excerpted from the article

Guns 'R' Us

by Martha Honey

In These Times magazine, August 1997

The United States, Britain, Russia, France and China dominate today's $32 billion global arms trade. But the United States has pulled out in front. According to the U.S. government's own estimates, Washington's share of the business jumped from 16 percent in 1988 to 50 percent between 1992 and 1994. The sky seems to be the limit. According to a 1995 Pentagon forecast, the United States accounts for 63 percent of worldwide arms deals already signed for the period between 1994 and 2000.

The Clinton administration has accelerated arms exports despite the global downturn in military production and defense budgets since the end of the Cold War. After peaking in 1987, world military spending dropped 40 percent to $811 billion in 1996, the lowest since 1966, according to the International Institute for Strategic Studies.

The overall U.S. military budget is one-third smaller than at its peak in the mid-'80s. In real terms, however, U.S. defense spending is still higher than during the Carter administration. Rather than embark on a serious program of defense cuts and economic conversion-the illusory "peace dividend" promised with the end of the Cold War- the Clinton administration is phasing out its conversion programs, opting instead to help boost the profits of military manufacturers through overseas sales.

The foreign policy risks of escalating arms exports are enormous. Most U.S. weaponry is sold to the Middle East and other strife-torn regions, helping to fan the flames of war instead of promoting stability. More than 40 percent of the international sales of major conventional weapons between 1984 and 1994 went to nations at war such as Iraq, Somalia and Sudan, according to the United Nations Development Program's 1994 Human Development Report. Civilians are increasingly the major victims of war. They accounted for half of all war deaths during the first half of this century, 64 percent in the '60s and 74 percent in the '80s. The share of civilian casualties appears to be higher still in the '90s. The United States has been a major arms supplier to nations at war. Since 1985, participants in 45 ongoing conflicts received over $42 billion worth of U.S. weapons, according to a 1995 World Policy Institute report. Among the major conflicts in 1993 and 1994 90 percent involved one or more parties that had received U.S. weapons or military technology prior to the out break of fighting.

International arms sales also put U.S. troops based around the world at growing risk. In discussing this so-called "boomerang effect," the CIA's Nonproliferation Center noted in 1995 that "the acquisition of advanced convention al weapons and technologies by hostile countries could result in significant casualties being inflicted on U.S. forces or regional allies." In fact, the last five times that the United States has sent troops into conflict-in Panama, Iraq Kuwait, Somalia, Haiti and Bosnia-American forces faced adversaries that had previously received U.S. weapons, military technology or training.

The Pentagon and defense contractors then turn around and use the presence of advanced U.S. weapons in foreign arsenals to justify increased spending on new leading-edge weapons back home so that the United States can maintain its military superiority. For instance, the export of F-15 and F-16 tactical fighters to U.S. allies in Europe, Asia and the Middle East is being used to justify the development of the F-22, the "next generation" fighter that has already cost taxpayers $16 billion. Air Force officials are already proposing F-22 production costs be offset through overseas sales of the plane, which will undoubtedly provoke calls for yet another new fighter.

But it's NATO expansion, the foreign policy centerpiece of Clinton's second term, that offers the biggest potential bonanza for U.S. weapons exporters. U.S. arms dealers are salivating at the prospect of the new states upgrading and retrofitting their militaries with Western weapons and equipment.

"The stakes are high," Joel Johnson of the Aerospace Industries Association told the New York Times. "Whoever gets in first will have a lock for the next quarter-century." It's no coincidence that the globe-trotting president of the U.S. Committee to Expand NATO is Bruce Jackson, whose other hat is director of strategic planning at Lockheed Mar tin, which wants its F-16 fighters to replace Central Europe's Soviet MIG-21s.

A bipartisan group of 20 senators, including Jesse Helms (R-NC) and Patrick Leahy (D-VT), took issue with President Clinton's contention that "NATO expansion is in our national interests." In a joint letter, the senators expressed doubts about forcing these relatively poor, fledgling democracies "to spend money on arms, when expenditures for the infrastructure critical to economic growth are more pressing." The letter promises "intense" debate about NATO expansion in the Senate, which must ratify new NATO members by a two-thirds vote.

Arms merchants and their Pentagon flacks are leaving no stone unturned in their export drive. The United States is contemplating the removal of a 20 year U.S. ban on sales of advanced fighter aircraft to Latin America. Imposed during the Carter administration when military dictators ruled most of the region, proponents of lifting the ban argue that with the end of the Cold War and the revival of democracy in most of Latin America, countries like Chile or Brazil should be allowed to buy F-16s if they want them.

In a declaration issued at a Carter Center meeting in - April, former Costa Rican president Oscar Arias warned that lifting the ban would suck up money better spent on human development programs and derail international efforts to ratchet down military spending in volatile regions. Arguing that the removal of the ban "could undermine regional military balances or stimulate an arms race," Sens. Joseph Biden (D-DE) and Christopher Dodd (D-CT) introduced a bill in July to extend the export moratorium for another two years. Clinton is expected to make a decision after he visits Latin America in October.

Given that international arms sales exacerbate conflicts and drain scarce resources from developing countries, why does the Clinton administration push them so vigorously? The official answer is, most often, jobs. But the government's own studies reveal that this rationale doesn't hold much water. The Office of Management and Budget estimates that for every 100 jobs created by weapons exports, 41 are lost in non-military U.S. firms that must compete with foreign companies that were granted access to the U.S. market in indirect payment for weapons purchases. U.S. arms exporters are also increasingly negotiating "offset" agreements, which sweeten the pot for foreign buyers by sending production (technologies and jobs) overseas along with American weapons. Even as U.S. arms exports soar, some 2.2 million defense industry workers lost their jobs between 1988 and 1996.

Political contributions by arms manufacturers reinforce this cozy relationship. During last year's election campaign, the top 25 weapons exporters contributed $10.8 mil lion, according to a study by the World Policy Institute. This marks a 56 percent increase in political action committee (PAC) and soft money contributions over the previous peak of $6.9 million during the 1991-92 election cycle. The "leader of the PACs"-contributing more than $2.3 million to last year's campaign-was Lockheed Martin, the world's largest arms manufacturer.

Unlike in any other industry, U.S. taxpayers fully under write the research and development costs for weapons systems. In 1995, the arms industry successfully lobbied for the abolition of "recoupment fees," a small government tax on foreign weapons sales that brought in about $500 million each year to help offset R&D costs. Arguing that recoupment fees made U.S. weapons uncompetitive, the industry convinced Congress to allow the president to waive them.

U.S. dominance of the global arms market has been accomplished as much through subsidies as sales: In 1995, more than half of the $15 billion in U.S. arms exports was paid with government grants, subsidized loans, tax breaks and promotional activities. The result is a net transfer of dollars from the U.S. Treasury to weapons manufacturers. Arms export subsidies are the second largest category of corporate welfare, surpassed only by agricultural subsidies.

Currently, 6,500 full-time government employees in the Defense, Commerce and State departments are engaged in promoting and financing weapons exports through a maze of programs. The Pentagon's Foreign Military Financing program provided $3.2 billion in grants in 1995 to foreign countries-chiefly Israel and Egypt-to buy American military equipment. U.S. AID Economic Support Fund grants totaling $2.1 billion in 1995 went to help offset the costs of arms purchases. The Commerce Department subsidized outstanding military-related loans given by the Export Import Bank to the tune of $2.1 billion in 1995. The Defense Department writes off another $1 billion each year for bad or forgiven weapons-purchase loans to foreign countries. Thirty-four countries, including Zaire, Turkey, Liberia and Sudan, owe the United States $14 billion in military loans, according to a 1996 Pentagon report; most of these loans will likely be written off.

In 1995, Lockheed Martin and other defense industry giants won congressional approval for the newest and potentially largest subsidy package. The $15 billion Defense Export Loan Guarantee Fund covers military contractor losses when foreign customers cannot afford to honor weapons sales agreements. East European NATO aspirants are now tapping this fund. In May, Romania became the first country to use the fund to underwrite the purchase of $23 million in unmanned reconnaissance planes.

The Defense Department also gives away, leases, sells at a deep discount or lends surplus weapons stocks. "While other, more visible forms of military aid have been cut since the end of the Cold War, shipments of surplus arms through a variety of programs have increased dramatically," says Lora Lumpe, director of the Federation of American Scientists' Arms Sales Monitoring Project. These giveaways-which include tanks, attack helicopters, bombers and pistols-have been used to fan regional arms rivalries (between Greece and Turkey, for instance) and to commit human rights violations in countries such as Bahrain, Colombia and Morocco.

"Recycled Weapons," a 1996 study co-authored by Lumpe, found that the U.S. military is giving away still useful equipment in order to justify the procurement of new weapons. The Air Force "Boneyard," a four square-mile stretch of Arizona desert outside Tucson, provides rust-free storage for 5,200 planes, 75 percent of which are still in operating condition. "We could have air superiority with what we have in the Boneyard," Rossiter of Demilitarization for Democracy told the New York Times.

Rather than trekking out to the Boneyard, potential buyers more often show up at overseas air shows and expos, which are also financed by taxpayers at an annual cost of about $125 million. Once offering stripped-down export models, U.S. arms dealers at today's arms marts display top-of-the-line diesel submarines, portable surface-to-air missiles, jet fighters, missile systems and other high-tech weaponry. If the price is right, any type of weapon (except for nuclear, biological, chemical or long-range missiles) is available.

In this era of balanced budgets and belt tightening at home, the multibillion dollar bevy of subsidies for arms exporters needs to be weighed against cuts in other government programs. The 1996 welfare reform law will cut federal support for poor families by about $7 billion annually over the next five years, an amount almost equal to the yearly subsidies given to U.S. weapons manufacturers. There are parallels as well between some of the specific welfare and warfare programs. The welfare law cuts child nutrition programs by $500 million and food stamps by $2.1 billion a year. On the other side of the ledger, arms export subsidies include recoupment fee waivers of $500 million and $2.1 billion in U.S. AID Economic Support Fund grants each year.

It is, in essence, the poor at home and abroad who pay the price for escalating arms exports. In a joint statement issued recently in New York, eight Nobel Peace Prize recipients-including Oscar Arias, Elie Wiesel, Jose Ramos Horta of East Timor and the Dalai Lama-who support an international Arms Transfer Code of Conduct declared, "Millions of civilians have been killed in conflict this century, and many more have lost their loved ones, their homes, their spirit. In a world where 1.3 billion people earn less than $1 a day, the sale of weapons simply perpetuates poverty. Our children urgently need schools and health care centers, not machine guns and fighter planes. Our children also need to be protected from violence. The dictators of this world, not the poor, clamor for arms."

But flanked against such eloquent, straightforward logic is the mighty U.S. arms industry and its government allies. "The brakes are off the system," says Lawrence Kolb, a Brookings Institute fellow and former assistant secretary of defense under Ronald Reagan. "It has become a money game: an absurd spiral in which we export arms only to have to develop more sophisticated ones to counter those spread out all over the world.... It is very hard for us to tell other people the Russians, the Chinese, the French -- not to sell arms, when we are out there peddling and fighting to control the market."

Martha Honey is director of the Institute for Policy Studies' Peace and Security Program.

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