Pentagon Reports Higher Proposed Weapons Deals

DESPITE THE ASIAN economic crisis, falling oil prices and decisions by states in Central Europe and Latin America to defer weapons purchases, the Pentagon notified Congress of proposed arms sales in 1998 worth more than $12.1 billion, almost $1.5 billion more than those proposed in 1997. Seventeen countries, including five in the Middle East, requested weapons and services from the Pentagon's Foreign Military Sales (FMS) program. U.S. arms exports consist of FMS as well as direct commercial sales.

Congress, which under the 1976 Arms Export Control Act can block proposed arms sales, opted not to bar any of the deals. All proposed weapons exports of $14 million or greater (whether FMS or direct commercial sales) must be notified to Congress, although not all result in actual deliveries. Congress has never stopped a sale after formal notification.

With the exception of Kuwait and Norway, all the potential arms buyers sought missiles, rockets or torpedoes, which accounted for approximately $4 billion of the possible deals. The United Arab Emirates (UAE) alone requested $2 billion in bombs and missiles, including the Advanced Medium Range Air-to-Air Missile (AMRAAM). The UAE seeks AMRAAMs to arm the 80 F-16C/D fighters whose purchase is being negotiated as a $5 billion direct commercial sale with Lockheed Martin. A U.S. government official said that the fighter deal is still "up in the air" pending resolution of issues between the two governments.

Prior to the proposed UAE deal, the only Middle East country to acquire the beyond-visual-range AMRAAM was Israel. The UAE won U.S. government release of the missile by conditioning the selection of a U.S. fighter on availability of the AMRAAM. Now other states in the region, led by Bahrain, will likely seek and receive these advanced missiles, greatly improving their air-to-air combat capabilities.

Egypt, Israel, Kuwait, Saudi Arabia and the UAE accounted for 60 percent ($7.3 billion) of the potential FMS deals. Israel led all states with $2.6 billion in arms requests, including 60 F-16C/Ds, 30 F-15Is or a combination of both for a cost of $2.5 billion. An announcement on Israel's selection is expected this spring.

Other requests for advanced weapons included 38 amphibious assault vehicles by Italy, 8 Apache attack helicopters by Singapore, 9 Chinook helicopters by Taiwan and 2 Paladin artillery battalions by Kuwait. Four states (Egypt, Greece, Taiwan and Turkey) requested 22 warships valued at $1.6 billion. All the ships were frigates except for 4 missile destroyers requested by Greece. Athens threatened to cancel the buy if Washington did not reverse a decision to supply the SM-1 Standard missile rather than the Greek-requested SM-2, but no action has yet been taken.

While proposed deals rose in 1998, signed agreements and actual FMS deliveries dropped during the 1998 fiscal year (FY), which runs from October 1, 1997 to September 30, 1998. The Defense Security Cooperation Agency, which oversees the Pentagon's FMS program, reported $8.5 billion in agreements signed and nearly $14 billion in weapons and services delivered for FY 1998, compared to FY 1997 totals of $8.7 billion in agreements and $19.2 billion in deliveries.

Saudi Arabia signed agreements valued at $2.3 billion, topping the other 98 countries that concluded FMS deals. The large disparity between the number of states that signed contracts and those whose deals are notified to Congress—seventeen, for example, in 1998—reflects the fact that most FMS deals do not exceed the $14 million reporting mark.

The Middle East led all other regions in deals finalized, with nine countries signing agreements worth a total of nearly $4.5 billion. Thirty-four European countries and Canada signed up for $1.8 billion in weapons and services, while East Asia and the Pacific accounted for almost $1.5 billion. Countries in Latin America and Africa totaled approximately $80 million and $18 million, respectively.

More than half ($7 billion) of the actual FMS deliveries flowed to the Middle East, with Saudi Arabia alone accounting for $4.3 billion. Many of the Middle Eastern deliveries represented deals concluded during or soon after the 1990–91 Gulf War. East Asia and the Pacific placed a distant second in deliveries, with a total of $3.7 billion.

In its World Military Expenditures and Arms Transfers (WMEAT) 1997—publicly made available in December—the U.S. Arms Control and Disarmament Agency (ACDA) significantly raised its figures for past U.S. direct commercial sales, thereby increasing total U.S. arms exports through 1996 (the last year covered by the volume).

The revised figures reflect a new methodology that ACDA has adopted to better account for direct commercial sales. Although data for authorized commercial exports is available in the annual State and Defense departments' "Section 655" report (See ACT, August/September 1998), figures for actual commercial deliveries are often incomplete because the State Department relies on export data that the Customs Service collects from exporters' shipping data, a slow and cumbersome process. Therefore, past figures on total U.S. arms exports have been considered by many arms trade analysts to be too low.

Using the new methodology, ACDA raised its estimates of total U.S. arms exports for 1986–1996 by an average of 45 percent per year. For example, the 1995 export total jumped from $15.6 billion to $22.6 billion.

The agency contends that the new methodology, which assumes that 50 percent of all commercial authorizations result in actual deliveries, is "more likely to underestimate than overestimate commercial deliveries." However, ACDA notes that the real relationship between commercial authorizations and deliveries is "uncertain, and the scarce empirical evidence presently available is inadequate for sound estimating purposes."

In the 1986–1996 period, in fact, reported commercial deliveries (by way of the Customs Service) never reached 50 percent of authorizations, peaking at 44 percent of authorizations in 1987 and exceeding 25 percent only three times.