Editor's Note: The figure used for China's defense spending in this article was corrected.

WASHINGTON — After three years in decline, global defense spending rebounded by 1.7 percent, driven by emerging markets in the East as the West largely continues with austerity, according to analysts with the International Institute for Strategic Studies (IISS).

US defense spending in 2014, at about $600 billion, still dwarfed its nearest rival, China, and the West still accounted for spent more than half of global defense outlays in 2014. However, this was down from two-thirds of global totals in 2010, according to a spending analysis performed by IISS Research Associate Giri Rajendran.

China spent some $129 billion, followed by Saudi Arabia at $81 billion and Russia at $70 billion, according to figures compiled in the recently released 2015 edition of "The Military Balance." The UK fell from third place to fifth, at $61 billion.

In contrast to the continuing decline in Europe, overall defense spending has increased in Asia, growing to more than $340 billion in 2014 from $270 billion in 2010. China's spending outpaces its neighbors, accounting for about 38 percent of the Asian total in 2014. Japan, in contrast, fell from 20 percent in 2010 to just less than 14 percent in 2014.

Driven largely by the European economic crisis, countries there have together reduced defense spending by 2two percent every year since 2010, with the largest drop in the Balkans, Southern Europe and Western Europe, according to an analysis . The only increases are in the north and southeastern Europe.

"There is an emerging sub-regional difference within Europe," said James Hackett, editor of IISS' 2015 edition. "The eastern states are increasing, but they are increasing over a relatively low base. Threat perceptions differ, and in Poland there is a weight of history that drives that."

In spite of appeals from NATO leadership for member states to meet the pledge to spend at least 2two percent of their GDP on defense — which would amount to $365 billion — the actual number is $100 billion less. Two-thirds of that spending comes from the top five NATO states.

Investment priorities land differ from country to country. Sweden and Estonia are prioritizing platforms, while Norway and also Sweden are focusing on increased training, flight hours or the time their ships are at sea.

During the crisis, Northern European countries focused on making their forces more agile and expeditionary, while Southern Europe avoided significant personnel cuts and slashed equipment and training instead. Such cuts appear to be easing as budget pressures loosen, Hackett said.

Top 15 Defense Budgets 2015

Photo Credit: IISS

UK's ranking slipped following over its cumulative 9nine percent cut in defense spending, which in turn yielded a whopping 20 to 30 percent drop in conventional capability, according to Ben Barry, IISS senior fellow for land warfare. Those reductions in maritime programs, combat air squadrons and readiness overall reflect lowered ambition, Barry said.

"Where before 9/11 the level of ambition had been to field a division within 90 days, it's now a year," he said. "Whereas the ambition for amphibious capability for the British Marine Corps had been to land a brigade-minus, it's now a battalion-plus. Whereas the ambition for the airborne force had been to land a parachute battle group, it's nowt to land a company group by parachute."

As European countries grapple with their responses to the Islamic State and Russia, there have been positive signs, Barry said: an uncontentious vote in UK's Parliament to pitch in against ISIS and the its dispatching of trainers, along with Canada and the US, to Ukraine.

But the bellwether, he said, is Germany, which has increased its defense spending and bought back 100 tanks.

"Also, Germany's very rapid assistance to the Kurds [against ISIS], where they basically donated the equipment for a light infantry brigade, and a major training package," Barry said. "That's bellwether stuff."

Germany began in February to prepare a "white book" to supersede its 2006 security policy guidelines. The new document will respond to Russia's actions in Ukraine and take into account the Islamic State group, the Arab Spring, and focus on climate change and cyber attacks, Defense Minister Ursula von der Leyen has said publicly.

"One of the phrases used by German policymakers is that this is a national document with an international flavor," said Bastian Giegerich, IISS' director of defense and military analysis. "There's been more robust partner nation involvement than in the past. What's in it, I don't know. It hasn't been written yet."

For NATO and its member states, the question is, what sort of deterrent will it mount. Any force that hopes to give Russia pause would have to be packed with armored vehicles and air defenses — to match Russia's artillery-heavy troops — and be able to operate in a battlespace colored by cyber attacks and electromagnetic jamming.

"How much that has sunk in and how much that affects the NATO response force — because against a heavy force, even the best equipped light force will be less capable," Ba e rry said. "I would hope the countries that have embarked on this are preparing in every way to cope with a very different 21st cCentury scenario."

Email: jgould@defensenews.com

Twitter: @reporterjoe

Joe Gould was the senior Pentagon reporter for Defense News, covering the intersection of national security policy, politics and the defense industry. He had previously served as Congress reporter.

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