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Arms Exports An Increasing Source of Friction
Both Russia and France have recently announced major government-sponsored initiatives to step up arms exports. They are going to streamline export licensing procedures, increase high-level government advocacy for sales, and provide more financing and marketing assistance.
Hey. All of this sounds familiar. See pages 2-4.
This export drive will undoubtedly bring these two governments into increasingly frequent conflict with the United States. Already, the U.S. and Russia are at odds over Russia's sale of S-300 air defense missiles to Cyprus. Moscow finds American protestations over this "defensive" weapons sale difficult to comprehend, given widespread U.S. sales of Patriot and other advanced anti-missile systems to several developing nations. And Cyprus finds Washington's opposition perplexing, given U.S. sales of overtly offensive ATACMS missiles first to Turkey and then to Greece. (This missile has a range of 30-165 km and can be upgraded to travel a greater distance. It carries an anti-personnel/ anti-materiel cluster munition warhead that spews shrapnel over a 150 square meter area.) The United States is currently also trying to pressure the South African government into dropping a major weapons deal with Syria.
This issue of the ASM--back after a year-long hiatus--tracks U.S. government assistance to arms exporters during 1996, which, as the table below makes clear, is paying off. The United States currently overwhelmingly dominates the commercially driven arms market. Increasingly, higher tech weapons are being sold for lower prices or paid for through creative financing mechanisms. And while the U.S. intelligence community routinely cites weapons sales by U.S. allies as a threat to American security or regional stability, the United States has pioneered in selling high-tech munitions--like ATACMS and AMRAAM missiles to very unstable regions. See the table on page 8.
Note: in millions of current year dollars. All data based on calendar year except for U.S. industry-negotiated sales, which is on a U.S. fiscal year basis. Sources: CRS 1988-1995, DSAA 1995 (see p. 14 for full citation)
The Defense Dept. has been giving away a lot of weapons made surplus by the end of the Cold War. In a recent study, "Recycled Weapons," we estimated that the United States transferred some $7 billion of surplus military equipment during 1990-1995, most of it for free. Included were nearly 4,000 tanks, 125 attack helicopters, over 500 bombers and more than 200,000 pistols and rifles.
In fiscal year 1996 the Defense Dept. exported $536 million (in terms of the original value) of surplus arms through its Excess Defense Articles program. An additional $90 million of weaponry and related gear was "drawn down" from Pentagon stocks and given to governments in Latin America and the Caribbean fighting narco-trafficking and to African countries to support participation in peacekeeping or other operations.
The Pentagon has also been unloading a good deal of its surplus by leasing equipment at little or no cost. This option is favored when the U.S. military might want the equipment back in the future, or when the recipient cannot afford to purchase the weapons outright. According to the State Department, during fiscal year 1996 the United States entered into new lease arrangements for $695 million of U.S. military equipment to 20 foreign militaries.
The above transfers are generally omitted from statistics on the overall value of U.S. arms exports. Even when surplus arms are included, the value ascribed to them is often heavily discounted (or the rental price is included, rather than the value of the equipment being leased), resulting in an undercounting of total levels of U.S. arms transfers.
Unlike other forms of military assistance, the full Congress never debates or votes on surplus arms grants.
On 8 November the Pentagon opened its new "Defense Export Loan Guarantee" (DELG) program. Established in the FY 1996 Defense Authorization Act (see ASM No. 32 p. 5), the program allows the Department of Defense to guarantee up to $15 billion in private sector loans to underwrite the sale or lease (commercial or government-negotiated) of U.S. weapons or related services to eligible nations. The guarantees issued under this program commit U.S. taxpayers to cover 100 percent of the principal and interest on any of these loans if the recipient defaults.
The loan program will reportedly further U.S. national security objectives "by encouraging standardization and interoperability of defense systems with our allies, lowering purchase cost of defense items to DOD, preserving critical defense skills, and maintaining the stability of the industrial base by facilitating the export of American-made products." (Federal Register, 8 Nov. 1996)
A predetermined list of countries (see box) are eligible for the guarantees, as long as the country is in good standing with the U.S. Export-Import Bank. (The Ex-Im Bank guarantees about $15 billion of loans per year, principally for non-weapons exports, but some of which is also used to support military exports.)
To obtain a guarantee, a party to the planned sale-- most likely the U.S. arms manufacturer--first requests a letter of interest from the DELG program office. In this letter, which is valid for six months, the Pentagon declares the preliminary eligibility of the customer for a guarantee and provides an estimate of the terms and fees. At a second stage, either the government seeking to purchase the weapons, or the bank considering financing the sale, seeks a final commitment from the DELG office to guarantee a loan. Before this commitment is made, a valid export license must be obtained.
Under U.S. law, the Pentagon may not offer guarantees with terms and conditions more favorable than those offered by the Ex-Im Bank, and it must use the same credit rating procedures to determine risk of default. In addition, the DELG program charges administrative fees to cover its costs, as well as an exposure fee to cover the risk of default.
According to program manager Robert Herzfeld, as of mid January the office had received no letters of interest from U.S. arms manufacturers or requests for a final commitment. He noted, though, that "several people said they would be sending [requests] in shortly."
For more information, click here
to visit the DELG on the world wide web or phone 703/697-2685.
Belly up. The following 38 countries are now eligible for loan guarantees for
weapons purchases. There is no cap on the amount that individual countries may receive, up
to the $15 billion program total.
In the FY 1996 Pentagon authorization bill, Congress effectively abolished the requirement that Foreign Military Sales include "recoupment fees" to recover some of the taxpayer-funded research and development costs for weapon systems being exported around the world (see ASM No. 32 p. 5). In recent years, these fees have returned several hundred million dollars to the Treasury annually.
The Clinton Administration was largely sympathetic to the arms industry's claim that recoupment fees raise the price of U.S. weapons exports, thereby making sales more difficult, and it supported repeal of this fee. In addition, the President's Advisory Board on Non-Proliferation also recommended (in its May report, see p. 14) the repeal of recoupment fees, because the U.S. government helps other industries with R&D and does not demand that they recoup the investment through export fees. (However, unlike with other industries, U.S. taxpayers entirely underwrite the development costs for weapons systems, vastly eclipsing governmental support for any other industry.)
Last year's law allows the President to waive recoupment fees if the added cost of these fees makes it "likely" that an arms sale will be lost, or if exports of the weapon system will lower the price of Pentagon purchases of the weapon. The waiver could only be exercised, however, if the President proposed and Congress passed as part of the FY 1997 budget some legislation to offset the several hundred million dollars of revenue which would be lost by ending the recoupment fees during FY 1997-2005.
Last June Senator William Cohen (now Secretary of Defense) introduced an amendment to the FY 1997 defense authorization act which fulfilled this requirement. To offset the lost revenue, the amendment proposed to sell off gems, precious metals, and other materials currently held in a "national defense stockpile." The money recovered would be returned to the general fund of the U.S. Treasury, as are the recoupment fees. (See Cong. Record, 27 June 1996, pp. S7153-4.)
Senators overwhelmingly approved the measure (74-18) in a late night vote, with no debate and little understanding of what they were voting on. This provision was maintained in the House-Senate conference version of the bill. The President signed the defense bill into law in September, meaning that the administration may now waive recoupment fees in all cases.
It was the busiest year yet for DOD-arms industry collaboration at international arms shows. As required by law, the Pentagon justified the expenditure of taxpayer funds and participation of U.S. government personnel and weaponry at each of the following shows as furthering U.S. national security interests (see ASM No. 31 p. 6).
The '96 marketing tour kicked off in Singapore in February, at Asian Aerospace '96. On display were Pentagon-owned copies of Boeing's Chinook transport helicopter, Sikorsky's Black Hawk utility/assault helicopter, McDonnell Douglas' Apache attack helicopter, F/A-18C fighter and F-15E bomber, Bell-Textron's Super Cobra attack helicopter, and Lockheed Martin's P-3C anti-submarine plane and ubiquitous F-16 fighter jet. The high point of the week-long event came when a Northrup-Grumman B-2 Stealth bomber made a fly-by appearance, reportedly "stunning into silence thousands of government officials, members of the aerospace industry and reporters watching the air show" (Wash. Times, 9 Feb. 96). This was only the second time that the $2 billion plane was displayed outside of the United States.
Next stop, Latin America, where Secretary of Defense William Perry attended the FIDAE '96 Air Show and Trade Exhibition in Santiago during 10-17 March. The Pentagon justification to Congress stated that participation at the bazaar is "consistent" with U.S. goals of "promoting democracy, increasing prosperity and trade ties, and achieving sustainable development" in Latin America. The Defense Department noted that, "Many representatives attending this event will be interested in U.S. weapon systems." Thus, the Pentagon sent a Blackhawk and Super Cobra helicopter, F/A-18 and F-16 fighter jets, C-130 and C-17 cargo planes, and aircraft refueling tankers to the show. The Pentagon assured Congress, however, that U.S. participation in the trade exhibition will not contribute to sales of U.S. equipment "which are qualitatively or quantitatively destabilizing in the region." The Pentagon's preliminary estimate of the cost to taxpayers was $500,000.
In June, the U.S. Navy and Air Force sent personnel and equipment to Jakarta for the Indonesian Air Show '96. Sighted at the show were a B-1 bomber, a Boeing KC-135 mid-air refueling tanker, McDonnell Douglas' F-15 and Lockheed Martin's F-16 fighter jets and P-3C naval aircraft. Ten planes from a carrier wing of the USS Carl Vinson conducted a fly-by demonstration. Justifying this presence, the Pentagon argued that "participation in the air show demonstrates our commitment to the Pacific region, contributes to our 'Cooperative Engagement' strategy and enhances military-to-military contacts."
Meanwhile, the U.S. Army was in force in Paris at the Eurosatory International Land Defense Equipment Exhibition '96. The show, which ran from 24-29 June, is the largest ground weapons bazaar in Europe. The Army sent the M1A1 Abrams main battle tank, M2A2 Bradley armored fighting vehicle, Patriot air defense system, Avenger missile system, AH-64A Apache attack helicopter and the UH-60A/L Blackhawk utility/assault helicopter. According to the Pentagon, "Eurosatory '96 provides an ideal forum to display U.S. technologies, thereby promoting standardization and interoperability with our allies. These factors are essential for combined operations during contingencies and deployments. DOD participation contributes to the spirit of cooperation embodied by Partnership for Peace and multi-national operations."
Nearly 260 American companies--more than ever before--attended the Farnborough '96 air show in London, in September. The Department of Defense loaned aircraft and personnel to the exhibitors, "to demonstrate the United States' involvement in international peace and stability." Among these aircraft were fighter jets, bombers (including the B-2), attack helicopters, and surveillance planes.
The '96 Euronaval International Maritime Defense Equipment Exhibition took place from 21-25 October in Paris. The Pentagon participated for the first time in this biennial exhibition by providing technology booths and military personnel. According to the DOD, "our involvement expands U.S. engagement in global strategy and enhances allied military preparedness. Military interopera- bility among U.S. and European nations has become critical in maintaining an effective deterrent and crisis response capability."
Wrapping up the tour, the U.S. Air Force sent two F-15 fighters and one C-130 transport plane to Bangalore for the Aero India '96 International Aerospace Exhibition, from 3-6 December. This was the first time the United States participated in an Indian air show. The Pentagon said that its participation in the bazaar "demonstrates the U.S. commitment to the entire Pacific region, contributes to U.S. regional cooperative engagement strategy, and enhances military-to-military contacts."
(Unless otherwise noted, quotes are from DOD press releases.)
On 30 September, the day before the new fiscal year began, President Clinton signed the FY 1997 foreign aid appropriations act into law. Congress froze funding at the FY 1996 level of $12.1 billion. Security assistance, which accounted for fully half of the total, is summarized in the accompanying box.
The act dramatically decreases the amount of subsidized loans to Greece and Turkey from previous years. (These loans finance arms sales but are separate from and in addition to the DELG program, see p. 2.) Congress also reduced Economic Support Funds to Turkey to one-third of the administration's requested level. At the same time, military assistance to countries in Central and Eastern Europe and to the former Soviet republics increased substantially.
State Dept. Reports on U.S. Clients
On 30 January, the State Department released its Country Reports on Human Rights Practices for 1996, as required by sections 116(d) and 502(b) of the Foreign Assistance Act. This year's report assesses the status of internationally recognized human rights in 194 countries, including all of those receiving U.S. military assistance. Following are summaries from the report on the human rights and democracy practices of some of America's leading arms customers during 1996. (See the tables on p. 7 and pp. 8-12 for the amounts and types of weapons sold or given to these countries.)
There are no democratic means by which the citizens of this Persian Gulf nation can change their government or political system, and the government strictly controls all political activity. The security forces committed numerous abuses during their efforts to quell civil disturbances: From January through July, the government used tear gas, rubber bullets, and live ammunition to disperse groups supporting the reestablishment of an elected parliament, the release of political prisoners, and other reforms.
The 1974 State Security Act invalidates the modest provisions protecting civil liberties and human rights found in the Constitution of the same year in cases which threaten "national harmony and security," as well as those involving arson, explosions, and attacks on individuals at work. This Act allows for the detention of persons for up to three years without trial. Although national law prohibits torture, there are "credible reports" that incarcerated prisoners are "beaten..., burned with cigarettes,...and... subjected to electric shock."
Internal armed conflict and widespread killings continued in Colombia, as an ever expanding list of guerrilla groups, paramilitary organizations, and the government's security forces are locked in combat. The political conflict and the war surrounding narcotics trafficking are the central causes of human rights' violations. While the government has taken some steps toward improving its record, the armed forces and police continue to commit a variety of serious violations, including threats, disappearances, and murder.
According to the State Department report, the government's early, high priority on human rights "became a casualty of the crisis over contributions by drug traffickers to the President's election campaign." The Samper Administration's recent lack of action against human rights abuses, particularly those involving the armed forces, verges on "tacit acquiescence."
In addition, political violence has eroded the democratic process, causing elected officials to resign and the public to refrain from voting.
The State Security Investigations Sector and the Central Security Force are locked in a violent confrontation with a number of terrorist groups. While the security forces limited their use of violence more this year than in the past, they still committed many serious human rights violations. Much of the justification for these abuses is found in the 1981 Emergency Law, which makes it easier to obtain an arrest warrant and detain individuals without charging them. During this detention, abuse and torture continue to be common.
The 1996 Nobel Peace Prize was awarded to Bishop Carlos Belo and Jose Ramos-Horta, widely publicizing the systematic oppression of the East Timorese population since 1975 by occupying Indonesian forces. While there was an overall decrease in incidents, the State Department noted that security forces continued to employ "harsh measures" in East Timor and Irian Jaya. These included extrajudicial killings, detention, torture, and obstruction of non-governmental and Catholic Church investigations into human rights violations.
The primary objective of the 450,000-member armed forces (which includes 175,000 police) is to maintain "internal unity and stability." The military wields significant power throughout Indonesian politics and society. Efforts to change this reality or reform other aspects of the government triggered harsh reactions in 1996, which "further infringed on fundamental rights." A case in point was the forcible takeover last July of the Indonesian Democratic Party headquarters. This action, and the ensuing riots sparked by it, resulted in five dead, 149 injured, and 23 missing, according to the National Human Rights Commission.
Since 1985, Israel has occupied a portion of southern Lebanon as a buffer zone, originally to block Palestinian infiltrators. Now that Israel and the PLO have established a cold peace, Hezbollah and hostile Islamic militias have become the primary rationale for maintaining the occupation zone. In April 1996, Israeli Defense Forces responded to Hezbollah rocket attacks from southern Lebanon into northern Israel with an aerial and artillery counterattack. One exchange started with Hezbollah mortar fire from near the United Nation's compound at Qana and ended in Israeli shells hitting the compound and killing 102 civilians that had gone there seeking protection. Through negotiations the two sides agreed to limit attacks on civilian populations, but on 11 February of this year Israeli jets again bombed Lebanon.
In September 1996, after Israel opened the Hasmonean Tunnel in Jerusalem and Arafat declared a general strike and protest marches in response, violence broke out first between the Israeli Defense Forces and Palestinian civilians and eventually between the Israeli and Palestinian defense forces. According to the State Department's report, "Palestinian sources contend that Israeli forces...
fired on demonstrators and Palestinian security personnel from helicopter gunships and elevated sniper positions."
While the government and the Zapatista National Liberation Army (EZLN) made considerable progress toward peace, the rise of the Popular Revolutionary Army (EPR) threatens to bring political violence back to several southern states. In its efforts first against the EZLN and now against the EPR, the security forces have committed numerous human rights abuses including extrajudicial killings, disapearances, and torture.
A number of human rights violations--specifically arbitrary arrest and physical abuse--resulted from the government's anti-contraband campaign. Most human rights allegations involve the Ministry of Interior, which is responsible for state security, elections, the U.N. referenda in the Western Sahara, the judicial system, local and regional budgets, and other social and political issues.
Though there is a constitution in place and a popularly elected parliament, ultimate authority rests with the King. He can terminate the tenure of any cabinet member, dissolve parliament, and rule by decree. Moreover, the constitution does not provide any protection for free speech, free press, or other civil liberties.
According to the State Department, the Saudi government "commits and tolerates serious human rights abuses," including arbitrary arrest, prolonged detention and physical abuse of prisoners. In addition, "the Govern- ment prohibits or restricts freedom of speech, the press, assembly, association, and religion." Since Saudi Arabia is a monarchy, without any democratic institutions, there is no method or right by which citizens can bring about government change.
In addition, the U.S. Justice De- partment has charged that the Saudi Government is withholding evidence and hindering the investigation into the bombing of a U.S. military housing complex at Al-Khobar, which killed 19 U.S. personnel and wounded many more.
The State Department cited "serious human rights problems" in Turkey in 1996, acknowledging that the situation deteriorated. Problems continue to center around Turkish government treatment of the Kurdish minority, and in particular around its prosecution of the war against the PKK. According to the report, "The Government forcibly displaced large numbers of non- combatants, tortured civilians, and abridged freedom of expression." In addition, the State Department said, "Torture remained widespread: Police and security forces often abused detainees and employed torture during periods of incommunicado detention and interrogation."U.S. Approved $25B in Arms Sales in FY 1996
The U.S. government approved $25.1 billion in exports of military equipment and services to more than 160 of the world's 180 countries in fiscal year 1996. Government-to-government sales, conducted through the Pentagon's Foreign Military Sales (FMS) program, rose to $10.5 billion, from $9 billion the preceding year. Egypt and Saudi Arabia were the largest customers, each contracting for over $1 billion of arms. In addition, $530 million of classified arms sales were made. P>
The State Department approved an additional $14.6 billion of export licenses for direct commercial sales (DCS) negotiated by U.S. arms exporters and foreign buyers. DCS figures do not necessarily represent final deals, but they do represent official permission for the sale to be completed. The State Department estimates that about half of the export licenses result in actual deliveries. FMS figures, on the other hand, represent contracts signed.
Foreign Military Sales and Direct
Commercial Sales by Country, FY 1996
During 1996, the Clinton Administration notified Congress of the following proposed government-negotiated Foreign Military Sales (FMS) agreements, export licenses for industry-negotiated Direct Commercial Sales (DCS), leases of equipment, and reduced price or free excess defense article (EDA) transfers to developing countries.
The Arms Export Control Act requires only that the administration notify Congress of FMS and DCS valued at $14 million or more. Sales below that threshold are not recorded here. (For a tally of the total dollar value of arms sales to all countries in FY 1996, see p. 7. ) Congress has 30 days to stop proposed FMS agreements or DCS licenses from going forward (15 days for NATO members and major non-NATO allies). For EDA transfers, the Pentagon is authorized to ship the items 15 or 30 days after Congress is notified.
To block a sale, a two-thirds majority in both houses of Congress must
pass a resolution of disapproval. With the exception of one transfer (marked with *), none
of the following sales were challenged, meaning that all may proceed.
A number of new reporting requirements established in last years legislation are likely to foster public oversight of U.S. arms transfer and military aid policies. These reports are highlighted below.
At the same time, one important transparency mechanism, the Price and Availability Report, was eliminated. These quarterly reports to Congress provided the only early warning to Congressional staff and the interested public of deals that the administration was considering (see ASM No. 32 p. 8). The provision of law mandating the P&A report was repealed last February.
Annual report on commercial and government arms exports H.R.2131, a law which amended several technical aspects of the Foreign Assistance Act and Arms Export Control Act, reinstated a requirement for an annual report specifying all transfers of U.S. defense articles and servicesthrough commercial and government channelsto each country. In 1981 the Reagan Administration abolished this report, which used to be known as the 657 report, after the section of law which mandated it. The compilation is due on February 1, covering exports during the preceding fiscal year. The report for FY 1996 is not yet available.
Publishing arms sales notices to Congress in the Federal Register
Study on the effectiveness of arms industry mergers
Quarterly reports on weapons coproduction agreements
Report on NATO enlargement
Report on financial assistance to the Khmer Rouge
Arms Proliferation Policy: Support to the Presidential Advisory Board
Congressional Presentation for Foreign Operations for FY 1997,
Conventional Arms Transfers to Developing Nations, 1988-1995,
The Costs of Expanding the NATO Alliance,
Country Reports on Human Rights Practices for 1996,
Defense Trade News and Export Policy Bulletin,
Developments in the Middle East
The DISAM Journal,
Export Administration Legislation,
Foreign Military Sales, Foreign Military Construction Sales and
Military Assistance Facts (as of 30 Sept 1995),
Foreign Operations, Export Financing and Related Programs
Appropriations for FY 1996--Parts 1, 2, 3, 4
Foreign Missile Threats: Analytic Soundness of Certain National
Global Organized Crime
Legislation on Foreign Relations Through 1996
Middle East Diversification and Defense Market Assessment:
Military Exports: Offset Demands Continue to Grow,
Military Technology and Conventional Weapons Export Controls: The
NATO Enlargement: NATO and U.S. Actions Taken to Facilitate
Enlargement, General Accounting Office
Offsets in Defense Trade, U.S. Department of Commerce , May 1996,
Overall U.S. Counternarcotics Policy Toward Colombia
Patterns of Global Terrorism, 1995,
Report of the Presidential Advisory Board on Arms proliferation
A Review of the President's certification Program for
Narcotics-Producing and Transit countries in Latin America
School of the America's: U.S. Military Training for Latin American
Terrorism--Looking Ahead: Issues and Options for Congress
U.S. Policy Toward Iran
U.S. Policy towards NATO Enlargement
World Military Expenditures and Arms Transfers, 1995,