Xiaodon Liang

Although the value of its arms sales agreements dipped slightly in 2010, the United States registered a marked increase in its share of the global arms trade as spending on imported conventional weapons systems dropped sharply worldwide, according to a recently released Congressional Research Service report.

Richard Grimmett, the author of “Conventional Arms Transfers to Developing Nations, 2003-2010,” found that the United States concluded arms sales agreements worth $21.3 billion in calendar year 2010, compared to $22.6 billion in 2009. The total value of world conventional weapons sales agreements dropped from $65.2 billion to $40.4 billion over the same period. As a result, the U.S. share rose from 34.7 percent to 52.7 percent.

The report, the latest in a series of annual analyses published since 1982, is based on unclassified U.S. government sources. It cites the “tenuous state of the global economy” as the leading cause of the significant fall in the total value of arms sales. Grimmett says that competition among major arms suppliers has become “increasingly intense” as each expands beyond traditional customers. Domestic economic concerns now motivate arms-supplier policy “as much, if not more” than foreign policy considerations, the report says.

The majority share of the market commanded by the United States is significantly higher than the country’s 38.6 percent average share over the eight-year period covered by the report. High-value agreements concluded last year by the United States include the sale to Israel of 19 F-35 Joint Strike Fighter aircraft for $2.8 billion and the sale of 60 UH-60M Black Hawk helicopters to Taiwan for $2.4 billion.

As in previous years, Grimmett emphasizes that follow-on parts and ammunition sales, upgrades, and support services constitute a large part of the total U.S. export figure. In 2010, Saudi Arabia signed contracts for support and spare parts for Abrams M1A2 and M1AS tanks worth $384 million and contracts for F-15 combat aircraft worth $230 million. Pakistan paid $220 million for midlife upgrades for its F-16 aircraft, while India purchased CBU-105 Sensor Fuzed Weapons, a type of cluster munition, for $384 million.

Russia retained a 19.3 percent share of the market, down slightly from 19.6 percent in the previous year despite a sharp drop in the value of its concluded agreements from $12.8 billion to $7.8 billion. The average value of annual Russian sales agreements over the past eight years was $10.1 billion.

The largest agreements concluded by Russia in 2010 were for the sale to India of 29 MiG-29K combat aircraft worth $1.5 billion and the sales to Algeria of 16 Su-30MKI fighters and to Uganda of five Su-30MK2 fighters, worth at least a collective $1.2 billion.

Although Russia and the United States were able to maintain their positions as leading arms suppliers, major European exporters suffered. The combined value of all arms export agreements signed by France, Germany, Italy, and the United Kingdom fell from $17.1 billion in 2009 to $4.6 billion in 2010. In terms of market share, those four states’ deals constituted only 11.4 percent of global export agreements, well below their eight-year average of 23.7 percent.

According to Grimmett, each of the main European exporters has experienced occasional years of strong sales, usually as the result of large contracts with a single arms buyer or a small number of major purchasers in one year. However, actual deliveries by the four states have continuously declined since 2003, when the value of weapons systems delivered to all clients was $14.8 billion in 2010 dollars. The report says continued foreign arms sales are important for these four states because they are a means to support domestic weapons development programs.

Key Markets in Developing World

Arms sales to the developing world in 2010 dropped approximately 38 percent from 2009 figures, matching the trend in total sales. The value of acquisitions by the developing world fell to $30.7 billion from $49.8 billion in 2009. As a fraction of sales worldwide, developing countries continued to make combined purchases worth slightly more than three-fourths of the total. Previous years saw a gradual climb in that proportion from 55.7 percent in 2003 to 78.8 percent in 2008.

The U.S. share of the developing world market in 2010 rose to 49 percent, approaching the high of 54 percent reported for 2008. The 2008 share was initially estimated by Grimmett to be closer to 70 percent (see ACT, November 2009), but subsequent revisions have lowered that figure.

The developing world is defined by the report as including all countries except Australia, Canada, Japan, New Zealand, Russia, the United States, and European countries.

Asia has consistently proved an important destination for arms exports. During the 2007-2010 period, that continent accounted for 33.2 percent of the worldwide conventional weapons market, according to the report.

In 2010, Taiwan signed agreements worth around $2.7 billion. A U.S. decision to approve the sale of helicopters, mine-clearing vessels, and Patriot missiles to Taiwan incurred diplomatic retaliation from China in January 2010. (See ACT, March 2010.)

India signed agreements to purchase approximately $5.8 billion in imported weapons systems, thus becoming the largest arms purchaser of 2010. The United Kingdom secured an agreement in August 2010 to sell India 57 Hawk jet trainers for $1 billion. Italy sold India 12 AW101 transport helicopters for approximately $765 million, according to a March 2010 press release issued by the manufacturer of the helicopters, AgustaWestland.

In the eight years covered by the report, India purchased around $38.5 billion in weapons systems. It has concluded several major acquisitions in 2011, including a purchase of U.S. C-17 cargo aircraft and upgrades for its aging fleet of 51 French Mirage 2000 fighter jets.

Russia remains India’s “principal” arms supplier, according to Grimmett.

The Near East, which is defined by Grimmett to include the Middle Eastern and North African Arab states as well as Iran, accounted for more than half of the value of global arms sales to developing countries from 2007 to 2010. During that period, combined U.S. and major European exporters’ arms sales constituted a dominant 82 percent of purchases in the region. Saudi Arabia led purchasers in the Near East with $2.2 billion in new acquisitions, while Egypt, Israel, Algeria, Syria, and Jordan all ranked among the world’s top 10 recipients. Saudi Arabia is likely to conclude further agreements with the United States following approval in November 2010 by Washington of a further $60 billion in possible transfers. (See ACT, December 2010.)

Deliveries Close Gap

In line with general contraction in the arms market, the total value of worldwide weapons deliveries declined in 2010 to $35.0 billion. This figure represents only a 7.9 percent drop from the 2009 figure of $38.0 billion, compared to the 38 percent fall in the value of arms agreements. Nevertheless, the 2010 sum is the lowest figure for arms deliveries since 2005. Deliveries to developing countries increased from $19.5 billion in 2009 to $21.9 billion in 2010.

The gap between total agreements and deliveries closed significantly to $5.4 billion, the lowest figure since 2003. Gaps between agreements and deliveries arise due to the time needed to implement a contract and the possibility of cancellations or delays. As the arms transfers arranged during the recent years of high sales volume are implemented, deliveries have remained strong while the effects of the economic downturn have discouraged further sales, leading to the narrower gap. The eight-year average gap from 2003 to 2010 between arms agreements and deliveries was $17.3 billion.

Daniel Horner

The organizers of a planned 2012 conference on creating a zone free of weapons of mass destruction (WMD) in the Middle East have chosen a Finnish diplomat as the coordinator and Finland as the host country, UN Secretary-General Ban Ki-moon said in an Oct. 14 press statement.

The long-awaited announcement, which named Jaakko Laajava, Finland’s undersecretary of state for foreign and security policy, as the coordinator, is the first major decision on the conference since the parties to the nuclear Nonproliferation Treaty (NPT) agreed during their 2010 review conference to hold the meeting. (See ACT, June 2010.)

Under the terms of the review conference’s final document, the conveners of the 2012 meeting are the secretary-general and the three countries that had co-sponsored a 1995 resolution calling for a Middle Eastern WMD-free zone—Russia, the United Kingdom, and the United States. Ban’s Oct. 14 announcement was a joint statement by him and those three countries.

In statements at the United Nations that day, the announcement was welcomed by several countries, including Qatar on behalf of the Arab Group. According to the 2010 NPT Review Conference final document, the decisions on the host country and coordinator are to be made “in consultation with the States of the region.”

In an Oct. 24 interview, a U.S. official called the decision “a big landmark on the road to 2012” and said it showed that the countries involved could work together to reach agreement. Egyptian Ambassador to the United Nations Maged Abdelaziz, in an Oct. 27 interview, also welcomed the decision.

In July, Canada, Finland, and the Netherlands were announced as candidates to host the conference. Interviews in August with diplomats involved in preparing for the meeting strongly indicated that Finland was the front-runner. (See ACT, September 2011.) However, the final decision apparently was more complicated.

Package Deal

The three co-sponsors pushed for the two elements to be linked, that is, for the coordinator to be from the host country. In the interview, the U.S. official said it was important to have this arrangement because the coordinator will have to work very closely with officials from the host country. Having a coordinator from a different country could lead to inefficient “separate tracks,” he said.

The Arab Group had insisted, as one of its conditions, that the coordinator be someone of at least the ministerial level. The group ultimately accepted Laajava after “thorough consultations” with Ban and the three co-sponsors, Abdelaziz said. One factor influencing the countries in the group was that they did not want to delay the process, which needs to be “rapidly moving,” he said.

The U.S. official also said that, after multiple meetings on the issue, the participants were determined to reach agreement on the coordinator and host because they “didn’t want to lose all the momentum [they] had gained.” On the question of Laajava’s diplomatic stature, he said that “though not everyone knows who he is, he can get the job done” and is a better choice than someone who would make “a splashy headline but wouldn’t be able to deliver.” Abdelaziz also said Laajava was a “good candidate” with “the right qualifications.”

Even with a key issue now settled, Abdelaziz and the U.S. official were cautious about predicting when the conference would take place. Abdelaziz said the timing is “an open question” because of the amount of preparation still required. At such conferences, the participants typically work out 75 to 80 percent of the final document beforehand, he said. It would be a mistake to hold the conference too early and risk having “fighting at the conference,” he said.

The U.S. official also emphasized the importance of having the conference “done right.” He suggested that a reasonable guess would be that it would be held in the second half of 2012.

Upcoming Forum

A potential indicator of the prospects for the conference, the U.S. official said, is an International Atomic Energy Agency forum, scheduled for Nov. 21-22, to discuss the experiences of existing nuclear-weapon-free zones and how they “could be relevant to the Middle East,” as the agency’s Sept. 2 announcement put it.

Emphasizing that the forum had no “direct link” to the 2012 meeting, the U.S. official said it was an opportunity to discuss many of the issues that will figure prominently there without “infus[ing] the forum with all the politics” of next year’s event. The forum has the potential to show that the countries involved in the issue can have “a constructive dialogue” or, alternatively, that they have “a long way to go,” he said.

Abdelaziz said another important element for the 2012 event is increased involvement by nongovernmental organizations. He noted that the section of the 2010 NPT Review Conference final document dealing with the Middle East meeting encourages involvement by these groups.

Peter Crail

Following U.S. accusations on Oct. 11 that elements of Iran’s government conspired to assassinate the Saudi ambassador to the United States, members of Congress reiterated calls to increase sanctions on foreign firms doing business with Iran.

Obama administration officials insisted that they were taking steps to strengthen sanctions against Iran in response to the alleged plot and Iran’s nuclear program.

Lawmakers particularly insisted that the United States penalize foreign firms making purchases through the Central Bank of Iran (CBI). Many countries, including U.S. allies in Europe and Asia, rely on oil imports from Iran and make payments through the CBI. Cutting off access could have implications for global oil markets.

“Our best hope for slowing the Iranian nuclear train is to bring its financial machinery to a grinding halt,” Rep. Howard Berman (D-Calif.), the ranking member of the House Foreign Affairs Committee, told the panel during an Oct. 14 hearing.

“Sanctioning banks and companies in other countries that do business with Iran’s central bank would have a uniquely powerful impact on the Iranian economy,” Berman added.

In August, more than 90 senators signed a letter to President Barack Obama calling on the administration to sanction the CBI. Sen. Mark Kirk (R-Ill.) has threatened to introduce legislation to do so if the administration did not take that step by the end of the year. (See ACT, September 2011.)

Members of Congress pressed administration officials in hearings Oct. 13 and 14 on U.S. efforts to toughen sanctions against Iran and the prospect of sanctioning the CBI. The officials said that they were focused on implementing the existing sanctions and would seek international cooperation to cut off the CBI from the global financial system.

“We are engaged in an effort to develop the multilateral support that would be…critically important in having action against the CBI be really effective,” Undersecretary of the Treasury for Terrorism and Financial Intelligence David Cohen told the House committee during the Oct. 14 hearing. Cohen said current sanctions were having a serious impact on Iran’s financial sector and that many foreign banks already were cutting relationships with Tehran. “Iran is now facing unprecedented levels of financial and commercial isolation,” he told the committee.

Congress also is mulling additional efforts to target other countries doing business with Iran, in particular with Iran’s Islamic Revolutionary Guard Corps. Legislation introduced in the House and Senate would sanction foreign firms purchasing oil or gas from Iran if the Guard was involved in the transaction, with the Senate bill extending this prohibition to include any transaction in which the Guard was involved.

The Guard has become increasingly involved in many aspects of Iran’s economy, including its energy sector.

The House foreign affairs panel is expected to take action on its bill early this month. That bill also would place greater limitations than current law on the president’s ability to waive the sanctions and eliminates such waivers in some cases. The Obama administration, like the two previous administrations, has sought to maintain waiver provisions for such sanctions to preserve diplomatic flexibility and to prevent the sanctions from causing friction with diplomatic partners.

Former National Security Council staffer Gary Sick said in an Oct. 13 e-mail to Arms Control Today that sanctions have a role as “bargaining chips” if the United States is willing and able to lift them in return for improvements in Iran’s policies, such as accepting additional International Atomic Energy Agency safeguards. “That gives us an exceptional array of tools we could use,” he said, adding that the “greatest failing of our diplomatic track” has been that the United States has not used such leverage in negotiations.

During congressional testimony, U.S. officials said the administration still is adhering to a “dual-track approach” of negotiations and sanctions, as is the so-called P5+1, a group comprising the five permanent members of the UN Security Council (China, France, Russia, the United Kingdom, and the United States) and Germany.

In an Oct. 21 letter to Iranian nuclear negotiator Saeed Jalili, EU High Representative for Foreign Affairs and Security Policy Catherine Ashton, who represents the P5+1, said the six countries would be willing to meet with Iran “within the coming weeks” if Iran is ready to “engage seriously in discussions” on the nuclear issue.

The last meeting between the two sides, in January, ended without agreement for follow-on talks. In a Jan. 22 statement, Ashton said that “the Iranian side was not ready” for constructive talks, having demanded the lifting of sanctions and recognition of a right to enrich uranium as preconditions for progress. She said those preconditions “are not a way to proceed.”

In Oct. 6 remarks to the First Committee of the UN General Assembly, Iranian UN ambassador Mohammed Khazaee said that his country was ready to engage in “serious and constructive negotiation” without preconditions.