Arms Sales Monitor #22, Sept. 1993

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No. 22, (September 1993)


Published by the Federation of American Scientists Fund, the ASM is
compiled and edited by Lora Lumpe, assisted by Paul F. Pineo. Our goal
in producing the newsletter is to provide timely information and
context to policymakers, the media and concerned citizens, in
furtherance of responsible U.S. conventional arms transfer policies.
This publication may reproduced or cited freely. It is available from
the FAS Fund at 307 Massachusetts Avenue, NE Washington, DC  20002
[phone (202) 675-1018] at a cost of $20 per year (6-8
issues). 

The ASM Project is supported with grants from The John H. Merck Fund,
The Ploughshares Fund, The Compton Foundation, Inc., The Winston
Foundation for World Peace, and The S.H. Cowell Fund.

The Federation of American Scientists is a non-profit civic
organization of natural and social scientists and engineers concerned
with science and society issues in general, and matters of
international security in particular.


Editorial: Dump the "Kempthorne Amendment" 
Spurred by government promotional policies and military aid programs,
American arms exports reached an all time high of more than $30 billion
during fiscal year 1993. Even so, some Senators, concerned about
defense layoffs, want to provide still more subsidies. 

The Senate's fiscal year 1994 DOD authorization bill contains a
provision---introduced by Sen. Dirk Kempthorne---which authorizes the
expenditure of $25 million to establish a new $1 billion loan guarantee
program. The House bill does not contain this program. Whether
it is passed into law will be decided in the House-Senate conference
during the latter half of October. 

The Pentagon did not request and does not support the loan guarantees.
Rather, the program has been promoted assiduously by the arms industry
lobby, which touts it as "a blue collar jobs program." While the Senate
usually is not so supportive of jobs programs, this one sailed through.
Even some of the staunchest proponents of arms control in the Senate
supported this arms-sales-for-jobs program (see box, p. 5). But, with
American soldiers currently facing American-made weapons in Somalia, it
should be clear that arms exports are not a cost-free substitute for
the necessary downsizing of the U.S. arms industry. 

Arms exports enable arms races and wars. The proposed loan guarantee
program will particularly exacerbate (and further underwrite) the arms
race between Greece and Turkey.
While all NATO member countries are eligible under the amendment to
receive guarantees, the countries on the southern tier of the alliance
are the most likely recipients of such aid.  In addition, European
governments will probably respond to a new
American aid program by providing increased financing and marketing
assistance to their industry, fuelling other arms races around the
world. 

The Kempthorne provision is also budgetary "smoke and mirrors." While
burying a new military aid program in the unwieldy Pentagon budget,
lawmakers are cutting such funds in the foreign aid budget, in response
to pressure from constituents to reduce foreign aid in general, and
military aid in particular. This shuffling of the accounts is
inconsistent and deceptive. 

Moreover, instead of costing "only" $25 million as advertised, this
program could cost taxpayers $1 billion if the loan recipients default
on their payments. Guarantees are needed precisely because the recipient
is a credit risk, and weapons loans have a history of going
bad: During Operation Desert Shield/Storm, the U.S. forgave Egypt $7
billion in past military loans; and an Italian bank is currently suing
the United States to recover $240 million in defaulted Iraqi loans which
the government guaranteed. 

Finally, the White House is in the midst of a major review of
conventional arms trade policies. By creating a new loan guarantee
program for arms exports,
Congress will pre-judge the outcome of the review.  

The Conference Committee should delete the Kempthorne amendment from
the Pentagon bill.
   --by Lora Lumpe, editor of the Arms Sales Monitor


Clinton Admin. Watch:

Still No Policy on Conventional Arms Sales...

27 September---President Clinton unfurls his administration's
much-anticipated non-proliferation policy review in a speech before the
UN General Assembly.
Proposals on chemical, biological and nuclear arms control and
missile-related
export controls are included. But, while he talks in his speech about the
devastation caused by
wars raging around the world, of the human toll these wars take, and of
the burgeoning
need for UN peace-keeping missions created by them, he offers no
initiatives to stem the
proliferation of conventional weapons.

At a background press briefing at the UN, a Senior Administration
Official says that as a follow-up to the proposals released today, 
the Administration "will be taking a serious look in the coming 
months" at conventional arms transfer policy. According a White House
fact
sheet on the non-proliferation policies, the conventional arms review
will take into account "national security, arms control, trade, 
budgetary and economic competitiveness considerations."

Admin. Seeks Repeal of FMS Recoupment Fees 

8 September---The Pentagon sends Congress draft legislation (S.1474)
which would amend the Arms Export Control Act, repealing now-mandatory
"recoupment" fees
on Foreign Military Sales (FMS). The fees are added to the price of
exports, in order to recover part of the taxpayer-funded R&D for the
weapon. Industry opposes the fees because the higher price makes U.S.
weapons less competitive. 

The arms industry successfully lobbied the Bush Administration last
year to remove non-statutorily-mandated recoupment fees for direct
commercial sales (see ASM No. 18 p. 4) but was not able to persuade them
to seek the repeal of the fees on FMS at that time.  But, with brilliant
lobbying strategy, advocates for the FMS program are now arguing that
they need the fee repealed in order to "level the playing field" with
the commercial sales program. 

As of early October, the bill has no Senate sponsors.

`Bottom Up Review': Recipe for Intervention

1 September---"Bottom-Up Review: Forces for a New Era," the Clinton
Pentagon's much-delayed review and pronouncement of post-Cold War force
and procurement needs is released. The operative assumption of the
blueprint is that U.S. forces must be able to fight and win two Major
Regional Contingencies (MRCs) simultaneously and on short notice. For
this, rapidly deployable, interventionary forces are essential.
According to Secretary of Defense Les Aspin, the following "Critical
Force Enhancements" are needed: 

 Additional pre-positioned Army equipment
 Additional airlift/sealift capabilities
 Improved anti-armor and precision-guided munitions
 More fast-arriving Naval air power
 Improved Army National Guard combat brigade readiness
 Improved Army Guard/Reserve support force readiness
 Improved Command, Control, Communication and Intelligence 
 Retained Marine Corps end strength

While the report does not address the role that arms transfers can play
in fostering the MRCs that the review assumes U.S. forces will fight, it
does cite Operation Just Cause in Panama, Operation Desert Storm against
Iraq, and Operation Restore Hope in Somalia as the types of conflicts
U.S. forces will face. In each of these cases, arms transfers directly
enabled the aggression or fuelled the instability that necessitated the
military operation; in two of the three cases, the weapons came primarily
from the U.S.

ITAR Amended Substantially

22 July---Major revision to the International Traffic in Armaments
Regulations (ITAR), which govern implementation of the Arms Export
Control Act, enter into effect today. The changes are intended to
"clarif[y] existing regulations and reduce the regulatory burden on
exporters." The most significant changes are: an increase in validity
of commercial arms export licenses from three years to four; a revision
of the policy used by the State Department to designate defense articles,
to take into account civil applications and functional equivalences;
several new exemptions from licensing requirements, including exports
under approved manufacturing or technical assistance
agreements, spare parts valued at $500 or less, intra-company transfers
of components being sent abroad for assembly, temporary imports for
repair or service, and weapons previously licensed for temporary export
to trade shows. 

The Aerospace Industries Association (AIA) and other arms industry
representatives worked closely with the State Department to enact these
revisions. AIA informed the Undersecretary of State for International
Security Affairs (Lynn Davis) at its International Council meeting in
April that "early implementation [of the new regulations]
would be read as a signal by industry and government personnel that there
was no intention of returning to the strong anti-arms transfer policy of
the Carter Administration." 

Legislation:
_____________________________________box__________________________
A Call for Sales Limits

30 July---Over a quarter of the House signs on to a letter to President
Clinton urging "fundamental re-evaluation of U.S. arms transfer policy."
The lawmakers note that U.S. arms sales have doubled since the end of the
Cold War to an average of $17 billion per year. They state that "it is
urgently in the national interest to find a way to stop this spiral of
militarization," fuelled by U.S. and others' sales. As an interim step,
the legislators suggest a "short-term moratorium on arms transfers to
unelected or repressive governments or governments not complying with the
new United Nations arms trade registry." 

Among the 111 signers are several Members, including the originator of
the letter Rep.  Howard Berman (D-CA), who represent districts with
significant arms industry. Of this, they say: "The public...must
understand that arms sales to developing countries are not a cost-free
way to extend military production lines. That understanding would
be greatly enhanced, at least in this country, if you explained that the
last three times U.S. forces went into action---Panama, Iraq, and
Somalia---they faced weapons or weapons technology either exported or
financed by our own government."

In August the President sends a polite response, in which he informs
Mr. Berman of his on-going conventional arms trade policy review.
___________________________________________________end
box_________________________

Bills Authorizing Foreign Aid Programs Still Pending in Senate

On 30 September, President Clinton signed into law the fiscal year 1994
foreign operations appropriations act. The contents of that law will be
summarized in the next issue. Meanwhile, the foreign aid authorization
bill has not been, and probably will not be, finalized and enacted into
law. (In fact, a foreign aid authorizing bill has not been passed since
1987.)  Nevertheless, relevant provisions from the pending Senate version
of the bill (S.1467) are summarized below, on the understanding that some
of these measures will be offered as amendments to the Foreign Relations
Authorization Act (S.12 81) when it is considered by the full Senate in
mid to late October. S.1281 authorizes appropriations for the State
Department for fiscal years 1994 and 1995. 

Legislative provisions from both bills relating to arms transfers, and
not included in the House-passed companion bills (see ASM No. 21), are
highlighted here.
After S.1281 is passed, a conference committee will then reconcile the
bill with the House version. 

`Spoils of War' Subject to AECA.  Title V of S.1281 states that all
weapons captured in war by U.S. forces can be transferred to another
person, group or government only under "the terms, conditions and
requirements applicable to the transfer of property of the same type
otherwise owned by the United States"---i.e., the Arms Export Control
Act and Foreign Assistance Act. In response to allegations that Syria
received some Iraqi weapons in return for its participation in the Gulf
War, the bill explicitly states that
captured weapons may not be transferred to any country determined by the
Secretary of State to sponsor terrorist groups or actions (see box, p.
7). 

The bill mandates that within 90 days of enactment the President submit
a report describing `spoils of war' taken in Operation Desert Storm and
subsequently transferred to a third party. "Such report shall be
submitted in an unclassified form to the
extent possible."

Unlimited arms sales to Taiwan.  Section 707 of S.1281 amends the
Taiwan Relations Act of 1979 [PL 96-8] to state that Sections 3(a) and
3(b) of that act take precedence over the 17 August 1982 Joint United
States-China Communique.

The Communique states: "the United States Government ... does not seek
to carry out a long-term policy of arms sales to Taiwan, that the arms
sales to Taiwan will not exceed, either in qualitative or in quantitative
terms, the level of those supplied in recent years since the
establishment of diplomatic relations between the United States and
China, and that it intends to reduce gradually its sales of arms to
Taiwan, leading over a period of time to a final resolution."

In contrast, Section 3(a) of the Taiwan Relations Act states that "the
United States will make available to Taiwan such defense articles and
services in such quantity as may be necessary to enable Taiwan to
maintain a self-defense capability."
Section 3(b) states that the volume of arms sales shall be "based solely
upon...the needs of Taiwan."

Sen. Frank Murkowski, the sponsor of the measure, argues that the Joint
Communique is merely a policy statement, without the force of law,
whereas the Taiwan Relations Act is law. Murkowski says that the
Administration "has not, up to now, seriously implemented paragraph 6 [of
the Communique] in a way which would violate Section
3(b)." The $600 million of sales in 1982, the base year of the
Communique, was sufficiently high that "as a practical matter, Taiwan's
needs did not exceed, to any great degree, what we were willing to sell
to them." But, he rightfully adds, "smoke and mirrors" have been used to
circumvent the limit, and in certain cases the policy requirement to
reduce sales levels has been blatantly ignored, as in the $6 billion sale
of 150 F-16 aircraft to Taiwan last September. 

The Administration opposes the amendment, and the government of Taiwan
is non-committal, both fearing hostile Chinese reaction. Yet, the
Pentagon has notified Congress of nearly $2 billion worth of arms sales
to Taiwan during June-September 1993 (see p. 9). 

Military aid reform.  Section 105 of S.1467 revises the justification
for military aid contained in the Foreign Assistance Act (Sections 501
and 502), eliminating references to the containment of communism and
instead emphasizing as objectives: promoting arms control, "legitimate
self-defense," democratic governance and participation in multilateral
peacekeeping operations; combatting narcotrafficking; meeting urgent
humanitarian needs; increasing respect for human rights; promoting the
professionalism of the armed forces; and furthering "the rationalization,
standardization and interoperability of the military forces of friendly
foreign countries with the Armed Forces of the United States."

Expanded IMET codified, concerns noted.  Section 105 of also amends
Section 541 of the Foreign Assistance Act to allow International Military
Education and Training (IMET) funds to educate non-military personnel
(including legislators) at U.S. military education and training
facilities or other schools and institutions in the United
States. or abroad. The Committee mandates that all IMET
training---whether short-term, technical training or longer-term
professional training---foster greater respect for and
understanding of democracy, principles of civilian control of the
military, and internationally recognized human rights.

The bill's report notes that the Committee "is deeply distressed by the
number of IMET graduates who have been involved in human rights
violations and anti-democratic activities, including nine who
subsequently became heads of state by coup or other violent means."
 

Study on balance of aid.  S.1467 calls for a report on the appropriate
balance between military and economic aid is due to Congress six months
after enactment into law. The report is to include an analysis of the
security threats and economic challenges facing aid recipients and a list
of which countries face a minimal military threat, making a shift from
military to economic aid possible.

7:10 ratio for Greek:Turkish EDA.  Section 305 of S.1467 amends the
Foreign Assistance Act by adding a new Section 516(g), which establishes
a 7:10 balance of excess defense articles (EDA)---surplus weapons given
away for free---transferred to Greece and Turkey.  Such a ratio currently
governs the provision of military aid to the two. Turkey has been
receiving substantial amounts of weaponry for cheap or free through the
EDA program.

Classified sales notifications.  Section 307 of S.1467 amends Sections
36(b) and (c) of the Arms Export Control Act to mandate that for
classified arms sales notifications to Congress, at least the name of the
recipient country or international organization to receive the material
and the general category of weapons or services to be transferred must
be reported in unclassified form.

New reporting requirements on offsets.  Section 308 of S.1467 requires
that information on any direct or indirect offset agreements under
negotiation or consideration as part of the sale of weapons or services
subject to Congressional notification be included in the quarterly
reports due to Congress under Section 36(a) of the Arms Export Control
Act, and in the 36(b) and (c) sales notifications. 

Section 36(b)(M) of the Arms Export Control Act allows Congress to
request information concerning offset commitments made by the U.S.
government in the negotiation of foreign military sales. But since the
U.S. government typically does not negotiate offsets, and the law does
not extend to offsets negotiated by industry, the measure is not terribly
meaningful. 

Another law (Defense Production Act Amendments of 1992 [PL 102-558])
already requires U.S. companies to provide information on offsets
exceeding $5 million to the Department of Commerce. This new provision
will ensure that Congress receives timely notification of this same
information, of interest to the Committee so that it can more
accurately assess the net "jobs" impact of potential sales. As the
Committee report explains: "In recent years, offset agreements requiring
U.S. purchases or marketing of foreign goods and services in exchange for
the purchases of U.S. military equipment have greatly expanded.  Such
agreements may result in some loss of U.S. jobs and business. In
light of the fact that foreign military sales are sometimes advocated on
the basis of the employment produced for the defense industry by such
sales, it is important that the committee have information on
accompanying offset agreements." 

Ban on indirect bribery to make sales.  Section 309 of S.1467 amends
Section 39 of the Arms Export Control Act to prohibit the approval of any
foreign military sale in which "a third-party incentive payment is
offered to any U.S. company or individual in order to induce that company
or individual to purchase foreign articles, services or equipment as part
of an offset agreement." The report explains: "The committee provision
would prohibit incentive payments or compensation paid by a U.S. supplier
of defense articles or services to any other U.S. company or individual
to induce that company or individual to purchase or acquire goods or
services provided by a foreign entity in order to satisfy an offset
agreement made with a foreign country in connection with the sale of
military articles or services....It is aimed solely at those instances
where the defense contractor or subcontractor seeks to make a payment to
a third party to induce it to choose a foreign company over an American
competitor." 

New reporting requirements on coproduction deals.  Section 310(a) of
S.1467 amends the Arms Export Control Act to mandate that the quarterly
reports due under Section 36(a) include information on all
government-to-government agreements for the foreign coproduction of
defense articles of U.S. origin. The report is to include the foreign
countries or organizations involved, a description and estimated value
and quantity of the articles authorized to be produced, the restrictions
on third-country transfers and a description of controls incorporated
into the agreement to ensure compliance with this. Section 310(b) creates
a new Section 32 in the Arms Export Control Act, to establish sanctions
against foreign countries or firms that violate the third-country
re-transfer restrictions.

Arms sales to Indonesia.  Section 514(a) requires the President to make
a determination as to whether the human rights situation in East Timor
has improved before any government negotiated Foreign Military Sales may
be approved, or any privately negotiated commercial sales licensed for
Indonesia. A list of factors to be taken into consideration are included.

House, Senate DOD Authorization Bills

The Senate passed S.1298, its version of the fiscal year 1994 DOD
authorization bill, on 14 September by a 92-7 vote. The House passed its
bill, H.R.2401, on 29 September by a 268 to 162 vote. Both bills include
relevant policy and programs.
Issues at variance will be resolved in Conference Committee, set to begin
the week of 11 October and run for 2-3 weeks. 

Arms sales = conversion?  The House bill contains an amendment, offered
on the floor by Reps. Tom Andrews (D-ME) and John Kasich (R-OH), which
bars the use of defense conversion funds to finance the sale or transfer
of weapons or related services or articles.  The provision passed by a
strongly bi-partisan 256-160 vote. The amendment was offered in direct
response to arms industry lobbying efforts to divert substantial amounts
of conversion funds to establish a loan guarantee program for arms sales
(see ASM Alert! 20 May 1993). The Administration apparently supports the
provision. In a letter to the editor of the L.A. Times <8 Sept. 1993>,
Undersecretary of Defense John Deutch stated emphatically: "if the
Administration were to support loan guarantees in the future, the funds
would not be diverted from defense conversion." 

New aid program for arms sales established.  The Senate bill creates a
$1 billion loan guarantee program for arms exports in fiscal year 1994.
The Pentagon will administer the program, with NATO members (which
includes Turkey and Greece), Japan, Australia, South Korea and Israel
eligible. $25 million is authorized to underwrite the loans---as
insurance against default. In addition to undergoing the usual review
procedure, the National Security Council is directed to review all sales
under this program to determine that any such sales are "in accord with
United States security interests, that it contributes to collective
defense burden sharing, and that it is consistent with United States
non-proliferation goals."

The administration did not request the program, which was amended to
the Senate Armed Service Committee's markup of the bill by Senator Dirk
Kempthorne (R-ID). 

During full Senate consideration of the bill, Senator Jeff Bingaman
(D-AZ) introduced an amendment to strip this program from the bill.
Senate Armed Services Committee Chair Sam Nunn introduced a motion to
table (kill) Bingaman's amendment, which passed by 63-37 votes (see box).


_______________________________box___________________________________

Roll Call: Senate Vote on the Kempthorne Amendment

YEAS: in effect, a vote to establish a new loan guarantee program for
arms sales 
Baucus (D-MT)
Bennett (R-UT)
Bond (R-MO)
Boren (D-OK)
Breaux (D-LA)
Brown (R-CO)
Bums (R-MT)
Chafee (R-RI)
Coats (R-IN)
Cochran (R-MS)
Cohen (R-ME)
Coverdell (R-GA)
Craig (R-ID)
D'Amato (R-NY)
Danforth (R-MO)
Dodd (D-CT)
Dole (R-KS)
Domenici (R-NM)
Durenberger (R-MN)
Faircloth (R-NC)
Feinstein (D-CA)
Ford (D-KY)
Gorton (R-WA)
Graham (D-FL)
Gramm (R-TX)
Gregg (R-NH)
Hatch (R-UT)
Heflin (D-AL)
Helms (R-NC)
Hollings (D-SC)
Hutchison (R-TX)
Inouye (D-HI)
Jeffords (R-VT)
Johnston (D-LA)
Kempthorne (R-ID)
Kennedy (D-MA)
Kerrey (D-NE)
Kerry (D-MA)
Lautenberg (D-NJ)
Lieberman (D-CT)
Lott (R-MS)
Lugar (R-IN)
Mack (R-FL)
McCain (R-AZ)
McConnell (R-KY)
Mikulski (D-MD)
Mitchell (D-ME)
Nickles (R-OK)
Nunn (D-GA)
Packwood (R-OR)
Pell (D-RI)
Pressler (R-SD)
Robb (D-VA)
Rockefeller (D-WV)
Roth (R-DE)
Shelby (D-AL)
Simpson (R-WY)
Smith (R-NH)
Specter (R-PA)
Stevens (R-AK)
Thurmond (R-SC)
Wallop (R-WY)
Warner (R-VA)

NAYS: a vote opposing the program

Akaka (D-HI)
Biden (D-DE)
Bingaman (D-NM)
Boxer (D-CA)
Bradley (D-NJ)
Bryan (D-NV)
Bumpers (D-AR)
Byrd (D-WV)
Campbell (D-CO)
Conrad (D-ND)
Daschle (D-SD)
DeConcini (D-AZ)
Dorgan (D-ND)
Exon (D-NE)
Feingold (D-WI)
Glenn (D-OH)
Grassley (R-IA)
Harkin (D-IA)
Hatfield (R-OR)
Kassebaum (R-KS)
Kohl (D-WI)
Leahy (D-VT)
Levin (D-MI)
Matthews (D-TN)
Metzenbaum (D-OH)
Moseley-Braun(D-IL)
Moynihan (D-NY)
Murkowski (R-AK)
Murray (D-WA)
Pryor (D-AR)
Reid (D-NV)
Riegle (D-MI)
Sarbanes (D-MD)
Sasser (D-TN)
Simon (D-IL)
Wellstone (D-MN)
Wofford (D-PA)

And the Administration...?

During the Senate debate over arms sales loan guarantees, letters from
Clinton Administration officials were used to bolster both sides' cases. 

Proponents of the program waived a June letter from Commerce Secretary
Ron Brown to Martin Marietta CEO Norm Augustine, in which Brown says:
"The [Commerce] Department has been a supporter of defense export loan
guarantee program proposals in the past and will continue to support them
in the future if viable within funding constraints."

But opponents had a more recent letter in hand, from Undersecretary of
Defense John Deutch to the editor of the L.A. Times, saying: "the
Administration has not yet determined the suitability or efficacy of
government-backed loan guarantees for defense exports. The Defense
Department is currently evaluating loan guarantees as one of
several possible tools to help defense contractors remain viable as U.S.
military needs decline." 


Arms sales commission created.  Another provision sponsored by Rep.
Kasich establishes a National Commission on Arms Control. Comprising 12
voting members, the Commission will study "the factors which contribute
to the global proliferation of strategic and conventional military
weapons and related equipment and the technology necessary to produce
such weapons and equipment."
The voting members will be appointed by the President, and the House and
Senate Majority and Minority leaders. Eighteen months after the members
are empaneled, the Commission is to submit a report to the President
containing recommendations on unilateral and multilateral initiatives to
"stop the global proliferation of strategic and conventional military
weapons and related equipment" and to promote conversion of foreign and
domestic weapons industries.

Bahrain eligible for excess articles.  As a reward for its fairly
self-interested assistance during Operation Desert Shield/Storm, Section
1034 of the House bill would make Bahrain eligible to receive Excess
Defense Articles (EDA) under the Foreign Assistance Act's Southern
Regions Amendment (Section 516). Other eligible countries include Turkey,
Greece, Egypt, Israel, Morocco and Oman. 

Industry concerned about EDA.  The arms industry is concerned that
excess defense article give-aways are cutting into the sales market,
meaning a loss of work and profit. Thus, the Senate bill recommends that
the President be required to consider, on a case-by-case basis, "the
effects of a transfer of excess defense articles on the national
technology and industrial base." 
________________________________box__________________________________
______
EDA Hotline

The on-line record of weapons transferred under the Excess Defense
Articles provisions of the Foreign Assistance Act, mandated in last
year's DOD authorization bill (see ASM No. 21 p.9), is up and running.
Through the Pentagon's "Bulletin Board Service" (BBS), users can obtain
information about articles to be transferred, their original
and current cash values, the date of Congressional notification, the
relevant section of the Foreign Assistance Act under which the articles
are transferred, and the Service responsible for the transfer. The BBS
currently contains data on EDA transfers only during fiscal years 1992
and 1993. Only the date of Congressional notification and the date of
authorization to consummate the transfer are included. By the end of the
year, the BBS will include the delivery date, as well.

To find out what the Pentagon is giving away and to whom, dial up (703)
697-3943 on your computer modem. 

Resurrection of SDAF?  The Administration's fiscal year 1994 budget
eliminated the Special Defense Acquisition Fund (SDAF)---a revolving fund
used to procure and stockpile popular export weapons. The House bill
urges the Pentagon to maintain the fund and recommends a $266 million
budget in fiscal year 1994. According to the HASC report, "The partial
liquidation of SDAF will affect the defense industrial base with the
negative implications of increasing costs, loss of jobs, and inability
to meet requests [for exports] on a timely manner." 

Although a Pentagon program, SDAF is considered "security assistance,"
which falls under the jurisdiction of the foreign aid bills. Both the
House-passed version and the pending Senate version of the foreign aid
authorization bill eliminate the fund.

Landmine export ban extended.  Passed by a 100-0 vote, an amendment to
S.1298 sponsored by Sen. Patrick Leahy (D-VT) extends the prohibition
initiated last year on the transfer of all anti-personnel landmines for
three years. The measure also reasserts that U.S. policy seeks verifiable
international agreements to prohibit the sale or transfer of, and to
limit the production of, anti-personnel landmines. It states the
belief of Congress that the President should submit the 1980 "Convention
on Prohibitions or Restrictions on the Use of Certain Conventional
Weapons Which May Be Deemed to Be Excessively Injurious or to Have
Indiscriminate Effects" [!] to the Senate for ratification.
In particular, the bill urges, the U.S. government should participate in
a UN conference to review Protocol II, the Landmine Protocol, of the
Convention. 

Leahy points out in the text of the amendment that small amounts of
money and few American jobs are involved in landmine exports: "During the
past ten years, the Administration has approved ten licenses for the
commercial export of anti-personnel landmines with a total value of
$980,000 and the sale under the Foreign Military Sales program of 108,852
anti-personnel landmines."    

The bill also authorizes the appropriation of $10 million for landmine
clearing for humanitarian purposes. 

Prevention and Control of Proliferation of Weapons of Mass Destruction
Act.  Subtitle E of the Senate bill establishes a Nonproliferation
Program Review Committee, comprising the Secretaries of Defense and
Energy, the Directors of Central Intelligence and ACDA, and the Chairman
of the Joint Chiefs of Staff. The purpose of the Committee is
"to optimize funding for, and ensure the development and deployment of
(A) highly effective technologies and capabilities for the detection,
monitoring, collection, processing, analysis and dissemination of
information in support of United States nonproliferation policy; and (B)
disabling technologies in support of such policy." 

The Committee will rationalize priorities and eliminate redundant R&D
efforts in programs related to intelligence, battlefield detection,
passive and active defenses, "counterforce," and inspection and export
control supporting technologies. By 1 May 1994, the Committee is required
to submit to Congress a report listing all relevant technologies which
it reviewed, a description of all requirements identified by the
Committee, a discussion of the short, medium and long-term programmatic
options formulated by the Committee and a description of the extent to
which the Secretary of Defense has incorporated nonproliferation and
counter-proliferation missions into the overall missions of
the unified commands. The report is to be provided in both classified and
unclassified form. 

Sense of Congress on space and the MTCR.  Included in the Senate bill
is a resolution, introduced by Senators Bingaman, McCain and Glenn,
expressing Congress' strong support for the strictest possible
interpretation and enforcement of the Missile Technology Control Regime
(MTCR) guidelines, including banning all exports of space launch
vehicles and related technologies to developing countries. The language
states that missile and space launch technologies are identical, and that
transfers of such technologies cannot be safeguarded "in a manner that
would provide timely warning of diversion for military purposes."  The
House later adopts this same provision in its version of the
authorization bill.

The provision is in response to the White House review of proliferation
issues, which proposes the possibility of allowing transfers of
MTCR-restricted technologies for use in space launch programs as an
incentive for countries to disavow ballistic missile programs and adhere
to the MTCR.

Senate pushes ASAT.  The Senate bill provides $10 million in
unasked-for funds for the kinetic energy anti-satellite (KE ASAT) weapon.
Proponents of the program cite increased access to space by developing
countries and the potential proliferation of reconnaissance and other
satellites as the post-Soviet justification for the program (see box),
which has absorbed $225 million to date. 

In a compromise following an effort to delete the funds, the money was
fenced until the Pentagon certifies a need for the program and provides
the operational requirements document for the ASAT, called for in last
year's authorization bill. In a 14 September letter, Deputy Secretary of
Defense William Perry notified Chairman Nunn that the Pentagon still
intends to terminate the ASAT program, because the requirement for such
a weapon has "substantially reduced" and because of funding limits.
  

Senate pushes satellites.  At the same time some in the Senate insist
that U.S. national security depends on being able to shoot down Third
World satellites, others are working to liberalize satellite sales.

At a closed hearing of the Senate Select Committee on Intelligence in
June, Chairman Dennis DeConcini reportedly encouraged CIA Director James
Woolsey to relax the CIA's opposition to the export of high resolution
reconnaissance satellites and imagery.  Currently, the export of
satellites and photos with a resolution of better than about 10 meters
are prohibited. Similarly resolute satellites are already
available on the international market in the French SPOT and Russian
Soyuz Karta. Using the threat of future possible sales by France and
Russia of higher resolution military reconnaissance satellites under
development, plus longer term German, Israeli and Chinese efforts, U.S.
industry is arguing that the U.S. will lose jobs and influence if it does
not permit the export now of much higher resolution satellites.  

At the hearing, John McMahon, president of Lockheed Mis- siles and
Space Company and former Deputy Director of the CIA, testified that
mining and oil exploration firms, ranchers, real estate developers
provide a $5-7 billion market for photos and digital data from satellite
imagery.  The data are also
extremely useful for verification of arms control agreements, as well as
for military reconnaissance and targeting. 

The UAE, Spain, Kuwait, Saudi Arabia, South Korea and Taiwan are
reportedly in the market for military reconnaissance satellites (see ASM
No. 18 p. 6). 
____________________________________end
box______________________________

Who's In, Who's Out:

Arms to Nigeria Limited

30 July---The Federal Register announces that, until further notice,
arms export license applications for Nigeria are being reviewed "on a
more highly
scrutinized case-by-case basis with a presumption of denial." The action
is in response to the
Nigerian military's refusal to turn over power to a civilian government
elected in June.  

Sudan Listed as State Sponsor of Terror

12 August---The State Department adds Sudan to its official list of
states sponsoring terrorism (see box). According to the Arms Export
Control Act (Section 40), such countries are barred from receiving any
items contained in the U.S. Munitions List, and under the terms of the
Foreign Assistance Act, are barred from receiving all but the most dire
humanitarian assistance.

Links between the Sudanese government and the government of Iran are
one of the primary concerns leading to the decision, as is Sudan's
"disturbing pattern of relationships with international terrorist
groups." According to State Department spokesman Mike McCurry, "The
evidence currently available indicates that Sudan allows the use of its
territory as sanctuary for terrorists, including the Abu Nidal
organization and members of Hezbollah and Palestine Islamic Jihad." And,
although this is not the primary reason for the listing, the State
Department spokesman also says that Sudan has provided "material
support," including weaponry, to Mohamed Farah Aideed in nearby
Somalia.   

U.S. Invokes Missile Sanctions Against China

24 August---After nearly a year of allegations in the press (see ASM
No. 19 p. 3), the State Department announces its decision that China has
transferred missile technology to Pakistan which requires the
re-imposition of sanctions under U.S. law (the Arms Export Control Act
and Export Administration Act). 
"Category II" trade sanctions, less restrictive than if actual missiles
had been transferred, are imposed against the Chinese Ministry of
Aerospace Industry and all of its divisions, and the Pakistani Ministry
of Defense. For two years U.S. companies are
barred from exporting any MTCR-restricted equipment or technology to
these entities, and the U.S. government cannot contract to import any
missile-related items from them. In addition, because China is considered
a non-market economy, the sanctions will extend to all activities of the
Chinese government relating to missile production, electronics,
space systems and military aircraft. This is expected to cost U.S.
satellite manufacturers up to $500 million per year in lost sales. 
 

Missile sanctions were previously imposed against China Great Wall
Industry Corporation and China Precision Machinery Import-Export
Corporation (both divisions of the Ministry of Aerospace Industry) and
Pakistan's Space and Upper Atmosphere Research Corporation, in July 1991.
President Bush waived the trade sanctions against China in February 1991
in return for a Chinese commitment to abide by the terms of the MTCR.
While the Chinese government acknowledges military ties to Pakistan, it
denies violating the regime.
______________________________________box____________________________
___________

Insight on Missile Sales

The Congressional Research Service's annual report, "Conventional Arms
Transfers to the Third World, 1985-1992," provides probably the most 
detailed source of public information on quantities of various types of
weapons systems delivered to the developing world. In Table 3 of the
report, transfers by weapon category are broken down by
individual major suppliers to each of four developing-country regions
(Middle East, Latin America, Asia/Pacific and Sub-Saharan Africa) in four
year aggregate periods. 

Of great interest is the data for surface-to-surface missiles (SSM),
defined as "all surface-to-surface missiles without regard to range, such
as SCUDs and CSS-2s....exclud[ing] all anti-tank missiles and all
anti-shipping missiles."

According to these data, during 1985-1988 China delivered 55 SSM to the
Near East.  Presumably these are the long-range CSS-2s which China was
revealed to have sold Saudi Arabia in March of 1988; the number of
missiles transferred has never been disclosed.  In the following four
year period, China transferred 190 missiles to
the region, the data show. Most likely these are some short-range systems
to Iran, and perhaps further missiles to Saudi Arabia. 

During 1985-1988, the Soviet Union transferred 710 SSMs to the Near
East. Iraq is the most likely recipient; the Soviet Union disclosed after
Operation Desert Storm that Iraq had purchased more than 800 Scud-Bs over
the years. Syria, Libya and Yemen are other possible customers during
this time. By 1989 the Soviet missile transfers had stopped.

"All others"---that is, other than the U.S., USSR/Russia, China, and
European suppliers---delivered 400 SSMs to the Near East during the eight
years covered by the report. This must be a reference to North Korea, the
only "other" missile exporter during this time period.

A whopping 1,655 SSMs were transferred by USSR/Russia to the
Asia/Pacific region during 1989-92. None had been delivered in the prior
four years. These missiles were most likely sent to the Afghan
government, which reportedly fired over 1,000 missiles during the Afghan
civil war. During the same time (1989-1992), the data show that
China also transferred 40 SSMs to the region, presumably to Pakistan.

"U.S. government" intelligence is cited as the source of the
information. 
_________________________________end
box___________________________________________

Haitian Embargo Lifted

27 August---The UN Security Council votes unanimously to suspend the
arms embargo of Haiti, imposed on 16 June as part of broader economic
sanctions. The sanctions were intended to force the military junta to
negotiate the return of democratically elected President Jean-Bertrand
Aristide. In a 3 July accord, brokered by the UN, the junta agreed to
Aristide's return on 30 October, clearing the way for the lifting of
the sanctions. 
 
DSAA Gears Up for Sales to Former Warsaw Pact

3 September---As required by law (Foreign Assistance Act Section
515(c)(2)), the Defense Security Assistance Agency sends the Foreign
Affairs Committee notification that it is beefing up the arms sales
office at the U.S. Embassy in Poland.
Currently only one person is overseeing the program.  

Guyana Vital to U.S. Security

23 September---President Clinton has determined that "the furnishing,
sale and/or lease of defense articles and services to the Cooperative
Republic of Guyana will strengthen the security of the United States and
promote world peace." Hmmm. 

UNITA Under UN Arms Embargo

26 September---A UN Security Council-mandated arms embargo against the
UNITA rebels in Angola enters into force today, marking the first time
that a non-governmental group is so targeted by the UN. The Security
Council voted for the sanctions on 15 September and gave the rebel force
until today to cease fighting and comply with the 1991 peace accord. 
Since UNITA refused, all UN members are barred from sending weapons to
the rebel force. 
 The government of Angola has
been under a UN arms embargo since 1991.

Deals in the Works:

Notice of the following government-brokered Foreign Military Sales
(FMS), export licenses for direct commercial sales from industry (DCS)
and grant excess defense article transfers (EDA) was sent to Congress for
approval during June-September. Some sales in June were reported in the
last issue of the ASM and are not repeated here.

_______________box is not reproduced here: for a copy of it, call (202)
675-1018____________________


Recent Government Publications:

Arms Trade and Nonproliferation in the Middle East: Part 2 (hearing
before the Technology and National Security Subcommittee of the Joint
Economic Committee, 13 March 1993) U.S.GPO: 1993, 112 pp.

The Bottom-Up Review: Forces for a New Era, Secretary of Defense Les
Aspin, 1  September 1993, 17 pp. summary.

Comparison of U.S. Administration Testimony and Reports with 1993 U.N.
Truth Commission Report on El Salvador (hearings before the House Foreign
Affairs Committee, July 1993), U.S.GPO: 1993, 57 pp.

"Conventional Arms Transfers to the Third World, 1985-1992," CRS Report
for Congress [no. 93-656F], by Richard F. Grimmett, 19 July 1993, 84 pp.

The Crisis in Somalia (hearings before the House Foreign Affairs
Committee, 17 December 1992 & 5 May 1993), U.S.GPO: 1993, 190 pp.

Defense Conversion Programs in the President's Fiscal Year 1994 Budget
Proposal (hearings before the Economic Growth and Credit Formation
Subcommittee
of the House Banking, Finance and Urban Affairs Committee, 19 & 22 April
1993),
U.S.GPO: 1993, 258 pp.

Defense Economic Conversion (hearing before the Economic Development
Subcommittee of the House Public Works and Transportation Committee, 1
April 1993),
U.S.GPO: 1993.

Foreign Military Sales, Foreign Military Constructions Sales and
Military Assistance Facts as of 30 September 1992, Defense Security
Assistance Agency, August
1993, 115 pp.

The Future of U.S. Foreign Policy (Part I): Regional Issues (hearings
before the House Foreign Affairs Committee, 2-3, 17, 23-24 February, 18
March 1993),
U.S.GPO: 1993, 494 pp.;  The Future of U.S. Foreign Policy (Part II):
Functional Issues
(hearings on 27 January, 2-3, 10, 17 & 23 March 1993), U.S.GPO: 1993, 481
pp.

Guatemala: The Prospects for Peace (hearing before the Western
Hemisphere Affairs Subcommittee of the House Foreign Affairs Committee,
3 March 1993),
U.S.GPO: August
1993.

"Hidden Killers: The Global Problem with Uncleared Landmines," A Report
on International Demining Prepared by the Office of International
Security Operations,
Department of State [as required by FY 1993 DOD Auth. Act, Section 1364].

The Impact of Defense Downsizing, Conversion, and Dual-Use Initiatives
on Defense Contractors (hearing before the Economic Growth and Credit
Formation
Subcommittee of the House Banking, Finance and Urban Affairs
Subcommittee, 10 June
1993), U.S.GPO:1993, 125 pp.

Industrial Base: Impact of Defense Downsizing on Selected Abrams Tank
Subcontractors (GAO/NSIAD-93-214), July 1993.

"Iraq Rebuilds its Military Industries," A Staff Report Prepared by
Kenneth Timmerman for the House Foreign Affairs Subcommittee on
International Security,
International Organizations and Human Rights, 29 June 1993.

Military Aid to Egypt: Tank Coproduction Raised Costs and May Not Meet
Program Goals (GAO-NSIAD-93-203), 27 July 1993.

Military Sales to Israel and Egypt: DOD Needs Stronger Controls Over
U.S.-Financed Procurements (GAO/NSIAD-93-184) 6 August 1993.

"Nonproliferation Regimes: Policies to Control the Spread of Nuclear,
Chemical and Biological Weapons and Missiles," CRS Report to Congress,
March 1993,
74 pp.

Peru: U.S. Priorities and Policy (hearing before the Western Hemisphere
Subcommittee of the House Foreign Affairs Committee, 10 March 1993),
U.S.GPO: 1993, 78
pp.

Proliferation Watch, published by the Senate Governmental Affairs
Committee, May-June 1993, 12 pp.

Proliferation of Weapons of Mass Destruction: Assessing the Risks,
Office of Technology Assessment (OTA-ISC-559), August 1993, 123 pp.

"Reemploying Defense Workers: Current Experiences and Policy
Alternatives," CBO Papers, Congressional Budget Office, August 1993, 48
pp.

"Reform of United Nations Peacekeeping Operations: A Mandate for
Change," A Staff Report of the Senate Foreign Relations Committee, August
1993. 

U.S.-Israel Arrow Program: Cost, Technical, Proliferation and
Management Concerns (GAO-NSIAD-93-254).

U.S. Policy Towards Burma (hearing before the Asia and the Pacific
Subcommittee of the House Foreign Affairs Committee, 25 March 1993),
U.S.GPO: 1993.

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