Monitoring arms trade.

• Author: Renner, Michael

STATISTICS SHOW THAT INTERNATIONAL SALES OF ARMS HAVE DECLINED SHARPLY SINCE THE END OF THE COLD WAR. BUT THOSE STATISTICS DON'T TELL THE WHOLE STORY.

During the Cold War, the two superpowers regarded arms sales as a convenient tool for cementing alliances, gaining military bases and political influence in recipient nations, and maintaining a carefully calibrated balance of power in the world. U.S. manufacturers shipped M-1 tanks to Egypt and F-16 jet fighters to South Korea, while the Soviets sent T-72 tanks to Syria and MIG-29 jets to North Korea. The arming of opposing "camps" so proliferated that the number of countries possessing at least 1,000 battle tanks, for example, now stands at 33.

Now that the end of the Cold War has largely eliminated the original geostrategic rationale for these sales, it is base economic incentives that keep them going. In an era of declining domestic military procurement budgets, arms makers have managed to convince their governments and publics that the way to keep their economies from withering is to sell more weapons abroad. Allow us to sell those Leopard tanks, and we'll save jobs threatened by a looming shutdown; permit us to ship those Sea Harriers, and we'll help to improve the country's trade balance; give us a license to sell those Meko-200 frigates and the resulting economics of scale will reduce the cost of building them.

In the absence of adequate programs to convert military industries to civilian use, affected workers and communities see little choice but to embrace the export option. Most governments and arms manufacturers have opposed conversion (preferring to preserve their defense-industrial base), but they are going to great lengths to find new clients for their wares. In an Orwellian twist, the U.S. Aerospace Industries Association argued (in a February 1993 letter to the Secretary of Defense) that government subsidies for weapons exports "would certainly be an appropriate part of any conversion or transition package."

Paradoxically, just as the superpowers are pulling back their big nuclear missiles, they are urgently seeking ways to sell more of their conventional bombs and guns to almost anyone who will buy. And while the published figures for total arms exports have declined sharply--by about two-thirds between 1984 and 1991--those figures are deceptive. They include fully assembled weapons, but not exports of components or manufacturing facilities, which account for a growing portion of the world's spreading capability for mayhem. And even for assembled weapons, the numbers are incomplete because they don't include what is generally known to be a very large "shadow economy" of illegal or unregistered transactions.

MYTH AND REALITY

Upon closer examination, each of the claimed economic benefits turns out to be dubious. First, while producing arms for export undoubtedly generates jobs, spending an equivalent sum of money on civilian industry generates more of them. Studies in the United States show that spending $1 billion (in 1992 dollars) creates about 11,000 jobs in guided missile production or 17,000 jobs in military aircraft production. But the same amount spent on manufacturing pollution control equipment yields roughly 20,000 jobs, and on local transit programs some 26,000 jobs.

Second, the contribution of arms sales to a nation's trade balance is less substantial than it might seem, partly because recipients now routinely demand "offsets" (arrangements under which the seller agrees to purchase products or services from the buying country as a condition for signing a contract, thereby reducing net export earnings), and partly because as competition among exporters intensifies, they frequently resort to price discounts to land a contract. In addition, many governments provide heavy subsidies to promote arms exports--in the U.S. case, more than $7 billion.

Third, economics of scale from exports materialize only if domestic and foreign orders are placed at the same time (rather than toward the end of the production run). But that means that foreign customers need to be lined up even before production starts; the result is a proliferation of the very kinds of advanced weapons and weapons technology, the exporting countries have geared up to combat.

Economic motivations for arms exports are institutionally addictive. Once jobs and economic well-being are made dependent on weapons exports, the exporting industry needs to keep selling, come war or peace. The purpose of any particular sale--what is being done with the...