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– Suzanne DiMaggio
Senior Fellow, Carnegie Endowment for International Peace
April 15, 2019
U.S. Atop Expanding Global Arms Market

Jeff Abramson

In 2007 the United States again led the world in delivery of and sales agreements for conventional arms. In that year, the value of global transfer agreements rose to nearly $60 billion, up approximately $5 billion from 2006, with the majority of the increase coming in arrangements with developing countries. The value of global deliveries fell, however, according to the latest annual report by Congressional Research Service analyst Richard Grimmett.

Near Eastern, Asian Agreements Fuel Arms Sales

Sales to countries in the developing world accounted for more than 70 percent of all conventional arms agreements, and more than $4 billion of the annual increase in 2007. The United States retained its position as the top arms supplier in the expanding global market, followed by Russia and the United Kingdom, based on figures released Oct. 23 in a report entitled "Conventional Arms Transfers to Developing Nations, 2000-2007." In the study, developing countries are defined as all those except Australia, Canada, Japan, New Zealand, Russia, the United States, and European countries.

In 2007 the United States concluded pacts to transfer $24.8 billion worth of conventional arms, with $12.2 billion of that figure going to developing countries. The total value of the agreements reached are the largest for Washington since 2000.

Many of the major U.S. agreements were made with countries in the Near East, the developing world's largest arms market. Key U.S. pacts were concluded with the United Arab Emirates for 26 UH-60M Black Hawk helicopters ($800 million) and 20 High Mobility Artillery Rocket Systems launchers and rockets ($595 million); with Egypt for co-production of 125 M1A1 Abrams tanks ($771 million); and with Saudi Arabia for 152 jet engines ($386 million) and for services to F-15 aircraft ($319 million). (See ACT, January/February 2008.)

The Near East and Asia accounted for the vast majority of developing world sales agreements, led by transfer agreements with Saudi Arabia ($10.6 billion), India ($5.0 billion), and Pakistan ($4.2 billion).

During 2004-2007, countries in the Near East accounted for 46 percent of the developing world market. Comprised primarily of Arab states and Israel, the Near Eastern market became increasingly competitive during the period. During 2000-2003, the United States provided more than 75 percent of transfer commitments in the region. During 2004-2007, however, the U.S. share fell to 33 percent, and the United Kingdom's rose to 28 percent.

In part due to a Saudi Arabian order of 72 Typhoon Eurofighter aircraft valued in excess of $9 billion, the United Kingdom remained the world's number three supplier, but surpassed Russia as the number two supplier to the developing world. Overall last year, the United Kingdom concluded $9.8 billion in global agreements, its largest annual amount this decade, and more than double the 2006 value of $4.2 billion. At the same time, the United Kingdom has been championing the creation of a global arms trade treaty that could establish new international standards for such deals.

The United Kingdom also led a group of western European suppliers, which included France, Germany, and Italy, whose combined share of developing world trade agreements expanded from $7.1 billion in 2006 to $13.6 billion in 2007. Although much of the one year increase can be attributed to the Eurofighter deal, this group collectively claimed a greater percent of the developing world market during the 2004-2007 period. In the Near East, for example, major western European suppliers concluded nearly 38 percent of arms agreements during 2004-2007, up from less than 6 percent during 2000-2003.

In Asia, which accounted for 42 percent of the developing world arms market, Russia maintained its arms sales lead. Here, too, competition grew more intense. During 2000-2003, Russia claimed nearly 50 percent of the Asian market, but secured only 36 percent during 2004-2007. Sales to China and India remained the backbone of this region for Russia, with India placing orders in 2007 for 347 T-90 main battle tanks, 40 Su-30MKI combat fighter aircraft, and a number of MiG-29 fighter aircraft. Also within the region, Indonesia made fighter aircraft and helicopter purchase agreements with Russia totalling more than $500 million.

In 2007, Russia concluded $10.4 billion in global agreements, $9.7 billion of which was with the developing world, ranking Russia second globally and third in trade with the developing world. Overall, however, global Russian agreements fell more than $4 billion from a $14.6 billion level in 2006. The report notes that "Russia's efforts to expand its arms customer base have met with mixed results" and that "the absence of major new research and development efforts...can jeopardize long-term Russian foreign arms sales prospects." Outside of Asia, Russian arms deals with Venezuela (see ACT, November 2007), Algeria, Iran, and Syria are highlighted in the report.

Africa and Latin America remained smaller markets, together accounting for just more than 11 percent of the developing world arms trade. Weapons transfers within these regions typically consist of less advanced systems and small arms and light weapons, which are less expensive.

In 2007, China remained an important supplier of such items to African countries, especially small arms and light weapons. Transfers of these weapons to regions of conflict has been a concern for the United States and the global community, highlighted earlier this year when a Chinese shipment bound for Zimbabwe was blocked by dockworkers in South Africa who refused to unload 70 tons of small arms. (See ACT, June 2008.)

China also engaged in trade of select advanced weapons, concluding a contract with Pakistan to manufacture J-17 fighter aircraft. The report also cited past missile technology transfers to Pakistan as well as possibly Iran and North Korea, raising questions about China's commitment to follow transfer restrictions laid out in the Missile Technology Control Regime (MTCR). China is not an MTCR member but states that it complies with some MTCR guidelines to limit the transfer of missile technology. (See ACT, April 2007.)

Arms Deliveries Decline

In 2007, global delivery of arms and services declined to $31 billion, down more than $2.5 billion from 2006. Arms deals can take years to implement, meaning that sales and delivery totals rarely match. From 2001 to 2003, global deliveries surpassed new agreements, but since then have lagged behind new transfer commitments. The 2007 gap between the agreements and deliveries, $29 billion, was the largest in the 2000-2007 period.

During 2007, delivery totals dropped for the top three supplier countries compared to 2006. The United States accounted for $12.8 billion in deliveries, the largest share of global arms deliveries, and a decline of less than $100 million compared to the previous year. Russia delivered $4.7 billion in 2007, down from $6.0 billion in 2006. The United Kingdom delivered $2.6 billion in arms and services, its lowest total in the eight-year period and down significantly from a $4.4 billion total in 2006.

The report does not speculate on whether recent developments, including fallen oil prices and a global financial crisis, will lead to the cancellation of future deliveries or shrinkage of future agreements. Grimmett told Arms Control Today, however, that a noticeable decline is possible, "It remains to be seen if the 2007 sales levels will be maintained given the economic circumstances with which most major suppliers are confronted."