Donald Rumsfeld, the defense secretary, defended the the 11% increase in Pentagon expenditure yesterday, telling the Senate armed services committee that it was necessary to compensate for "a decade of overuse and underfunding", and to prepare for future wars beyond the current anti-terrorist campaign.

"When the cold war ended, a defense drawdown [cutback] took place that went too far... overshot the mark," the defense secretary said. "Now, through the prism of September 11, we can see that our challenge is not simply to fix the underfunding of the past."

However, a breakdown of the budget figures suggests that relatively little of the $379bn (£266bn) planned spending for 2003 is directly relevant to the requirements of combating shadowy terrorist groups such as al-Qaida.

A far greater proportion of the defense budget will go towards "big ticket" weapon systems designed for the large-scale conventional battles envisaged during the cold war. They had been facing the axe under the "military transformation" initially planned by George Bush and Mr Rumsfeld.

The sharp rise in defense spending proposed in President Bush's budget marks a defeat for reformers who had planned to transform the US military into a lighter, more mobile and more efficient force. Among the programs to have survived widely expected cuts are three separate tactical warplanes with overlapping functions demanded by the armed forces: the navy's super hornet, the air force's F- 22 raptor and the joint strike fighter (JSF) intended for all the services.

On the campaign trail, Mr Bush said the country could not afford all three aircraft, but the budget allocates $12bn to be spent on them in 2003. When the JSF enters full production, it will cost twice as much as the current workhorse, the F-16, with a total bill of $200bn.

Another controversial weapon given a reprieve in Monday's budget is the crusader artillery system, a hefty mobile gun which critics said might have performed well in big land battles against Soviet tanks, but which is too heavy to be rapidly deployed in far-flung corners of the globe.

Paul Krugman, a liberal economist, argued in yesterday's New York Times: "The military build-up seems to have little to do with the actual threat, unless you think that al-Qaida's next move will be a frontal assault by several heavy armored divisions."

Loren Thompson, a senior analyst at the Lexington Institute, an independent defense thinktank, said the budget reflected "the staying power of a deeply entrenched bureaucracy in terms of protecting programs it values".

Mr Rumsfeld and his chief strategic adviser, Andrew Marshall, had hoped to accelerate the pace of military reform, but even before September 11 they found themselves blocked by the heads of the armed services who refused to scrap established projects to make money available for a new generation of weapons such as the national missile defense (NMD) system, the B-2 stealth bomber and unmanned aircraft.

The terrorist attacks on New York and Washington - combined with Mr Bush's declaration that the US was threatened by an "axis of evil" consisting of Iraq, Iran and North Korea - has created a political atmosphere in which both sides in the debate can pursue their strategies at the same time.

"Instead of wiping away previous priorities, Rumsfeld has just added his projects on top of them," Mr Thompson said.

As well as earmarking funds for the crusader, the three tactical aircraft and a host of other established projects, the budget sets aside $7.8bn for NMD and $630m for more global hawk unmanned aircraft.

According to Steven Kosiak, an analyst at the Center for Strategic and Budgetary Assessments, the total 2003 defense budget will be 11% higher than the average military expenditure during the cold war. By 2007, under the Bush plan, defense spending will be 20% higher than average cold war levels.

"Some advocates of transformation are not going to be happy," Mr Kosiak said. "It's partly because there is so much money available the administration does not have to make choices."

In the current political atmosphere, Congress is unlikely to question the defense budget and may even insist on boosting it further. Among the big winners will be the defense contractors such as Lockheed Martin, Boeing and United Defense, which makes the crusader.

The majority stake in United Defense is owned by the Carlyle Group, an investment company which employs George Bush, the president's father, and the former British prime minister John Major as lobbyists to open doors in the US and abroad. The elder Mr Bush has converted speaking fees into Carlyle stock, and stands to benefit considerably from the crusader's reprieve.

Another significant consequence of the jump in US defense spending, most defense experts agree, is the further weakening of NATO.

In Kosovo and Afghanistan, America's NATO. allies had little to contribute to the hi-tech air war that was the basis of US strategy. The Bush defense plan is likely to widen the technological gap, reinforcing the administration's ideological preference for unilateralism.

What the money is being spent on

Missile defense
$7.8bn

Aircraft
Navy F/A-18E/F super hornet $3.3bn
Air force F-22 raptor $5.2 bn
F-35 joint strike fighter $3.5bn
Global hawk unmanned aircraft $630m

Artillery
Crusader artillery system $475m

© Guardian Newspapers Limited 2002

###