Jeff Abramson and Meghan Warren
Although the United States retained its place as the world’s top arms supplier, its share of conventional arms agreements dropped in a shrinking 2009 global market, according to a recent Congressional Research Service report.
“Conventional Arms Transfers to Developing Nations, 2002-2009,” the latest in a series of reports authored annually since 1982 by security specialist Richard Grimmett, found that the value of arms transfer agreements in 2009 totaled $57.5 billion, an 8.5 percent drop from the 2008 value of $62.8 billion and the second consecutive year of decline. Grimmett cites numerous reasons for the trend; he concludes that “the clear decline in all arms orders collectively in 2009 reflects, in part, the effect of the international recession.”
The United States and Russia continue to dominate the market, ranking first and second, respectively, as arms suppliers. In 2009, France jumped to third overall, increasing its agreements from $3.2 billion in 2008 to $7.4 billion. (See ACT, October 2009.)
Having dominated 2008 arms agreements with 60.6 percent of the global total by value, the United States saw its arms agreements drop sharply in 2009 to $22.6 billion from $38.1 billion the previous year, only 39.3 percent of the global total. According to the report, the unusually high U.S. share in 2008 could be attributed to the large number of high-value agreements, which are rarely repeated in consecutive years. The latest figure is closer to the average U.S. market share of 39.9 percent over the 2002-2009 period.
As in previous years, the United States’ primary developing-world clients tended to be in the Near East or Asia. High-value agreements in 2009 included $3.2 billion for a Patriot air defense missile system for Taiwan, $1.7 billion for F-16 fighter aircraft for Egypt, $745 million in support to the United Arab Emirates for Black Hawk helicopters, and $540 million in support to Saudi Arabia for Apache helicopters.
Unlike the United States, Russia saw its arms transfer agreements decrease significantly in 2008, but rise in 2009. Russia nearly doubled the value of its arms agreements, increasing to $10.4 billion in 2009 from $5.5 billion in 2008. Although Grimmett notes that sales programs to India, and to a lesser extent China, will be central to maintaining Russia’s arms programs, Moscow has sought to foster closer ties with Latin American and Southeast Asian states. In 2009, Russia inked a deal with Venezuela to provide a $2.2 billion loan for the procurement of main battle tanks, armored cars, and anti-aircraft missile systems. Other notable transfer agreements included $1.8 billion in diesel submarines and $500 million in Su-MK2 fighter aircraft to Vietnam, $570 million in MiG-29 aircraft to Myanmar, and $500 million in jet engines for China’s J-10 fighters.
During 2002-2009, Russia held approximately 17.7 percent of the arms transfer market, and with 18.1 percent in 2009 returned to its approximate eight-year average. Using new information, Grimmett updates all prior-year figures, increasing Russia’s 2008 total and placing it second to the United States in global agreements in each of the last eight years. Originally, Italy placed second in global agreements for 2008, but the most recent report lowers it to third place for that year.
As in previous reports, Grimmett identified deficiencies in Russia’s research and development investments and pointed to efforts to acquire French naval technology through the prospective purchase of Mistral ships as an example of not keeping pace with other suppliers. He concludes that the weakness of Russian research and development is “a factor that may deter expansion of the Russian arms client base.”
Developing States Are Central
Agreements with developing states, which comprised 78.4 percent of the global market in 2009, remain the primary drivers of fluctuation in the international arms market. The total value of these agreements was $45.1 billion in 2009, down $3.7 billion from 2008 totals, according to the report. Grimmett defines developing nations as “all countries except the United States, Russia, European nations, Canada, Japan, Australia, and New Zealand.”
The market for arms sales to developing countries remains fiercely competitive, with Russia, the United States, the United Kingdom, and other European countries all vying for the limited resources of smaller, less wealthy countries. Developed states seeking to ink these lucrative agreements often pursue innovative financing solutions to secure deals for high-cost weapons systems.
In contrast to recent years, two Latin American countries led the list of developing states making arms agreements in 2009. Brazil approved $7.2 billion in arms purchases, the bulk of which were related to contracts for diesel submarines from France. Venezuela ranked second among developing states with $6.4 billion in such approvals, largely as a result of trade with Russia.
Countries in Asia and the Near East comprised the remainder of the top 10 developing states concluding arms transfer agreements in 2009. During 2006-2009, Saudi Arabia ranked as the top importer of foreign arms, constituting 17.2 percent of all developing states’ arms transfer agreements in the period, using values not adjusted for inflation. In 2009, however, it ranked as the third-largest importer, granting $4.3 billion in agreements.
Arms deals with Saudi Arabia are controversial. Even before an expected official notification to Congress of a multibillion-dollar U.S.-Saudi deal, Reps. Anthony Weiner (D-N.Y.), Shelley Berkley (D-Nev.), and Christopher Carney (D-Pa.) promised to try to block the agreement, writing in a Sept. 15 letter to President Barack Obama that “Saudi Arabia is not deserving of our aid, and by arming them with advanced American weaponry we are sending the wrong message.”
Although ninth in agreements for 2009, India remains a top prize for major suppliers, ranked second during 2006-2009 and accounting for 10 percent of developing states’ arms transfer agreements in that period. Last year, Washington and New Delhi agreed on defense trade procedures, and Obama is scheduled to visit India later this year. (See ACT, September 2009.) Although not specifically identifying arms sales, Secretary of State Hillary Rodham Clinton said in a wide-ranging foreign policy speech Sept. 8 that the United States is “laying the foundation for an indispens[a]ble partnership. President Obama will use his visit in November to take our relationship to the next level.” Neighboring Pakistan concluded approximately one-half the value of agreements as India did during 2006-2009, according to data in the report.
China, whose arms supply deals often involve small arms and light weapons for Asian, African, and Near Eastern states, concluded a contract to sell 36 J-10 fighter aircraft to Pakistan for $1.4 billion. Although Pakistan remains a key client, China’s overall arms transfer agreements, valued at $1.7 billion, or 3 percent, of the market in 2009, indicate that it “does not appear likely to be a key supplier of major conventional weapons in the developing world arms market in the immediate future,” the report said.
Deliveries Continue to Decline
Global arms deliveries totaled $35.1 billion in 2009, down from $36.7 billion in 2008. The 2009 figures show a gap of $22.4 billion between agreements and deliveries. For the developing world, actual deliveries dropped to $17.0 billion from $20.5 billion, creating a gap between agreements and deliveries of $28.1 billion for those states. These figures represent the lowest yearly total of deliveries in the 2002-2009 period covered by Grimmett’s report.
The gulf between agreements and deliveries often arises as a result of delays in the implementation of arms transfer agreements. These agreements may require years to come through and are subject to change based on economic conditions and military requirements. The total value of agreements is $117.7 billion higher than that of deliveries over the eight-year period of the report.
The United States remains dominant in the realm of actual arms deliveries. It closed in on 41 percent of total deliveries with $14.4 billion delivered in 2009, up from $12.2 billion in 2008. Russia was a distant second, delivering $3.7 billion in weapons, a 38.7 percent drop from $6.0 billion in 2008. Germany ranked third with $2.8 billion, down $1.1 billion from 2008. The three countries combined constituted almost 60 percent of total weapons deliveries in 2009.