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Arms Sales and American Interests

Sep. 17, 2012 - 02:14PM   |  
By JONATHAN CAVERLEY and ETHAN B. KAPSTEIN   |   Comments
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With the U.S. economy in the doldrums and pessimism over American international influence at its peak, the occasional bits of good news naturally grab the headlines. A case in point is a recent Congressional Research Service report on the global arms trade. The report states that the U.S. captured an astonishing $66.3 billion in weapon purchase agreements last year, nearly 80 percent of the market.

But a closer look at these numbers reveals some troubling trends. In terms of actual weapon deliveries, the U.S. holds only a bit more than one-third of this market. That share has fallen sharply from a decade ago, when America had a near monopoly on the trade. Further, more than half of the 2011 agreements were signed with a single client, Saudi Arabia.

Unfortunately, the picture in Asia is quite different. In that region, the site of escalating geopolitical tensions and a genuine arms race, the U.S. has only a narrow sales advantage over Russia, and new competitors like China and South Korea continue to grab market share. Pakistan once purchased nearly all its arms from Washington; today, Beijing is becoming its main supplier. Australia, a stalwart ally, has delayed its planned purchase of American-made F-35s due to that program’s massive cost overruns. Owing to their price-tag, American planes did not even make it to the final round in India’s competition for 126 new combat aircraft.

Given Asia’s central and growing role in the global economy and world politics, the potential for fading American influence in the region should be the focal point of any report on U.S. arms sales. And an analysis of why some competitors are taking weapon transfers away from the American defense industry leads to the conclusion that the U.S. is not necessarily producing what the customers need or want.

American strategy in the arms trade consists of selling a few high-technology and ultra-expensive weapon systems to clients that can pay for them, like the oil producing states. That strategy may maximize the short-run interests of the industry and the U.S. armed services, but is it consistent with America’s long-run interests? Unlike many sectors, the arms trade has both an economic and security function to fill. From an economic standpoint, foreign weapon sales not only keep workers employed at home, but by extending production lines, can lower unit costs for the platforms the U.S. armed forces require. From an American security perspective, arms sales are a vital tool of influence, since countries that acquire weapons from Washington are less likely to use them in a way that would jeopardize future access to American defense technology. By monopolizing arms sales, the U.S. can also limit the number of advanced weapons on the world market.

This suggests a possible tension between what is good for the industry and the Pentagon on one hand, and what is good for U.S. foreign policy and international stability on the other. To date, the former view appears to be winning out.

The U.S. should commit itself to designing and producing simpler, more cost-effective weapons, with the foreign market in mind from the outset. American defense technology is too often “gold-plated,” leading to high costs that only the Pentagon and a few militaries overseas can afford. And in an era of looming austerity, it is unclear that even the U.S. can continue to buy these luxury goods.

By building more stripped-down weaponry, the U.S. can solve its own procurement problems while advancing its foreign policy interests, especially those in Asia. Today, that region is booming economically; the U.S. has the greatest interest in ensuring that it does not boom militarily instead.

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Jonathan Caverley, assistant professor of political science at Northwestern University, and Ethan B. Kapstein, a non-resident senior fellow at the Center for a New American Security who teaches at the University of Texas at Austin and is a visiting professor at Georgetown University.

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