Arms race and debt boom, alarm for NATO countries (including Italy)

A new era of global rearmament has begun, with NATO countries increasingly pressured to enrich their defense budget.
Any upward shift in national budgets allocated to the military security sector will entail huge costs and some difficult decisions for Western governments already grappling with messy public finances.
For this reason, the extreme hypothesis of a 4% increase in GDP allocated to defense by the members of the organization has triggered the alarm: the unbridled arms race will explode the already too bloated debt of the developed countries and, in general, of the world? The possibility is not excluded and casts shadows on the rather bumpy growth path at a global level.
If, in fact, on the one hand the reasons for insecurity are increasing with the two ongoing wars and with the US-China tension at the highest levels, on the other a polarized world dedicated to increasing military force rather than diplomatic channels is frightening.
Not only on a political and social level, but also in the economic and financial sphere.
The debt bubble can actually explode if triggered by the fuse of increasing military spending.
NATO members, including Italy, are at great risk.
Here because.
Will $10 trillion in military spending cause the debt to explode? Although global defense spending reached a record $2.2 trillion last year, European Union nations have only just begun to consider further spending.
The need to ensure security in the 21st century with an aggressive Russia agitating on their eastern borders, an unstable Middle East and the expansion of Chinese armed forces towards the Pacific agitates NATO countries and suggests they act with greater determination.
Translated: shell out more resources to defend your borders.
Security-focused officials say military budgets may have to emulate Cold War spending of up to 4% to realize the alliance's plans.
read also Europe, is increasing military spending possible or is it a gamble? The 3-Point Answer If the United States and its G7 allies were to reach those levels, it would equate to more than $10 trillion in additional commitments over the next decade, according to calculations by Bloomberg Economics.
Threats from Russia and China are pushing Western leaders – and their voters – to address issues related to taxes, welfare and public debt as great power competition returns.
Bloomberg Economics analysis shows how the growing burden of war preparation will create a new fiscal paradigm for most NATO members.
Even just reaching the Alliance's minimum 2% of annual GDP target for military spending would block much of the EU's post-pandemic debt consolidation.
Getting to 4% would force the bloc's weakest countries to make painful choices between even deeper levels of debt, significant cuts elsewhere in the budget, or tax increases.
France, Italy and Spain would be particularly exposed if the additional spending was financed through bond markets, with Italian government debt rising to 179% of output by 2034 from 144% this year.
Even the United States, which is already allocating 3.3% of its annual GDP to defense, would see borrowing increase from 99% to 131% over the next ten years if it pushed its military budget to 4%.
The painful implications could emerge when the IMF releases updated debt forecasts next week at its spring meetings.
Its officials have already told countries to gradually start rebuilding fiscal buffers amid growth that is likely to be weaker over the next five years than before the pandemic.
Despite the worrying scenario, it is still unlikely that NATO members will accept a firm commitment to spend up to 4% of GDP on defense any time soon.
Last year they agreed on at least 2%, but this too sparked intense debate.
However, the winds of war and the arms race are real and represent concrete threats to the already weak Western financial situation.
read also Turning point in Germany, military defense becomes a priority.
How much will Berlin spend? All against all, more weapons less money? While the wars in Ukraine and Gaza have focused attention on Europe and the Middle East, rising military budgets are a global phenomenon.
China's defense spending will grow 7.2% in 2024, the most in five years.
According to analysis by defense intelligence firm Janes, Malaysia beats year-on-year growth projections for 22 Asia-Pacific nations with a 10.2% increase and total spending of $4.2 billion this year.
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This was followed by growth of 8.5% for the Philippines with $6.6 billion.
In the United States, President Joe Biden's administration will demand a 1% increase to a military budget that already dwarfs that of any other nation, and Matthew Kroenig of the Atlantic Council says it may need to double that as a percentage of GDP.
How a militarized world can accommodate limited tax revenues and ever-increasing needs for welfare and health resources is destined to become a burning political question in the years to come.