For purposes of standardization and comparability, this Report presents defense spending figures using the NATO definition wherever possible. According to this approach, defense expenditures are defined as outlays made by national governments specifically to meet the needs of the armed forces. In this context, the term "national government" limits "defense expenditures" to those of central or federal governments, to the exclusion of state, provincial, local, or municipal authorities. Regardless of when payments are charged against the budget, defense expenditures for any given period include all payments made during that period. In cases where actual 2002 defense outlays are not available, final defense budget figures are substituted. War damage compensation, veterans’ pensions, payments out of retirement accounts, and civil defense and stockpiling costs for industrial raw materials or semi-furnished products are not included in this definition of defense spending. Defense spending figures depicted in this Report for the United States are based on the NATO definition and therefore may differ somewhat from other U.S. defense spending figures provided to Congress or used within the Department of Defense. NATO’s definition of defense spending includes spending on programs funded outside of the Department of Defense, namely, the Department of State’s International Security Assistance Programs, and the defense-related portions of the Coast Guard and the Department of Energy.

Ground combat capability data includes major combat systems, including tanks, artillery, and attack helicopters for army and marine units. Armored vehicles, anti-tank weapons, mortars, small arms, and transport and combat service support assets are not included in this assessment. The quantity and quality of nations’ equipment holdings are assessed using widely accepted static measures.

Naval combat, and mine countermeasures tonnage data includes aircraft carriers, attack submarines (non-strategic), principal surface combatants (cruisers, destroyers, frigates, and larger corvettes), mine warfare ships and craft (including mine layers), and patrol combatant ships for the combat, strike and defense category.

Combat aircraft capability data includes fixed-wing combat aircraft (air force, naval, and marine assets) in the following categories: fighter/interceptor, fighter/bomber, conventional bomber, and tactical fighter reconnaissance aircraft (including combat-capable trainer and electronic warfare aircraft). Not included are maritime patrol aircraft (MPA), anti-submarine warfare (ASW) aircraft, transports, air-to-air refueling aircraft, or any support or special mission aircraft. The quantity and quality of nations’ equipment holdings are assessed using widely accepted static measures.

Naval supply, tender and transport tonnage includes amphibious warfare ships, various types of tenders, landing ships, tankers, transports, and other support ships.

Military transport aircraft capacity data includes military fixed wing transport aircraft (air force, army, marine, and naval assets) to include multi-role tanker/transports. Not included are transport aircraft with maximum payload capacity less than 12,000 lbs, aircraft identified as VIP transport, government-owned aircraft operated in civilian markings, and commercial aircraft available under contract or national legislation in a time of war or national emergency. Transport capacity is derived from number and model of aircraft multiplied by cargo capacity measured in short tons (maximum payload in pounds (lbs) (as stated in Jane’s All the Worlds Aircraft) divided by 2,000).

Tanker aircraft fuel offload capacity data includes fixed wing air-to-air refueling aircraft (air force, naval, and marine assets) to include multi-role tanker/transports. Fuel offload capacity is derived from number and model of aircraft multiplied by maximum fuel offload capacity measured in pounds (lbs) at a mission radius of 1000 nautical miles.

Bilateral cost sharing is divided into two categories, according to whether the costs are borne by the host nation on-budget (direct cost sharing), or as imputed values of forgone revenues (indirect cost sharing). Direct cost sharing includes costs borne by host nations in support of stationed U.S. forces for rents on privately owned land and facilities, labor, utilities, and vicinity improvements. Indirect cost sharing includes forgone rents and revenues, including rents on government-owned land and facilities occupied or used by U.S. forces at no or reduced cost to the United States, and tax concessions or customs duties waived by the host nation.

The OECD has a 29-nation membership including all NATO countries, Japan, and the Republic of Korea. The OECD establishes economic and political conditions that nations must meet before receiving assistance (e.g., demonstrated commitment to political reform, and free and fair elections). Subsidies are provided in the form of trade and investment credits, grants, and loan guarantees, and are directed into areas such as food aid, medical supplies, and technical assistance in management training, privatization, bank and regulatory reform, environmental projects, market access/trade, nuclear reactor safety, and democratic institution building. The OECD is also coordinating nuclear safety assistance to the New Independent States of the former Soviet Union (NIS).

Aid to 12 of the 22 emerging economies of Central Europe (including the Czech Republic, Hungary, and Poland) and the NIS does not qualify as official development assistance for OECD purposes, but instead is categorized as official aid (OA). Both categories, ODA and OA, cover identical types of assistance, with the only difference being the recipient nations. Other OA recipient nations include more advanced developing countries (e.g., Kuwait, Qatar, and the United Arab Emirates). Recipient nations move from one aid category to the other depending on their development status. Total foreign assistance evaluated in this Report is the sum of all ODA and OA.

Foreign assistance data in this Report cover the period 1995 through 2001. At this time, complete and reliable foreign assistance data are available only through 2001 due to complexities and delays in the OECD collection and reporting process, and data are still not complete for some countries for 1995-1997. Assistance data are not available for the Czech Republic or Poland for years covered in this Report prior to 1998. This is to be expected since these nations, along with Hungary, are primarily recipients of foreign assistance. This is also the case with Bahrain, Oman, and Qatar, for which no foreign assistance contributions are reported.