Estimating the cost of corruption in the defence sector is not a precise science. Not the least of its flaws is that such calculations do not begin to estimate the cost in terms of human misery as corruption traps millions in poverty and misery and breeds social, economic and political unrest.  However, in order to stimulate debate and further research, TI-DSP estimates the global cost of corruption in the defence sector to be at a minimum of around $20 billion per year.

The defence sector compared

The Global Corruption Barometer 2010 shows that between 2004 and 2010, perceptions of integrity in the military and police have improved. Yet in 2010, 58% of respondents worldwide reported the police to be corrupt or extremely corrupt, and 30% described the military as corrupt.  

The problem of corruption also occurs in defence companies. A 2006 survey by Control Risks showed that roughly one third of international defence companies felt they had lost out on a contract in the last year because of corruption by a competitor. Yet many defence companies today recognise the challenges that corruption poses to them, and are addressing the issue much more directly.

Trade

Global military expenditure in 2010 is estimated to have been US $1531 billion (SIPRI 2010). This is a 6% rise from 2008, and a 49% rise from 2000.  In 2009, military expenditure equalled 2.7% of Global GDP. During 1998-2005, developing nations collectively accounted for 66.8% of the value of all international arms agreements (Congressional Research Service, 2006), making them the main importers of conventional weapons.

Suppliers

Russia, USA, France, Germany and the UK accounted for approximately 80% of recorded global transfers of major conventional weapons over 2000-2004, with Russia in first place.

Companies

In 2003, top 10 defence company sales accounted for approximately 57% of the arms sales of the top 100 defence companies combined (SIPRI). A handful of large companies therefore very much “rule the roost”. The graph below gives a breakdown of the nationality of the top 100 companies.

Russian firms only account for a small proportion of the top 100 companies, and the firms do not compare in size to the biggest US or European firms (for instance, there are no Russian companies in the top 10). Yet Russian transfers of conventional weapons were the highest of any supplying country over 2000-2004, exceeding US transfers.

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