Asia Arms Itself in Global Defense Shift

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Military spending is on the rise worldwide — especially in Asia.

With geopolitical tensions simmering across the region, the weight of global defense outlays is “clearly shifting” toward the Asia-Pacific, as well as the Middle East, according to a new report from the Stockholm International Peace Research Institute. Worldwide, they rose slightly to $1.7 trillion last year, or roughly 2.2 percent of global GDP.

While the U.S., China, Saudi Arabia and Russia remain the biggest buyers, the world's top five has a surprising new entrant: India.

Driven partly by strategic rivalries with China and Pakistan, New Delhi's spending increased 5.5 percent in 2017 from 2016 to reach $63.9 billion. But that doesn't exactly mean India is fielding advanced weapons along its borders. In fact, most of the boost is being eaten up by sprawling personnel costs, as well as a reliance on expensive arms imports.

Even so, with Indian Prime Minister Narendra Modi meeting Chinese President Xi Jinping recently to try and minimize the chance of a border standoff like the one last year in the Himalayas, it may allow India to focus more on diplomacy than flexing its military muscle.

Global Headlines

Presidential subpoena? | Donald Trump's current team of lawyers lacks the security clearance needed to discuss sensitive issues related to a possible presidential interview with Special Counsel Robert Mueller, Shannon Pettypiece and Chris Strohm report. Mueller's team has made clear to the president's lawyers that it would consider a subpoena compelling Trump to testify before a grand jury if he refuses to participate in a voluntary interview.

Lowering the bar | The Trump administration is trying to temper expectations for a swift breakthrough on trade issues with China as a delegation of senior U.S. officials prepares to visit Beijing this week. China — in what was perceived as a warning to the U.S. — weakened its daily currency fixing by more than traders and analysts had expected ahead of the talks.

Brexit war cabinet | U.K. Prime Minister Theresa May today presides over a meeting of 10 top ministers to hash out the next steps in the divorce from the European Union. Tim Ross takes you inside the room, where a fight is raging between pro-EU members and the euroskeptics who might have the upper hand now. The political drama has triggered a dip in the pound.

Trust dividend | It's the summit that changed the perceptions of a nation. The meeting between South Korean President Moon Jae-in and Kim Jong Un prompted 78 percent of respondents to a South Korea Research Center poll to say they trusted the North Korean leader. That's up from the 10 percent approval rating in a Gallup Korea poll conducted just a month-and-a-half ago. It's unclear whether the optimism will last until the planned summit between Kim and Trump.

Futuristic transport | The French want a piece of Tesla founder Elon Musk's fast-train-in-a-tube idea, but they have no money to fund infrastructure-heavy projects. So as Ania Nussbaum and Marie Mawad report, cities — in the country that invented high-speed TGV trains and the supersonic Concorde — are relying on handouts of real estate, tax cuts and subsidies to attract Hyperloop-inspired projects.

What to watch

— The European Commission will unveil its proposal for the EU's 2021-2027 budget framework today, urging reductions in farm and regional aid in favor of more security spending and seeking greater contributions from members to fill the hole caused by Brexit.

And finally ... China's push to cleanse its internet of unsavory elements has claimed an unlikely victim, with thousands of videos of children's program “Peppa Pig” reportedly culled from a video app. It's not the first time cartoons have been caught up in Chinese censorship. In February, Winnie the Pooh was temporarily banned after commentators used the character in posts as a stand-in for President Xi Jinping.

--With assistance from Kathleen Hunter

To contact the author of this story: Iain Marlow in New Delhi at imarlow1@bloomberg.net.

To contact the editor responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Michael Winfrey

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