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ARMS SALES MONITOR Issue No. 25, April 1994

No. 25 (30 April 1994)


FY 1995 Budget Request:
Weapons Aid for "Promoting Peace and Building Democracy"---Mostly the Names Have Changed

In an attempt to sell the American public (and Congress) on foreign aid, the Administration reorganized this year's $20.861 billion international affairs budget around six new "mutually reinforcing goals."

Undersecretary of State Lynn Davis explained to a Senate subcommittee on 12 April: "we adopted the approach in the Peace, Prosperity and Democracy Act [the Administration's proposed re- write of the Foreign Assistance Act] of requesting funds, not according to functional types of assistance, but to serve [these six] critical policy objectives." Accordingly, development and military aid now falls under one of the following titles: Promoting U.S. Prosperity; Building Democracy; Promoting Sustainable Develop- ment; Promoting Peace; Providing Humanitarian Assistance; or Advancing Diplomacy.

This rhetorical shift has made it much harder to figure out what military-related aid the Administration is proposing to provide, to whom and why. In years past, this information was published in a lone Congressional Presentation Document for Security Assistance Programs. Now, in order to get a full picture of the funding re- quest, multiple volumes must be located from bureaucracies that themselves seem unaware of the reports' existence. (The necessary Congressional Presentation Documents are listed on p. 10).

Security assistance programs fall now under the "Promoting Peace" or "Building Democracy" titles of the budget. The FY 1995 security aid request is $5.85 billion.

Total FY 1995 Request for Security Assistance: $5,850,552,000

Comprising:
Military Financing: $3,195,456,000
Economic Assistance: $2,376,746,000
Direct Military Training: $26,350,000
International Narcotics Control: $232,000,000
Anti-terrorism Assistance : $15,244,000
International Criminal Justice: $4,756,000

Military Financing

The Administration is seeking just under $3.2 billion in military financing assistance. (Congress appropriated just over $3.2 billion last year.) All but $5 million of this funding is requested under the "Promoting Peace" title of the international affairs budget. It will underwrite weapons exports from the United States to five countries. Ninety-seven percent will go to sustain Israel and Egy- pt's customary high levels of aid. Jordan is the only other country slated to receive grant military assistance.

Military Financing: $3,195,456,000

comprising:
Grants:
Israel : $1,800,000,000
Egypt: $1,300,000,000
Jordan: $7,300,000
De-mining: $5,000,000

Loans:
Greece: $24,536,000
(to underwrite $317 million of loans)
Turkey: $35,062,000
(to underwrite $453 million of loans)

Administrative Costs: $23,558,000

The budget requests $59.5 million to underwrite loans for weapons purchases by Greece and Turkey. As has also become customary, this aid will be provided in a 7:10 ratio ($317 million of loans for Greece: $453 million for Turkey), in order to maintain some parity in their arms race. Portugal, which received subsidized loans last year, was "graduated" from the aid program this year.

Under the "Building Democracy" title of the budget, the Administration requests $5 million in grant aid for locating and removing anti-personnel landmines. These funds will train foreign government personnel in demining and provide equipment and logis- tics support for mine clearing activities in Afghanistan, Cambodia, Costa Rica, Eritrea, Honduras, Liberia, Mozambique, Nicaragua, Rwanda, and possibly El Salvador, Laos and Somalia.

Economic Assistance

The Administration is seeking $2.377 billion in grant bilateral economic assistance under the "Promoting Peace" and "Building De- mocracy" titles of the budget. Even though some of this money may not be targeted for military purposes, grant economic aid to Israel, Egypt and Turkey---the three largest recipients---has his- torically been considered "security assistance." Israel's $1.2 billion is explicitly to repay past military debt owed to the Unit- ed States. (Development-related aid falls under the "Sustainable Development" title of the budget.)

Economic Aid: $2,376,746,000

comprising in part:
Israel : $1,203,600,000
Egypt: $816,700,000
Turkey: $100,000,000
El Salvador: $30,000,000
Haiti: $15,000,000
Nicaragua: $12,000,000
Jordan: $8,750,000
Lebanon: $4,000,000
Morocco: $1,300,000

Anti-Drug, -Terror & -Crime Aid

Under the "Promoting Peace" title, the Administration requests $252 million to provide weapons, other material and training to curb illicit drug trafficking, terrorism and international crime. De- tails of these programs are spelled out in the CPD for Narcotics, Terrorism and Crime.

Of this total, $232 million is slated for counternarcotics assistance, primarily to countries in the Andean region of South America, but also to Guatemala, Pakistan, Thailand and Turkey, among others. (By comparison, in FY 1994, the Admini- stration requested $171.5 million for State Department-run nar- cotics control programs. Congress appropriated only $100 million.) In the DOD budget, the Administration requests an additional $874 million for counternarcotics programs. But the Pentagon programs do not involve the transfer of weapons to other countries.

International Narcotics Control: $232,000,000

comprising:
Asia/Africa/Europe: $7,150,000 Latin America: $165,894,000
International Organizations: $11,500,000
Inter-regional Aviation: $30,000,000
Inter-regional Programs: $11,156,000
Administrative Costs: $6,300,000

The Administration asks for $15.2 million to assist countries in countering terrorism this year. (In FY 1994, the Administration sought $15.6 million; Congress appropriated $15.2 million.) $4.75 million is being sought for the International Criminal Justice program.

Military Training

The Administration wants $26.35 million for the "Direct Training" of more than 2,221 members of 105 foreign militaries. (By compari- son, $21.2 million was appropriated last year for the then-named International Military and Education Training of 2,072 people.)

Direct Military Training: $26,350,000

for:
Regional Peace & Security: $11,975,000
Building Democracy: $13,145,000
Peacekeeping: $850,000
Administrative Costs: $380,000

Direct Training is funded under both the "Promoting Peace" and "Building Democracy" titles of the budget; the difference between the two types of military training is obscure. Both programs will focus on traditional military training (the operation and support of equipment, logistics and management training), as well as human rights and civil-military relations. Civilian members of foreign defense and related ministries will continue to be eligible for training under both programs.

Testifying before the House Subcommittee on Foreign Operations on 14 April, Alexander Watson (Asst. Secretary of State for Inter- American Affairs) gave the usual rationales for the military training programs: they promote American values, build relationships, provide access to future leaders.... But he candidly added: "they bring certain economic benefits for the United States as well; they give Latin and Caribbean officials experience using American hardware, and thus can influence their future procurement decisions."

The funding request for individual countries is listed on the next page, with the number of soldiers and others to be trained in parentheses. For a brief description of the goals and emphases of military training for individual countries, see the country profiles in the CPD for Promoting Peace and the CPD for Building Democracy.

Recipients of U.S. Military Training, FY 1995

Promoting Peace Program

(dollars in thousands)

Africa Botswana: $350 (21)
Namibia : $150 (12)
Sao Tome/Principe: $75 (2)
Senegal: $500 (24)
Zimbabwe : $250 (19)
East Asia & Pacific
Korea: $10 (2)
Malaysia: $500 (40)
Philippines: $1195 (124)
Singapore: $20 (4)
Solomon Islands: $100 (20)
Thailand: $1000 (77)
Tonga: $50 (6)
Vanuatu: $50 (3)
Western Samoa: $50 (2)

Western Europe
Austria: $15 (2)
Finland: $15 (2)
Greece: $50 (15)
Malta: $65 (8)
Portugal: $500 (22)
Spain: $50 (9)
Turkey: $1000 (69)

Latin America
Argentina: $10 (16)
Brazil: $100 (13)
Chile: $100 (56)
Costa Rica: $50 (11)
Dominican Rep.: $200 (35)
Ecuador: $300 (34)
Jamaica: $170 (27)
Mexico: $200 (31)
Uruguay: $100 (9)
Venezuela: $250 (36)
Eastern Caribbean: $200 (?)
Panama Canal Area Military Schools: $425 (?)

Near East
Algeria: $75 (6)
Bahrain: $75 (16)
Egypt: $1000 (87)
Jordan: $1000 (100)
Lebanon: $100 (5)
Morocco: $400 (27)
Oman: $110 (62)
Tunisia: $800 (60)

South Asia
Bangladesh: $175 (12)
India: $200 (12)

Building Democracy Program

Africa
Benin $100 (7)
Botswana $100 (7)
Burundi $100 (5)
Cape Verdi $75 (3)
Central Afr. Rep. $100 (5)
Chad $175 (10)
Congo $150 (9)
Cote D'Ivoire $150 (8)
Djibouti $150 (7)
Eritrea $200 (7)
Ethiopia $250 (11)
The Gambia $100 (8)
Ghana $200 (14)
Guinea $150 (7)
Guinea-Bissau $75 (3)
Kenya $200 (14)
Lesotho $50 (5)
Malawi $125 (9)
Mali $130 (6)
Mozambique $125 (3)
Niger $200 (9)
Rwanda $150 (9)
Senegal $100 (2)
South Africa $250 (10)
Swaziland $50 (4)
Tanzania $100 (8)
Uganda $150 (14)
Zambia $100 (?)

East Asia & Pacific
Cambodia $200 (5)
Mongolia $100 (3)
Papua New Guinea $125 (8)

Eastern Europe & FSU
Albania $200 (13)
Belarus $100 (5)
Bulgaria $500 (23)
Czech Republic $500 (24)
Estonia $200 (20)
Georgia $75 (4)
Hungary $700 (30)
Kazakhstan $100 (5)
Kyrgyzstan $50 (3)
Latvia $200 (16)
Lithuania $200 (9)
Macedonia $125 (7)
Moldova $50 (3)
Poland $700 (38)
Romania $500 (40)
Russia $700 (40)
Slovakia $350 (19)
Slovenia $125 (3)
Turkmenistan $50 (3)
Ukraine $600 (25)
Uzbekistan $50 (2)

Latin America & Caribbean
Belize $40 (5)
Bolivia $350 (42)
Colombia $600 (280)
El Salvador $400 (60)
Guatemala $200 (20)
Guyana $75 (9)
Honduras $325 (51)
Nicaragua $100 (4)
Paraguay $125 (19)
Peru $325 (13)
Suriname $50 (2)

Near East
Maldives $50 (3)

South Asia
Nepal $100 (7)
Sri Lanka $100 (4)

Funding for Peacekeeping and Non-Proliferation

In addition to the aforementioned nearly $6 billion in bilateral security assistance, the Administration is seeking $908 million for multilateral peacekeeping operations (PKOs) in FY 1995, comprising:

--- $533 million in the international affairs budget for dues owed the UN for peacekeeping activities;
--- $75 million in the international affairs budget for voluntary contributions to ongoing operations; and
--- $300 million in the DOD budget for expenses incurred by the armed forces during participation in PKOs.

The Administration is also requesting $50 mllion for non-prolifer- ation and disarmament activities. This includes $10 million for a Nonproliferation and Disarmament Fund to support "export controls and interdiction, weapons destruction, and safeguards and verifica- tion"; and $40 million for the International Atomic Engergy Agency, which verifies compliance with nuclear non-proliferation commitments.

Editorial:
The Arms Export-Peacekeeping Tautology

The UN currently has 70,000 peacekeeping troops deployed in 17 missions around the world, at a cost of $3.2 billion this year. In support of U.S. contributions to peacekeeping operations (PKOs), Secretary of State Warren Christopher told Congress, "[m]illions spent now on multilateral preventative diplomacy, emergency refugee support, and peacekeeping may save hundreds of millions in defense and international relief later."

He's right, but why not take that logic one step further? Restraining arms exports would likely lessen the need for preventative diplomacy, refugee support and peacekeeping missions in the first place. Arms exports (e.g., to Angola, Somalia and Iraq) in the 1970s and 80s greatly increased the level of violence and chaos which led to current UN peacekeeping operations.

In FY 1993, the U.S. government approved nearly $60 billion of weapons exports to 145 countries. Some of these weapons may necessitate future PKOs. The U.S. Joint Chiefs of Staff stated in their 1992 Joint Military Net Assessment that instability arises "in areas where nations are acquiring increasingly sophisticated and expensive military equipment and large armed forces. This tendency undermines regional stability and the balance of power and defers economic growth." Very few developing countries produce any let alone all of their own armaments; they import weapons from the same countries that are ostensibly working to develop international peacemaking and peace-enforcing mechanisms.

The United States and other peacekeeping participants should restrain arms exports to national governments, instead supplying weapons primarily to international or regional security organizations. The UN, NATO, Organization of African Unity, and Organization of American States are currently on the United States' list of approved arms customers.

Global restraint in arms production and exports would make a true contribution to global and regional peacemaking/peacekeeping. Pursuing peace with one hand, while doling out weapons with the other is cynical and counterproductive.

The Cost of Keeping the Peace v. the Profits of War

[table omitted]

Clinton Admin. Watch
U.S. Approved $60 Billion in Arms Exports in FY 1993

Data recently made public by the State and Defense Departments show that the U.S. government signed off on, or actively brokered, $59.915 billion of arms exports during fiscal year 1993 (1 Oct. 1992■30 Sept. 1993). Comparable official data from the other major arms exporting states is not available, but press accounts indicate that during calendar year 1993 Russia, France and Britain each sold from $4-8 billion of arms.

The majority of the U.S. sales were negotiated by the government, through its Foreign Military Sales (FMS) program. The Pentagon signed FMS contracts for $33.2 billion of weapons, related ser- vices, and related construction with over 90 countries. More than 80 percent of these sales ($27 billion) were to developing coun- tries.

FMS Agreements Over the Years

FY 1990 -- $14,180,197,000
FY 1991 -- $22,891,600,000
FY 1992 -- $14,983,700,000
FY 1993 -- $33,215,993,000

During the same time, the State Department approved export licenses for an additional $26.5 billion of arms to 145 countries. These sales are negotiated directly by arms manufacturers, and license approvals do not represent finalized sales. The State Department estimates that 40-60 percent of all licenses will result in actual sales. Developing countries accounted for just over 60 percent of the direct commercial sales (DCS) licenses granted.

Over $570 million of the FMS agreements, and $2.2 billion of the DCS licenses, were "classified"■sales of unknown weapons to unknown recipients. Apparently the weapons exported are so technologically advanced that knowledge of their existence would endanger national security. Alternatively, perhaps the recipient country is so unsavory that the U.S. government fears disclosure.

Also in FY 1993, the Pentagon gave over $100 million of "excess defense articles" (EDA)■older items now surplus to the Pentagon's needs■to 20 countries. The United States also leased $410 million of military equipment to 18 countries and to international orga- nizations. Rental charges totalled $37.5 million.

Highlighted Recipients of U.S. Arms

[table omitted]

U.S. to Initiate Production of Diesel Subs Solely for Export

On 7 April, the State Department approved a license to Ingalls Shipbuilding of Pascagoula, Mississippi for the production for export of Type 209 diesel submarines . Ingalls has sought permission for several years to build subs for Egypt, but it has been thwarted by U.S. Navy opposition (see ASM No. 16 p. 2).

Currently only nuclear-powered submarines are produced in the United States (at Newport News, VA and Electric Boat in Groton, CT). Ingalls will produce the diesel subs under a manufacturing license from the German firm HDW. The potential deal with Egypt is worth $700 million; Egypt would pay with U.S.-supplied grant mili- tary aid, which is restricted to purchases from America.

In a 1992 report, the Navy stated that "construction of diesel sub- marines for export in U.S. shipyards would not support the U.S. submarine shipbuilding base and could encourage future development and operation of diesel submarines to the detriment of our own forces."

The creation of this new production line will likely result in pressures to make further submarine sales to developing countries. Taiwan, and possibly Saudi Arabia, are also in the market for diesel subs.

Selling Old Weapons to Buy New

In 1991, China's policy of funding procurement of new weapons through arms exports generated outrage and near hysteria in the western press. Similarly, U.S. government officials heavily criticized a Russian plan to finance arms industry conversion through arms sales. In both cases, officials feared the creation of a dangerous and short-sighted bureaucratic interest in selling weapons.

In January, the U.S. Air Force disclosed plans to fund the procure- ment of up to 90 new F-16C/D aircraft through sales of some 360 older model F-16A/B planes (see ASM No. 24 p. 5). USAF Vice Chief of Staff Michael Carns, the architect of the plan, said the scheme would give him "brand new warfighting planes at no cost to the taxpayer" <. The Chinese and Russian arguments must have sounded similar.

To overcome arms control opposition, the USAF put a Madison Avenue spin on the sales plan, re-packaging it as "Coalition Force Enhancement"■a way to strengthen friendly militaries. Already, over a dozen countries have been briefed on the availability of the cheap F-16s ($14 million per plane). Spain would like 50. Other potential customers are Egypt, South Korea, Malaysia, Morocco, New Zealand, Philippines, Singapore, Thailand, Tunisia and possibly some East European countries.

Since the U.S. Constitution mandates that all federal spending originate in Congress, the Air Force is currently seeking Con- gressional support for the plan in the FY 1995 DOD authorization bill.

There is precedent for this sort of off-budget procurement (although not to the magnitude envisioned here■the Air Force plan would involve $5 billion worth of aircraft sales.) In the FY 1993 authorization bill, Congress permitted the Army to use $197 million from the sale of excess M-48 and M-60 tanks for the Abrams tank upgrade program. The act also allowed the use of $15.2 million from M-113 sales for the procurement of Bradley Fighting Vehicles. And in the FY 1994 DOD bill the House Armed Services Committee suggest- ed that the Navy sell excess Mk-46 torpedoes and use the proceeds to offset buying the Mk-50 Advanced Light Weight Torpedo.

Lockheed■manufacturer of the F-16■is lobbying hard for the hundreds of millions of dollars in upgrade work and new USAF orders.

Pentagon Participation in Arms Shows Here to Stay

In April, Defense Secretary William Perry authorized the military services to participate at the 1994 "Eurosatory" exhibition of army equipment, to be held in Paris during 20-25 June. At no cost to industry, the Pentagon will provide and transport many of its weapons to the marketing show, including the M-1A1 Abrams tank, M-2 Bradley Fighting Vehicle, M-109 self-propelled howitzer, Patriot missile launcher and attack and utility helicopters. According to U.S. law, Perry had to certify that participation is in U.S. "national security interests" before taxpayer funds could be used. (Preliminary Pentagon estimates of costs for the show are $385,000.) This show marks the second time that national security has been invoked to justify Pentagon arms marketing (see ASM No. 25 p. 1).

One of the vital interests Perry cited was the contribution to "interoperability and equipment commonality" which U.S. arms sales would hasten. He said DOD participation will "contribute to the Partnership for Peace initiative," implying that sales to East Europe and former Soviet states lies at the heart of the decision.

In addition, Perry said a strong U.S. presence was necessary to demonstrate that European security remains important to the United States. Perry asserted, rather mysteriously, that "a weak showing by U.S. industry, especially in contrast with the effort orches- trated by the French government, will send a ... powerful negative signal."

Undersecretary of Defense for Policy Frank Wisner told an arms in- dustry gathering that the Pentagon will also participate at the upcoming Paris Air Show and the Abu Dhabi arms bazaar .

U.S. Liberalizes Spy Satellite Sales

On 10 March, the Administration revised its policy on sales of high-resolution imagery and reconnaisance satellites. The Depart- ment of Commerce will now decide licenses with "the presumption that remote sensing space systems whose performance capabilities and imagery quality characteristics are available or are planned for availability on the world marketplace will be favorably consid- ered" (emphasis added) . Thus, exports of pictures and satellites with a one meter resolution will now be licensed. Previously, exports were limited to ten meters resolution.

The Pentagon and CIA opposed the policy change, fearing high resolution satellites will be used to gain military advantage against the United States or against U.S. allies. Next up: look for some members of Congress to push for the development of an Anti- Satellite Weapon to combat these exported capabilities (see ASM No. 22 p. 7).

Industry Update
DTAG Meets, Outlines Industry's Wish List

On 17 March, the State Department held the fifth public meeting of its Defense Trade Advisory Group (DTAG) (see ASM No. 23 p. 4). High ranking Department officials addressed the group of, primarily, arms manufacturers.

Assistant Secretary for Politico-Military Affairs Robert Gallucci said that industry should "not look for dramatic change" in the Administration's forthcoming policy on conventional arms sales. The new policy, he said, will likely support: 1) increased transparency in the arms sales process; 2) defense conversion; and 3) arms exports when appropriate. The difficulty lies in reconciling the contradictory objectives of supporting American industry and preventing dangerous or destabilizing transfers, Gallucci said. But the consensus among industry and government officials was that "rogue states," rather than arms exports, are the problem (i.e., "guns don't kill people...").

William Schneider, Chairman of DTAG's policy working group, presented several export policy recommendations.

Opening Up New Markets

The global market for weapons has contracted significantly since the late 1980s and is expected to shrink by an additional 25 percent before the end of the decade, as the traditional markets (e.g., Middle East) are saturated. Schneider identified Taiwan, Latin America, and South Africa as growth markets for U.S. industry.

Schneider emphasized the opportunities for increased business in Taiwan (which has the world's largest cash reserves) and urged a liberalization of U.S. sales policy. Exports are currently limited, theoretically, by a 1982 accord with China, in which the United States pledged that "arms sales to Taiwan will not exceed, either in qualitative or in quantitative terms, the level of those supplied in recent years." U.S. sales have not been constrained by this proviso (see ASM No. 18 p. 2), but the Administration is nevertheless reviewing Taiwan policy.

Improving economic and political circumstances have opened up the Latin American market. U.S. sales have increased with the consoli- dation of democracy in Chile and the easing of export restrictions on Argentina, which resulted from its 1982 war with Britain. But industry would like greater government help in marketing arms to these nations. (Lack of DOD participation at a recent air show in Chile was widely criticized in the military trade press.) Industry is also seeking approval for exports of more modern equipment. Lockheed Corporation, for example, has been lobbying for permission to market its hot-selling F-16 fighter to Chile. (Venezuela is the only South American state currently possessing F-16s.)

With the democratic election in South Africa, the UN- levied arms embargo will soon be lifted. This opens yet another heretofore forbidden market to U.S. manufacturers. "As the legal environment changes, opportunities will be created to displace South Africa's dependence on non-U.S. suppliers and inefficient indigenous production," Schneider wrote in a memo for the meeting. (The State Department is already permitting industry to market some weapons in South Africa. See Fed. Reg. 24 March 1994.)

Upgrading Soviet-made Arms

Upgrading■or "Westernizing"■Soviet-manufactured equipment in Indian and Eastern European arsenals provides "important market opportuni- ties" for U.S. firms, Schneider said. He lamented that some busi- ness has already been lost because current U.S. policy does not permit such deals.

U.S. law does not explicitly prohibit these upgrades; presumably the policy is due to sensitivity about horning in on Russia's last remaining major market. Russian arms industry has undergone a radical downsizing, resulting from greatly decreased Russian weapons procurement and dramatically diminished arms exports. U.S. domination of the Soviet upgrade market could cause grave political problems for President Yeltsin with his military industrial estab- lishment.

Aerospace CEOs Lobby for MiG Upgrades

Seven leading arms industrialists wrote to the Secretaries of State, Commerce and Defense in early March, seeking permission for U.S. firms to upgrade Soviet-made weapons in the Indian arsenal.

The CEOs from Grumman, Honeywell, Litton, Martin Marietta and Lockheed and the Presidents of the Aerospace Industries Association and the Electronics Industry Association claimed that upgrading India's fleet of MiG-21 fighters would generate $350 million of business. But the stakes are really much higher, as some 40 air forces fly more than 2,500 MiG-21s. "The winners of this competi- tion will obtain a distinct advantage in future upgrade programs in Eastern Europe and elsewhere," they wrote.

The industrialists cited increased influence with the Indian mili- tary; creation or maintenance of American jobs; the fact that similar levels of technology have previously been transferred to India; and the inevitability of the planned Indian upgrade ("the Indian government will award the MiG-21 upgrade program with or without U.S. industry participation") as reasons why the U.S. government should change its policy.

The Lowest Common Denominator

Schneider also urged that the Pentagon establish a "Foreign Avail- ability Database," listing all weapons available for export from other countries. The intent is to bolster the "if we don't sell them, somebody else will" adage, with the logical conclusion being that the United States government should only restrict items which are manufactured solely by U.S. firms. "A foreign availability database can provide useful information on the offerings of non- U.S. producers in foreign markets to assist in making appropriate licensing decisions," Schneider wrote in a policy paper for the meeting.

Increase Codevelopment, Coproduction

DTAG's policy working group supported increased weapons technology transfer, through joint development and production, as a means of gaining and maintaining access to the Western European and Japanese markets.

In sync with industry, the civilian leadership at the Pentagon has been pushing for increased "international arms cooperation." Defense Secretary William Perry, Deputy Secretary John Deutch, and Kenneth Flamm (very long job title) favor coproduction to spread the technical and financial risks of new projects among the many partners. Perry wrote in a June 1993 memo that international cooperation will make "the most efficient use of the resources we apply to our collective defense."

However, legal prohibition on the retransfer to third parties of U.S. military technology is cited as an obstacle to cooperative projects. (Section 3(a)(2) of the Arms Export Control Act mandates that as a condition of any arms sale or cooperative project, the recipient must first agree not to transfer title to, or possession of, U.S.-supplied weapons without prior approval from the U.S. gov- ernment.) So, the Pentagon is seeking to relax the retransfer restrictions. In a 22 February speech, Deutch said the government would instead establish a threshold, below which military technol- ogy could be re-transferred among NATO allies and Japan without case-by-case reviews.

Tanks Are Like Toasters

Schneider urged the government to stop discriminating against weapons exports. Arms exporters face "statutory and regulatory encumbrance" which exporters of other products (e.g., toasters and VCRs) do not face. Arms producers "are not eligible for export credit/insurance," he said. (Except for $3 billion of military financing provided annually■see p. 1.) "Tax treatment of defense export earnings differ from ordinary export earnings; government policies on export promotion diverge between defense products and other industrial exports," he complained.

Punishing Crime is Bad for Business

Even more cheekily, Schneider proposed that firms debarred from doing business with the Pentagon (because of fraud or other illegal activities) should nevertheless be permitted to continue overseas sales. He wrote: "The practice of denying export authority to firms suspended or debarred from doing certain types of business with the Department of Defense has had the unintended consequence of disrupting the readiness of the armed forces of allied nations and undermining the international perception of the U.S. as a reliable supplier."

"Safe" Arms Sales Supported

In his policy memo, Schneider also suggested that the government convene a joint Defense Science Board-DTAG panel to examine ways in which advanced technologies could be applied to mitigate the risk of the unauthorized use or transfer of weapons exported by the United States. Proposals floated in recent years have included electrical locks, black boxes, and computer viruses to shut down exported weapons. Earth's Market Potential

During February and March, President Clinton certified that furnishing weapons and other defense articles to Albania, Bulgaria, Cambodia, Eritrea, Estonia, Latvia, Lithuania and Romania "will strengthen the security of the United States and promote world peace."

Over the years, Presidents have made this statement about 156 of the world's 195 states, plus NATO, the UN, the Organization of African Unity and the Organization of American States. The finding is required by law (section 3(a)(1) of the Arms Export Control Act) before the government or industry can export weapons to a particular country or organization.

The finding for Eritrea was motivated by an apparently benevolent desire to provide equipment and military training to assist in the removal of some 500,000 antipersonnel mines sewn during its long war for independence .

The decision for the Eastern European countries is apparently aimed at facilitating their inclusion into NATO's "Partnership for Peace." Arms exports■to promote "rationalization, standardization and interoperability" of forces■will be one result of the expansion of NATO.

In the case of Cambodia, the State Department said the finding is merited by "the installation of a new and democratically-elected government, and the end of multifactional civil conflict that plagued the country for over a decade" .

South Africa, Syria, Russia, Ukraine, Belarus, Uzbekistan, Kazakhstan, Kyrgyzstan, Armenia, Azerbaijan, and Georgia are not on the list of approved buyers...yet.

Deals in the Works

The Administration notified Congress of the following Foreign Military Sales (FMS), leases, grant excess defense article (EDA) transfers and export licenses for direct commercial sales (DCS) from industry during March-April. Abbreviated source information is given in the table; for more information, contact our office.

More Planes for Israel Through Extra Aid Channel

In April, the Administration formally notified Congress that it will `sell' Israel 20-25 F-15E bombers (see ASM No. 25 p. 9). The planes will be paid for with $2.4 billion of grant military assistance from the United States.

In addition, the U.S. will give Israel 50 F-16A/B fighters through a special drawdown account established by Congress in 1991. The account originally contained $700 million, with which Israel could purchase weapons the Pentagon was retiring from Europe.

Israel bought 24 Apache and 10 Blackhawk helicopters, 10 F-15A/B fighters and other weapons, depleting most of this fund. On 30 March, however, President Clinton added $161.9 million to the account, to cover the $250 million cost of the F-16s .

Recent Government Publications

Congressional reports and hearings can be obtained for free through the Congressional Committee or Subcommittee which issued them, or for a small charge, through the Government Printing Office [(202) 783-3238]. CBO reports are also available through the Government Printing Office. To order (free) GAO reports, phone (202) 512-6000. CRS reports are free; request them through your Congressional Representative's office. Congressional Presentation for Building Democracy, FY 1995, U.S. Department of State, U.S. Agency for International Development, Defense Security Assistance Agency, 1994.

Congressional Presentation for Narcotics, Terrorism, and Crime, FY 1995, U.S. Department of State, Bureau of International Narcotics Matters, 1994, 84 pp.

Congressional Presentation for Promoting Peace, FY 1995, U.S. Department of State, Defense Security Assistance Agency, 1994, 245 pp.

Congressional Presentation Summary Tables, FY 1995, U.S. Agency for International Development, 1994, 66 pp.

Defense Trade News, Volume 5, Number 1, U.S. Department of State, Bureau of Politico-Military Affairs, January 1994, 33 pp.

Department of Defense: Weaknesses in Humanitarian and Civic Assistance Programs, General Accounting Office [GAO/T-NSIAD-94- 158], 19 April 1994.

Enhancing U.S. Security Through Foreign Aid, Congressional Budget Office, April 1994, 90 pp.

"Export Administration Act of 1994: Side-by-Side," Congressional Research Service Report for Congress [94-266E], Glennon J. Harri- son, 23 March 1994, 39 pp.

Foreign Operations, Export Financing, and Related Program Appropriations, Fiscal Year 1994, Part I, II (hearings before the Senate Appropriations Committee), U.S. GPO: 1994.

Illegal Military Assistance to Israel (hearing of the Oversight and Investigations Subcommittee of the Energy and Commerce Committee, 27 October 1993) U.S.GPO: 1994.

International Peacekeeping and Peace Enforcement (hearing before the Senate Armed Services Committee, 14 July 1993), U.S. GPO: 1994, 74 pp.

"Iran: Conventional Arms Acquisitions," Congressional Research Service Report for Congress [94-138F], Richard F. Grimmett, 22 February 1994, 7 pp.

Oversight of State Department Country Reports on Human Rights Practices for 1992 and U.S. Human Rights Policy (hearing before the International Security Subcommittee of the House Foreign Affairs Committee, 4 March 1993), U.S. GPO: 1994, 79 pp.

Peacekeeping and Conflict Resolution in Africa (hearing before the Africa subcommittee of the House Foreign Affairs Committee, 31 March 1993), U.S. GPO: 1994, 101 pp.

Reducing the Deficit: Spending and Revenue Options, a report to the Senate and House Budget Committees by the Congressional Budget Office, March 1994), U.S. GPO: 1994, 377 pp. (Highlights savings possible through cuts in military aid and elimination of subsidies to arms exporters.)

Survey of Peacekeeping Operations in the Middle East and Europe (report of a House Foreign Affairs Committee staff study, March 1994), U.S. GPO: 1994, 27 pp.

Testimony of Former Employees of the Banca Nazionale Del Lavoro (hearing before the House Banking, Finance and Urban Affairs Committee, 9 Nov. 1993), U.S. GPO: 1994.

U.S. Arms Control and Disarmament Agency Authorization and Consideration of the Agency's Future Status and Responsibilities (hearing before the Senate Foreign Relations Committee, 14 July 1993), U.S. GPO: 1994, 49 pp.

U.S. Nonproliferation Policy (hearing before the House Foreign Affairs Comm., 10 Nov. 1993), U.S. GPO: 1994.

U.S. Security Policy Toward Rogue Regimes (hearings before the International Security Subcomm. of the House Foreign Affairs Comm., 28 July, 14 Sept. 1993), U.S. GPO: 1994.

World Military Expenditures and Arms Transfers, 1991-1992, U.S. Arms Control and Disarmament Agency, 1994, 156 pp.


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