The real reason for maintaining armies is the same reason why some men buy expensive sports cars... overcompensating.
Seriously, think of armies as insurance. Even if it's small, amateurish, and under-funded, it's likely to give potential bullies a little pause. (Of course, a big country like Iraq can sweep up a little country like Kuwait in no time flat, as we all know).
Part of the answer is social/ economic/ political inertia. The military is part of the playground for the elite and privileged. (I use the word playground as in "fork over your lunch money, weakling.") Who wants to get rid of their army just to balance the budget? I sure haven´t seen "fire soldier-boys" on any IMF or World Bank wish lists
A lot of countries, fragile democracies, say, find armies to be an effective tool to use on internal "problems." In a pinch, a loyal military can keep your nation away from chaos. On the other hand, they work equally well to keep dictators in power.
<span>Many countries do get a lot more mileage out of their armies than Iceland or Costa Rica could possibly get. Obviously, a lot of African countries find them pretty handy. </span> Also, keep this quote in mind <span>"It takes two countries to maintain peace and only one to make war"</span>
