The world may be in the midst of a crippling recession but many nation states are still throwing money at national security, according to figures released by the Stockholm International Peace Research Institute (SIPRI).
While industries such as banking, construction and automotive have been ravaged during the past five years, SIPRI's findings reveal the average volume of arms sales has risen by 22%, meaning the global arms trade is now far in excess of the $1,000bn it reached in 2006.
"It's difficult to pinpoint exact figures because there are grey areas about what needs to be registered on the UN register of conventional arms and some countries are more open than others," says Jane's defence industry chief analyst Guy Anderson. "However, it is fair to say that the arms trade is flourishing despite the global recession.
"There are two main reasons for this. The world isn't getting any more peaceful and countries use arms as a means of global positioning and status. The defence industry also creates a lot of skilled jobs. Cuts in defence spending could kill high value employment."
Military exports – new markets emerge
In broad terms, the global arms market is serviced by the supply of tanks, guns, missiles, aircraft and boats from developed nations whose defence industries have grown out of strong economies and a desire to protect their status on the world stage.
The 2009 Conventional Arms Transfers 2001-2008 report – also known as the Grimmett Report after its author, Richard F. Grimmett – shows that, in that period, the US was the world's top arms exporter, accounting for 41% of total sales. Russia was next with 17%, followed by France (8%), the UK (7%) and Germany (5%).
Whilst the main players on this side of the arms trade have not changed in years, the markets they are exporting to have altered radically over the last decade.
"I'd say around 90% of US arms sales were domestic," says Anderson. "Europe has long relied on internal and US sales, and Russia predominantly sold to India and China but things have changed a lot over the last few years.
"There's been no room for growth in the US and Europe since the economic collapse and whilst India is now looking to Europe for its arms, China is looking to manufacture its own, so all the main exporters are looking to new frontiers."
Developing nations driving export market
So who's buying all the firepower? According to SIPRI, China is still the world's largest importer of arms with 9% of total sales from 2005-09, although spending has dropped from $3.5bn to $0.6bn in that time as the country's focus has shifted to transfer agreements and home-grown equipment. China currently accounts for 3% of global arms exports and is looking to become increasingly self-sufficient.
The other burgeoning Asian super power, India, is second on the list with 7% of the total world import sales. Its spending on arms imports has doubled from $1.04bn in 2005 to $2.1bn in 2009, due to the purchase of 82 Sukhoi-30 MKI fighters and T-90 tanks from traditional suppliers in Russia and an A-50 / Phalcon airborne early warning (AEW) system integrated by Israel.
As part of a marked change in direction, India is in the process of spending over $5bn with the US on a mixture of Super Hercules transport planes, P81 long-range maritime aircraft and C-17 Globemaster airlifters.
"The reason developing nations like China and India have spent so much on arms over the last five years is twofold," says Siemon Wezeman, senior fellow at SIPRI's arms transfer programme.
"First of all these countries have real or perceived threats that they need to counter. Second, they have to import to service that need because they are not capable of making their own arms.
"China is getting much better at this now but India is still reliant on imports. Traditionally these countries have always been a client of Russia but fears over the longevity of their technology and a slackening off of US conditions over post-sale inspections has seen them look increasingly to the States for their equipment."
Unsurprisingly, there is a lot of arms activity in areas of political unease. Locked into a seemingly endless arms race with India and boosted by US military aid, Pakistan has increased arms import spending from $0.3bn in 2005 to $1.15bn in 2009, according to SIPRI. It is currently importing 300 combat planes and two new frigates from Russia, plus an early warning aircraft from Sweden.
Massive spending by China and South Korea, third in SIPRI's list of arms importers with 6%, has triggered a raft of defence increases among neighbouring countries. Indonesia and Malaysia have significantly boosted their spending on arms while Singapore has become the first South East Asian nation to become a top ten importer since the end of the Vietnam war.
"These economies have developed substantially over the last decade," says Siemon Wezeman. "That has allowed many South East Asian states to catch up on arms procurement programmes that were put on hold in the 1990s. There's also a real threat perception in the region. Many countries are claimants to parts of the South China Sea. If oil were to be found there, they could be bullied out of their claims pretty quickly if they didn't have the arms to back themselves up."
UAE leads Middle East imports
Perhaps the most politically unstable region in the world, it is no surprise to see a vigorous arms trade in the Middle East. The only shock is that most of the importing is currently being done by the United Arab Emirates (UAE), which has shot up from 16th to fourth in SIPRI's list after spending $7bn, mostly with the US and France, in 2009. It now accounts for 34% of weapons flowing into the region.
"The UAE have bought a lot of equipment over the last ten years," says SIPRI arms transfer programme researcher Pieter Wezeman. "Its expenditure is driven by fear of Iran and also, I think, the idea of international prestige.
"Elsewhere in the region, Israel and Egypt are still importing a lot of weapons. They both have known security threats and receive military aid from the US. Saudi Arabia, which imported so much in the 1990s, is recovering from its financial problems and will be looking to increase its arms spending in the near future."
South America's surprise spend
The most startling revelation to come out of SIPRI's report comes from South America, where the volume of arms transfers has risen by 150% over the last five years.
Venezuela used $2.2bn of Russian credit to buy air defence systems, artillery, armoured cars and tanks; Brazil began to take delivery of 220 second-hand German tanks; Chile took 14 of the same Leopard tanks; and Peru said it was going to buy 80 tanks from China.
"Several governments in South America have money to spend at the moment because of the high price of their natural resources," says Mark Bromley, researcher on SIPRI's arms transfer programme.
"Brazil is seeking to create a modern military force and stimulate the development of its own defence industry. Chile wants the most up-to-date military force in the region and Venezuela is looking to defence because of perceived tensions with the US and Columbia."
Africa's arms race?
Algeria, Libya, Morocco and Tunisia accounted for 3% of the world's arms imports between 2005 and 2009, according to SIPRI, with most of the orders being serviced by Russia. The organisation noted that increased orders from Algeria and Morocco may signify the beginning of an arms race in the region.
More worryingly, SIPRI said that arms were continuing to reach unstable parts of north-east Africa, with Sudan importing armoured vehicles from Russia, China and Belarus. They were also concerned that the warplanes and tanks delivered to Chad and Kenya by Ukraine may end up in Sudan.
"Sudan is not under a UN embargo and there are still plenty of countries willing to sell arms to them," says Pieter Wezeman. "This could be a concern in the context of what the government is doing in Darfur. There is also potential for conflict between the north and south of Sudan when the issue of independence comes up next year. Only a small amount of weapons are getting through but they could still have a major impact in that part of the world."
Global arms outlook
So what of the arms trade in the future? The list of buyers is likely to fluctuate depending on the finance and perceived threat levels of individual nations at any given time. And the US will continue to dominate the supply side of arms, pushing up market value and driving some nations towards unconventional war tactics, according to Siemon Wezeman.
"A strong trade in high-tech equipment will continue, which will mean the arms market increases in value," he says. "US dominance in the production of high-tech equipment will increase because it is so expensive and less countries will be able to compete.
"Countries with close ties to the US will be able to access this high-tech equipment but others like North Korea, Iran and Syria will have to use older equipment or different strategies like asymmetric warfare, guerrilla tactics and nuclear weapons."
Guy Anderson foresees a more open playing field, with the emergence of a powerful Chinese defence industry turning the supply of arms into a battle between east and west.
"China is pouring billions into its defence industry and will become a major player within a generation," Anderson says. "That will set up a fascinating battle between east and west. In the west, defence companies are private and looking to make money but in the east everything is state-owned. The Russians and Chinese will be looking to export on favourable terms in return for access to raw materials."
And if you're looking for a wildcard entry into the top exporters list, look no further than Brazil.
"They are definitely the one to watch in South America," says Bromley. "Chile and Venezuela are in front at the moment but there will be a big influx of weaponry into Brazil over the coming years. They've got deal in place to take submarines, fighter aircraft and helicopters from France and armoured vehicles from Italy. And they're making significant investments into their own defence industry as they seek to regain their position as one of the world's leading arms exporters."