Does the US economy benefit from its military presence abroad?

A report by the think tank RAND tries to shed light on whether Washington's military alliances improve its economic performance
US tanks Syria

AFP/DELIL SOULEIMAN  -   US armoured vehicle convoy near the north-eastern city of Al-Qahtaniyah

The United States currently controls some 750 military bases in at least 80 countries. US diplomacy has been divided since the end of the Cold War on this question, about the presence of its troops abroad. One school of thought defends Washington's role as the main provider of global security, as it would receive a range of political, military and economic benefits in return.

The other camp advocates significantly reducing the number of troops stationed at overseas bases because, they argue, there are no such benefits and, on the contrary, it leads to increased spending that takes resources away from other important items. It also increases exposure to attack.

A team of researchers from the RAND think tank composed of Bryan Rooney, Grant Johnson, Tobias Sytsma and Miranda Priebe have analysed the potential economic benefits of US military alliances and the presence of US troops abroad in a new report. In the paper, the analysts unpack the rationale behind both currents and try to unravel whether US military involvement abroad indirectly benefits the US economy.

Vehículos blindados militares de Estados Unidos pasa en una patrulla por delante de un pozo de petróleo en Rümeylan (Rmeilan), en la provincia nororiental de Al Hasakah, Siria
AFP/DELIL SOULEIMAN - A convoy of US armoured vehicles patrols the village of Ein Diwar, in the northeastern province of Al Hasakah, Syria, Nov 4, 2019

The group takes the perspective of the Biden administration, which has repeatedly highlighted the benefits the United States receives as a result of its security alliances and foreign military presence. Former President Donald Trump's term in office was characterised by precisely the opposite approach, which led to Washington's withdrawal from the international stage. On this point, the Republicans agree with the most left-wing of the Democratic Party, which denounces the excessive military spending in the budget.

Another argument made by security analysts advocating military withdrawal is that US security commitments and troops on foreign bases "can counterintuitively undermine national security by exacerbating tensions with rivals", according to the RAND research. In this sense, the tangible volume of benefits extracted by Washington from the foreign presence is "less important" to policymakers than the ability to deter its adversaries or whether it incentivises its allies to adopt risky policies that increase the likelihood of conflict.

El presidente de Estados Unidos, Donald Trump
AP/ALEX BRANDON - Former U.S. President Donald Trump has been

"Neither school of the grand strategy debate has specified the full range of these arguments theoretically or examined them fully empirically," the analyst team stresses in the introduction.

The RAND research does, however, take into account some of the economic side-effects of military alliances. In the first instance, because the United States has the economic capacity to invest substantial defence budgets. And also because the analysis must take into account both the direct economic compensation provided by the state hosting the military base and the indirect economic effects that this reception generates.

PHOTO/NATO SUMMIT - NATO Secretary General Jens Stoltenberg and Prime Minister Pedro Sánchez receive US President Joe Biden at IFEMA

The conclusions of the study provide some relevant data. US consumers would have lost 0.4% of their purchasing power in 2006 if Washington had decided to leave NATO five years earlier. This change, the analysts argue, seems small, but its impact is similar to that of a regional trade agreement such as the North American Free Trade Agreement and does not analyse the extent to which this loss of purchasing power could be prolonged over time.

As for Atlantic Alliance membership, the researchers suggest that it is associated with higher levels of trade, according to data on bilateral trade in manufactured goods and US economic welfare.

Washington's military alliances are likely to avoid conflicts that affect some international trade and investment. "However, the extent to which foreign conflicts affect the US economy in particular remains unclear," the report notes.

Americas Coordinator: José Antonio Sierra