The Arms Trade is Big Business

World Military Spending Out Does Anything Else

As detailed further on the next page on military expenditure¹, world military spending has now reached one trillion dollars, close to Cold War levels.

As summarized from the Military Balance, 2000/2001, by the International Institute for Strategic Studies² (October 2001), for the larger arms-purchasing nations each year:

• Arms procurement is normally 20-30% of their military budgets
• The main portion is usually on operations, maintenance and personnel
• Some 40 to 50 billion dollars are in actual deliveries, (that is, the delivery of sales, which can be many years after the initial contract is signed)
• Each year, around 30-35 billion dollars are made in actual sales (agreements, or signing of contracts).

In more recent years, annual sales of arms have risen to around $50-60 billion although the global financial crisis is slowly beginning to be felt in arms sales too.

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Arms sales figures

Every year, the U.S. Congressional Research Service releases an authoritative report looking at arms transfers to the developing world.

The latest report (as of writing), released August 24, 2012, is titled Conventional Arms Transfers to Developing Nations, 2003-2011³.

These reports are also known as the Grimmett Report, after the author, Richard F. Grimmett. They provide insight into where the arms are going. The following breakdowns are based on this report.

Global Arms Sales By Supplier Nations

The 5 UN Security Council permanent members are generally the largest arms dealers (though others such as Germany often feature quite high - higher than China for example):

Arms sales (agreements), by Supplier, 2004-2011 (in billions of constant 2011 U.S. dollars)

Supplier	Total Sales in US Dollars (billions)	Percent of total sales
Source: Richard F. Grimmett, CRS Report for Congress; Conventional Arms Transfers to Developing Nations, 2004-20116, August 24, 2012 Notes: Percentages are rounded; Each country shown as follows: developing countries industrialized countries If you are viewing this table on another site, please see https://www.globalissues.org/article/74/the-arms-trade-is-big-business7 for further details and context.
United States	220.608	44%
Russia	83.323	17%
France	41.96	8%
United Kingdom	27.037	5%
China	17.808	4%
Germany	22.068	4%
Italy	14.278	3%
Other European	48.259	10%
Others	27.109	5%

Global Arms Sales Trends 2004-2011

Developing countries are the main recipients of arms sales:

• As a chart
• Raw data

As a chart

Raw data

Arms sales (agreements), 2004 to 2011, (in billions of constant 2011 U.S. dollars)

Year	Total Dollars	Percentage of total
Source: Richard F. Grimmett, CRS Report for Congress; Conventional Arms Transfers to Developing Nations, 2004-20118, August 24, 2012 Notes: Percentages are rounded; Each country shown as follows: developing countries industrialized countries If you are viewing this table on another site, please see https://www.globalissues.org/article/74/the-arms-trade-is-big-business9 for further details and context.
2004	51.054	10%
2005	52.538	10%
2006	64.505	13%
2007	66.338	13%
2008	70.567	14%
2009	67.765	13%
2010	44.508	9%
2011	85.274	17%

Developing nations are top recipients

The Grimmett Report also notes that,

• Developing nations continue to be the primary focus of foreign arms sales activity by weapons suppliers though most arms are supplied by just 2 or 3 major suppliers.
• Despite the global economic climate¹⁰, major purchases continue to be made by a select few developing nations in these regions, principally India in Asia, and Saudi Arabia in the Middle East.
• Saudi Arabia and India’s large spending reflects their modernization efforts since the 1990s.
• The strength of individual economies of a wide range of nations in the developing world continues to be a significant factor in the timing of many of their arms purchasing decisions.
• Increases in the price of oil, while an advantage for major oil producing states in funding their arms purchases, has, simultaneously, caused economic difficulties for many oil consuming states, contributing to their decisions to curtail or defer new weapons acquisitions.
• A number of less affluent developing nations have chosen to upgrade while reducing new purchases.

For arms suppliers, despite the impact the global economic situation has had recently on sales, a number of weapons-exporting nations have increased competition for sales, going into areas and regions they may not have previously been prominent. Competition between sellers will only intensify due to the limits for growth, Grimmet also notes.

Although recent years were showing a sign of declining sales, 2011 saw a massive jump, almost solely by what the report describes as an extraordinary increase in market share by the US, whose massive sales to Saudi Arabia distorted an otherwise downward trend in arms sales.

Many Middle East countries purchase arms from the US which became the prime supplier to the region after the 1991 Persian Gulf crisis, the report notes. In more recent years, concerns (real or exaggerated) over Iran have contributed to further purchases in addition to military modernization programs.

Just ten developing nation recipients of arms sales accounted for 61% of the total developing nations arms market between 2004 and 2011:

Arms sales (agreements) by the Leading Recipient Developing Nations, 2004-2011 (in billions of current U.S. dollars)

Rank	Country	Amount spent	Percent of total
Source: Richard F. Grimmett, CRS Report for Congress; Conventional Arms Transfers to Developing Nations, 2004-201111, August 24, 2012 Note: Percentages are approximate. If you are viewing this table on another site, please see https://www.globalissues.org/article/74/the-arms-trade-is-big-business12 for further details and context.
1	Saudi Arabia	75.7	21%
2	India	46.6	13%
3	UAE	20.3	6%
4	Egypt	14.3	4%
5	Pakistan	13.2	4%
6	Venezuela	13.1	4%
7	Brazil	10.9	3%
8	Algeria	10.3	3%
9	Israel	9.5	3%
10	South Korea	9.2	2%
11	All other developing countries	145.168	39%

What is sold?

The Grimmett Report describes items counted in the weapons categories as follows:

Tanks and Self-propelled Guns:

This category includes light, medium, and heavy tanks; self-propelled artillery; self-propelled assault guns.

Artillery:

This category includes field and air defense artillery, mortars, rocket launchers and recoilless rifles — 100 mm and over; FROG launchers — 100mm and over.

Armored Personnel Carriers (APCs) and Armored Cars:

This category includes personnel carriers, armored and amphibious; armored infantry fighting vehicles; armored reconnaissance and command vehicles.

Major Surface Combatants:

This category includes aircraft carriers, cruisers, destroyers, frigates.

Minor Surface Combatants:

This category includes minesweepers, subchasers, motor torpedo boats, patrol craft, motor gunboats.

Submarines:

This category includes all submarines, including midget submarines.

Guided Missile Patrol Boats:

This category includes all boats in this class.

Supersonic Combat Aircraft:

This category includes all fighter and bomber aircraft designed to function operationally at speeds above Mach 1.

Subsonic Combat Aircraft:

This category includes all fighter and bomber aircraft designed to function operationally at speeds below Mach 1.

Other Aircraft:

This category includes all other fixed-wing aircraft, including trainers, transports, reconnaissance aircraft, and communications/utility aircraft.

Helicopters:

This category includes all helicopters, including combat and transport.

Surface-to-air Missiles:

This category includes all ground-based air defense missiles.

Surface-to-surface Missiles:

This category includes all surface-surface missiles without regard to range, such as Scuds and CSS-2s. It excludes all anti-tank missiles. It also excludes all anti-ship missiles, which are counted in a separate listing.

Anti-ship Missiles:

This category includes all missiles in this class such as the Harpoon, Silkworm, Styx and Exocet.

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As world trade globalizes, so does the trade in arms

Control Arms¹⁴ is a campaign jointly run by Amnesty International, International Action Network on Small Arms (IANSA) and Oxfam. In a detailed report titled, Shattered Lives¹⁵, they highlight that arms are fueling poverty and suffering, and is also out of control. In addition,

The top five countries profiting from the arms trade are the five permanent members of the United Nations Security Council: the USA, UK, France, Russia, and China.

The third world is often the destination for arms sales as the Control Arms Campaign also highlights graphically:

In order to make up for a lack of sales from domestic and traditional markets for military equipment, newer markets²⁰ are being created or sought after. This is vital for the arms corporations and contractors in order to stay afloat.

Respect for human rights is often overlooked as arms are sold to known human rights violators.

Heavy militarization of a region increases the risk of oppression on local people. Consequently reactions and uprisings from those oppressed may also be violent. The Middle East is a current example, while Latin America is an example from previous decades, where in both cases, democracies or popular regimes have (or had) been overthrown with foreign assistance, and replaced with corrupt dictators or monarchs. Oppression (often violent) and authoritarianism rule has resulted. Sometimes this also itself results in terrorist reactions²¹ that lash out at other innocent people.

A deeper cycle of violence results. The arms trade may not always be a root cause, because there are often various geopolitical interests²² etc. However, the sale of arms can be a significant contributor to problems because of the enormous impact of the weapons involved. Furthermore, some oppressive regimes are only too willing purchase more arms under the pretext of their own war against terrorism.

In quoting a major international body, six basic points harshly criticizing the practices and impacts of the arms industry are listed below, by J.W. Smith:

But, this was not of the arms industry of today. Smith was quoting the League of Nations after World War I, when Stung by the horrors of World War I, world leaders realized that arms merchants had a hand in creating both the climate of fear and the resulting disaster itself.. And unfortunately, it also summarizes some of the problems of today, too. Justification for arms and creating the market for arms expenditure is not a new concept. The call to war and fear-mongering is an old tradition.

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It does not seem to matter who arms are sold to

As mentioned above, the War on Terror has seen the U.S. selling weapons or training to almost 90% of the countries it has identified as harboring terrorists. Yet, for decades, a lot of the arms that the West has sold has gone into the hands of military dictatorships or corrupt governments. This can have the additional intention or effect of hampering any form of democracy³³ in those countries.

Sometimes, these arms sales are made secretly³⁴ and sometimes, arms are sold to human rights violators³⁵ (such as one third of all sales by the US, in 1998, as the previous link notes).

According to a report³⁶, from the Council for a Livable World’s Arms Trade Oversight Project, [s]ince the end of the Cold War, the United States has been the world’s largest arms dealer … Consequently, governments with some of the worst human rights records [have] received American weapons and training.

In November 2001, The Center for Defense Information, a military watch-dog in Washington D.C., provided a detailed list of the 18 countries and 28 terrorist groups cited by the U.S. State Department as hotbeds of terrorist activity³⁷. Included in the list is a chronology of U.S. arms sales and training from 1990-1999 and information on use of child soldiers by governments and non-state actors in each country. The U.S. supplied arms to a number of these nations:

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Geopolitical and Economic Agendas

With the arms trade, governments and corporations can cooperate to meet their different political and economic agendas. The military industrial complexes of the powerful countries also help influence and shape foreign and military policies⁴² in a way that enhances their bottom line of profits. For governments though, selling arms can help other geopolitical and strategic interests. Consider, for example, the following:

• A number of years ago, the United States had agreed to sell⁴³ 80 advanced F16s to the United Arab Emirates. The deal was estimated to be around $15 billion. In return, the US was to be able to build military bases there with improved access to the only deep-water port capable of housing carriers in the Persian Gulf. This led to concerns about the resulting stability⁴⁴ in the region and the possibility of an arms race this could start with neighbors. It is of course hard to know if subsequent arms purchases in the region has been precisely because of this.
• Many US weapons are also sold to Turkey. These have been used against the Kurds, in what some have described as the worst human rights violations⁴⁵ and ethnic cleansing since the second World War. The US turns a blind eye to these atrocities because they are able to set up bases in such a key geopolitical location, giving access to places in the Middle East, and because Turkey could be one of the main receivers of oil headed to Western countries, from the Caspian sea.
• There are also many arms trade-related interests in the Middle East. By having pro-US monarchies and other regimes (not necessarily democracies) at the helm and promoting policies that often ignore democracy⁴⁶ and human rights, arms deals are often lucrative and help continue US foreign policy objectives.
• The British arms manufacturer, BAE was being investigated for bribing Saudi officials to buy fighter planes, but the government intervened in the investigation citing national interests⁴⁷. The Guardian also reported that BAE gave a Saudi prince a £75 airliner ($150m approx) as part of a British arms deal, with the arms firm paying the expenses of flying it⁴⁸. This seemingly large figure is small compared to the overall deal, but very enticing for the deal makers, and it is easy to see how corruption is so possible when large sums are involved.
• Furthermore, the Middle East is the most militarized region in the world procuring more arms than anywhere else⁴⁹. When combining authoritarian regimes and dictatorships, with arms sellers willing to sell weapons to those regimes, the people of the regions are often repressed, and this is a partial (not the only) explanation for why there is so much fanaticism and extremism. (That is, severe and extreme measures in governance and religion, etc has resulted in counter reactions that are also extremist. The majority of ordinary people that want neither of these extremities are the ones that pay the real price.)
• The New York Times noted that China has been suspected of flouting international sanctions and selling arms to countries such as Libya, DRC, Sudan and others that are involved in conflicts⁵⁰. China of course denies most of this but the article notes that internal problems and tension between various factions such as the Defense Ministry and the Foreign Ministry as both have a say in approving arms sales and that state-run military companies (a so-called government-military-industrial complex) has an advantage over foreign ministry.
• Inter Press Service notes concerns from various human rights groups as the US continued with a partial sale arms to Bahrain ⁵¹ even though Bahrain’s violent suppression of protesters as part of the Arab Spring has been well known.

As mentioned later in this web site’s section on arms trade, selling advanced weapons is often accompanied by the same sellers and the military industrial complex pointing out how the new world is getting more dangerous due to an increase in the sophistication of weapons. As a result, they inevitably recommend more research and development to stay ahead! This is a nice circular argument that also serves to keep the military industry in business, largely paid for by the tax payers. The Council for a Livable World’s Arms Trade project shows an example of this, in an article, where the title alone summarizes this situation quite well: U.S. in arms race with itself⁵². The article describes how the U.S. Pentagon allows the U.S. Navy to export its newest jets. As a result, they note that:

As another example, consider India. Since September 11, 2001, there has been even more volatility in terms of Muslim/Hindu relations, India/Pakistan/Kashmir tensions and other issues. As a result, India is seeking to increase their military spending, while arms dealers are only too willing to help both India and Pakistan. Furthermore, government officials from major arms dealing nations are major actors in attempting to see deals through, as there are obvious political dimensions.

The Financial Times in UK reported (February 27, 2002⁵⁴), that While the international community calls for restraint on the Indo-Pakistan border, governments led by the UK and the US are jockeying as never before for a bigger slice of India’s growing arms budget. Further, they also reported that, Industry officials were unabashed in admitting that the current regional tension between the nuclear-armed neighbors is a unique selling opportunity. (Emphasis Added).

One could point out that as a business an arms company’s main objective is to make profit so they can remain in business. However, for governments that host these arms industries, it would seem that security issues would be an important part of their foreign policy objective.

In that context then, when even very senior government officials are taking part in procuring contracts, it suggests that while this helps achieve economic objectives of arms firms, it doesn’t really address the issue of achieving political stability or not, or even if it is really a major concern as touted. For sure, it is no easy task for such governments because there can be powerful domestic interests and issues and concerns from related industry and other groups, who can argue that continuing to sell arms will help maintain or even create jobs, etc. (This is discussed in more detail a bit later in this section on propaganda for arms trade).

For example, in reference to India holding so-called talks with various governments on easing India-Pakistan tensions (while pitching for defense contracts), the same Financial Times report also points out that Jack Straw, Britain’s Foreign Secretary, is also expected to use the opportunity to lobby for a Pounds 1bn (Euros 1.6bn, Dollars 1.43bn) deal to sell BAE Systems Hawk jets to India. An official of no less stature than Foreign Secretary (somewhat similar to U.S. Secretary of State) is involved in marketing for a weapons company.

But it can go even higher than that. Yahoo world news quoted (February 22, 2002⁵⁵), Praful Bidwai, an Indian journalist and commentator who specializes on defense issues who commented on British Prime Minister, Tony Blair, It’s disgraceful that Blair should have spent more than half his time in India [during his last visit] urging India to buy the jets. (The sale of jets Bidwai is referring to is 66 British-made hawk jets, at a cost equivalent to US$1.4 billion.)

While public relations departments of such governments can say that their leaders are going on humanitarian or peace missions to urge some nations not to go to war, they are also selling arms at the same time, often to both parties. Geopolitically, this is divide and conquer still at work, while economically, this proves beneficial to the armament firms. Corrupt leaders of recipient governments are only too happy to take part as well.

Unfortunately, these are not isolated occurrence (nor is it usually even reported as sensational or questionable), as for a long time, public officials and leaders have been involved in such issues.

As an example of how long this has been going on, consider J.W. Smith’s research:

It isn’t just the UK that appears to target each side. The World Policy Institute reports in its 2005 report about U.S. routinely funneling military aid and arms to undemocratic nations ⁵⁶ that, As in the case of recent decisions to provide new F-16 fighter planes to Pakistan, while pledging comparable high-tech military hardware to its rival India, U.S. arms sometimes go to both sides in long brewing conflicts, ratcheting up tensions and giving both sides better firepower with which to threaten each other.

And, as J.W. Smith adds,

A cycle of violence is a real concern. Though the arms trade may not always be a root cause, their impacts are of course significant. Some countries resort to oppression as the way to address problems, and are only too willing to accept new arms. But the arms industry is also willing to help, while some governments may often encourage such regimes to purchase weapons from them, rather than from competing nations.

The UN has long called for a creative partnership⁶³ with the arms industry saying that such an arrangement would help promote greater transparency, help curb illicit arms trafficking and ensure legitimate use of the purchased weapons. In some respects, this is would be a welcome step forward (as assuming a transition to a real world peace without arms and weapons etc seems highly unlikely, even though it is probably desired by most people.) The U.N. as well as various public groups are in essence pressuring governments of major arms producing and selling countries, to be more responsible and accountable for who arms are sold to and for what purpose.

However, it could be argued that it is under under such rhetoric, combined with the powerful lobbying of the military industries that governments can intentionally or unintentionally end up aiding military industrial complexes more than other governments. As a result, many are concerned that seeking peace via war is a questionable foreign policy to say the least. Indeed, military expenditure in major countries seem to be rapidly increasing, as we turn to next.

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Government Military Budgets and Spending

The next page in this section discusses these numbers.

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