Defence Spending, Rare Earths and Trunk Truths

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Hello and welcome to a brand new series of More or Less.

Did you miss us?

Did anything happen while we were away?

This week, the Prime Minister Keir Starmer has announced an increase in defence spending with more to come.

Where might the money come from?

And are there hard choices coming?

It's Lent, with many people choosing to give up luxuries for 40 days.

Or is it really 40?

The US has demanded $500 billion of Ukraine's rare earth minerals.

Does that number make sense?

And I'm told that there are 100,000 mussels in an elephant's trunk, or 20,000, or 17,

or 9.

We'll get to grips with that at some stage, I hope.

But first,

last week, Ukrainian President Vladimir Zelensky traveled to the White House to meet the American President Donald Trump.

It was an ill-fated trip, which ended in a bitter shouting match, as Zelensky was repeatedly told to say thank you for the support given to Ukraine by the US.

You got to be more thankful.

Because let me tell you, you don't have the cards.

With us, you have the cards.

But without us, you don't have any cards.

The U.S.

had given Ukraine huge amounts of support, Donald Trump argued.

How much?

And we are thankful.

I said thankful.

You haven't been on the cabinet.

We gave you, through this stupid president, $350 billion.

You warned me of the money.

We gave you military equipment.

If you didn't have our military equipment, this war would have been over in two weeks.

In three days, I heard it.

It was, of course, an extraordinary meeting, which generated many huge headlines.

But we shouldn't overlook the extraordinary statistic mentioned by Donald Trump that the US has given Ukraine $350 billion.

It wasn't the first time he's made that claim recently.

It's become part of a familiar complaint.

As you know, Europe has given $100 billion.

The United States has given $350 billion.

And as you know, we're in for probably $350 billion.

Europe is in for $100 billion.

And that's a big difference.

So we're in for probably three times as much.

So is this $350 billion figure true?

And has the US given many times more than Europe?

We spoke to Taro Nishkawa.

He leads the Ukraine Support Tracker at the Kiel Institute for the World Economy, which is a respected German economic think tank.

And they've been keeping track of the billions of dollars of aid pledged to Ukraine since the start of the war.

Let's start with that $350 billion.

Based on our data, the $350 billion figure mentioned by President Trump does not align with the number we track.

So our data set click away total US aid to Ukraine primarily based on the amount appropriated under the Ukraine Supplemental Appropriation Act since 2022, and the total is significantly lower than the $350 billion President Trump mentioned.

Even when checking figures from official U.S.

sources, the number remains much lower than his claim.

So it's not $350 billion.

The true figure?

Well, when you look at aid that has either already been delivered or has been specified for delivery rather than vaguely promised, the true number is $122 billion.

What about the figure for Europe?

So according to our data set, Europe has contributed over $142 billion

to Ukraine.

$142 billion,

slightly more than the US on $122 billion.

These are all figures for the total value of the aid given to Ukraine.

And those figures can be broken into three categories.

Financial aid, humanitarian aid, and military aid, such as weapons.

When you do break it down, Europe gives substantially more humanitarian and financial aid than the US.

America does give more military aid than Europe, although only just.

But Donald Trump has been making another claim about aid to Ukraine.

But here's worse.

Europe gave it in the form of a loan.

They get their money back.

We gave it in the form of nothing, so I want them to give us something for all of the money that we put up.

So what's the true picture?

Is all of Europe's aid a loan and all of the US's a free gift?

Europe provided more aid in the form of loans compared to the US.

So by the end of 2024, Europe has provided $47 billion in financial aid as loans, while the US provided approximately $20 billion as a loan.

For Europe, that loan component makes up approximately 33% of its total aid, whereas for the US, it represents approximately 16% of its total aid.

So about 33% of Europe's total aid to Ukraine is in the form of loans.

The US has also provided some loans, about 16% of its total aid.

These European loans tend to have very long repayment terms, typically around 35 years, and given that they've loaned it to someone currently fighting a terrible war, there is no guarantee they'll get it back at all.

Our thanks to Taro Nishkawa from the Kiel Institute for the World Economy.

If you want to follow all the twists and turns of the Ukraine story, you might want to listen to Ukrainecast on BBC Sounds.

You're listening to more or less.

It's Lent.

No, I'm not talking about the past participle of Lent.

I mean Lent, Old English for lengthen, and the current Christian period of fasting and reflection before Easter.

But How long is Lent?

If you Google what Lent is, which I totally didn't have to do, your results will say Lent is a 40-day period that begins on Ash Wednesday and finishes on Holy Saturday, aka Easter Eve.

This year that runs from the 5th of March to the 19th of April.

Now, not to be a pedantic penitent, but the 5th of March to the 19th of April does not 40 days of fasting make.

It makes 46.

Back to Google.

This time it says that for some Christians, Lent actually goes from Ash Wednesday, again, this year the 5th of March, until Holy Thursday, which this year is the 17th of April.

But again, that's not 40 days, it's 44 days.

So what is going on?

According to one source, Catholic News, which is the official newspaper of the Archdiocese of Singapore, we shouldn't count Sundays.

According to Catholic News, Sundays are a mini-Easter, which is, I assume, why Cadbury's mini eggs exist.

This all seems a bit odd, and the maths well, they still aren't really mathing.

The true answer is probably that, well, forty days is actually just an arbitrary number.

Here is a list of things that the Bible says lasted 40 days.

The Great Flood, Moses chilling on Mount Sinai, Israelites spying on Canaan, Goliath taunting Saul, Elijah travelling, Jesus fasting in the desert, and the time between Jesus' resurrection and ascension.

It has been suggested by Bible scholars that 40 just means quite a few.

In fact, it's used in Jewish, Christian, Middle Eastern, and Islamic scriptures to mean loads, or perhaps umpteen.

Although, if that's how we translated it, the Bible might sound a bit like an Alan Bennett play.

He fasted for umpteen days and nights, and afterwards was hungry.

So he had a cup of tea and a slice of Battenberg cake.

So if you find yourself relapsing in penance or fasting, just say you're taking one of your six Lent cheat days and we don't really know how many days they meant anyway.

The seismic geopolitical events of the last few weeks have prompted deep unease in Europe.

as politicians worry that the United States might end decades of security backing on the continent.

In response, the Prime Minister, Sir Keir Starmer, announced plans to raise spending on defence from 2.3% of gross domestic product GDP to 2.5% by 2027, paid for by cutting the aid budget.

Perhaps more significant was what he called his ambition to raise it to 3% in the next parliament.

Economists promptly started muttering about the end of the peace dividend.

This might have been news news to people who haven't even heard of the peace dividend, let alone realised that they've been spending it.

To explain, I spoke to Ben Zaranko, an economist at the Institute for Fiscal Studies who never mutters.

The peace dividend is the decline in public spending on defence that occurred over the second half of the 20th century and the early 21st, which allowed governments everywhere to,

by cutting spending on defence, they were able to increase spending on nice things like health and social security and education without having to necessarily raise taxes because the savings from defence in a more peaceful world enabled them to do those things without having to really confront too many tough choices.

Right.

And I can well imagine that defence spending was reduced, say, between 1945 and 1946, but give us the longer perspective.

Well, clearly there was a fall off after the end of the Second World War.

But if we start in the mid-50s, say, when the UK still had lots of international commitments, famously east of Suez, we talk about the rule of the British Empire and so on, Britain was spending about 7.5%

of its GDP on defence each year in 1955.

So that's quite a big chunk.

And at that point, it was more than one-fifth of what government did.

So one pound in every five was going on defence at that point.

So it was quite a warfare-oriented state.

That fell over time to more like like 5% in the mid sixties, to more like 4% in the mid-1980s, to more like 2% in the 2000s and 2010s.

So that's quite a big saving over time.

More than 5% of GDP we no longer had to spend on defence, freed up to spend on other things.

And so then what is the government spending money on instead?

Or is it all just tax cuts?

The government's spending much more on what we think of as the welfare state.

So in particular, the healthcare system is a good example of that, but also just social security and the social safety net more generally.

So one way to think about that is that in the 1950s, spending on defence was about the same as the combined spend on health and social security.

But health plus social security together, the same as defence.

Exactly.

Wow.

By 1980, we spent three times as much on health and social security.

By 1990, four times as much as on defence.

By the 2000s, six times as much.

By 2010, eight times as much, and now nine times as much.

So we've really just ramped up spending on the welfare state, while we've been ramping down spending on the warfare state.

Kirst Armer announced that defence spending will increase from 2.3% to 2.5% of GDP by 2027.

And this would be paid for by reducing the foreign aid budget by the same amount.

But what about the ambition to reach 3% by the next parliament?

How might that be paid for?

Barring any unexpected windfalls, it would be tax rises or spending cuts elsewhere.

Let's start by analysing the potential cuts.

So let's assume that defence spending does increase from 2.3% of GDP to 3% over the next few years.

Let's also assume that healthcare spending isn't cut because it's never cut.

And let's assume that taxes don't rise any further because they're already quite high and they've been raised quite a bit.

Given those constraints, what else is going to be cut?

What would that look like?

Well, the NHS is the single biggest public service in terms of its budget, and defence is the third biggest.

So if you're increasing those two things at once, well within quite a tight overall spending envelope or spending pot, you are going to be making cuts elsewhere.

Precisely how big will depend what you give the NHS, it'll depend on what form the defence increase takes and so on.

But as a sort of back of the envelope, before coming on, I had a look at this.

And I think you'd you'd be looking at cutting everything else by around 2% per year in real terms for the rest of the parliaments over the next four years.

Ballpark 8%

cut to those budgets.

That includes things like the police, it includes things like local government, it includes prisons, it includes further education, it includes HMRC.

All those things would be on the chopping block.

But say the government wanted to avoid any spending cuts and decided to pay for extra defence by raising taxes.

What would that look like?

Just to give a sense of scale, if you put two pence on all rates of income tax, that would get you about 20 billion.

So that would pay for this extra defence spending Kier Starmer says he wants.

Or if you put 3p on the main rates of national insurance contributions, that would also do the job.

That would raise about 17 billion.

And bearing in mind that Jeremy Hunt knocked 4p off the main rate of national insurance in his last year as chancellor.

So if we undid three quarters of Jeremy Hunt, we could probably pay for this extra defence spending.

That's a delicious image.

Well, we'll maybe leave that with listeners.

Undoing three quarters of Jeremy Hunt, I'm not even sure what that means.

And what if even 3% isn't enough?

What if we need to go back to 4%, which is by no means historically unprecedented?

No, 4% of GDP would take us back to what we had under Margaret Thatcher.

That would just require, I think, a re-examination of our promises on taxes and what we expect to pay in terms of tax to the state, but also our expectations of what the state can provide for us and whether some of the things the state currently does, we might have to stop doing in order to prioritize defense, if that's really what matters and what is most important for the country.

Our thanks to Ben Zaranko from the Institute for Fiscal Studies.

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Sometimes a question comes along.

A question so important that it could change the fabric of human understanding.

One such question came into our inbox from long-term loyal listener, Beatrice Dixon.

Watching a documentary about elephants, I was surprised to be informed that an elephant's trunk has over 100,000 muscles.

Funny, previously I'd been told 40,000, then over 20,000.

So I looked at a dedicated elephant website which said this is all nonsense and an elephant has just 17 muscles in its trunk.

We love numbers.

Please can you find find the definitive answer?

Hmm.

Well, it's quite a jump from 17 to 100,000.

So what is going on?

With me is our translator of trunk terminology, Lizzie McNeill.

Hello, Lizzie.

Hey, Tim.

So obviously, I went straight down to the zoo to figure this out for myself, but now the zoos has a band.

Wait, what?

Anyway, then I rang Andrew Schultz, a postdoctoral researcher at the Max Planck Institute for Intelligent Systems in Stuttgart, Germany.

He's been involved in studying elephants' trunks trunks to see how we can replicate their range of movements in the world of robotics.

But we started off with a simpler question.

What is a trunk?

So it's actually, it's an extended upper lip of an elephant.

And unlike us British, these upper lips are actually very much not stiff.

And it's composed primarily of muscles.

This muscle can be thought of as almost like water.

And so they're able to move this structure in a very, very similar way to the way we understand fluids.

These structures primarily can do four different things using that fluidic type of movement.

So they can extend, they can shorten, they can twist, and they can wrap.

For these movements, you need a lot of flexibility.

Primarily what we're thinking of with muscles is we have a bone, and then we have a muscle tendon unit that is connected to that bone.

Now, the muscles in an elephant's trunk are not connected to bone.

Instead, they're made up of muscles and skin, and this makes them them way more flexible.

Well, that's all very interesting, but what about the numbers?

And why is there such a huge disparity?

How do we get from 17 to 100,000?

Well, these numbers are talking about different things.

So the largest number is actually referring to muscle fascicles, which are bundles of muscle fiber which then combine to make muscles.

It's estimated that they have around

90,000 muscle fascicles and then they have around 40,000 muscles that these these fascicles are organized into.

Think of it as kind of like a cheese string.

So the muscle or cheese stick is made up of thousands of muscle fibers or cheese fibers which then group together to make the muscle and or stick.

Lizzie, doesn't it make more sense to think about a rope made up of smaller strands all braided together?

Think of it kind of like a cheese string.

Okay,

so elephants' trunks have tens of thousands of small muscles in them and those in turn are made up of even more muscle fibers.

Yeah.

So, where does the number 17 come from?

Ah, well, so each of these small muscles then cluster together to form big groups of muscles like obliques, transversal muscles, etc.

These are large masses of muscle that are made up of lots of tiny muscles.

So, sort of like a bag of popcorn.

You have one bag of popcorn, but the bag contains lots of little pieces of corn.

I am getting the impression you're hungry.

Talking about that an elephant has nine to 17 muscles would be incorrect because you have these 90,000 fascicles that are likely making up somewhere on the magnitude of 40,000 muscles that are broken up into 9 to 17 different muscle groups.

So to answer your question, Beatrice, Elephants have around 9 to 17 muscle groups that are comprised of around 40,000 individual muscles, which are then made up of around 90,000 strands of muscle fiber.

Now, the reason these numbers matter to Andrew is that it will help him create robots that can move the same way an elephant's trunk can.

They're controlling of these 90,000 fascicles, right?

And can you simplify it down?

to a point where you're able to successfully control like a robotic manipulator that could help with something like disaster recovery.

So getting through very, very tight spaces while having a really, really rigid structure.

Oh, wow.

I was being sarcastic in my introduction.

This really could change the fabric of human understanding, at least in how we approach robotics.

You were joking.

Well, that's irrelevant now.

Oh, God.

Thank you, Lizzie, and thanks to Andrew Schultz.

As part of the fast-moving argument over US military support to Ukraine, the US demanded $500 billion worth of access to what was variously reported as Ukraine's rare earths or rare metals or rare minerals.

That might all sound like the same thing, but in fact, the rare earths are a very specific group of elements.

Lutetium, Prometheum, Samarium, and Terbium, yttrium, ytterbium, anthulium, and erbium, europium, ganolinium, dysprosium, neodymium, cerium, scandium, holmium, lanthanum, then proseodymium, la la la la la la la la la la la la la

That was geeky songstress Helen Arney listing all 17 rare earths, with apologies to the great Tom Lehrer.

So, those are the 17 rare earths, and they're used a lot within traditional industries such as glass making and ceramics, or for making catalysts.

They're also used to make very powerful magnets, which go into electric vehicles and into offshore wind turbines.

But what about the $500 billion?

I spoke to Ellie Sakhlat-Vala, head of non-ferrous metal pricing at Argus Media, a global commodity price reporting agency.

I started by asking her, are rare earths rare?

They are famously not rare.

Well, the rare earths, those 17 elements that we refer to, they are not technically rare.

They are quite abundant in the Earth's crust.

I love the fact that you say they're famously not rare.

I mean,

for Argus, maybe it's famous that they're not rare.

I'm not sure most of us realize they're not rare.

Okay, so go on.

That's fair.

I'd say within the metals world, it's a bit of an in-joke that rare earths are not really rare.

So you can find rare earth deposits in various parts of the world across various different continents.

They become rare when we actually think about access to them.

It's one thing to have any type of mineral in the ground.

It's quite another to be able to extract it, utilize it, process it, etc.

So rare earths, those 17 elements, are amongst the hardest minerals to extract and process and plug into a meaningful supply chain.

You've got huge variation in terms of the mineralogy.

You've often got radioactive elements sitting in there in the mix like uranium and thorium.

Very difficult to separate rare earth elements from the other materials that surround them in these deposits.

So it's a very difficult set of minerals to extract, therefore very difficult actually to develop new supply chains.

Hence we're still hugely reliant on China to access supply.

And because China now has such dominance over both supply and consumption, that also means China has huge influence over rare earth prices.

So if you're a project developer outside China, you run the risk of spending well over a billion dollars, probably more than a decade, just to get a new rare earth project up and running.

And then you probably have very little control over the price at which you can sell your product.

So that becomes a huge red flag to investors and has definitely contributed to the lack of progress diversifying that supply chain.

So it does make sense that the US would be concerned to secure access to rare earths from somewhere other than China?

Yes, absolutely.

These are undoubtedly critical materials for all sorts of industries, as we've mentioned.

And the US supply chain for them is extremely vulnerable, partly because of the geopolitical angles here, tensions between the US and China, but also just in simple logistical terms, to really only have one major source for so many critical materials, as we saw, for example, during COVID, it carries enormous logistical risk.

So the US is absolutely right to zoom in on rare earths as a vulnerable area and try to take steps to strengthen the supply options.

So I wanted to get to this claim that the US wanted $500 billion worth of Ukraine's rare earths, or at least they did a few days ago.

I mean, it's a fast-moving story, let's just say it's a fast-moving story, but the rare earths themselves are not fast-moving.

So this figure that there's $500 billion worth of rare earths in Ukraine, or that the US could get a $500 billion share of rare earths in Ukraine, does that number make any sense?

From my perspective, not very much.

I mean, let's start with the true rare earths that are potentially in Ukraine.

There has been some mapping in the past, which suggests Ukraine may have some of those 17 elements that I mention.

However, we would need any of that mapping to be done fresh with the most up-to-date standards.

We need to understand the exact nature of any deposits, how deep are the ores, what's the mineralogy like.

We need all of that sort of detail in order to put any sort of valuation on what it might be worth.

You talked about this old mapping.

How old are we talking about?

Well, Well, it depends on who you speak to, but I've spoken to people who believe some of that mapping dates back to the Soviet era.

1980s, 1970s.

Potentially something like this.

I mean, it's certainly not being done with the up-to-date processes and systems that we would expect nowadays.

So we need a lot more detail on what exactly is sitting within those deposits.

Only then, I think, could you draw some sensible valuations on what it could be worth once you've put in the substantial amounts of money to pull it out.

And then if we think about the wider context in terms of, you know, what is the value, for example, of the global rare earths market right now, well, it's very difficult to put true accurate valuations on these things.

But in 2024, if you look at the different estimates that are out there, I mean, the highest estimates that I've seen are something like maybe $12.4 billion global value of the rare earths market last year.

So to imagine we're going to get $500 billion worth out of Ukraine Ukraine all of a sudden, to me, that is just pie in the sky.

Right, that would be the value of the entire global market for decades.

Yes, it would be an extraordinary amount if we're talking about true rare earth elements.

Might there be other elements that are not, strictly speaking, rare earths, but are nevertheless valuable mineral resources, and maybe they could be responsible for the balance of the $500 billion?

Yes, I think that is most likely what's happening.

I think the term rare earths is being used in quite a loose sense to really refer to this wide array of minerals that we know that Ukraine has.

Thanks to Elie Sakhladvala of Argus Media.

And of course, thanks also to Tom Lehrer, a proper mathematician, I'll have you know, and to Helen Arne.

Her geeky songs are available at helenarney.bandcamp.com.

That is all we have time for this week, but please keep your questions and comments coming in to more or less at bbc.co.uk.

We'll be back again next week and until then, goodbye.

More or less was presented by me, Tim Harford.

The producer was Charlotte MacDonald with Nathan Gower, Josh McMinn and Lizzie McNeil.

The production coordinator was Brenda Brown.

The programme was recorded and mixed by James Beard and our editor is Richard Varden.

This is Danny Robbins here, host of Uncanny with some exciting news to share.

The Uncanniverse is getting even bigger with a brand new Uncanny TV series on BBC2 and iPlayer, featuring some frankly terrifying cases that will make your hair stand on end.

But then we will be taking an even deeper dive into these stories with Uncanny Postmortem, a new visualized podcast straight afterwards on BBC2, iPlayer, and right here as audio on BBC Sounds.

Expect spine-tingling new twists and some chilling revelations.

That is uncanny post-mortem.

Join me if you dare.

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