Title: What Do Crisis and the Military System Have in Common
Abstract: The cyclical crises in the 2th century, stemming primarily from the economic and sector and subsequently spreading into all of the social systems, have also influenced the military subsystem. In such circumstances the military subsystem as a major user of budgetary resources would be under a twofold pressure: the diminishing resources would call for profound or even radical changes of its dimension and quality, while on the other hand the crisis would usually involve an increased security risk, which would in turn involve the increasing demands being imposed on the military system. The Slovenian version of the global economic which broke out in 2008 as a crisis in the USA and Europe, resulted in a radical decrease of budgetary resources intended for the military system, which had been professionalised. One of the first economy interventions of the state involved a reduction of the military budget in the amount of 25 percent. The crisis hinders the stability and especially the development of the military system, and due to their size and lack of flexibility the military systems are not capable to adapt quickly. Nevertheless, in none of the cases can we discern any examples of increased aggressiveness towards the internal public, which demonstrates the traditional loyalty of the army in this space.Key words: economic Great Depression, military system, defence spending, Yugoslavia, Slovenia.i THEORETICAL GROUNDSTo understand the complex interplay between a global national and international responses to it and the overall implication this has for national defence spending we need to first look at the basic terminology and economic theory. There is no precise definition of financial crisis, but a common view is that disruptions in markets rise to the level of a crisis when the flow of credit to households and businesses is constrained and the real economy of goods and services. The origins of the crisis that started in mid-2007 lie in the mounting losses in subprime mortgage markets which triggered disturbances throughout the international system. The subprime crisis triggered a reassessment of risk that encompassed other markets, including leveraged loans, takeover financing, credit derivatives and commercial paper. In this changed atmosphere, many market participants became reluctant to extend credit, either because they could not judge the prospective borrower's condition with any confidence, or because they were unsure what the assets in their own capital base would bring, should they be forced to liquidate them to cope with unexpected losses. This in turn had trickledown effect and heavily impacted the national economies over the next years, with effect still being felt, especially in European countries.The first wave of global crisis in the fall of 2008 was somewhat delayed in Europe, but the effects of the second and third waves have created a perfect economic storm that has upended European finance and politics. These conditions have led to growing unemployment and social unrest, the fall of a number of governments, and increasing pressures to reduce discretionary governmental spending, including for defence and foreign assistance.4 Tight fiscal circumstances over the next five years will require cuts in force levels, capabilities, and readiness, as well as deferred procurements, further eroding overall European military capabilities already suffering from two decades of underinvestment. European governments have undertaken major reduction in their structures, and defence spending has been flat of slightly declining over the past two decades.5Economically burdened nations are now compelled to restructure budgets to cope with the current crisis and reflect new fiscal realities. Most countries have opted for a reassessment and subsequent reduction of their defence budget. …
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: article
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