Sunday, September 2, 2012

The United States and the Global Arms Market

A recent article in the New York Times by Thom Shanker pointed out that the US had its best year ever for arms sales in 2011. 
"Overseas weapons sales by the United States totaled $66.3 billion last year, or more than three-quarters of the global arms market, valued at $85.3 billion in 2011. Russia was a distant second, with $4.8 billion in deals."

"The American weapons sales total was an "extraordinary increase" over the $21.4 billion in deals for 2010, the study found, and was the largest single-year sales total in the history of United States arms exports. The previous high was in fiscal year 2009, when American weapons sales overseas totaled nearly $31 billion."

This interesting chart was provided for background on sales to developing countries.

A news item such as this will generate a range of emotional and intellectual responses—often within the same individual. One is likely to feel a bit of national pride in the accomplishments of our corporations. There is also the sense of relief that, at least in this instance, international trade will be flowing large amounts of money into the country rather than out. But, deep down, there must be a sense of sadness that the world still feels a need to invest so much in the weapons of war. For some, the response will be anger over the fact that our country is disseminating these weapons and encouraging violence for mere monetary profit.

It was interesting to encounter an article that provided a more nuanced view of selling arms on the global market. Good and evil were not the subjects, but practicality, efficiency, and strategic interests were. This article was provided by Jonathan Caverley and Ethan B. Kapstein in Foreign Affairs under the title: Arms Away: How Washington Squandered Its Monopoly on Weapons Sales.

The authors state that the US was once in the enviable condition of being able to control the international arms market. The fall of the Soviet Union effectively eliminated much of its competition, and the performance of its weaponry in the first Gulf War clearly demonstrated the excellence of its war produce. However, they claim that the Defense Department lost its way after 9/11 and took advantage of its elevated budgets to invest more money in less practical weaponry—items that would prove to be too expensive for most countries.

"But that advantage is fading. In the 1990s, the United States controlled 60 percent of the global weapons market. Today, it is responsible for only about 30 percent. By focusing on cutting-edge technology and developing excessively expensive defense systems, Washington has left the door open for foreign competitors to market practical weapons at an affordable cost. Consequently, Russia has resurged as an arms merchant, and a host of other countries, such as China, Israel, and South Korea, are becoming important suppliers."

The recent surge in activity seems to have been generated by large purchases by the wealthy Middle Eastern states that are uneasy about Iran, Israel, and the related political uncertainties.

The authors suggest several reasons why a strong performance in the global market is important for our own needs.

There is an important economic reason that must be considered. Weapons are expensive; they require enormous upfront costs in their development. These costs can only be recovered by selling large numbers of the weapon. Having buyers from other countries helps amortize the development costs and lowers our own procurement expenses.

There is also a strategic advantage to being an arms supplier. A country whose defense (or offense) depends upon US weaponry is less likely to engage in adventures that the US might disapprove of and respond by limiting access to replacement parts and maintenance services, and even to future weapon systems.

"So the more weapons Washington sells, the more control it has over security decisions made abroad. More specifically, Washington can exploit its market power to advance important foreign policy objectives. In 2005, for example, Washington suspended Israel's access to the F-35 program to force Jerusalem to stop selling unmanned aerial vehicle parts to China. The United States has used similar tactics to prevent Brazil and Spain from selling aircraft to Venezuela."

"Meanwhile, signs of U.S. decline in the arms sphere in Asia abound. Pakistan's largest arms supplier is now China, Singapore is acquiring French naval vessels, and for the first time in its history, the Philippines is looking to non-American aircraft sources. These countries are less interested in the newest high-tech weaponry and more interested in medium-sized arms they can afford. Washington does not sell weapons to China or Russia, of course, and India purchases only a limited quantity. South Korea, a long-standing U.S. ally, has developed a growing domestic arms industry, producing, for example, diesel submarines that it exports to such countries as Indonesia. If Washington wants its "pivot" to Asia to stick, it needs to regain the ground in the arms market that it has lost."

The most intriguing insight provided by the authors was the suggestion that the US would be better off if it actually tailored its weapons development to accommodate perceived demand on the global market. They even suggest that the US should be actively pursuing weapons systems from other countries if they meet our needs.

Their position is premised on the need to escape from the traditional Pentagon procurement cycle in which the military and its suppliers define excessive performance requirements that drive up development costs and produce delays and large budget overruns.

"The White House (with congressional support) must force the Pentagon and its suppliers to do something they have rarely been willing to do in the past: rather than design and produce unnecessarily sophisticated weapons for domestic use, they should develop simpler and more cost-effective ones for a global market, under rigorous civilian oversight."

The issue of increased, and improved, civilian oversight is of critical importance to the authors. The military leaders and their defense industry allies have a distinct knowledge advantage over civilians in evaluating and defining required performance characteristics. This has made it easy for them to generate expensive and bloated weapon procurements.

"Perhaps most important, however, these simpler programs would reduce the industry's and the Pentagon's informational advantages and make civilian oversight more feasible."

"Ultimately, it must be civilian leaders, rather than the armed forces and the defense industry, who take responsibility for deciding which weapons the United States develops, since those choices have grand strategic consequences. The current approach of building a small number of unrivaled superweapons that few states want and that wreck the nation's defense budget is not grand strategy; it is a policy devoid of strategy altogether."

The authors proceed further and argue that to the extent the US dominates the world arms market, opportunities and motivation for others to participate will be limited. That can only be a good thing—right?

"The United States now develops arms so sophisticated that they will supposedly deter opponents from launching their own weapons in anger. Instead, it should focus on preventing most foreign weapons from being built at all."

It would seem, by the authors’ arguments, that a more aggressive and more successful role for the US in the arms market would slow down the arms race and make the world a safer place.

That is certainly an interesting perspective.


JONATHAN CAVERLEY is an Assistant Professor at Northwestern University. ETHAN B. KAPSTEIN is a Professor at the University of Texas at Austin, a Visiting Professor at Georgetown University, and a Senior Fellow at the Center for a New American Security.

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