Arms Sales Monitor #6, August 1991

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(Issue No. 6 , August 1991)




Sales in progress                                     

11 July  Effective today, the US government will deny all new
applications for munitions export licenses and suspend all 
previously-approved licenses to Yugoslavia.  The action is taken 
pursuant to sections 38 and 42 of the AECA and the relevant ITAR
provisions.  

19 July  The Pentagon notifies Congress of a proposed Letter of
Offer and Acceptance by the US Air Force to Morocco for 20 
F-16A/B fighter jets at a total cost of $250 million.  The price 
includes spare engines.  

19 July  The DSAA notifies Congress of a proposed $150 million sale
of 119 V-300 Commando armored, wheeled vehicles to Oman.  

19 July  Congress is notified of a proposed $146 million "Product
Improvement Program" for 12 of Egypt's Hawk anti-aircraft missiles. 


19 July  A $34 million sale of 12 Amphibious Assault Vehicles is
announced to Brazil.  The price includes machine guns and "as-
sociated equipment."   

19 July  The Pentagon notifies Congress that under a commercial
license, it proposes to export "major defense equipment" to Mexico. 
 

23 July  The DSAA sends Congress notification of a proposed $2.8
billion sale of 80 F-16C/D fighter aircraft, along with 12 spare
engines, and support equipment to be coproduced in Turkey by
Turkish Aerospace Industries.  The Turkish government wants to
produce 160 new aircraft on top of the 160 licensed in 1984, but a
lack of FMS financing limits this to 80 for now.    Funding for the remaining 80 will be
sought from allies in the Persian Gulf.  

23 July  Lt Gen Teddy Allen, the Director of the DSAA, transmits the
price and availability report for the fiscal quarter ending 30 June 1991
to the Speaker of the House and the Chairman of the Senate Foreign
Relations Committee.

25 July  The DSAA notifies Congress of the administration's intention
to export $365 million worth of cluster bombs, components for laser-
guided bombs, and air-to-air missiles to Saudi Arabia.  Specifically,
the sale would include 2,000 MK-84 bombs, 2,100 CBU-87 cluster
bomb munitions, 770 AIM-7M Sparrow air-to-air missiles.  

25 July  The DSAA notifies Congress that Taiwan is to receive from
the US Navy--through its Coordination Council for North American
Affairs--97 SM-1 Standard Missiles, training missiles and materials
and logistics support to be used aboard Taiwanese ships.  The
contract value is $55 million.  

30 July  The Speaker of the House receives a letter from the DSAA
transmitting notification of a proposed sale of defense articles and
services to Greece by the Navy.  

30 July  The State Department certifies to Congress that the Peruvian
government passes the human rights criteria of the International
Narcotics Control Act of 1990, and therefore should be permitted to
receive $35 million in US military aid.  The State Department's annual
report on human rights released last January found that Peruvian
"security forces personnel were responsible for widespread and
egregious human rights violations."  Based on this, the Appropriations
and Foreign Aid/Relations Committees have held the aid hostage to
an improvement in the situation.  The military aid to Peru is part of
the Bush administration's war on coca production and includes
military hardware and training by a "small number" of US military
personnel.  

1 August  Sen. Robert Byrd, Chairman of the Senate Appropriations
Committee, sends another letter to President Bush concerning arms
sales to countries delinquent in paying their dues for the Gulf War. 
"Despite the prohibition of Section 109 [of the Desert Shield/Storm
supplemental budget bill enacted into law in April 1991], the State
Department has notified the Congress of three arms sales to Saudi
Arabia, a country with an outstanding commitment of $4.11 billion,
and a sale to Korea, which has paid only 62 percent of its pledge.  Of
course the thirty day notification period for these sales will expire
while the Congress is out of session in August." 

Byrd quotes the State Department's legal advisor as follows from a
letter to the GAO: "We do not interpret Section 109 as prohibiting
Executive branch officials from taking steps that might be preliminary
to the making of sales, so long as no agreements are actually
concluded."  Byrd asks Bush then to "refrain from finalizing the four
pending sales and any future sales to Korea or Saudi Arabia until they
have paid their entire pledges."  

2 August  Rep. Mel Levine organizes a letter to President Bush which
76 colleagues co-sign, expressing their intention to oppose any major
weapons sale to Saudi Arabia.  Such a sale has been anticipated in
Congress for nearly a year.  "We cannot support arms transfers to
Saudi Arabia which contravene the need for arms control in the Gulf.
... If we have learned anything from the mistakes of the past, it is
that friendship and stability cannot be bought with arms."  The
signatories also express dismay over reports that Saudi aid to Syria
for its participation in the war is now being used to buy weapons
from the Soviet Union, North Korea and Czechoslovakia.  
8 August  Rep. David Obey, Chairman of the Foreign Operations
Subcommittee of the House Appropriations Committee, sends a letter
to Secretary of State Baker, requesting a halt to the proposed
coproduction/sale of 80 F-16s to Turkey.  The 15 day congressional
notification that NATO nations require passed on the 6th of August,
but the LOA has not yet been signed.  

"I am informing you of my objection to proceeding with this sale at
this time," Obey writes to Baker.  Obey opposes the deal because it
would require a commitment of some $500 million in FMS grant aid
over the next five years on top of the annual $420 million Turkey
already habitually receives in FMS through the foreign aid bill.  He
objects to such "cash flow" funding agreements, where the State
Department enters into long-term commitments and expects Congress
to approve the promised money at anticipated levels.  

8 August  The thirty day congressional notification for the sale, co-
assembly and licensed co-production of 120 F-16 aircraft to South
Korea expires, clearing the way for the agreement to be formalized. 

29 August  Maj Gen Dennis Malcor, the Pentagon official in charge of
the Saudi security assistance survey, is reportedly briefing State and
Defense department officials on his findings today.  He is expected to
brief members of Congress soon after the August recess.   

30 August  The South Korean Ministry of Defense announces today
that it has signed a final MOU with the US government on the KFP,
agreeing to pay more than $5 billion for the 120 F-16s.  The 
delivery/ production schedule is: 12 off-the-shelf, 1994-5; 36 
co-assembled, 1995-7; and 72 co-produced, 1997-9.   


Notes from some hearings                            

25 July  Under Secretary of State Reginald Bartholomew appears
before the HFAC Subcommittees on Arms Control and Europe/Middle
East.  He testifies on the meeting of the Permanent Five in Paris on
7-8 July to discuss Middle East arms control.   

      Bartholomew on Paris Talks

The US entered the talks, Bartholomew says, seeking development of
guidelines on arms transfers and "a mechanism of consultation,
notification, and information exchange to back it up."  Noting the
difficulty that lies ahead in achieving agreement--among both arms
exporters and importers--he says: "We must coax certain suppliers
that normally export arms in secrecy to open their process to the
transparency of consultations, notifications and information exchange.
... We are asking nations in the region that normally underpin their
security on secrecy and arms stockpiling to accept an approach that
demands transparency and arms limitations.  Saudi Arabia has
demonstrated its leadership by boldly declaring a willingness to abide
by any restrictions on weapons of mass destruction and to be among
the first nations to dispose of weapons so restricted."  [Does that
mean Saudi Arabia has some mass-destruction weapons?!] Conspicu-
ously absent is a statement about Saudi compliance with limitations
on conventional arms.
 
Rhetorical progress on controlling the spread of unconventional
weapons was more apparent: "The Five," he says, "agreed to develop
and maintain stringent national and, as far as possible, harmonized
controls to restrict the transfer of weapons of mass destruction and
related material."  The group further endorsed a freeze on the testing
and acquisition of ballistic missiles, with a view to their total
elimination; encouraged all countries in the region to open all nuclear
activities to IAEA inspection; supported a ban on importing "nuclear
weapons-usable material"; and encouraged all states in the region "to
become parties to the CW Convention as soon as it is concluded (in
1992)."

A follow up meeting of experts will be held in September, with
another plenary to take place in London on 17-18 October.

          ...On US Arms Sales

Again expressing administration opposition to a halt in arms sales,
Bartholomew says American sales are not the problem.  "Let me
assure you that the United States never had a `business as usual'
attitude with regard to its security assistance programs.  We only
approve transfers that are consistent with our export licensing
process, contribute to regional defensive capabilities, and thus
strengthen stability, and enhance US military cooperation with the
region.  We will continue to follow a prudent security assistance
policy that strengthens the defensive needs of responsible, friendly,
and peace-seeking governments."  He doesn't explain the criteria for
identifying a "peace-seeking government"--perhaps it lies in the
willingness of a country to take part in Secretary Baker's Middle East
peace conference.  "We are not the source of excessive stockpiles in
the Middle East," he says.

Specifically on the moratorium that the HFAC supports, he says:

   [A]ny unilateral action by the US in seeking a change in the
   global arms trade, such as implementing a moratorium, is
   a non-starter.  Will halting unilaterally US arms transfers to
   the Middle East enhance our chances of getting other
   suppliers to follow our lead? In the administration's view,
   it would accomplish the exact opposite.

   More than likely, a moratorium would impede our efforts to
   construct an effective international supplier restraint
   system, deter the other major suppliers from working with
   us, and would allow `renegade' suppliers to simply step in
   and take our place.

 North Korean Scuds to Syria Confirmed

In the Q&A many Representatives inquired about heretofore uncon-
firmed allegations of North Korean Scuds going to Syria over the past
several months.  To Rep. Meyers' direct question as to whether North
Korea is selling missiles to the Middle East, Bartholomew replied: "We
have evidence that they have sold Scud missiles.  There have been
Scud missile deliveries to Syria this year.  This is something that is of
great concern to us.  North Korea is emerging more and more as a
major supplier of missiles of this type around the world.  They are a
major prospective merchant, almost acting as a renegade merchant
in this business."  Bartholomew will not answer questions on the
quantity of missiles sold to Syria this year, nor whether any of the
North Korean-supplied missiles are operational, saying that informa-
tion is classified.


             Israel's Qualitative Edge

Rep. Ackerman queries Bartholomew as to whether any of the
proposed US arms sales to the Mideast would in any way reduce
Israel's qualitative edge; the Undersecretary flatly says "no" they
would not.  "The administration," he continues, "is not in the
business of supplying arms that would contradict its own policy of
maintaining Israel's qualitative edge."  Ackerman presses on further,
noting the eight 36 (b) notifications for arms sales to Egypt, Saudi
Arabia, the UAE, Kuwait and Morocco which the Congress received
in June and July, totalling some $3.268 billion.  "Would any of that
reduce Israel's qualitative edge at all?"  "Not in our judgment,"
responds Bartholomew.

             Can You Define "Destabilizing Sale"?

Rep. Berman and others continue to seek clarification on this sticky
definitional question.  Bartholomew discloses that Iraq is a case-study
in destabilizing arms transfers, mainly because of the "scale and
rapidity of buildup of sales to Iraq" over the past ten years.  "I'm not
saying that everything sold to Iraq was illegitimate" and destabilizing,
he hedges.  

He cites the Soviet sale of in-air refuelling capability to Libya as a
specific example of a destabilizing sale.  Berman then wonders "With
air refuelling capability to countries in the Middle East, could we say
here is a generic example of something that they do not need for their
deterrent and defensive capabilities, and this is something that should
not be supplied to countries...?"  Bartholomew is "not ready to say
that aerial refuelling equipment in all circumstances to all countries
would be proscribed."  He cites Saudi Arabia--because of its huge
territory--as a legitimate recipient of such a capability.

Berman then asks about offensive strike aircraft, to which the
Undersecretary replies: "It depends on the state involved, circum-
stances, numbers that are involved."  Cutting off this line of question-
ing, he says, "I think that we have to think very carefully about the
direction that your questions are taking me, Congressman."  [?]

             $15 Billion in US Arms Sales in Mideast Since Last August

Subcommittee Chair Lee Hamilton notes that the US has contracted
to sell over $15 billion in weapons and related services to the region
since the Iraqi invasion of Kuwait last August.  In 1989 the US sold
$10.7 billion worth of arms world-wide and in 1990 $13.9 billion
globally.  Thus, he concludes, the administration is mouthing "very
good rhetoric with respect to restraint" but not demonstrating it
practically.  Bartholomew says that these were all war related sales,
"support, spares, ammunition, construction--all that went into
supporting a 500,000 man effort."  Hamilton corrects Bartholomew,
saying: "Most of this equipment, Mr.  Secretary, was not delivered
during the war.  It is in the process of being delivered over a period
of years."

He continues: "What this says to the world is that we are going to
continue to put arms into that region in massive quantities and we are
saying to France and to the Soviet Union and to Great Britain and to
China `you folks stop.' I'm saying to you that we are not going to be
credible on this arms restraint business until we are prepared by our
own example to slow--not to eliminate--the flow of these arms."

             What's Wrong with the Moratorium Idea Again?

Hamilton wonders: "How is it that a moratorium impedes our effort
to construct a[n arms control] system.  Does it not impede our effort
to put into effect a supplier restraint system if we are selling $15
billion of arms there ourselves? Is that not an impediment to such a
system? You say that a moratorium would deter the other major
suppliers from working with us--that it only works if they are
cooperating with us.  You say that a moratorium would allow
renegade suppliers to step in and take over.  The problem has not
been renegade suppliers.  It has been the Permanent Five." 

Rep. Solarz continues that theme: "If we either by law or by adminis-
tration policy announce to the world that we are not going to sell any
major military equipment to countries in the Middle East unless and
until another country sells major military equipment to a country to
the Middle East, what do you think would happen?" Bartholomew
responds, "I think that it would damage the effort that we have
underway to get the support of the other four major suppliers.  I think
that it would damage our relationship with some of the major
countries of the region, starting with Israel and Saudi Arabia."  [The
Israeli government is on record as supporting a multilateral moratori-
um on weapons transfers to the region.] 

31 July  The House Ways and Means Committee holds a hearing on
foreign contributions to the costs of the Persian Gulf War.  Richard
Darman, Director of the Office of Management and Budget, presents
the fifth report mandated by PL 102-25 (the Desert Shield/Storm sup-
plemental budget bill), which reports on foreign financial contributions
to offset the costs of the war received through 29 July.  (Updated
reports will be provided on the 15th of each month.) According to his
report, Saudi Arabia at this time, owes over $4 billion for pledges
made in 1990-91; Kuwait owes about $3.5 billion; and South Korea
owes $136 million.  Section 109 of PL 102-25 mandates that any
country in arrears on its pledged payments not be eligible to buy arms
from the US.  Nonetheless, arms sales to all three of these countries
have been notified to Congress and have passed the congressional
review.

1 August  The Asian/Pacific Affairs and Arms Control Subcommittees
of the HFAC hold a hearing, at the behest of Rep. Richard Gephardt,
on the "Korean Fighter Program" (KFP)--the sale and licensed
production of 120 F-16C/D to South Korea which Congress had been
notified of on 8 July.  Testifying, along with Gephardt, are Joseph
Kelley of the GAO and Glenn Rudd, Deputy Director of the DSAA.

Gephardt Concerned about Economic/Security Issues of KFP 

"This hearing will allow us to focus on what I and others view as the
diminishing value and possible adverse effects of licensing and co-
production aerospace agreements to the U.S.  economy and our
national security," Gephardt says in his opener.  Further, he is not
convinced that the deal is in the best interest of the country, the
aerospace industry, or its workers.  "In my view, we cannot continue
to be party to agreements, which disproportionately benefit the
workers of our allies the trading partners, cede market leadership to
them, and gain very little in the American national interest."

He continues:
   Though I realize that the KFP is not of the scope that we
   witnessed with the FSX with Japan, I am certain that we
   will see such a proposal for technology sharing and devel-
   opmental guidance for Korea and other countries in the
   future.  In the long-term, all we are really doing is hastening
   the day when we will have to compete against Japan,
   Korea and other countries in the aerospace field--one of the
   few bright stars on our competitive horizon.

          History of KFP Deal

The ROK government originally requested a commercially-licensed
production program for the entire 120 fighter aircraft that it was
seeking, Rudd says.  After realizing that they were not going to agree
to buy the planes off the shelf, the Pentagon insisted on a phased
production plan.  The compromise struck was 12 aircraft purchased
off the shelf, 36 co-assembled, and 72 produced in South Korea
under license.  Additionally, Rudd reports, "the USG took the position
that key components of the final 72 aircraft would have to be
purchased through FMS channels."  In order to protect sensitive
information, Rudd says the Defense Department established the
"FMS-must" list--those items which had to be brokered in a govern-
ment-to-government deal rather than a commercial sale.  Included on
that list are "key soft-ware support, avionics sub-systems (the radar
warning receiver, identification friend or foe system, electronic
counter measure system, radar), explosives and weapons."

As to the seemingly rushed timing of the sale's notification--three
weeks before Congress' August recess--Rudd says that the Korean
minister of Defense requested that the contracts be let by the end of
this year.  "We ... informed the [South Korean Ministry of Defense]
that we could not guarantee that we could complete our analysis,
negotiate a new MOU, complete the necessary USG notification
requirements, and deliver a countersigned LOA [formal letter of offer
and acceptance] in time to award contracts before the end of the
year.  However, we made the internal decision to try and, if possible,
to notify the Congress before the August recess."

Pentagon intervenes in offset negotiation

He also discusses the Pentagon's involvement in limiting the offset
component of the KFP deal.  Korea entered the negotiations request-
ing offsetting arrangements worth 60 percent of the value of the pro-
gram.  McDonnell Douglas (F/A-18) and General Dynamics (F-16)
battled fiercely for the sale.  "As the competition intensified, both
contractors raised the ante and eventually pushed each other up past
the 100 percent offset mark. ... Both Secretary Cheney and Secretary
Mosbacher became personally involved in convincing the ROK
[government] that the offset program must be capped at 30 percent
of the contract value."

Rudd stressed that under the agreement there will be no directed buy-
backs of F-16 co-produced or licensed parts, which leaves the pos-
sibility that South Korea will have no follow-on market after it
completes its domestic procurement.  A trainer codevelopment project
called "KTX-2" and other aerospace industrial development projects
are possible offsets for the engine competition, which is still being
negotiated.  


          GAO on KFP

Joseph Kelley, who has by now authored several reports on the KFP for 
the GAO, was tasked by two separate requests from Congress "to examine 
(1) events and factors leading to the reevaluation of the F/A-18 
decision and selection of the F-16, (2) the government-to-government 
and commercial agreement provision, (3) technology transfer decision 
and the basis for those decisions, (4) interagency meetings and review, 
(5) US government assessments of the program's impact on the US 
industrial base, (6) US, Korean and other countries' work shares, and 
(7) commercial offsets being proposed...."  Left begging is the 
question of past South Korean violations of transfer restrictions on 
US-licensed war material.  The report is in a preliminary state, he 
says.  "We have been unable to fully evaluate the technology transfer 
decisions on this program in any detail."

Kelley says that in the F-16 sale the Pentagon has negotiated an
improved MOU over that of the F/A-18 deal, incorporating some of
the GAO's previous recommendations for strengthening the third
party transfer language--a time limit on how long the ROK had to
respond to visit requests to ensure production does not exceed what
it should, specification of the frequency with which the ROK was
required to provide the US government with production reports of
defense items produced under the MOU.  He says "We are now
evaluating an additional change made to the third-party transfer
provision during the May 1991 negotiations [on the new MOU] to
determine the extent to which the restrictions may have been
technically weakened."

1 August  In one of an ongoing series of hearings on the dealings of
the Bank of Commerce and Credit International (BCCI) being held by
the Senate Foreign Relations Subcommittee on Narcotics and
Terrorism, Senate investigator Jack Blum says that BCCI helped
finance and transport North Korean made Scud missiles to Syria,
Chinese Silkworm missiles to the Middle East and handled payoffs
and financing for other Chinese arms sales around the world.  Blum
also testifies that BCCI was allegedly involved in black market sales
of US-supplied arms to the Afghan resistance, in arms to Guatemala
from Jordan and in selling enriched uranium from South Africa to the
Middle East.  

Legislation passed or pending                              

ASM No. 4-5 reported on the House-passed foreign aid authorization
and appropriation bills and on the SFRC action on the foreign aid and
State Department authorization bills.  This issue examines the Senate-
passed versions of the latter two and the questions remaining for the
Conference Committees.  

International Security and Economic Cooperation Act of 1991                     
              S.1435 -->H.R.2508  

[Amends the Foreign Assistance Act and the Arms Export Control Act
and makes foreign assistance authorization for FY92 and 93.]

This bill was discussed on the Senate floor during 23-26 July, passing
by a 74-18 vote on the 26th.  In FY92 it authorizes $12.8 billion in
foreign assistance spending, with $4.5 billion of that total in grant
weapons aid.  This is the first time since 1985 that the Senate has
passed a foreign aid authorization bill, its passage largely due to the
delegation of the bill's management to subcommittee heads and to
compromise on the floor; both Senators Biden and Helms withdrew
controversial floor amendments, fearing that they would derail the
entire bill.

         Arms and Democracy

Sen. Biden's amendment, the "Middle East Security and Democracy
Initiative Act of 1991," would have mandated that for any commer-
cial or FMS sales notification to Congress, the administration would
have to certify what steps the recipient country is taking toward
democratization, and in the case of oil exporting countries, what
steps are being taken "to invest and contribute, in a manner commen-
surate with its wealth, to the economic development of the region." 

The amendment contained a presidential waiver, stating that if the
required certification could not be made, the sale could go ahead with
"a certification that the proposed transfer ... is of such compelling
importance to the security interests of the United States as to
warrant such transfer notwithstanding the President's inability to
make the appropriate certifications required...."  The wording of this
waiver apparently aroused a great deal of opposition.

In support of his initiative, Biden asserts that US policy should
promote stability and security in the Mideast, best achieved through
a policy of support for political pluralism and economic development. 
"Promoting democracy has never been an objective of US policy in
the Middle East.  Indeed, for years we sought precisely the opposite--
the maintenance of monarchies that extend privileges and basic rights
to a select few. ... A key cause of the instability in the region is the
jealousy felt by many Arabs toward the oil-rich states, whose
contributions to Arab development they consider woefully inade-
quate."  "To those who say that this amendment might offend our
allies in the Gulf, I say that promoting democracy should not be an
offense to anyone, especially those whom American soldiers fought
to defend.  It seems like the least we can expect....I believe that our
willingness to shed American blood in the Persian Gulf permits us to
expect progress toward democracy and economic development." 

In opposition to the amendment, Sen. Mitch McConnell says, "the
issue on the Biden amendment is not whether we are for or against
democracy evolving in the Middle East.  The issue [is] whether at this
particular juncture having a public report card on our allies in the
Middle East--in which they are stood up and given a grade, presum-
ably none would get an A, maybe somebody would get a D, some
probably would get an F--in what way, Mr.  President, does that make
any contribution whatsoever at this most delicate time in which there
is quite possibly for the first time maybe ever a chance to solve once
and for all the Arab-Israeli dispute?"  Biden wonders how the
administration's proposal for a massive new arms sales to Saudi
Arabia positively impacts on the peace process.

In a show of concern over post-war human rights violations and anti-
democratic practices in Kuwait, a move to table the Biden amendment
is defeated by a vote of 39 to 57.  With a Republican filibuster
looming on this issue, and another on an amendment by Jesse Helms
opposing the linkage of aid to Israel to Israel's housing policies in the
occupied territories, the two amendments are withdrawn.

Arms Sales Moratorium Not Supported by Democratic Leadership

Sen. Paul Wellstone introduced an amendment analogous to the arms
sales moratorium provision in the House-passed foreign aid authoriza-
tion bill.  He was joined in sponsorship by Sens. Akaka, Cranston,
Harkin and Daschle, but was not supported by the Democratic
leadership, most critically not by Sens.  Pell and Biden, and strongly
dissented against by Republicans.  Sen. Sarbanes, while almost
saying he supports Wellstone's position, urges him to withdraw the
amendment, saying it will be taken up in conference committee. 
Wellstone complies, saying before doing so: "a proposal to sell up to
$14 billion in advanced conventional weapons to Saudi Arabia is
expected to be sent to the Congress as early as September. ... [N]ow
is the time to focus on weapons proliferation.  Now is the time to
learn the lessons that we need to learn...."  In response to the tired
old charges that the moratorium proposal is "unilateralism," he says:
"The only unilateral action called for in this amendment is US
leadership.  The resulting moratorium is multilateral."  The amend-
ment was withdrawn.

  Arms for El Salvador Hotly Debated

Military aid to El Salvador proved possibly the most contentious issue
on the floor.  A Dodd-Leahy amendment would have forced the
administration to seek congressional approval before lifting a
moratorium on aid to the Salvadoran government.  The amendment
also would have attached conditions on aid already in the pipeline but
not yet delivered (about $150 million worth).  A Republican filibuster
led by Sen. McCain blocked the amendment, as the two-thirds vote
for cloture was not mustered.  The vote for cloture did, however,
draw 52 votes, which demonstrates a high level of Senate support for
further withholding weapons aid.

Regional Nuclear Non-Proliferation Regimes Urged

An amendment introduced and passed by Sen. Glenn encourages the
development of regional nuclear non-proliferation regimes.  It contains
sense of Congress language in support of the important roles that the
NPT and IAEA can play in establishing nuclear weapons free zones.

"The president should pursue a regional negotiated solution to the
issue of nuclear non-proliferation in the countries of South Asia,
including at least the countries of the People's Republic of China,
India, and Pakistan, and the President should seek an accord to be
signed by all nuclear weapons states in the Asian region which would
prohibit nuclear attacks or the threat to use nuclear weapons by
nuclear weapons states on countries in South Asia." 

The amendment also calls for a report each January on progress made
and obstacles toward achieving regional nuclear non-proliferation
regimes.

Senate Demands All Relevant Info on Coproduction Deals

Sen. Alan Dixon introduced an amendment to this bill that would
amend the AECA to delay the approval of arms sales licensing agree-
ments and exports unless/and until the corresponding memoranda of
understanding and any related documents for the coproduction or
codevelopment of major defense equipment have been transmitted to
Congress.  Dixon says "We have unfortunately experienced all too
many times a situation where Congress has practically had to
threaten the administration before we received the critical cooperation
we should have gotten from the outset.  This is a grave problem--it
shows a sloppy attitude on the part of the administration toward
national security measures and it threatens the very integrity of our
democratic governing process. ... Our amendment is designed to end
once and for all the present charade in which we in Congress are
continually asked to approve an agreement between the President and
a foreign government, while nobody--nobody at all--in the Senate or
the House is permitted to look at the document before we act."

         Conference

The arms sales moratorium provision contained in the House-passed
bill is the most controversial issue facing the Conference Committee,
scheduled to begin on 16 September. Given the very strong adminis-
tration opposition on this point, it is not likely to survive. Conferees
for the Senate are Pell, Sarbanes, Biden, Cranston, Dodd, Wofford,
Helms, Lugar, Kassebaum, Murkowski and McConnell.  House
appointees are: Fascell, Hamilton, Yatron, Solarz, Gejdenson,
Donnelly, Torricelli, Broomfield, Gilman, Lagomarsino, and Leach.

Foreign Relations Authorization Act            S.1433-->H.R.1415

[Contains the State Department authorization for FY92 and 93.]

On 29 July S.1433 as amended below passed the Senate by a vote
of 86 to 11.  This bill, which had been reported unanimously out of
the SFRC on 12 June, authorizes appropriations of $6 billion for FY92
and $5.5 billion for FY93 for the State Department, US Information
Agency and the Board for International Broadcasting.

Title IV of the bill makes weapons obtained as the spoils of war
subject to the existing US laws governing the transfer of military
equipment.  Title VIII lays out Sen. Biden's "Arms Suppliers Regime
Act of 1991," which encourages and authorizes the administration to
do what it has already done by convening the meeting in Paris of the
Permanent Five countries on arms transfers.  And Title IX ("Miscella-
neous Foreign Affairs Provisions") contains both the Kerry-Brown
criteria to be applied to any arms sales to the Middle East [see ASM
No. 3 and No. 4-5] and the loan guarantee program to finance
commercial arms sales to NATO member-countries, Japan, Australia,
New Zealand and Israel.

         Chemical Weapons Sanctions Bill Attached

Senators Pell and Helms offer as an amendment a new title, Title X,
on chemical and biological weapons proliferation.  The amendment is
similar to the chemical weapons sanctions bill passed by both houses
last fall and pocket vetoed by President Bush.  The bill would
establish sanctions against countries that use chemical or biological
weapons and, in Sen. Pell's words, "against foreign companies that
assist certain countries in acquiring a chemical or biological weapons
capability."  The bill requires that a presidential determination be
made within 60 days after "information becomes available that a
country may have used chemical or biological weapons."  Upon a
positive determination, ten sanctions would be levied for at least one
year against that country.  Similarly, a list of sanctions would be
applied to a company that was found to be aiding in proliferation. 
The bill contains the allowance of a presidential waiver of the
sanctions in one year's time and at any time "if the president
determines and certifies to the Congress that there has been a
fundamental change in leadership and policies of the government of
that country."  The amendment was agreed to.

         MTCR Clarifications

As part of an en bloc amendment, Pell also introduced a measure
which would clarify and strengthen MTCR provisions contained in the
AECA, specifying that the US policy prohibits the acquisition of
complete ballistic missile systems as well as component parts.  It also
contained a provision aimed at China, which would designate that in
the case of non-market economy countries that sell missiles,
components or expertise, wide-ranging sanctions will be taken against
the government, and not just against the trading companies serving
as fronts for what must be government-sanctioned activities.  The
bloc was agreed to.

         Arms and Democracy II

Sen. Biden reintroduces as a floor amendment his "Middle East
Security and Democracy Initiative of 1991," which he had withdrawn
under heavy opposition from the foreign aid authorization bill [see
description above].  

Pell spoke on the amendment's behalf, saying that the administration
does not object to the provision which would require that he President
issue a report with every sale or transfer describing progress in that
country toward building or maintaining democratic institutions.  Thus,
the Senate Republicans no longer object to the measure.  As icing on
the cake, Biden says that he has cleared the amendment with the
Saudi government.  ("I sat down with the Saudi Ambassador, and I
went over it in detail with him.  He did not see any problem with it.") 
Quite a change from the heavy opposition engendered three days
previously.

The difference in the two versions lies in the presidential waiver: the
waiver in this version has been relaxed to such an extent as to make
the legislation impotent.  It now reads that a sale of armaments can
be made to Mideast countries that do not embody democratic
principles if the President certifies that the proposed transfer "would
serve the national interests of the United States."  Watered down
from being "of such compelling importance" to serving "the national
interest" renders it a meaningless pro forma statement, easily
complied with.
               Re: China

Another Biden amendment which was passed adds a new section at
the end of the bill on "Chinese proliferation practices."  It calls for a
presidential report within 90 days of enactment on Chinese nuclear,
chemical, biological and missile proliferation practices.  

An amendment passed by Sen. Hank Brown requires a detailed report
be made available to Congress and the public 45 days before China's
MFN status is up for renewal.  Among other things, the report would
examine China's weapons proliferation policy over the past year,
detailing previous and possible future sales M-series ballistic missiles,
technologies related to the production of nuclear-weapons-grade
materials, and technologies for the production or use of chemical
and/or biological arms.  It would also report on Chinese willingness to
adhere to the MTCR, Australia Group, and Nuclear Suppliers Group
export control guidelines.  

              Conference

The Conference Committee is tentatively scheduled to begin on 17
September.  Senate conferees are: Pell, Kerry, Simon, Moynihan,
Biden, Sarbanes, Dodd, Helms, Lugar, Kassebaum, Pressler, Murkow-
ski and Brown.  House conferees are: Fascell, Berman, Weiss,
Dymally, Faleomavaega, Lantos, Broomfield, Snowe, Gilman, Smith,
Oakar, Neal (North Carolina), LaFalce, Leach and Bereuter.  The most
important issue for conference is the program for financing commer-
cial arms sales through State Department loan guarantees.

Other legislation of interest                           

Nuclear Proliferation Prevention ActS.1601 

Sponsor: Tim Wirth

This bill amends the Atomic Energy Act of 1954 to restrict exports to
states that do not permit full-scope IAEA safeguards or have a nuclear
cooperation treaty with the United States of any items--in addition to
nuclear facilities and nuclear fuel--that could contribute to nuclear
weapons proliferation.  Included would be such material as "high-
speed computers, specialty metals and nuclear-related machines and
components."  The legislation would also phase out the export of
highly enriched uranium for civilian nuclear uses.  S.1601 requires the
President to undertake negotiations with the Nuclear Suppliers Group
countries to adopt similar export controls.

Entered into the record by Sen. Wirth is an extensive discussion of
S.1601, including a series of self-imposed questions and answers
concerning the bill; a side-by-side comparison of S.1601 to Sen.
Glenn's nuclear non-proliferation bill (S.1128), to the McCain-Gore bill
(S.309) and the Rep. Stark's bill (H.R.830); an endorsement by
several arms control lobbying groups; and an accounting by the CRS
of "US exports that could have been affected by the provisions of the
proposed Nuclear Proliferation Prevention Act, had it been in force at
the time the exports occurred."  

Status: Introduced on 31 July and referred to the SFRC.  House
companion legislation (H.R.2755) was introduced last month by Reps. 
Markey, Wolpe, Solomon and Stark and referred to the HFAC.

National Defense Authorization Act for FY92 and 93                S.1507

During the floor debate on the FY92 Defense Department authori-
zation bill, Sen. Bob Graham brings up US arms sales to the Middle
East.  He had intended to introduce an amendment on the issue, but
decided against--presumably because of time constraints.  But he says
"it will be my intention when we return to offer legislation which
would amend the Arms Export Act to provide the Congress 60 days
in which to review [proposed sales] so that we would not be caught
in a circumstance such as we currently find ourselves" [with the
notification of a $365 million sale to Saudi Arabia four days before
congress adjourns for a month].  Other measures he intends to
propose would require the President to analyze the military balance in
the Persian Gulf region and define the threat facing countries in the
area; and lay out the legitimate defensive requirements of each state
in the region, taking into account the current inventories of counties
on the Arabian peninsula.  

Recent congressional publications                    

Arms Trafficking, Mercenaries and Drug Cartels (Hearings of the
Permanent Investigations Subcommittee of the Senate Governmental
Affairs Committee on 27 & 28 February 91) USGPO: 1991.

"China's Arms Sales: Overview and Outlook for the 1990s," by
Shirley Kan (CRS) in China's Economic Dilemmas in the 1990s: The
Problems of Reforms, Modernization, and Interdependence, Volume
2 (Study Papers submitted to the Joint Economic Committee, April
1991) USGPO: 1991.

"Conventional Arms Transfers to the Third World, 1983-1990," by
Richard F. Grimmett, CRS Report for Congress (No. 91-578F), 2
August 1991, 82 pp.  See review below.

Department of Defense Report [to Congress] of the Defense Technol-
ogy Security Administration, July 1991, 39 pp.  The report is
available by calling (703) 693-7110.

Foreign Aid Funding and Chemical Weapons (Hearing of the House
Budget Committee's Task Force on Defense, Foreign Policy and Space
on 30 may 91) USGPO: 1991, 47 pp.

Foreign Assistance Legislation for Fiscal Years 1992-93, Part 9
(Hearings of the House Foreign Affairs Committee on 7, 9, 14, & 21-
23 May 91) USGPO: 1991.

Government Contracting: Reimbursement of Foreign Selling Costs [of
Military Goods and Services], June 1991, GAO/NSIAD-91-01, 42 pp.

Post War Policy Issues in the Persian Gulf (Hearings of the Arms
Control and Europe and the Middle East Subcommittees of the House
Foreign Affairs Committee on 31 January, 21 &28 February and 11
April 91) USGPO: 1991.

Trade in Conventional Weapons: The International Arms Bazaar
(Hearing before the Permanent Investigations Subcommittee of the
Senate Governmental Affairs Committee on 12 June 91) USGPO:
1991.


   Literature Review: CRS' Conventional Arms Transfers to the Third World

Conventional Arms Transfers to the Third World, 1983-1990, by Richard 
Grimmett of the CRS, was released in early August.  This annually-updated 
report is an extremely useful indicator of trends in arms sales to developing
countries: who's buying and who's selling; how much they're buying and 
selling; and what they're buying and selling. 

The report is divided up into two sets of statistical tables: one series 
on sales agreements made by year and the other on weapons deliveries made 
by year.  The author is careful to provide both current year dollar figures 
and constant dollar figures, as well as to provide market share percentages 
over four year periods and changes in market share from four year period 
to four year period to correct distorting effects of inflation.  

The CRS data include the values of weapons, spare parts, military
construction, services, and military assistance and training programs
sold or given to developing countries each calendar year, including US
Military Assistance Program and International Military Education and
Training grants.  US commercial sales, however, are excluded from
this accounting, as no commercial sales agreement data are main-
tained by the State Department.  Data on commercially licensed arms
deliveries are gathered only by completed export licenses and shipping
documents which are returned to the State Department's Office of
Defense Trade Controls.  This omission results in a significant under-
representation of US arms exports.  By looking at the latest issue of
the FMS Facts (see box for full citation), you find that from $2-4
billion dollars in weapons sales to developing countries have been
made through commercial channels over each of the past few years. 
Cumulative for the period 1983-1990, the United States has
transferred $15 billion more in weapons and related services than the
CRS report shows.  

For the foreign-country data, Grimmett draws on classified US
government figures, and the only information the reader gets on its
source or methodology is contained in a footnote to the main
statistical tables: "Statistics for foreign countries," it reads, "are
based upon estimated selling prices." 

According to the CRS report, last year was the first year since 1987
that the value of arms transfer agreements rose over the previous
year.  New sales agreements in 1990 totalled $41.3 billion.  Grimmett
views this Gulf war surge as a blip in what otherwise would have
been a continued downward trend in sales.  He attributes the past
decline in sales to the absorption of previously bought arms and the
increasing proportion of spares, ammunition, and support services
that developing countries are now buying.  

Arms deliveries in 1990--at $26.3 billion--were at the lowest value of
any year in the period from 1983-1990, also the third consecutive
year that the value of deliveries dropped significantly.  Due to the
above-mentioned decline in global sales, as well as to a professed
policy of drastically reduced weapons sales and conversion of the
arms industry, Czechoslovakia registered the greatest percent decline
(82.1 percent) in arms deliveries from the four-year period 1983-86
to the four-year period 1987-90.  Italy also registered a very signifi-
cant decline of 78.5 percent in its deliveries from the first time period
to the second.

The most often-cited finding of the report is that in 1990-
-for the first time since 1983--the United States overwhelmingly 
led in arms sales agreements made with third world countries, 
accounting for a full 45 percent of all such agreements.  The
value of American sales agreements jumped from $8 billion in 1989 
to $18.5 billion in 1990, mostly attributable to Saudi purchase
agreements.  

The Soviets were the second largest dollar-volume arms trader in 
1990, making deals worth $12.1 billion, down from $13 billion the year
before.  This represented 29 percent of the third world market.  The
third largest seller in terms of deals made in 1990 was China, trailing
far behind at $2.6 billion and accounting for 6 percent of the market. 

The major European sellers--France, United Kingdom, Germany and Italy--
combined accounted for only 10 percent of the market in 1990, valued 
at about $4.1 billion.  All other arms suppliers accounted for the
remaining 9 percent ($4 billion) of the arms sales agreements made last
year.

Countries in the Middle East continue
to be on the receiving end of about 60 percent of all arms transfer
agreements made with and weapons deliveries to the third world. 
Saudi Arabia was the largest recipient of arms in 1990, importing
over $6.7 billion.  Great Britain was its largest supplier.  The Saudi
kingdom was also overwhelmingly the biggest arms deal maker in
1990, signing $18.65 billion of new agreements.  Of that, $14.5
billion was with the United States.  (According to the report, US sales
agreements with the Saudis are not all attributable to the Gulf war--
$6.1 billion worth of the sales were made before the Iraqi invasion.)
For the entire period 1983-1990, Saudi Arabia was the overall leader
in agreements and deliveries, signing sales agreements worth $57.3
billion and actually taking delivery of $48.1 billion worth of arms in
that time.  

Iraq has been the second largest recipient in both agreements and
deliveries of arms during 1983-1990, with its agreements totalling
$30.4 billion, and deliveries totalling $39.6 billion.

The accompanying two tables from the CRS report are interesting.  
Rather mysteriously, Israel is absent from the list of top ten third
world arms importers.  Since 1985, Israel receives from the United 
States every year $1.8 billion in FMS financing--grant aid to purchase 
US weapons.  Over the past six years, that aid alone would equal $11 
billion, and would place Israel as the ninth largest arms importer 
during that time period, not even counting imports in 1983 and 84.  
Under a special exemption granted by Congress, though, some portion
of this aid may be spent on domestically-developed and manufactured 
weapons. Israel's absence from the tables might mean that Israel
is not spending its military grant to import weapons or that at 
least $600 million of that aid per year is being spent domestically 
on Israeli made weapons.  

The report also gives quantities of different categories of weapons 
transferred by each of the major suppliers to the third world, and to
specific regions, over four year time blocs.  The following chart 
is based on those data:

(for chart, please contact ASM directly)

Free copies of this, or any other CRS report, can be obtained through
your Congressperson's office.

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