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Revised Obama Strategy Could Slow Armed UAV Market

Intel Demand To Remain Robust

Jun. 3, 2013 - 05:53PM   |  
By JOHN T. BENNETT   |   Comments
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WASHINGTON — US President Barack Obama’s intention to limit aerial drone strikes could slow demand for armed unmanned aircraft, but some experts are sticking by previous forecasts of a robust market for remotely piloted combat platforms.

In a landmark May 23 counterterrorism speech, Obama said his administration would order drone strikes only “against terrorists who pose a continuing and imminent threat to the American people, and when there are no other governments capable of effectively addressing the threat.”

Analysts at the New America Foundation have been charting a sharp decline in US drone strikes in Pakistan and Yemen since late 2012.

Data compiled by New America shows drone strikes spiked in Pakistan between 2009 and 2010, jumping from 54 to 122. The 2009 figure jumped from 36 in 2008, the last year of the administration of President George W. Bush. Obama ordered 73 strikes in 2011 and 48 in 2012.

In Yemen, New America found 13 US-orchestrated strikes in 2011, then about 45 in 2012. There have been around a half-dozen this year.

That sizable drop raised eyebrows in national security circles for months, as did a sharp decline in the Pentagon’s planned spending on drone aircraft. After seeking $1 billion for unmanned aircraft in 2013, the Defense Department is seeking around $500 million in 2014.

If the administration’s actions continue to match the president’s words about tightened standards for aerial drone strikes, the demand for new General Atomics-built MQ-9 Reaper unmanned aircraft and other armed drones could slow, an analyst said.

“President Obama’s speech is the latest indication that demand for unmanned aircraft will weaken in the years ahead,” said Loren Thompson, Lexington Institute COO and an industry consultant. “Overseas wars are winding down, the military has hundreds of high-end drones in inventory, and now the president says he will tighten up on when they can be used in lethal missions.

“Predictions of a growing domestic market for drones in civil and commercial missions are speculative,” Thompson said. “Demand is likely to be modest, especially when compared with the kind of money the Pentagon has been spending on unmanned aircraft over the last dozen years.”

Industry officials and other analysts, however, said Obama’s revised drone-strike policy won’t slow the demand for armed and unarmed remotely controlled combat systems.

“The growth of unmanned systems for military and civil use is projected to continue through the next decade,” the Aerospace Industries Association (AIA) said in a recent report. “It is estimated that [unmanned systems] spending will almost double over the next decade, from $6.6 billion to $11.4 billion on an annual basis, and the segment is expected to generate $89 billion in the next 10 years.”

In the wake of Obama’s speech, the defense/aerospace lobbying group is sticking by that forecast.

“[Obama’s position] shouldn’t have an impact on the [unmanned systems] market because it really doesn’t affect the requirement for a strike capability or the availability of assets to carry out those missions,” Dan Stohr, an AIA spokesman, said on May 30.

What’s more, industry officials and analysts are quick to point out that the US and global remotely piloted vehicle market is full of systems that will never fire a missile into a village in Pakistan or Yemen. Stohr said drone manufacturers remain focused on breaking into the civilian market, where they see ample profit potential.

The revised Obama policy “has absolutely no effect on the military ISR market, or more importantly, on the civilian market, which is where the greatest potential growth opportunity exists,” he said.

“The hurdle we face in the civilian market is integration of [unmanned systems] into the national airspace system, and we’re working closely with [the Federal Aviation Administration] to provide them with the data and information they need.”

Globally, the market outlook appears even stronger.

An analysis by the Institute for Conflict Cooperation and Security (ICCS) at the UK’s University of Birmingham published May 29 notes, “the majority [of experts] seem to be concerned by the potential negative consequences” of using remotely piloted military vehicles.

“The ironic counterpoint to this is that as fast as the public can condemn the use of drone strikes, their governments are buying up supplies,” ICCS notes.

European nations have been buying US- and Israeli-made UAVs, ICCS found. And such nations as Australia are “stocking up” on them.

Citing the independent Oxford-based Drone Wars UK, the institute says “76 countries have or are in the process of developing the necessary hard and software.”

“Clearly, the technology is proliferating rapidly ... but it remains to be seen whether this represents the international arms race some commentators are claiming,” ICCS said.

That’s because “the current technology in this area is fairly immature still; there is a lot of upside, it seems to me, for technological improvements to UAVs,” said Christopher Preble of the CATO Institute.

Because drones will only become more effective and more lethal, Preble said US defense firms that manufacture the airframes and their component systems have a lot to look forward to.

“From an industry perspective, there’s a lot of potential there, for sure,” he said.

But others, such as Thompson, said the future missions to which US forces will be deployed will differ from those for which drone aircraft are best suited.

“They aren’t likely to be useful against state-based threats unless they are stealthy,” he said, “because they are too easily intercepted and destroyed.”

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