% to 7%, even 10% for Greece,” Wolff said. “Fortunately, these cuts will be much less painful than anything the European south had to endure.”
Sweden, Norway, Romania and the Netherlands have lower debt burdens. But even so, Dutch far-right firebrand Geert Wilders also plans significant spending on social security housing and agriculture to ensure his new four-party coalition holds.
“As well as the fiscal capacity and the indebtedness problems, this resource debate is overlaid on an ongoing difference of threat perception across Europe,” Rathke said, so countries located further from Ukraine may be less keen to prioritize defense than those near its border.
Next target: 3%?
Defense spending is expected to keep increasing over the next decade. NATO’s 2% defense spending target was first set in 2014 after war broke out between the Ukrainian military and Russian-backed separatists in the east of the country and Moscow annexed Ukraine’s Crimea peninsula.
Last year, at a meeting in Vilnius, Lithuania, NATO leaders agreed that the target could often exceed 2%. Germany, which until now has struggled to meet the original target, has now mooted the prospect of a 3% budget target, which would have even bigger ramifications for government finances.
International tourism revenues reached $1.5 trillion in 2023, which means a full recovery to the level of pre-pandemic 2019 in nominal terms and by 97% adjusted for inflation, according to the United Nations World Tourism Organization (UN Tourism).
According to the organization, Europe received the highest revenues from international tourism – $660 billion, which is 7% more than in pre-pandemic 2019. Revenues in the Middle East increased by 33%. Last year, America recovered 96% of its pre-pandemic international tourism revenues, Africa – 95%, and the Asia-Pacific region – 78%.
According to UN Tourism, in 2023, GDP from tourism recovered to the level of 2019. It is estimated to have amounted to $3.3 trillion, or 3% of global GDP.
As noted, several destinations achieved outstanding results in terms of international tourism revenues in the first quarter of 2024 compared to 2019. Among them are Serbia (plus 127%), Turkey (plus 82%), Pakistan (plus 72%), Tanzania (plus 62%), Portugal (plus 61%), Romania (plus 57%), Japan (plus 53%), Mongolia (plus 50%), Mauritius (plus 46%) and Morocco (plus 44%).
In the framework of international cooperation and cultural exchange, representatives of the Embassy of the Republic of Kazakhstan in Ukraine visited the Central State Historical Archive of Ukraine in Kyiv. The main purpose of the visit was the ceremony of handing over digital copies of the Kamianets-Podilskyi Armenian Voytov Court record books written in the Armenian-Kipchak language.
The ceremony was attended by counselors of the Embassy Alibek Alibekov, Yevgeniy Katrenov and Daniyar Satybaldin, director of the Central State Historical Archive of Ukraine Yaroslav Fayzulin, as well as archive staff and representatives of Kazakh business.
These unique historical documents are of great importance for the cultural heritage and history of both Ukraine and Kazakhstan. They testify to the rich cultural and historical ties between the peoples who lived on the territory of modern Ukraine and Kazakhstan.
The representatives expressed special gratitude to Kazakh businessman and philanthropist Aidyn Rakhimbayev, who made it possible to obtain these historical documents. Aidyn Rakhimbayev is known for his numerous charitable projects and support of cultural initiatives. In gratitude for his cooperation, five modern computers were donated to the Central State Historical Archive of Ukraine on behalf of Mr. Rakhimbayev.
This gesture contributes to strengthening bilateral relations between the two countries, as well as supports the preservation of historical heritage and the development of cultural ties.
Ancient Kipchak books are handwritten documents created in the Middle Ages, when the Kipchaks (Polovtsians) were one of the most powerful nomadic peoples in Eastern Europe and Central Asia. These books contain valuable historical, legal, and literary texts that reflect the social life, traditions, and legal systems of the time.
The Armenian-Kipchak language is considered to be a unique historical and linguistic phenomenon that arose as a result of the long coexistence of Armenian and Kipchak communities on the territory of modern Ukraine. This language was used by Armenians living in the Crimea, Kamianets-Podilskyi, and other cities where the Kipchaks had significant influence. The Armenian-Kipchak language is a mixed language that combines elements of the Kipchak (Polovtsian) and Armenian languages, making it a unique cultural heritage.
The Kamianets-Podilskyi Armenian Voytiv Court was a judicial institution that operated in Kamianets-Podilskyi during the Middle Ages. It resolved legal issues of the local Armenian community. The record books of this court are valuable sources on the history of law, ethnography, and social life of the society of that time. These books have been stored in the archive for centuries and have now become available thanks to their digitization.
Kazakhstan has now received digital copies of unique ancient Kipchak books, which are now available for study and research, enriching the historical heritage of both countries.
On July 22, 1992, the Republic of Kazakhstan and Ukraine established diplomatic relations. And in December 1994, the Embassy of the Republic of Kazakhstan in Ukraine was opened.
Ribas Hotels Group is expanding its network to Moldova, with the management of the Tree House Relax Park hotel complex in Chisinau starting on June 1, the company’s press service reports.
“The opening of Tree House Relax Park is a strategic step in the expansion of the Ribas Hotels Group network abroad, which helps to strengthen the company’s position in the international hospitality market. Thanks to its location, high-quality amenities and integration of the company’s best practices, the complex has every chance to become a popular destination for leisure and business events in Moldova,” said Yulia Kosenko, CEO of Ribas Management.
Tree House Relax Park has been operating since 2013 and is aimed at nature lovers and conscious eco-vacationers, from couples with children to business travelers. The park offers comfortable cottages and villas with a sauna, a swimming pool, gazebos, a restaurant and a conference room for business and festive events, and a parking lot for 250 cars.
Artur Lupashko, founder of Ribas Hotels Group, told Interfax-Ukraine that at this stage the company is taking the hotel complex under management, and that its renovation and expansion are planned for the future, with the development concept to be presented later.
Ribas Hotels Group, which has been operating since 2014, is an international management company whose flagship service is the operational management of hotel and restaurant complexes. The company also provides concept development, design, support for all stages of project implementation, consulting, and franchising services for developers.
Its portfolio includes 55 hotels under management and construction, including five projects in Bali. The operator’s total room capacity is over 1000 rooms.
Currently, the company is developing properties in Poland, Montenegro, Austria, Switzerland, Germany, Georgia, Armenia, Italy, and East Asia.
A snap presidential election in Iran, organized in the wake of the death of Iranian President Ibrahim Raisi, is scheduled for June 28, Al-Arabiya TV channel reported on Monday.
According to Iranian media, candidate registration will take place from May 30 to June 3. The deadline for campaigning is from June 12 to the morning of June 27.
The day before, a helicopter carrying Iran’s president crashed in a mountainous area in heavy fog in the northwest of the country, near the border with Azerbaijan. On Monday morning it became known that all the people in the helicopter were killed. In particular, in addition to the president, Iranian Foreign Minister Hosein Amir Abdollahian died.
On Monday, Iran’s Supreme Leader Ayatollah Ali Khamenei confirmed that Iran’s First Vice President Mohammad Mokhber will serve as the country’s president. Khamenei also said that Mokhber will have a maximum of 50 days to hold the country’s presidential election.
In addition, according to Iranian media, Iranian Deputy Foreign Minister Ali Bagheri Kani has been appointed acting foreign minister.
Earlier Experts Club think tank presented an analytical material about the most important elections in the countries of the world in 2024, more video analysis is available here – https://youtu.be/73DB0GbJy4M?si=eGb95W02MgF6KzXU Subscribe to Experts Club YouTube channel here – https://www.youtube.com/@ExpertsClub
The State Property Fund of Ukraine (SPFU) is finalizing the list of large-scale privatization objects to be agreed with the Cabinet of Ministers and submitted to the auction commission, said Vitaliy Koval, head of the agency.
“Large-scale privatization is when an asset is worth more than UAH 200-250 million at its book value or starting price. Today, the official list has been approved, all large-scale privatization objects must go through the procedure of approval by the Cabinet of Ministers, be included in the list and transferred to the auction commission under the regulation of the minister, who will approve the data on the auction conditions,” he said at the Business Breakfast with Forbes Ukraine on Wednesday.
Koval named 66.65% of the Ocean Plaza shopping mall (Kyiv), which will be put up for privatization at a starting price of UAH 1.63 billion, and one of the pre-war leaders in the aerated concrete market, AEROC Investment Deutschland GmbH, with three production sites at a price of about UAH 1 billion, as the most valuable assets included in the list of large-scale privatization. Among the state-owned assets, the Ukraina Hotel (Kyiv) will be put up for privatization at a price of UAH 1.8 billion.
In addition, the assets of the United Mining and Chemical Company (UMCC), which has been given control of the Vilnohirsk Mining and Metallurgical Plant (VGMK, Dnipro region) and Irshansk Mining and Processing Plant (IGOK, Zhytomyr region), will be auctioned at a starting price of UAH 3.7-3.9 billion.
“We have a task from the Ministry of Finance – UAH 4 billion (to replenish the state budget in 2024 – IF-U). But I am confident that we will exceed it. The ambitious price is much higher,” said the SPF head.
Speaking about the target audience that the SPF is interested in transferring privatization objects into ownership, Koval said that the Fund manages a variety of assets: from a small shop, hair salon, service center and tailoring studio to large objects such as the UMCC. Accordingly, the target audience is very diverse – from individuals to corporations.
“A very cool client for us is someone who comes for the second, third, or fourth time. In addition, when it comes to international business, international groups that already have business in Ukraine, understand the country’s agenda, and are familiar with the context and feel the microclimate are of the greatest interest. Such clients are very important to us. As well as domestic investors who have small and medium-sized businesses – they are needed,” summarized the head of the SPF.