U.S. Tops Expanded Arms Market

Worldwide conventional arms sales agreements climbed for the first time in four years in 2004, but one constant remained: the United States sold and exported more arms than any other state, a recently released Congressional Research Service (CRS) report revealed.

Published Aug. 29, Conventional Arms Transfers to Developing Nations, 1997-2004 charts the ebb and flow of countries’ deals for tanks, combat aircraft, missiles, and other military hardware over an eight-year period. CRS analyst Richard Grimmett first authored the annual report in 1982, and it is widely recognized as the best compilation of arms trade data available.

New global arms agreements in 2004 totaled nearly $37 billion, which marked an $8 billion spike from a year earlier. In a Sept. 16 interview with Arms Control Today, Grimmett attributed the jump to India’s conclusion of several long-pending arms deals with Israel, Russia, and the United Kingdom.

Actual arms deliveries for 2004 dropped by nearly $1 billion from the preceding year to almost $35 billion. Once a deal is consummated, it sometimes takes years for the weapons to be exported, so agreement and delivery sums for any given year never match.

As has been the case since the end of the Cold War, U.S. weapons dealings last year surpassed those of all other states. Despite experiencing an approximately $3 billion falloff in new deals from 2003, the United States still tallied $12 billion in sales, which equaled one-third the value of total sales. Russia ranked a distant second with $6.1 billion in agreements fueled largely by Chinese and Indian purchases. The United Kingdom followed closely with $5.5 billion in deals.

In 2004 the United States accounted for just more than half of worldwide weapons shipments. It exported arms worth $18.5 billion, a sum four times greater than the next highest totals of $4.6 billion by Russia and $4.4 billion by France.

Grimmett largely credited the U.S. arms market supremacy to Washington’s practice of providing long-term support, maintenance, and upgrades for its weapons. “A large number of countries…have, over decades, acquired and continue to utilize a wide range of American weapons systems, and have a continuing requirement to support, modify, and replace them,” Grimmett wrote. He further noted that spare parts and other support services constitute “a very substantial portion” of new U.S. agreements.

Russia is seeking to give the United States a stiffer challenge in the global arms bazaar by replicating its practices. In addition to adopting “more flexible payment arrangements,” Grimmett stated Moscow is striving to improve “its follow-on support services to make Russian products more attractive and competitive.”

Still, Grimmett sees the United States as maintaining its advantage. “There is an almost ingrained reluctance on the part of many developing nations to purchase advanced armaments from a supplier like Russia that is still engaged in reorganization and rationalization of its defense production base, when more stable, well-known, and established sources of such weapons exist,” the report stated. Russian arms manufacturers are still recovering from the Kremlin’s dramatic reduction in military spending after the Soviet Union’s 1991 dissolution.

Developing nations are the leading customers for arms sellers, accounting for nearly 60 percent ($21.7 billion) of the arms agreements concluded last year. They were also on the receiving end of nearly two-thirds ($22 billion) of all weapons transferred. Grimmett defines developing nations as all countries except Australia, Canada, Japan, New Zealand, Russia, the United States, and those in Europe.

India eked out China as the leading purchaser for the entire eight-year period. New Delhi signed weapons contracts totaling $15.7 billion, while Beijing finalized $15.3 billion in arms agreements. These two sums are not adjusted for inflation.

India’s unmatched $5.7 billion in deals last year included an array of weaponry from different suppliers. It purchased 66 advanced jet trainers from the United Kingdom, a refurbished aircraft carrier and a dozen fighter jets from Russia, and three advanced airborne early-warning aircraft from Israel.

New Delhi is continuing its shopping spree this year. French President Jacques Chirac and Indian Prime Minister Manmohan Singh announced Sept. 12 their intent to co-produce six diesel-electric Scorpene attack submarines. India also is seeking 125 fighter jets and anti-missile systems, all of which U.S. arms companies are looking to supply. Although India has been a traditional arms client of Moscow, Washington is trying to forge closer ties with New Delhi as both capitals monitor Beijing’s military modernization. (See ACT, September 2005.)

The military buildups of India and China have put Asia ahead of the Near East as the top arms destination in recent years. During 1997-2000, the Near East accounted for 49 percent of all new developing nation arms agreements, but Asia completed 49 percent of such deals from 2001 to 2004.

Asia is unlikely to relinquish the top spot soon because Grimmett sees few states other than China and India undertaking major purchases. Citing the “unsettled state of the world economy” and “lack of sufficient funds” among many developing nations, Grimmett predicts their arms buys are “likely to remain relatively static or continue to decline in the near term.”