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The Boom in the Death Business

Arms Uncontrolled Research Institute by

prepared for the Stockholm International Peace Frank Barnaby, by Ronald Huisken
Harvard University Press, 232 pp., $12.50

The Arms Trade with the Third World

by the Stockholm International Peace Research Institute
Holmes and Meier (revised and abridged edition), 362 pp., $15.00

World Armaments and Disarmament: SIPRI Yearbook, 1975

MIT Press, 618 pp., $25.00

The newest increase in the arms trade is said to have amazed even the Department of Defense. Announcing recently that US foreign military sales were worth $9.5 billion in the 1975 fiscal year, the Defense Department described the pleasant news as “unexpected.” In 1973, these US sales were worth some $3.9 billion. The entire value of the world’s arms trade was $9.2 billion in 1973, according to the US Arms Control and Disarmament Agency, and only $5.8 billion in 1970. “Foreign military sales” (from aircraft and missiles to howitzers and military “support services”) are now worth almost a tenth of the value of all US exports, overshadowing the other stars of American foreign trade. In measuring sales for 1975, the Defense Department counted orders made during the year, rather than deliveries of weapons.1 But $9.5 billion is twice the value of all US wheat exports, and three times the value of exports of computers.

The most lucrative corner of this boom market is, notoriously, the Persian Gulf. Three countries, Iran, Kuwait, and Saudi Arabia, bought close to half of all US military exports. In the fastest arms race in history, these countries spent more money last year to buy American armaments alone than they paid for all their arms imports in the twenty years before 1973. Of course, a billion dollars buys a lot less bang than in the 1950s and 1960s, what with inflation and hard times. But four billion dollars a year is still worth a fighter squadron or so; Iran has ordered several squadrons of the supersonic F-14A fighter, only two years in service with the US Air Force. Meanwhile, the United States’s competitors in the arms trade, France and the Soviet Union, are also active, having sold some billion and a half dollars’ worth of arms apiece, last year, to the Persian Gulf countries.2

The rearmament boom extends beyond the Middle East. It is not simply a spree by the prosperous oil exporting countries, not just another Iranian extravaganza. All continents are involved, and many different developing countries. Of the US sales that the Defense Department lists for 1975, some two thirds are to developing countries, including the oil exporting countries. Latin America, for example—until recently relatively parsimonious and “unsophisticated” in its local arms race—has increased its imports of US arms particularly fast in the last three years.

The arms bonanza may be the sign of a lasting change in the world arms economy. It may mark the beginning of a long expansion in US arms exports to developing countries. Such an expansion would be perhaps the most dangerous of all the recent changes in the world economy. It would certainly be the change which is least amenable to political and public control. Few seem to realize that the arms sold by US and European companies are often resold after they arrive in the country that buys them. Iran exports US fighter planes to Ethiopia and to Jordan with US government approval. Jordan sells its British “Tigercat” air defense system to a Liechtenstein corporation, for shipment to South Africa, while seeking military aid from the US.

For the United States, there have for many years been political reasons to export weapons, and these reasons are invoked to justify the present boom. Iran, it is suggested, will be tied ever more intimately to the United States by its dependence on US arms and expertise, and above all by its need to buy spare parts for American planes.

The political rationale may now be reinforced by economic pressures. Military exports are increasingly important to the US economy. One reason has to do with the balance of payments, since arms exports improve the US trade balance in general, and the balance with oil exporting countries in particular. A second reason is industrial: arms exports to places other than Southeast Asia may become more and more useful for the US aerospace industry now that arms shipments to Indochina are finished.

The economic pressure on US companies to export has in fact been illuminated in exhaustive detail in recent congressional investigations of corporate payoffs and of the use of foreign sales agents. The most comprehensive was a study of the Northrop corporation, one of the largest exporters of military aircraft, and a company that concentrates with particular effort on developing countries. Northrop was also, of course, one of the corporations that made illegal contributions to President Nixon’s re-election campaign. The hundreds of pages of Northrop documents made public by the multinationals subcommittee of the Senate Foreign Relations Committee provide an unprecedented view of the economic reasons that lead aerospace companies to export; as well as of the small incidents—the briefings, the retired generals wandering around Switzerland with $600,000 in currency—that added up to export promotion for one particular company.

The arms trade is carried on in secret: since the first armaments conference held by the League of Nations in Geneva in 1925, reformers have believed that if more were known about arms exports the arms trade could be controlled. One of the few reliable sources of information about the recent arms trade, and about world military expenditure, is the Stockholm International Peace Research Institute (SIPRI). The Institute was set up in 1966 by the Swedish government (to commemorate 150 years of uninterrupted peace, the SIPRI publications explain). It has published studies of the arms trade, nuclear proliferation, chemical and biological warfare. Each year it produces a yearbook and a “register” of arms sales. To an important extent, SIPRI provides the kind of information that the idealists of 1925 called for, and that the League of Nations itself published in its Armaments Yearbooks between 1924 and 1939. SIPRI studies hundreds of newspapers and thousands of government press releases, analyzes Jane’s Fighting Ships, reconstructs the hidden statistics of the Soviet arms industry.

The Arms Trade with the Third World, published by SIPRI in 1971, is of particular interest now. It provides an important history of the commerce in arms; it also explains the economic forces which encourage the present multiplication of the arms trade. Barnaby and Huisken’s Arms Uncontrolled uses this arms trade study in a wider examination of the world arms race.

(SIPRI has this year published the 1971 study in an abridged version, which is unfortunately much less valuable than the original: it leaves out most of the history of the arms trade with Iran and Saudi Arabia, for example, as well as a considerable part of the discussion of the “economic pressures to export,” and it dispenses with the more anecdotal sections of the study—for example, with Paul Warnke explaining as assistant secretary of defense that “We’re selling security not soap chips.”3

The study distinguishes two main patterns of arms exporting among the developed countries which account for almost all the world commerce in arms. Some countries export arms for “hegemonic” reasons, i.e., to extend political influence, and others for reasons that are more or less “industrial.” Two countries, the United States and the Soviet Union, export arms for largely political purposes. The Soviet Union, as the SIPRI studies show, in the 1960s and early 1970s exported considerably more major weapons to developing countries than did the United States, and was by far the leading supplier of arms to the Middle East, mainly to Egypt, Syria, and Iraq.

The other exporting countries, and above all France and Britain, sell arms in large part for economic reasons having to do with the needs of their own arms industries. They could not maintain an advanced defense industry without exporting as much as a fourth of the armaments they produce. They must export in order to pay for military research and development, and to achieve the benefits of long production runs.

Both France and Britain of course also have political reasons for sustaining a domestic defense industry. But the pressure to export has its own momentum. The commerce in arms is self-reinforcing, as the SIPRI studies show. French companies design aircraft specifically for the “developing world” market; the French military is directed to request for its own use those weapons which might profitably be exported. By far the most important pressure on the French is to maintain full employment. Export orders keep the companies and workers in the aerospace industry occupied when there are lulls in work on domestic orders. The benefits of exporting become an urgent issue in domestic politics.

The case of France, which recently replaced Britain as the third largest exporter of arms, after the US and the Soviet Union, illustrates clearly the export momentum. The French began to expand their arms trade most diligently in the 1950s after they retreated from Indochina and from the responsibilities of procuring weapons for colonial wars. The value of their exports quadrupled between the mid-1960s and 1972, and doubled again in the recent boom: export orders are now worth almost $5 billion. Their defense industry employs 270,000 people, or more than almost any other French industry: its fate is critical to the national economy. The US now sells planes to Iran two years after they are first flown, but in France outraged military officers have recently accused the government of selling advanced tank technology in the Middle East even before it is used in the service of the French Republic.

In the recent spring selling season, the French government welcomed some seventy national delegations to its Le Bourget airshow. Its indigenous specialty is in arms for developing countries. (France competed unsuccessfully with the US, earlier this year, to supply advanced fighters to Belgium and other small NATO countries; it now tries harder in the developing world, even to the extent of revising its long policy of supplying arms to South Africa.) Customers from Africa to Israel inspected the French offerings. After the airshow, most of the delegations repaired to another government-sponsored pageant, at the Satory exposition of land-based armaments. There they considered more than 600 different weapons and watched promotional maneuvers: the shows were reported to include demonstrations of a training device called an “atomic explosion simulator” to be used in war games, where its 300-foot mushroom cloud of smoke mimics the effect of detonating a tactical nuclear weapon.

The recent expansion in US arms sales suggests peculiarly important questions about the economics of the arms trade. Are US arms exports likely to continue to increase? To what extent do the inherent pressures to export that determine French policy also apply to the US defense industry? Of course, the US defense budget of $90 billion or more per year is still uniquely suited to support an indigenous industry. But the US industry now exports considerably more than the 5 percent of its total production that it sold abroad in the 1960s, and the foreign exchange benefits to the US economy are correspondingly greater.

The US may, in the SIPRI researchers’ terms, expect that “industrial” reasons to export will be more intense. For one thing, increased exports allow aerospace companies to expand without inflationary and often unpopular increases in domestic military buying. Iran and Saudi Arabia now pay the research and development costs for certain US weapons. Just as the recent expansion in US food exports allowed the Nixon Administration to abolish many domestic farm support programs, so arms exports remove some of the pressure from the domestic military budget.

  1. 1

    These measurements are quite loose. Thus, the Defense Department has until recently counted the value of foreign military sales orders in the 1974 fiscal year as $8.263 billion. But in a statement described as “final,” prepared on August 26, 1975, the Defense Security Assistance Agency Comptroller notes that the value of these sales orders was $10.809 billion. Most of the $2.5 billion “increase” is accounted for by an increase in the value of sales to Saudi Arabia from $588 million in the original count to $2.539 billion in the final version.

  2. 2

    See The Defense Monitor, May 1975, Center for Defense Information, Washington, DC.

  3. 3

    The original study, distributed in the United States by Humanities Press, is still in print.

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