President Obama’s “pivot to Asia” appears to have come at just the right moment. A new report from the International Institute for Strategic Studies (IISS) claims that defense spending in Asia this year is set to overtake that of Europe for the first time in centuries.The report, which Financial Times calls “a blunt assessment of the shift in the global redistribution of military power across the world”, argues that a combination of strong economic growth and strategic instability is fueling Asia’s military spending boost. Conversely, as the financial crisis took hold in Europe, 16 members of NATO were forced to reduce their defense budgets between 2008 and 2010.In Asia, much of the increase is driven by China, which upped its share of regional defense expenditure to 30 percent. But the IISS report also points out that Australia, India, Indonesia, Japan, Malaysia, Singapore, South Korea, Thailand and Vietnam are upgrading their air and naval capabilities as well. It may be too early to describe this as an arms race, but there is little doubt the modernization of the Chinese military is making its neighbors rather jittery.Closer to home, the U.S. remains by far the world’s biggest spender, with a defense budget that exceeds the next ten biggest spenders combined. But American strategists should take note. Europe vividly demonstrates the truth that a strong and sustainable fiscal situation is a crucial element of military superiority.As the Great Game heats up in Asia, this truth is as important as ever.