Predictability in Effects-Based Defence Budgeting

This is the starting point for the fourth strategic choice set out in “A Realistic Defence for Emerging Countries.” The foundational article in this series argued that emerging countries should not imitate the posture, force structure or symbols of prestige of the great powers. They should instead build defence capabilities capable of making coercion more difficult, costly, slow and uncertain. Following defence by denial, technological asymmetry and selective autonomy, this fourth choice focuses on predictability and effects-based budgeting as the bridge between strategy and execution. This article examines that choice in greater depth: without a coherent budgetary framework, the others remain doctrinal intentions rather than effective capabilities.

Defence by denial requires distributed systems, mobility, redundancy, persistent intelligence, resilient communications, stockpiles, maintenance and the capacity to reconstitute forces. The value of these elements lies in their integration: sensors, command, logistics and fires must form an architecture that prevents an aggressor from achieving its objectives quickly, cheaply and predictably. As our previous article on technological asymmetry demonstrated, smart defence is not necessarily synonymous with cheap defence. Lower-cost technologies become force multipliers only when supported by software, personnel, industrial replenishment, experimentation and continuous adaptation. In both cases, the budget is a fundamental element of operational design. If funding arrives late, fluctuates without clear criteria or finances isolated and disconnected programmes, the result will be inefficiency and waste.

From Input-Based to Capability-Based Budgeting

Traditional logic begins with institutional requirements, such as personnel, units, platforms, infrastructure projects, fuel and organisational demands. Under this logic, the questions are limited to how much each service received, how much it managed to spend and how much it wants to receive. Effects-based logic starts at the opposite end. It begins by asking what the state needs to prevent, protect, detect, move or sustain in order to guarantee its sovereignty and national defence. Denying maritime access; protecting energy infrastructure; ensuring cyber defence; mobilising rapidly; sustaining prolonged operations; and maintaining situational awareness are effects that cut across bureaucratic boundaries. Each requires different combinations of doctrine, training, personnel, data, sensors, munitions, platforms, logistics and relationships with civilian suppliers.

Moving to capability-based budgeting does not mean abandoning financial and budgetary controls. It means subordinating them to an explicit results chain. Resources fund activities; activities generate readiness; readiness makes capabilities available; and, when employed in a given context, those capabilities produce strategic effects. This chain forces planners to reveal their assumptions about employment, bottlenecks and dependencies. A maritime-denial capability, for example, does not exist simply because a country has acquired an anti-ship system. It depends on detection, identification, command, communications, mobility, munitions, training, maintenance, protection and rules of engagement. Budgeting only for the platform finances the appearance of capability, not its actual availability.

The first instrument for correcting this distortion is to treat the full life cycle of a system or programme as the unit of cost. Acquisition, operation, maintenance, modernisation and decommissioning must be planned as a continuum. The purchase price is only the first instalment of the cost. The relevant figure is the cost of ownership and employment over time. When a budget separates the decision to acquire from the requirement to keep a system operational, it creates nominal capabilities, partially unserviceable inventories and systems with unstable availability. Life-cycle analysis also improves comparisons between solutions. A platform that is cheaper during the tender process, for example, may require a more expensive logistics chain, depend on proprietary software or offer less scope for upgrading.

Predictability as a Strategic Condition

Strategic projects cannot function under erratic funding-release cycles. Technological development, certification, training, serial production and supplier development follow timetables that differ from the political budgetary process. Repeated interruptions increase contract costs, disperse teams and lead companies to abandon production and research. The predictability required for defence, therefore, cannot be an abstract promise of future expenditure. It requires a commitment by the state to translate strategic priorities into multi-year budget allocations, with verifiable targets, clearly assigned responsibilities and transparent criteria for review.

A useful reference is the French Lois de Programmation Militaire. The law covering 2024–2030 sets defence-policy objectives and links them to multi-year financial programming. The French Ministry of the Armed Forces describes the instrument as a transformation project approved by Parliament. The example should not be copied mechanically, nor does it imply that a law eliminates annual choices, reviews or adjustments. Its importance lies in raising the political cost of opportunistic interruptions, making deviations visible and creating a common legal basis for executive, legislature, armed forces and industry. In emerging countries, multi-year provisions protected by law could perform a similar function, provided they are combined with periodic review and accountability.

Ring-fenced strategic funds are a second instrument. Critical projects — such as resilient communications, cyber defence, maritime surveillance, munitions or data integration — can receive funding lines separate from routine expenditure and ordinary maintenance. This separation reduces the risk that a long-term priority will be crowded out by immediate pressures from payroll, facilities or current operations. Yet ring-fencing without governance and transparency can create opaque funding pools and poor decisions that are difficult to reverse. Each fund should therefore have a clearly defined purpose, a public disbursement schedule aligned with its requirements and a defined delivery timetable. Disbursements should be subject to audit and include clear accountability clauses for deliverables and outcomes.

Predictability also requires the capacity to adapt to changes in the strategic environment. A contingency reserve for urgent decisions and the accelerated development of defence capabilities should make it possible to bring deliveries forward, increase stockpiles, contract additional batches or accelerate prototypes when risk indicators require it. This mechanism must be exceptional, traceable and tied to already prioritised capabilities; it must not become a blanket authorisation for unscrutinised emergency procurement. Combining the two approaches is essential: multi-year programming preserves direction and continuity, while the reserve provides flexibility to respond to shocks without dismantling the rest of the portfolio. In this sense, predictability is the capacity for orderly adjustment.

 Govern Effects, Not Quotas

 No reform will be effective if defence budgeting is captured by proportional allocations among the services. Contemporary capabilities are inherently joint. Situational awareness integrates space, air, maritime, land and cyber assets. Protecting energy infrastructure requires surveillance, air defence, digital security, engineering and civil coordination. Rapid mobilisation depends on transport, communications, reserves and joint logistics. A permanent joint planning body should arbitrate priorities according to expected effects and address dependencies, duplication and incompatibilities. It must have the authority to assess the requirements of the whole, not merely harmonise plans already finalised by each organisation.

This governance requires a common language. Each capability should have an integrating lead, a baseline, clearly identified time-bound targets, points of vulnerability and dependency, and options for addressing them. Investment decisions must compare effects: which additional expenditure contributes most to survivability, mobility, situational awareness or the sustainability of operations? The method reduces the influence of projects whose principal justification is tradition, prestige or internal political balance. It does not eliminate distributive conflicts altogether, but forces them to be treated as strategic choices. For countries with limited resources, this transparency is an advantage: it makes explicit what will be postponed and what risk the state accepts by doing so.

Measure Delivery and Sustain Legitimacy

Budget execution is necessary, but it does not measure capability. Spending the full authorised appropriation may coexist with low platform availability, lengthy mobilisation times or intermittent training. Effects-based metrics should track the readiness produced by the budget. These may include: the proportion of systems available; the time required to deploy and employ a force; the length of an operation that can be sustained; the replenishment rate for critical items; recovery time after a cyberattack; and performance in integrated exercises. Specific indicators may be classified, but some form of assessment should remain publicly available to support a more transparent debate over defence resources.

 Poorly designed metrics, however, encourage artificial behaviours. An availability rate may improve because difficult systems have been removed from the denominator, or a delivery time may be shortened at the expense of testing. Indicators should therefore combine quantity, quality, time and sustainability, and should be audited and tested in realistic exercises. Accountability should also explain the causal link: which budgetary decision changed which component of readiness? This discipline protects the budget from two weaknesses: institutional opacity and simplistic demands for full budget execution.

Orders, Innovation and the Industrial Base

Stable orders send a signal to the defence industrial base. When the state presents credible, phased and technically consistent demand, suppliers can invest in machinery, personnel, certification and component supply chains with less uncertainty. Instability, by contrast, raises the cost of capital, fragments production batches and destroys specialist suppliers. In many cases, an erratic or volatile larger budget can completely disrupt a production chain, generating costs far greater than those associated with a smaller but stable order book. Predictability also supports exports by making schedules, scale and after-sales support more reliable. Defence industrial policy thus begins less with the promise to “produce domestically” than with the quality of public demand.

That demand must include technology procurement, innovation contracts and public procurement geared towards prototyping. The aim is not to fund innovation without focus, but to solve defined operational problems: detecting targets in a degraded environment, restoring communications, reducing maintenance time, protecting energy networks or producing munitions at greater speed and volume, for example. Phased contracts can release resources after verifiable demonstrations and allow unsuccessful solutions to be terminated early. At the same time, transition mechanisms must bridge the so-called “valley of death” between prototype and scale. Without a route to testing, certification, acquisition and sustainment, experimentation produces demonstrations, not capabilities.

Connecting with the national applied-research ecosystem is equally important. Universities, technological institutes, software, telecommunications, energy and logistics companies, and start-ups possess expertise that does not fit the traditional prime-contractor model. Mission-oriented calls for proposals, secure test environments, controlled access to data and mixed teams can turn military problems into actionable civilian research agendas. This connection also supports the fifth strategic choice proposed in the foundational article — defence as a national ecosystem — and has a concrete budgetary implication: research funding should be linked to the development of dual-use technologies.

Offsets Targeted at Capability Gaps

Major foreign acquisitions frequently include technological compensation arrangements, or “offsets.” The risk is that these become a collection of industrial opportunities disconnected from strategy: low-value-added domestic assembly, transfer of equipment without the capacity to maintain it or projects selected for the supplier’s convenience. Capability-oriented offsets begin with previously identified capability gaps. If the vulnerability lies in software, sensor integration, repair during crises, munitions, cryptography or critical components, the offset must strengthen precisely those areas. The measure of success is not the announced value of the transfer, but the operational autonomy actually acquired and demonstrated.

This requires negotiating rights of use, access to interfaces, personnel training, documentation, tooling, testing and modernisation capability. It also requires realism: as we have argued in previous articles, selective autonomy does not mean mastering everything. A country does not need to manufacture every component; it needs to control the bottlenecks that could paralyse its ability to use its assets in a crisis. Integrated into life-cycle planning, offsets can reduce critical dependencies. Separated from it, they tend to create new facilities, obligations and sustainment costs that compete with the very capabilities they are meant to support.

A Possible Sequence for Reform

Change need not begin with a comprehensive reform of the budget. It can start with a small number of selected strategic missions and a pilot portfolio. First, the government defines priority effects and reference scenarios. A joint body then maps the necessary capabilities, measures the baseline and identifies dependencies and vulnerabilities. Each portfolio defines life-cycle costs, readiness targets, a multi-year schedule and an integrating lead. Ring-fenced funds are reserved only for projects that pass these filters. Innovation orders and offsets are then directed towards the identified gaps. Finally, an acceleration and emergency reserve should be linked to pre-defined triggers and pre-prepared options.

Sequence matters. Creating funds before defining priority effects or reassessing legacy projects, or approving multi-year provisions without metrics, protects inefficiency; establishing indicators without defining governance produces reports without consequences; and accelerating procurement without mature options turns urgency into improvisation. Reform must align strategy, money, responsibility and learning. Its purpose is not to bureaucratise the decision-making process, but to improve the quality of decisions by making the intended effects, total costs, forgone alternatives and accepted risks clear.

Conclusion: The Budget as an Enabler

Emerging countries will not overcome their fiscal constraints through rhetoric, nor will they build deterrence simply by increasing allocations. The central challenge is to convert limited resources into available, integrated, sustainable, auditable and adaptable capabilities. This requires effects-based budgeting.

The budget, therefore, is not an administrative chapter that follows strategy. It is the temporal element that determines whether sensors will communicate with command systems or whether munitions will be available when needed. It enables personnel to be trained and the defence industry to survive and develop. The relevant questions are therefore which capabilities will be ready, by when and for how long – and what evidence demonstrates that they can meet real threats.

The fourth strategic choice can therefore be formulated in more demanding terms: predictability is not stability for the sake of preserving existing structures, but the continuity required to produce concrete, previously defined effects. A realistic budget does not protect the past from competition for resources. It protects future capability from volatility, without insulating it from evaluation, review or public accountability. For countries that cannot compete in terms of mass, this can be a powerful strategic multiplier. It converts constraints into priorities, priorities into orders, and orders into readiness — the only sequence capable of turning expenditure into credible deterrence.

About the authors

Dr Vinicius de Carvalho is a Reader in Brazilian and Latin American Studies in the Department of War Studies at King’s College London and the Circle U. Vice-Dean for Academic Chairs.

Jackson Schneider is a Senior Fellow at the Initiative for Policy Dialogue (IPD) at Columbia University and a Trustee of the Brazilian Center of International Relations (CEBRI).