Saturday, September 06, 2008

US Outsells Other Arms Suppliers

The United States in 2006 continued to lead the world in conventional arms sales agreements and deliveries. The latest installment of an annual report to Congress on global arms sales also found that Washington reclaimed the top spot in arms deals with developing countries. Total global arms sales, however, declined from the previous year.

Released Oct. 1, the Congressional Research Service (CRS) report, “Conventional Arms Transfers to Developing Nations, 1999-2006,” revealed that the U.S. government agreed last year to $16.9 billion in arms sales and delivered slightly more than $14 billion worth of weapons abroad. Arms deals can take years to implement, so annual agreement and delivery totals rarely match.

The U.S. 2006 tallies surpassed by a few billion dollars those compiled in 2005 and marked the largest yearly sums for the United States since 2000. That year, the United States contracted almost $21 billion in transactions and carried out almost $15.2 billion in transfers. (Past and cumulative figures are adjusted to 2006 dollars to account for inflation.)

Last year’s U.S. totals significantly exceeded the sums accumulated by other leading arms suppliers. Russia ranked second and the United Kingdom third in the two categories of global arms agreements and deliveries. Moscow posted $8.7 billion in sales and $5.8 billion in exports, while London sealed $3.1 billion in agreements and shipped $3.3 billion in weapons.

The only other country to pass the $1 billion level both in agreements and deliveries was Germany, which signed $1.9 billion worth of deals, all but $100 million of which involved submarine deals with Brazil and Israel. Berlin also transferred $1 billion in arms. As with the top three suppliers, Germany’s 2006 activities marked increases from the preceding year.

China and France, however, experienced downturns, Paris most precipitously. French arms sales dropped from $8.3 billion to $500 million, and deliveries declined from almost $2.3 billion to $400 million. Meanwhile, China, which sells less advanced and cheaper weaponry than Russia and Western countries, agreed to $800 million in sales last year in contrast to $2.6 billion in 2005. Beijing’s delivery total also shrank from $936 million to $700 million.

All told, global arms sales agreements from 2005 to 2006 dipped $6 billion to $40.3 billion. That total, however, is slightly higher than the annual average of the eight-year period covered by the report, at $39.6 billion.

CRS analyst Richard Grimmett, who has authored the report since 1982, attributed the decrease in agreements reached last year to the fact that some key arms buyers slowed procurement in order to integrate previously bought weapons into their militaries. In addition, Grimmett claims rising oil prices have led some states to spend less on weapons, although he indicates the trend also has filled the pockets of some oil-rich arms purchasers, such as Venezuela and Saudi Arabia.

Those countries and others in the developing world, according to Grimmett, continue to be a “primary focus” of arms suppliers, accounting for $28.8 billion, or 71 percent, of all agreements last year. The report classifies developing countries as all states except Australia, Canada, Japan, New Zealand, Russia, the United States, and European countries.

Washington and Moscow used arms transfers during the Cold War as one means to win allies in what both capitals saw as a global ideological and military struggle. Now, Grimmett contends, arms sales “may be based as much on economic considerations as those of foreign or national security policy.”

In the current era, the United States and Russia remain the dominant suppliers to developing countries, selling them $10.3 billion and $8.1 billion worth of arms in 2006, respectively. But other suppliers, such as China, Israel, and Sweden, are seeking inroads. These emerging dealers tend to offer older weapon systems, niche equipment, or small arms and light weapons rather than the big-ticket items such as combat aircraft and warships.

Still, experts say the availability of inexpensive weaponry, such as those based on the Soviet-origin AK-47 assault rifle, has contributed to countless human casualties in global conflicts. A 2006 deal by Russia to help Venezuela build a factory to produce a derivative of the AK-47, the AK-103, has raised U.S. concerns about the potential spread of these weapons. More generally, the United States has warned that recent Venezuelan arms purchases, totaling $3.1 billion in 2006, might spur arms buildups elsewhere in Latin America.

The United States regularly dismisses similar complaints lodged against its arms transactions. For example, India had protested that U.S. sales of combat aircraft to Pakistan could jeopardize Indian security, but the United States still signed a September 2006 deal to provide Pakistan up to 36 new F-16C/D fighters. (See ACT, November 2006. )

Overall, Pakistan ranked as the top developing-world arms buyer in 2006 with $5.1 billion in new deals. India, traditionally a purchaser of Russian weapons but now being heavily courted by the United States, placed a distant second with agreements valued at $3.5 billion.

Russia in recent years has sought to branch out from its two main clients, China and India, through various sales strategies, such as licensed production arrangements and debt relief. Moscow used the latter method last year with Algeria to conclude an estimated $7.5 billion arms package, which included an assortment of 64 combat aircraft. Grimmett reports that the actual revenue to be recouped by Moscow will be much less than the cost of the arms because “about $4.7 billion…is being paid through forgiveness of Algerian debt to Russia.”

Russian efforts to expand its customer base has yielded “mixed results,” according to Grimmett, who also assesses that Moscow’s lagging investment in new weapons research and development could hurt its future sales. Still, he predicts that China and India “should provide” Russia with “sustained business throughout this decade.”

Of all the major arms sellers, the United States has cultivated the largest client base and, in Grimmett’s analysis, “appears likely to hold its position as the principal supplier to key developing world nations, especially those able to afford major new weapons.” Even if those clients do not procure fresh arms, they regularly seek upgrades, replacement parts, and service support for previously acquired weapons, helping ensure steady U.S. business and preeminence in the global arms market.

Source - ArmsControl


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