Defying a continuing decline in the global conventional arms market, the United States increased its weapons sales again last year, according to an annual report published Aug. 26 by the Congressional Research Service (CRS).
The United States accounted for more than half of all new arms sales agreements in 2003, as global arms sales declined for the third year in a row, while U.S. sales rose for the second year running. Countries worldwide agreed to nearly $26 billion in new arms purchases last year and made actual transfers worth almost $29 billion. The figures were compiled by Richard Grimmett, a CRS analyst who for more than two decades has authored the report, which is generally considered the best public accounting of the global arms trade.
The worldwide totals represented a continuing slowdown in the arms bazaar over the past several years from peaks of $41 billion in new agreements in 2000 and $57.5 billion in deliveries in 1998. All figures are adjusted for inflation.
Arms sales agreements typically take years before they result in actual exports. For example, the high level of 1998 deliveries resulted largely from the completion of a splurge of agreements signed following the 1991 Persian Gulf War.
Grimmett attributed the downturn of the past few years to several factors, the most prominent being a lack of money in the pockets of potential buyers. Due to this shortage of funds, many governments are maintaining and upgrading their existing weaponry rather than purchasing expensive new hardware. There is also a growing interest by some countries in building their own weapons instead of importing them. Moreover, several major arms purchasers, particularly in the Middle East, are still absorbing armaments acquired over the last decade.
Still, the United States, which has been unrivaled as an arms exporter since the end of the Cold War, bucked the downward trend. Washington secured nearly a $1 billion increase from 2002 in new arms sales agreements, to $14.5 billion—its second-highest mark in the eight-year period covered by the report. Since 1996, the United States has concluded $105 billion in arms sales, while its closest competitor, Russia, amassed only $40 billion in new deals.
Based on its past sales, the United States is best positioned to take advantage of the growing emphasis on retaining and relying on older weapons. “The sale of munitions, upgrades to existing systems, spare parts, training and support services to developing nations worldwide account for a very substantial portion of the total value of U.S. arms transfer agreements,” Grimmett noted.
Russia, which still ranked second among all arms exporters last year despite a $1.6 billion falloff in new agreements to $4.3 billion, is not as well positioned as the United States. Although Russia has orchestrated an upswing in its arms sales since the late 1990s, China and India account for most of the deals, and they are increasingly looking to produce their own weapons and exploring new partners with which to do business. New Delhi is testing the waters with Israel and the United States, while Beijing is trying to persuade Europe to scrap its almost 15-year-old arms embargo on Beijing. (See ACT, September 2004.)
Russia’s poor reputation for helping maintain the weapons it sells diminishes the appeal of its relatively cheaper arms. Grimmett cited the Kremlin’s “perceived inability to provide consistent high-quality follow-on support, spare parts, and training for the weapons systems it sells” as a “significant obstacle” to Russia luring customers away from Western exporters.
Although some European countries negotiated slight arms sales increases in 2003, they are generally being pinched by the combined effects of the general decline in the arms market, stiff Russian competition, and a commanding U.S. presence. Their collective market share has fallen from a high of almost half several years ago to less than a quarter.
Germany staked out the third-highest sales total for all exporters with $1.4 billion. France followed with $1 billion, and Italy cemented $600 million in new deals. They have an uphill climb if they want to boost their sales further, according to Grimmett. “The demand for U.S. weapons in the global arms marketplace, from a large established client base, has created a more difficult environment for individual West European suppliers to secure large new contracts with developing nations on a sustained basis,” he wrote.
The most heated near-term competition for arms sales will likely center on Asia, where several countries, led by China, have military modernization programs underway. This reflects a recent tilt away from countries in the Middle East, many of which went on arms-buying binges during the first half of the last decade. Whether the U.S.-led ouster of Saddam Hussein from power in Iraq will lead to a further reduction in arms sales to the region because neighboring countries might feel safer “remains to be determined,” Grimmett stated. Latin America and Africa have few countries with the resources to make major arms buys anytime soon.
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