Panel on Restructuring of the
Global Arms Industry and its Implications

By John Silson
Intern for Lawyers’ Committee on Nuclear Policy

June 21, 2000 UN Headquarters, NY

Moderator:

David Gold, former Senior Economic Affairs Officer Department for Economic and Social Affairs, United Nations

Panelists:

Joel Johnson, Vice President International, Aerospace Industries Association

Janne Nolan, The Century Foundation, Member of Commission to the President on Arms Trade

Natalie Goldring, Program on Disarmament, Department of Government and Politics, University of Maryland

William Hartung, World Policy Institute, New School University, New York

Also Present:

Joao Honwana

Note: The following highlights points of interest made by the panel, and does not seek to present an LCNP analysis or policy prescription.

Historically, world arms trade and the dialogue surrounding it has been anything but static. From the Cold war to present day, the nature of arms trade and manufacture has changed fundamentally. During the height of the cold war as the Soviet Union and the United States vied for world dominance they selected weapons clients based largely on the bipolar international political climate; weapons were sold for political gain. Of course, the client countries of both the United States and Soviet Union changed through time. At first, the United States sold primarily to European allies, but then with the changing political atmosphere, the doors of the U.S. weapons trade began to open to other countries, first during the Nixon Administration to Asiatic allies, and then in the 1970s to countries like Iran. During the Reagan Administration, the policy of selling strictly to allies changed to a kind of "laissez faire" attitude as selling arms began be an economic concern as well as a political one.

In 1989, weapons production in the United States was at an all time high. Coupled with the booming commercial airline industry, U.S. arms manufacturers enjoyed a very lucrative business; they employed approximately 1.35 million workers and about half of their budget came from the United States defense budget, 120 billion dollars. Then in the early 1990s with the fall of the Soviet Union, the arms industry changed fundamentally in the United States.

With no super power rival, demand for weapons in the United States dropped significantly. The defense budget was cut by approximately one third and at the same time, the commercial airline industry slowed considerably in the United States. With production lines comparatively empty in the manufacturing plants, defense contractors were encouraged by the academic community to retool to make other peacetime products. However, as they considered the low success rate of such retooling among other types of industries such as the chemical weapons manufacturing industry in the United States, defense contractors were skeptical about the possibilities of such action. As a result, the arms industry in the United States "imploded" where once there were many smaller companies, there came to be only a few large ones. Only when the Government stepped in with anti-trust laws did the consolidation of the defense industry stop.

With an end to mergers, companies were encouraged to look overseas for further economic growth. However, a similar process of consolidation was underway in Europe. There was already only one company in the United Kingdom and there was a planned merger of the three main manufacturers on the mainland. Because there were already large companies with strong national roots, mergers of entire companies were unlikely. Instead, in the end companies began to work together internationally at the sub-contractor level and became multinational through the acquisition of remaining small independent companies.

As "downsizing" in the arms industry continued, it had several political effects. In Washington, the lobby for the military contractors became more effective and focused. In the past there had been diversity of opinion among the contractors, now there was unity. Internationally, the political climate had changed from the bipolar Cold War to a myriad of states, each with regional concerns which resulted in smaller nations with only a regional prospective purchasing arms.

Some new problems came with this changing global environment. During the Cold War, since the Soviet Union and United States were primarily concerned with creating and maintaining a sphere of influence, they kept tight control of arms trade and sale within their constituency. When the Soviet Union collapsed, the political control scheme fell with it. The motivation for arms trade shifted from entirely political issues to a mix of political and economic concerns. Because during the Cold War, no major arms control agreements had been made, arms trade became much freer than it had been during the Cold War.

Into the evolving climate of small states purchasing weapons for regional conflict came operation Desert Storm in which U.S. weapons demonstrated great superiority over weapons used by the Iraqis. Additionally during the Gulf war, the United States demonstrated the use of advanced information gathering and the processing systems to great effect. As a direct result, U.S. sales of both weapons and information gathering and processing systems increased. Additionally, because of Middle Eastern cooperation with the coalition, the possibility of weapons sales to Arab nations opened.

Another important aspect of the Gulf war was the demonstration by Saddam Hussein that once sold, weapons could be turned against the seller. A particular example of this was the French Mirage plane which could not be flown by the coalition because the French planes were indistinguishable from ones the French had previously sold to Iraq. In light of this realization, major weapons producers began talks concerning the limitation of the sale of major weapons platforms following the conflict in the Gulf. But, even as the talks proceeded, trade continued from many of the nations involved to their client states. When the U.S. sold F-16s to Taiwan during the talks, China walked out. Since then, no arms sale talk or limitation arrangement has occurred.

The current situation on arms control in the U.S. and other major arms producers is a difficult one. There are currently 27 "active conflicts" in the world, most of which evolve U.S. weapons. As shown in Somalia, in the post-Cold War era, there is no clear-cut policy concerning intervention by large powers in small conflicts. Further, most of the killing in regional conflicts is done with small arms, though they are often supported by major weapons platforms like tanks, armored personnel carriers or artillery.

As a result of the myriad of conflicts and the commercialization of arms production, there is currently no system to control arms trade. In recent consideration of the problem of arms control, a special commission to the President on arms trade concluded that it is important to recognize that the arms trade is not a benign industry, and that the repercussions of arms trade can last for decades; it is vital that control of the arms trade industry be established. In her analysis of the Government agencies in the U.S. that oversee weapons trade, Ms. Nolan commented that the bureaucracy is "organized to promote failure". The historical context of industry creates a complicated situation where control of this dangerous industry is ineffective or simply nonexistent. Starting from the basic infrastructure of the organization, the bureaucracy surrounding arms control is crippled by lack of the proper technology, such as modern computers, and is unable to do its most basic jobs. As a result the arms control bureaucracy in the United States needs to be reformed through reorganization, acquisition of appropriate technology, and an update of policy to account for global political changes.

Reflecting the current political climate, reductions have occurred in the arms production and trade industries since the end of the Cold War. U.S. arms production is down a third from cold war levels, EU arms production is down one fifth, and the arms trade industry dropped from 50-60 billion during the Cold War to 20 billion currently, but in Asia, particularly in China, arms production is up. As during the Cold War, approximately 80-85% of the major weapons (tanks, fighters, etc) manufacture occurs in the Nuclear Weapons States (NWS). If there were regulations applying to the NWS, control of much of the major weapons platform trade could be accomplished.

The panel commented mostly on describing the global arms trade, not policy programs for change. However, with the exception of Joel Johnson, the panelists felt that non-governmental groups have a fundamental role to play and there are concrete steps that may be taken to affect change both nationally and internationally. Ms. Goldring commented that though there is resistance to arms trade and proliferation in general, there is no organizational unity with in the NGO community. NGOs, she said, need to leverage their assets more effectively. She continued by explaining that the non-governmental community must shift from holding meetings to effecting changes in policy. NGOs need a core group of leaders, they must to push for firearms protocol, they must directly confront the NRA and similar organizations that impede action on the reduction of arms trade and production both within the United States and internationally. Finally, Ms. Goldring said that NGOs must use a large variety of paths and options to push their agenda, focusing efforts narrowly will not achieve progress.

In light of the need for diversification of issues taken up by the non-governmental community, according to Goldring NGOs and other lobbying groups for the control of weapons need to create more priorities for themselves. They should push for the destruction of any arms when they are seized; not allowing them to be stored and potentially used again, a destroyed weapon will never harm another human being. NGOs should work for the creation of an international coordinator to oversee weapons transfers, ensuring that weapons that are traded go to their intended purchasers and no illegal trade transpires. Domestically, NGOs should push for practical measures such as a law limiting the purchase of firearms to one gun a month, and the creation of national oversight through gun registration. Finally, NGOs should push for consideration of the social environments that weapons are going into and how the sale of weapons will effect them both short and long term.

One aspect of the arms industry deserving particular attention by the Non-Governmental community is that of the weapons technology race. In a world where business is the primary driving force behind weapons trade, the continual sale of new technology around the globe is promoting a self-sustaining war economy wherein constant striving for the technological edge keeps the arms industry going and provides it with a certain independence from any government control and the assurance of indefinite business. A prime example of this kind of proliferation of technology occurred in the sale of war planes to the United Arab Emirates that are technologically superior to planes flown by the United States armed forces. NGOs need to work to end this kind of self-perpetuation in the arms trade industry.

A consideration brought up by Joel Johnson is the practical problem seen in Kosovo of coalition members not all having equivalently technologically sophisticated militaries. On one hand, the United States wishes to have one of, if not the most, technologically advanced military in the world, but on the other hand if the U.S. military is alone in that technology, then it may not be confident in its allies within a coalition.

While some favor regulating arms trade by banning sale to certain countries, there are not always clear-cut answers regarding which are countries are deserving of sales. Complicating the situation, once weapons are traded, they are often in use for considerable amounts of time. Some U.S. jets sold to Iran have been flying long past their expected life span much to the surprise of the vendors. Simple weapons have an even longer life span; deciding whom to sell arms to might entail looking as many as twenty to fifty years into the future. Past examples are indicative of the complexity of this question. For instance the transfer of arms to Joseph Stalin before WWII served United States interests with respect to Germany but not with respect to Russia after the Second World War. However, Joel Johnson claimed that there has been "no situation where a US soldier has face[d] a significant U.S. weapon".

Press coverage and the interest of the American people is another aspect of serious concern to NGOs. Mr. Johnson noted that the press only covers issues that will sell papers and the proliferation of weapons is not one of them. As a direct result, weapons and proliferation of weapons are not issues on the presidential ticket. Mr. Hartung agreed that there seemed to be little interest, but he also commented that even in the coverage of international news, there is coverage of the massacres, as in Indonesia, but no mention of how the U.S. armed the perpetrators.

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