No. 27 (November 1994)
Over the years, Congress has attempted to exert this leverage by placing conditions on U.S. weapons exports (see box). However, these requirements have often been tepidly enforced or blatantly ignored. U.S. clients have acted in opposition to American laws or policies, largely with impunity; witness on-going widespread human rights abuses in Turkey, Israel's 1982 invasion of Lebanon, Saudi Arabia's retransfer of American-supplied arms to Iraq in the 1980s, and the Thai military's continuing support for the Khmer Rouge.
Today, suppliers are shying away from even attempting to influence buyers' behavior. The arms bazaar is increasingly run as a free market, and the global oversupply of arms means that buyers call the shots. They threaten to turn elsewhere if they dislike condi- tions attached to a sale. Thus, manufacturers pressure their gov- ernments to renounce all conditions which might offend customers.
Several recent events demonstrate how, in today's arms market, buyers influence sellers' behavior.
*When several European governments criticized Turkey for human
rights abuses in its war against Kurdish nationalists, the Ankara
government announced it would no longer buy arms from those coun-
tries. Turkey placed vocal critics Austria, Finland, Sweden and
Switzerland on a prohibited or "red" list; less critical Norway and
the Benelux countries were placed on a "yellow" list, meaning that
arms purchases from these countries would be reviewed on a case-by-
case basis
*The United States' foreign aid appropriation for fiscal year 1995
withholds $36.4 million of a $364.5 million military loan to Turkey
until the Secretary of State reports to Congress on "allegations of
abuses committed against civilians by Turkish armed forces" and on
the situation in Cyprus. Fearful of "insulting" Turkey, Congress
only withheld 10 percent of the aid, rather than the 25 percent
which the House version of the bill had proposed
*Thai Army chief Gen. Wimon Wongwanit recently canceled the pur-
chase of Australian-built Steyr rifles and prohibited other arms
purchases, protesting claims by some independent Australian human
rights groups that Thai weapons often end up in the hands of the
Khmer Rouge. "This shows that Canberra cannot control its people
from making speeches" against Thailand, the General was quoted as
saying
*In 1990, when President Bush was no longer able to certify that
Pakistan did not have a nuclear bomb, the United States cut off
most arms sales, as required by law (see box). Now, many in the
United States are working to end this prohibition, claiming that it
is ineffective and simply diverting business from U.S. industry.
(The close U.S. military relationship with Pakistan prior to 1990
was supposed to dissuade Pakistan from building the bomb.)
Meanwhile, Prime Minister Benazir Bhutto demanded earlier this year
that corporations and governments seeking to sell arms to Pakistan
promise to fulfill contracts even if Pakistan is at war U.S. exports are subject to the following stipulations---
No Aggression Section 4 of the AECA authorizes provision of mili-
tary equipment and services only for internal security, "legitimate
self-defense," participation in U.N. operations or operations
consistent with the U.N. Charter.
Respect Human Rights Section 502B of the Foreign Assistance Act
(FAA) requires that "no security assistance may be provided to any
country the government of which engages in a consistent pattern of
gross violations of internationally recognized human rights."
No Nukes Section 620E(e) of the FAA mandates that "no military
equipment or technology shall be sold or transferred to Pakistan"
unless the President certifies that Pakistan does not have a
nuclear weapon.
The United States has two separate channels for selling weapons
abroad---Foreign Military Sales (FMS) and Direct Commercial Sales
(DCS). In FMS, the government (represented by the Defense Security
Assistance Agency) negotiates arms sales with foreign governments.
The Pentagon acts as a middleman, buying the weapons from manufac-
turers and overseeing shipment. In DCS, arms manufacturers broker
deals directly with foreign corporations or governments, and the
State Department's Office of Defense Trade Controls licenses the
exports.
Most public and policy attention focuses on FMS, since this program
is much more visible and historically has accounted for the major-
ity of U.S. arms exports. In recent years, however, the dollar
volume of DCS licenses has skyrocketed, with multi-billion dollar
deals of sophisticated weapons cleared for export. In fiscal year
1989, more arms were exported through DCS than FMS (see table).
Until recently, primarily Canada, Japan, and European allies used
DCS. Now major Third World customers--- like Israel, South Korea
and Taiwan---are increasingly using this channel. What accounts for
the rising popularity of direct sales? The commercial route is
quicker ("less red tape" according to one arms marketeer), cheaper,
more covert and entails less government oversight.
The commercial sales program originated in the 1930s, when the gov-
ernment first promulgated laws and regulations aimed at
establishing some control over munitions trading. (The government-
to-government program evolved out of post World War II grant arms
transfer programs.)
Volume DCS did not become a major export channel until the 1980s.
The 1976 Arms Export Control Act prohibited individual commercial
sales in excess of $25 million. This limit was raised to $35
million in 1979, $100 million in 1980, and was abolished altogether
in 1981. Between 1950 and 1980, only $10.4 billion of weapons were
exported under DCS licenses, but during the next ten years, nearly
four times that amount ($38.5 billion) were delivered.
Since the 1990-1991 Gulf War both new FMS agreements and DCS
licenses have reached astounding heights. In fiscal year 1991, the
Pentagon sold $23 billion of arms to countries around the world,
while the State Department approved an additional $39 billion for
export (see box, next page).
State Department officials are quick to point out that DCS license
approvals do not represent final sales. They estimate that only 40-
60 percent of the licenses approved will result in actual exports.
One reason cited for this low completion rate is that the buyer
sometimes cancels. However, in order to apply for a license, the
exporter must have a letter of intent or a purchase order, indicat-
ing a fair degree of seriousness on the buyers' part. Further, if
a license expires before an order is filled, the exporter must ap-
ply for another license to complete the
TABLE: Foreign Military Sales and Direct Commercial Sales
Deliveries, FY 1984-1993
[table omitted; contact our office for the data.]
Note: Information on DCS deliveries trickles in over a period of
several years. The DCS totals for FY91-93 will almost certainly
increase in the next 2-3 years, so these figures should not be
assumed to indicate a downward trend in DCS deliveries as compared
to FMS deliveries. Columns do not add up, presumably due to the
omission of classified exports. Source: Defense Security Assistance
Agency, Foreign Military Sales, Foreign Military Construction
Sales, and Military Assistance Facts, 1993.
transaction. This may also overstate levels of DCS; though, export
licenses are now valid for four years, up from two years in the
mid-1980s, increasing the likelihood of an order being completed
under one license.
Assessing how much DCS-licensed weaponry is actually delivered is
difficult. The Pentagon, because it is actually selling and
shipping the weapons, maintains complete and timely data on FMS.
The State Department, however, compiles information from shipper's
documents, returned by the Customs Service several years after the
licenses are issued.
Sophistication The surge in dollar volume of DCS licenses re-
flects, in part, an increase in the level of technology being
exported. Until recently, DCS largely consisted of spare parts,
follow-on sales, light weapons, and other "minor" sales. Through
1987, only one big aircraft sale (F-16s to Greece) had gone DCS.
Now, sales of modern major systems (e.g., F-16 upgrades and the Ar-
my's latest tank) are approved for export through DCS.
In general, Administration officials are neutral about which sales
channel is used, but the Pentagon determines that some weapons may
be exported "FMS-only" so that the government can maintain tighter
control. Similarly, to avoid liability for failed or flawed weap-
ons, systems which have not passed operational testing and evalua-
tion must be exported through DCS. Weapons which are not standard
with U.S. forces must also be sold through DCS.
Price A savvy customer can probably buy the same weapon system and
contractor support more cheaply today through DCS than FMS. The
market alone determines the price in DCS, while U.S. law currently
mandates that two taxes be included in the price of FMS. One is a
3-5 percent surcharge designed to recover the Pentagon's cost of
administering the sale. A 5-25 percent fee is also imposed to
recoup some of the taxpayer-funded research and development costs
for the weapon being exported. Manufacturers generally make a high-
er profit on DCS, since they can charge the foreign country more
than they can charge the Pentagon for the same weapon, and still
underbid the Pentagon's FMS price.
Secrecy The Pentagon is much more forthcoming with information
about FMS than the State Department is about DCS. Specific informa-
tion on DCS (such as quantity and type of weapons to be exported,
manufacturer, dollar volume of the contract, and offsets) is
considered "confidential business information" and, while not
classified, is unavailable to the general public. Even the total
dollar volume of exports licensed by the State Department in a
given year is hidden from the public. (During 1992-1994,
Representative Lee Hamilton has placed this information in the
Congressional Record.)
Oversight Direct Commercial Sales---as the name implies---are
treated basically as business deals: If the licensing paperwork is
filled out properly, and if there is no overriding foreign policy
or national security reason to block an export, a license will be
granted. The State Department receives about 50,000 license
applications annually. On average, about ten percent are denied or
returned without action.
FMS foster close ties between the U.S. and foreign militaries. Con-
gress retained the authority for DCS in the 1976 Arms Export Con-
trol Act as a way for the government to distance itself somewhat
from certain countries, those with whom it might want to do busi-
ness but not appear too cozy. In fiscal year 1993, the United
States signed FMS contracts with 86 countries, while DCS exports
were licensed to 146 countries.
By definition, DCS receive less government oversight than FMS.
Moreover, within the past few years, several reports---by the
General Accounting Agency (GAO), the State Department Inspector
General and various Congressional committees---have sharply criti-
cized the State Department's management of the DCS program. Most
recently, at a hearing of the Senate Governmental Affairs Subcom-
mittee on Federal Services on 15 June, the GAO identified several
problems in State's screening procedures for license applications.
In addition, GAO found that the State Department had "not routinely
collected or reviewed" required reports on the overseas manufacture
of U.S. military equipment. Files were in such disarray that the
Office of Defense Trade Controls (ODTC) could not tell if reports
were misplaced or never received.
Investigations have also faulted the State Department for woefully
inadequate end-use checks (inspections to determine if equipment is
being used for the purposes stated on an export license). The ODTC
ran only 478 end-use checks on 45,000 licenses approved in 1993;
this was a dramatic improvement from the 38 checks performed in
1990. (ODTC has 24 officers in the licensing division and 10 in the
compliance division.)
Implications Having two sales channels increases the difficulty of
accurately quantifying U.S. arms exports in a given year. DCS are
often omitted from arms trade statistics. For example, the Congres-
sional Research Service, which annually publishes the most detailed
and timely information on arms exports to the Third World (see p.
11), does not include DCS in its figures for U.S. sales because of
the difficulty of obtaining this data.
In addition, regulatory differences between the two programs are
played off against each other and used to bring legal restrictions
down, and government assistance and subsidies up to the highest
common level. For instance, when the Clinton Administration
proposed repealing recoupment fees on FMS in September 1993, it ar-
gued that such a move was necessary to "level the playing field"
with the commercial sales program. Blurring the two programs, the
Pentagon recently proposed selling Sweden AMRAAM missiles through
a combination FMS/ DCS deal. The objective was to sidestep FMS fees
while maintaining control of the technology.
"Enlargement" refers to increasing the community of democratically-
governed, free market states around the world; "Engagement" appears
to be code for globe-encircling military ties and attendant armed
interventions by U.S. forces. "We can only engage actively abroad
if the American people and the Congress are willing to bear the
costs of that leadership---in dollars, political energy and, at
times, American lives," President Clinton wrote in the foreword.
Throughout, the document implies that military force is the United
States' only means of influence in world affairs.
The report grudgingly admits that "The dawn of the post-Cold War
era presents the United States with...a generally improved security
environment." In the same breath, lest it undermine public support
for this year's $260 billion military expenditure, the report touts
the "many distinct dangers" which have emerged. In addition to
"rogue states" and the spread of weapons of mass destruction, the
report defines nearly all potential sources of political
instability around the world---drugs, ethnic conflict,
international crime, refugee flows, even large scale environmental
degradation---as military threats. The role that enhanced develop-
ment assistance or arms control could play in alleviating these
causes of instability is treated minimally in the publication.
The plan highlights recent undertakings in the military area
intended to promote security: the "Bottom Up Review" and the
resultant five year DOD budget proposal; inclusion of Eastern
European countries in NATO through the "Partnership for Peace"; a
"counter-proliferation" policy to combat the spread of weapons of
mass destruction and missiles; and a Presidential Decision
Directive on U.S. participation in and support for multilateral
peacekeeping operations. No mention is made of how the policy under
development on conventional arms production and trade might further
the nation's security.
Martha Harris, Deputy Assistant Secretary for Export Controls,
spoke of the State Department's efforts to adapt export controls to
the post-Cold War world. Harris described the Department's goals in
this area as controlling the spread of "destabilizing" conventional
arms and weapons of mass destruction; supporting friends and
allies; promoting democracy; and, when appropriate, promoting com-
mercial interests.
In the afternoon, DTAG members attended closed briefings on: sales
policy to East Asia and the Middle East; the Administration's arms
transfer policy review; the COCOM successor regime; exports of
diesel submarines; arms transfers to Taiwan; and policy on offsets.
In reality: a) we've been waiting for the review since 1993 and
will probably continue to wait until sometime in 1995, given the
tumult in Congress; and b) this is news? Since at least autumn
1992---when Presidential candidate George Bush announced his ap-
proval of $15 billion of fighter/bomber jet sales before workers at
the aircraft production plants---economic and political consid-
erations have been at the heart of export decisions.
(Candidate Clinton also supported these sales-for-jobs.) Moreover,
the Clinton Administration stated at the outset that its arms
policy review would consider economic competitiveness, as well as
national security (see ASM No. 22 p. 1). Since then, State
Department officials have acknowledged time and again that
commercial factors are being considered (e.g., see DTAG above).
Officials have been clear that no one need expect much of a break
with current policy. Industry executives will not get the statement
of unconditional support for arms transfers which they are seeking;
although, the policies and practices will continue to favor
exports.
Arms controllers will get no visionary proposals for U.S. leader-
ship in taking arms sales out of the free market. In fact, the
inclusion of even a mild statement of rhetorical support for the
ideal of restraint may not make the cut.
This issue---along with the question of a new $1 billion program to
finance arms sales (see ASM No. 26 p. 5) and increased internation-
alization of arms production---was bumped up to President Clinton
for resolution. His decisions on these issues will be the real
story.
---reaffirm the basic legitimacy of arms transfers as a diplomatic
and security tool.
---state that decisions to export will not be made primarily on
economic grounds, but commercial factors (e.g., maintenance of the
defense-industrial base) will be considered.
---support "responsible" exports to "responsible" states (i.e., our
friends and allies); urge restraint to current "rogue" regimes
(Iran, Iraq, Libya, North Korea) and to states of chaos
(Afghanistan, Liberia, Rwanda, Somalia).
---reaffirm the need for transparency in exports (as opposed to
restraint); support the UN Register of Conventional Arms, and
similar regional initiatives.
---restate the initiative on anti-personnel landmines which the
President announced in September (see p.9).
---reaffirm that the government will support arms marketing efforts
at some international arms bazaars.
---reaffirm that U.S. embassy personnel will fully support arms
marketing efforts abroad.
---announce a $1 billion program to finance exports.
---support increased internationalization of arms R&D and
production with allies (further commercializing the arms industry
and creating more production capacity).
---support downsizing and conversion of arms industry in Russia,
Ukraine, Belarus and China.
The policy will not:
---state unequivocally that limiting the global traffic in conven-
tional arms is a goal of U.S. policy.
---propose multilateral restrictions on the introduction of new
levels of weapons technology into regions.
---bar development of U.S. weapons solely for export.
---bar export of weapons not deployed with U.S. forces.
---regulate or promote transparency in offsets, the job-siphoning
side deals which accompany arms sales.
---push vigorously for the conversion of excess U.S. and European
arms production capacity.
The Clinton Administration decided in 1993 to develop a
multilateral forum on conventional arms exports through the COCOM
infrastructure, rather than seek to resume the talks among the
Permanent Five members of the U.N. Security Council (see ASM No. 26
p. 1). The new regime will block arms sales to "pariah" states like
Iran, Iraq, Libya and North Korea, and may involve pre-notification
among the regime partners of arms sales to other states.
Iraq and Libya are currently subject to U.N. arms embargoes. North
Korea is broke and believed to have nuclear weapons. Iran, however,
is under no international sanctions, and it has income from oil
exports. Between 1990 and 1993, Russia sold Iran $3.7 billion of
weapons.
During meetings in Washington with President Clinton in September,
Boris Yeltsin pledged that Russia will make no further arms sales
to Iran. "Those are the grounds upon which Bill Clinton agreed that
we are going to participate in the post-COCOM era," Yeltsin said.
However, Russia would continue to honor a 1988 contract.
Clinton was cautious about Yeltsin's promise, saying simply: "we've
made progress on the difficult issue of Russian arms sales to
Iran." He later said, "we reached a conceptual agreement in
principle about how we would proceed, and then we agreed to let our
experts on this matter work through it....[W]e cannot say that it
is resolved." Yeltsin's pledge is considered half of what is needed
to allow Russian participation in the new COCOM; also necessary,
and still missing, is information on what is in the pipeline to
Iran, and a firm commitment not to stretch those contracts out
indefinitely.
At a background briefing on Yeltsin's visit, a senior Ad-
ministration official said, "the other partners in this new regime
are working day and night to try to put it into place." The
partners include the 17 COCOM members plus Austria, Finland,
Ireland, New Zealand, Sweden and Switzerland. However, other
government officials say that Britain, France and Germany are
playing a somewhat obstructionist role, refusing to move forward on
the political issues until Russian participation is guaranteed.
A working group meeting in October failed to move the process
forward. A high-level meeting on 21 December is not expected to
yield a breakthrough, either.
White House, Office of the Press Secretary, Fact Sheets and
accompanying materials, 28 September 1994
Recent developments will further strengthen the norm against
missile exports. The 25 MTCR partners, meeting in Stockholm during
4-6 October, "reacted favorably to Russia's application for member-
ship...and agreed in principle to early South African membership"
according to a State Department press release. A formal decision on
Russian membership is expected by early next year.
Also on 4 October, Secretary of State Warren Christopher and his
Chinese counterpart, Qian Qichen, signed a "Joint U.S.-China
Statement on Missile Proliferation." According to Christopher, the
two countries "agreed to a step-by-step approach to resolve their
differences on the export of missiles under the MTCR." As a first
step, the United States agreed to lift the sanctions it imposed
against China in August of 1993 for the transfer of missile parts
to Pakistan. The State Department waived the sanctions on 1
November; sanctions against Pakistan remain in effect
In return, China agreed not to export missiles. Christopher said
the accord goes beyond requirements of the MTCR---which calls for
a strong presumption against exports, but does not outlaw them. It
constitutes "a global and verifiable ban on Chinese exports of all
missiles within the [MTCR] parameters." China also agreed that any
missile with the "inherent capability" to be adapted to MTCR
control ranges is covered by the MTCR, thus clearing up an area of
contention.
As a second step, Christopher said the United States and China have
agreed to hold further in-depth discussion on the MTCR, including
discussions of China's possible MTCR membership in the near future.
The State Department (during the Bush Administration) claimed twice
previously to have obtained China's pledge to abide by the MTCR
(see ASM No. 17 p. 4).
A White House fact sheet released that day explained that the
President was proposing a multilateral landmine control regime to
reduce the "illegal and indiscriminate" use of anti-personnel
landmines. The proposal seeks to replace "long-lived" mines with
self-neutralizing or self-destructing mines. The President also
seeks to strengthen the Inhumane Weapons Convention, which has a
protocol on anti-personnel landmines, and limit landmine exports to
Convention adherents.
While falling short of what they wanted, the fact that the
President mentioned landmines in his speech is credit to the
International Campaign to Ban Landmines---a coalition of veterans,
human rights, arms control, medical and development organizations.
Over the past few years, the Campaign has effectively publicized
the terrible human and economic toll landmines are taking around
the world: as many as 100 million landmines sewn throughout more
than 60 countries kill or maim 40 people---mostly civilians, many
of them children---every day.
Sen. Patrick Leahy (D-VT) and Rep. Lane Evans (D-IL) have led the
campaign against landmines in Congress. They succeeded in imposing
a one-year moratorium on U.S. exports of anti-personnel landmines
in 1992, which Congress extended in 1993 for another three years
(see ASM No. 23 p. 8). Leahy and Evans introduced legislation in
June 1994 to end U.S. production and procurement of landmines for
one year. The bill, which was not acted upon, also urged the
President to seek an international ban on the production, transfer
and use of mines.
The International Campaign and UN Secretary General Boutros Bou-
tros-Ghali are also seeking a ban on all anti-personnel mines. In
a recent letter to President Clinton, groups associated with the
Campaign said permitting production and exports of more complex and
expensive mines will give developing countries and rebel groups
"little incentive to agree on limits on any type of landmines." The
U.S. Army opposes a ban; landmines are regarded as an integral part
of Army doctrine.
The Commission is intended to facilitate the conversion of Chinese
arms manufacturers to production of commercial goods; the U.S.
government is promoting technology transfer from U.S. firms to aid
this transition.
Under discussion at this first meeting was the development or sale
of an air traffic control system (which is run by the Chinese air
force) and "clean car" technologies. Perry and background press
briefers were adamant that arms sales were not discussed. They said
arms sales and military technology transfers to China will not be
resumed in the near term.
When asked by a reporter why it is in the United States' interest
to aid the conversion of Chinese defense industry, Perry said: "it
is to our benefit...to help these countries resist the pressure to
make weapons even beyond their needs....And secondly, to resist the
pressure for foreign arms sales. One very obvious way...of using
the excess capacity in the arms industry in each of these countries
is to continue to produce the same amount but then to sell the
excess to other countries. And that creates...its own set of policy
and security issues. So to the extent we can be useful and
constructive in diverting this pressure into the production of
commercial goods, then I believe it is a security benefit"
Military aid restrictions The act bars any direct aid to Cuba,
Iran, Iraq, Libya, North Korea, Serbia, Sudan and Syria, dropping
Vietnam from the list. Foreign Military Financing (FMF) is
prohibited for Guatemala, Liberia, Peru, Sudan and Zaire. The law
blocks FMF for Colombia and Bolivia until the Secretary of State
certifies that the funds will be used "primarily" for drug war
activities.
IMET expansions/restrictions International Military Education and
Training (IMET), which was expanded to non-military governmental
personnel last year, is now extended to non-government persons. The
law prohibits Indonesia, Rwanda and Zaire from receiving IMET funds
in fiscal year 1995, and the Administration must notify Congress
before granting IMET to Algeria or Thailand.
Report on SOA The law requires a report on how the School of the
Americas IMET program for FY 1995 "will contribute to the promotion
of human rights, respect for civilian authority and the rule of
law, the establishment of legitimate judicial mechanisms for the
military, and achieving the goal of right sizing military forces."
No small arms for Indonesia The law continues a ban on the
provision of light arms and crowd control gear to Indonesia until
the Secretary of State reports to Congress that "significant prog-
ress" has been made on human rights in East Timor and elsewhere in
Indonesia.
Report on Thai support for Khmer Rouge The Secretary of State must
report to Congress by 1 February 1995 on "the Thai military's
support for the Khmer Rouge and the Thai government's efforts to
impede support for Burmese democracy advocates." The law requires
the President to "terminate assistance to any country or organiza-
tion" cooperating militarily with the group.
Drawdown weapons for Bosnia The law permits the President to
provide $50 million of Pentagon equipment and services to Bosnia if
the U.N. lifts the arms embargo against Bosnia, or if he decides to
breach it unilaterally. In order to provide such assistance, the
President must certify that the aid would bolster Bosnia's defense
and that U.S. allies are prepared to join the effort.
Countries cleared for EDA The act makes Jordan eligible to receive
excess small arms and ammunition during FY 1995, as long as Jordan
is in compliance with U.N. sanctions against Iraq. It also approves
Albania to receive non-lethal excess defense articles.
Military expenditures & international loans The act directs the
Secretary of Treasury to instruct U.S. Executive Directors of
international financial institutions (e.g., World Bank, IMF) to
consider the following factors when deciding whether to support
loans: the extent to which the recipient is willing to provide
accurate and complete data on annual military expenditures, to
establish good and publicly accountable governance, and to reduce
excessive military expenditure and forces.
*Ten percent of this aid is withheld until the Secretary of State
makes certain findings to Congress (see ASM No. 26 p. 7).
Source: H.R.4426 and accompanying conference report (Report 103-
633)
Arms to E. Europe After rejecting it twice before, Congress
included the "NATO Participation Act" in the defense appropriation.
Poland, Hungary, the Czech Republic and Slovakia may now begin to
standardize their militaries with NATO forces through receipt of
excess defense articles, leases and loans of major military equip-
ment, and participation in co-development of weapons.
Increase Israeli eligibility The authorization act "encourages"
the President to make available to Israel any weapon offered to any
NATO or major non-NATO ally. It also "urges" the provision of U.S.
technology for development of the ARROW/ACES anti-missile system.
Restriction on U.S.-Emirates weapons development The
appropriations act prohibits joint development of an advanced radar
jammer until the Secretary of Defense reports to Congress on the
program (see ASM No. 26 p. 8). The measure is aimed at the United
Arab Emirates and does not apply to NATO or major non-NATO allies.
Military assistance reporting requirement The authorization act
requires annual DOD justifications for arms transfers, military
assistance and/or joint training. The reports are to cover the
"increased capabilities expected to arise" from the aid, how the
assistance is "intended to increase regional security," and how the
assistance "could pose an increased threat" to U.S. forces. The
Pentagon must also "present alternative strategies for regional
security based on mutual reductions in the size, spending, and
capabilities of forces and on agreements among arms-supplying
nations to join the United States in reducing or halting military
cooperation activities."
Counter-narcotics $721 million ($150 million less than last year)
is appropriated for counter-narcotics activities, including
operational support to source nations in detecting, monitoring and
dismantling cartels.
Conversion aid A provision in the authorization bill expands
eligibility for conversion and training programs under the Job
Training Partnership Act. Assistance is now available to workers
who lose jobs as a result of reduced arms exports, as well as work-
ers who lose jobs due to base closures or reduced military spend-
ing.
African Conflict Resolution Act This law (P.L. 103-381) authorizes
the President to provide assistance (funds and training) to
conflict mediation organizations in Africa, including the Organi-
zation for African Unity.
Authorization for Export-Import Bank Financing of Non-lethal
Defense Articles This law (P.L. 103-428) permits the Ex-Im Bank to
finance exports of nonlethal military items to be used primarily
for civilian purposes (see ASM No. 26 p. 4).
Code of Conduct on Arms Transfers Act of 1994 Rep. Cynthia McKin-
ney (D-GA) and Sen. Mark Hatfield (R-OR) introduced this bill in
November 1993 (see ASM No. 23 p. 1). Under the Code, the U.S.
government could only export weapons to countries that: 1) are
democratically governed; 2) do not abuse basic human rights; 3) are
not engaged in aggression; and 4) participate fully in the UN
Register of Conventional Arms. The bill gathered 101 co-sponsors in
the House and seven in the Senate. It also enjoyed the support of
over 200 citizens organizations. Both McKinney and Hatfield are
committed to re-introducing the Code of Conduct early in the 104th
Congress, where Hatfield will serve as the influential Appropria-
tions Committee chairman.
Export Administration Act of 1994 The Administration sent Congress
in February a comprehensive revision of the 1979 Export Administra-
tion Act, the law governing export of items with significant
military as well as commercial uses (see ASM No. 24 p. 3). The bill
seeks to liberalize Cold War restrictions on high technology trade.
The Senate Banking Committee worked on the bill, but let the House
take the lead. Sam Gejdenson (D-CT), Chairman of the House Foreign
Affairs Subcommittee on Economic Policy, worked vigorously to pass
a pro-trade bill. The House Armed Services Committee feared that
Gejdenson's bill favored trade at the expense of security, and the
re-write effort stalemated in early October. Industry lobbied hard
for trade liberalization and will undoubtedly renew their efforts
next year.
Peace, Prosperity and Democracy Act of 1994 The Administration
also submitted a massive, post-Cold War revision of the 1961
Foreign Assistance Act, the principal law governing economic and
military aid. The House Foreign Affairs Committee held hearings but
took no other action. The Senate Foreign Relations Subcommittee on
International Economic Policy held hearings on the bill (see ASM
No. 24 p. 4) and marked-up it up in June, dramatically curbing
military aid provisions; the full Committee never scheduled a mark-
up. A desire to reform development aid and lift prohibitions on
military aid to formerly communist countries will likely lead the
Administration to re-introduce the same or a similar bill in the
104th Congress. With Sen. Jesse Helms (R-NC)---a foreign aid oppo-
nent---chairing the Foreign Relations Committee, this effort may
not get too far.
[table omitted; contact our office for a hard copy of the text.]
Sources: House Foreign Affairs Committee; DOD Excess Defense
Article computer bulletin board.
Two compilations of data on the arms trade in 1993 confirm
overwhelming U.S. dominance of the world market.
On 29 July, the Congressional Research Service (CRS) released its
annual report, Arms Transfers to the Third World. According to the
report, $20.4 billion of new arms transfer agreements were made
with the Third World in 1993. (The report's definition of "Third
World," however, excludes Turkey, Greece, East European countries
and all former Soviet republics.) The "U.S. Government" is cited as
the source of information.
According to the report, the United States' Foreign Military Sales
agreements rose slightly to $14.8 billion in calendar year 1993, up
from $14.6 in 1992. U.S. market share, however, shot up to 73
percent of all Third World agreements, from 56 percent in 1992. The
CRS report actually understates the magnitude of U.S. sales agree-
ments. It excludes arms sales negotiated directly by industry (see
next page). The author of the report acknowledges this omission,
which is due to the difficulty of obtaining data on these industry-
direct sales agreements.
Meanwhile, other suppliers---often cited in the press as
irresponsible merchants of death---made marginal sales, in terms of
dollar volume, by comparison. Russia's sales fell from $11.8
billion in 1990 to $1.8 billion last year, accounting for 9 percent
of all agreements made with the Third World. Iran, Syria and the
United Arab Emirates were Russia's largest customers.
China sold less than $300 million worth of arms in 1993---about one
percent of the market. Beijing, which had peak sales of $5.8 bil-
lion in 1987, fell from the third-ranked seller in 1990 to sixth
place in 1993. China was also the third largest arms importer in
1993, buying $1.3 billion of weapons.
At $2.6 billion in sales, the four largest European suppliers
(France, Britain, Germany and Italy) together accounted for 13
percent of all sales made to the Third World in 1993. This is down
from $7.5 billion---29 peercent of the market---in 1992. French
sales agreements dropped precipitously from $4.1 billion in 1992 to
$200 million in 1993. Britain's sales dropped from $2.2 billion in
1992 to $1.8 billion in 1993. German sales decreased slightly from
$700 million in 1992 to $600 million in 1993. Italy fell from $500
million in 1992 to "effectively nil" in 1993.
On 1 Septebmer, the United Nations released its second annual
Register of Conventional Arms (see ASM No. 24 p. 6), containing
data on arms imports and exports of seven categories of weaponry
during 1993. Eighty-one UN members submitted information.
The report demonstrated that the United States was also dominant in
terms of actual equipment delivered, delivering nearly 2,400 tanks,
832 armored combat vehicles, nearly 300 artillery pieces and 100
aircraft, 75 attack helicopters, and 2,900 missiles and missile
launchers in 1993. The United States exported ten times the number
of tanks as the second largest overall exporter, Germany. Russia
delivered 120 tanks delivered, 350 armored vehicles, 14 artillery
pieces, 33 combat aircraft, one submarine and no missiles.
Turkey and Greece were the leading importers, with most of their
equipment coming from the United States or other NATO nations in
conjunction with the Conventional Forces in Europe treaty.
Defense Trade News, Vol. 5 No. 2 (dated April 1994), U.S.
Department of State, Bureau of Politico-Military Affairs: August
1994, 27 pp.
Democracy and Development in Africa (a hearing of the Africa
Subcmte. of the House foreign Affairs Cmte. on 22 April 1994), US
GPO: 1994, 147 pp. [Contains information on AID's efforts to
further African demobilization efforts; also an examination of past
U.S. military aid.]
Developments in the Middle East---June 1994 (a hearing of the
Europe and Middle East Subcmte. of the House Foreign Affairs Cmte.
on 14 June 1994) US GPO: 1994, 90 pp.
The DISAM Journal of International Security Assistance Management,
Dr. Lou Samelson, editor, Vol. 17 No. 1 (Fall 1994), Defense
Institute for Security Assistance Management, Wright-Patterson AFB:
November 1994, 141 pp.
East Asia Policy (a roundtable discussion before the House Foreign
Affairs Cmte. on 15 June 1994), US GPO: 1994, 75 pp. [Includes
discussion of regional security issues.]
Foreign Operations, Export Financing, and Related Programs
Appropriations for 1995, part 2 (hearings before the House
Appropriations Cmte.), US GPO: 1994, 526 pp. [Contains testimony on
Latin America, Anti-Narcotics Program, Africa.]
The Global Landmine Crisis (a hearing before the Foreign Operations
Subcmte. of the Senate Appropriations Cmte. on 13 May 1994), US
GPO: 1994, 137 pp.
International Aspects of the President's Drug Control Strategy (a
hearing before the House Foreign Affairs International Security
Subcmte., 3 November 1993), US GPO: 1994.
A National Security Strategy of Engagement and Enlargement, The
White House, US GPO: July 1994, 29 pp.
Omnibus Export Administration Act of 1994 (House Report 103-531)
Parts 1-4 (Reports of the HFAC, HASC, Intelligence Cmte. and Ways
and Means Cmte. on the revision of the Export Administration Act---
H.R.3937) US GPO: 1994.
Oversight of the State Department's Country Reports on Human Rights
Practices for 1993 and U.S. Human Rights Policy (hearings before
the International Security Subcmte. of the House Foreign Affairs
Cmte. on 1 February and 10 May 1994) US GPO: 1994 133 pp.
Peace Operations: Withdrawal of U.S. Troops from Somalia, General
Accounting Office [NSIAD-94-175], June 1994.
Proliferation Watch, Randy Rydell, editor, Vol. 5 No. 1 (dated
Jan/Feb 1994), published by the Senate Governmental Affairs Cmte.:
August 1994, 12 pp.
The Quest for Peace in Angola (a hearing held before the House
Foreign Affairs Subcmte. on Africa, 16 November 1993), US GPO:
1994, 73 pp.
A Review of Arms Export Licensing (a hearing held before the
Federal Services Subcmte. of the Senate Governmental Affairs Cmte.
on 15 June 1994) US GPO: 1994, 1633 pp.
Rewrite of the Foreign Assistance Act of 1961 and FY 1995 Foreign
Assistance Request, part 5 (hearings before the Western Hemisphere
Submte. of the House Foreign Affairs Cmte. on 1 & 9 March 1994), US
GPO: 1994, 164 pp.
The United States and the Use of Force in the Post-Cold War World:
Toward Self-Deterrence (CRS report for the House Foreign Affairs
Cmte., August 1994), US GPO: 1994.
U.S. Counter-Terrorism Policy (hearing of the House Foreign Affairs
Subcmte. on International Security, 1 March 1994) US GPO: 1994, 37
pp.
U.S. Policy Toward Iraq Three Years After the Gulf War (hearing
before the House Foreign Affairs Europe and Middle East, 23
February 1994), US GPO: 1994, 61 pp.
The War Powers Resolution: Relevant Documents, Reports,
Correspondence (prepared by the House Foreign Affairs International
Security Subcmte., May 1994), US GPO: 1994.
No Retransfer Section 3(a)(2) of the Arms Export Control Act
(AECA) requires that countries obtain approval from the U.S.
government before retransferring U.S.-supplied weapons to another
country.
Issue Brief:
Direct Commerical Sales, The United States' Other Arms Sales Program
FMS DCS
Agreements Licenses
FY 1990 $14.2 B not available
FY 1991 $22.9 B $39.1 B
FY 1992 $15 B $16 B
FY 1993 $33.2 B $26.5 B
FY 1994 $12.9 B est. $24 B
For more information
Clinton Admin. Watch:
A National Security Strategy of Military Engagement
In July the White House published A National Security Strategy of
Engagement and Enlargement, outlining its perceptions of threats to
the nation and likely responses.
Arms Industry Advises State on Trade Policy
On 6 October, the Defense Trade Advisory Group (DTAG)---comprised
of some 50 arms industry representatives and a few independent
policy analysts---met at the State Department to advise officials
on policy, technology and regulatory issues related to arms exports
(see ASM No. 25 p. 7).
White House Drags Feet on Export Policy
Three months after inauguration, Jimmy Carter released a
comprehensive policy on conventional arms transfers. After only six
months in office, Ronald Reagan reversed Carter's policies. Nearly
two years into his presidency, Bill Clinton still has not completed
the review of Bush/Reagan arms export policy which he promised
Members of Congress.
The nation's major papers reported in mid-November that: a) the
Administration was about to release the results of its review
(Presidential Decisions Directive (PDD)-41---see ASM No. 26 p. 1);
and b) the policy would legitimize economic considerations in arms
export decision-making.
The draft policy was placed on President Clinton's desk in late
September, but the White House is in no hurry to release a policy
statement sure to disappoint everyone.
PDD-41?
Tired of waiting for the official policy? Based on statements of
various Administration functionaries, we expect the policy on
conventional arms will:
Russia Holding Up COCOM Successor Regime?
The post-COCOM arms transfer regime which was supposed to be up and
running by 1 April 1994---when COCOM was disbanded (see ASM No. 24
p. 4)---and then by October, does not appear to be a near term
reality. Russian sales to Iran are said to be the hold up.
Norm Against Missile Exports Strengthened
In 1987, Canada, France, Germany, Italy, Japan, the United Kingdom
and the United States formed the Missile Technology Control Regime
(MTCR). They agreed to restrict exports of ballistic and cruise
missiles with a range of 300 km or more and a payload of 500 kg or
more and associated technologies. Since then, 18 more states have
joined the regime, including Argentina and Hungary.
Clinton Proposes Landmine Controls; Groups Seeking Ban
Addressing the U.N. General Assembly on 26 September, President
Clinton proposed "a first step toward the eventual elimination" of
anti-personnel landmines. He asked all nations "to join with us and
conclude an agreement to reduce the number and availability of
those mines."
On 15 November the UN General Assembly passed a U.S.-sponsored
resolution urging countries to end exports of anti-personnel land-
mines. Already, Argentina, Belgium, Britain, Canada, the Czech
Republic, France, Germany, Greece, Israel, Italy, Netherlands,
Poland, Slovakia, South Africa, Spain, Sweden and Switzerland have
followed the U.S. lead and announced moratoria or other export re-
strictions. Cambodia---where one in 236 people are landmine ampu-
tees---has said it will no longer buy or use mines in its war with
the Khmer Rouge.
Italy, a major exporter of mines, recently said it would stop
exporting anti-personnel mines. China and Russia, two other major
exporters, have thus far failed to act. President Yeltsin agreed in
September "on the need for a comprehensive approach to the anti-
personnel landmine problem" and expressed an interest in working
closely with the U.S. in devising "effective measures."
Pentagon Supports Arms Industry Conversion...in China
On 17 October Defense Secretary William Perry travelled to Beijing
to attend the first meeting of the Joint [U.S.-Sino] Defense
Conversion Commission. This was the first visit to China by a U.S.
Secretary of Defense since high-level military contacts with and
arms sales to China were broken off in June 1989, following the
crackdown on pro-democracy demonstrators in Tiananmen Square.
Legislation:
Foreign Aid Appropriation Signed into Law
Congress passed a $13.8 billion foreign aid appropriation in early
August, and the President signed it into law (P.L. 103-306) on 23
August. Levels of security assistance are summarized in the accom-
panying box. See ASM No. 25 for the Administration's requested
levels.
Appropriated Security Assistance, FY 1995
Foreign Military Financing $3,151,279,000 (FMF)
Israel $1,800,000,000
Egypt $1,300,000,000
Greece $19,730,530*
(to underwrite loans of $255,150,000)
Turkey $28,186,470*
(to underwrite loans of $364,500,000)
Economic Support Fund (ESF) $2,349,000,000
Cyprus $15,000,000
Egypt $815,000,000
Israel $1,200,000,000
Mideast Regional Cooperation $7,000,000
Panama $3,000,000
International Military Education & Training $25,500,000
Additional IMET from Peacekeeping account $850,000
Military-to-Military Contact Program $12,000,000
East Europe, Baltic countries $9,200,000
Asian/Pacific countries $2,800,000
International Narcotics Control $105,000,000
Anti-terrorism Assistance $15,244,000
International Criminal Justice $30,000,000
(for former Soviet republics, East Europe)
Prepositioned Stockpiles $250,000,000
Israel $200,000,000
South Korea $40,000,000
Thailand $10,000,000
Drawdown of Military Equipment by Israel $775,000,000
Department of Defense Funding Bills
The FY 1995 Defense Authorization Act (P.L. 103-337) and Defense
Appropriations Act (P.L. 103-335) also include arms transfer
policy.
Legislative Round-Up
Several other relevant bills were ushered through in the final days
of the 103rd Congress; a few went unfinished.
Deals in the Works
From late July to November, the Administration notified Congress of
the following proposed Foreign Military Sales (FMS) agreements,
leases of equipment, export licenses for Direct Commercial Sales
(DCS), and grant or reduced-price Excess Defense Article (EDA)
transfers to the developing world. The Arms Export Control Act
gives Congress 30 days within which to block proposed FMS
agreements or DCS licenses (15 days for NATO member countries and
major non-NATO allies). To do so, both houses of Congress must pass
a resolution of disapproval by a two-thirds majority. None of the
following sales were contested, meaning that the FMS letter of
offer and acceptance (the formal contract) may be signed, and that
the DCS license may be issued. In the case of EDA, Congress is
notified 30 days before actual delivery of the items.
Reports Demonstrate U.S. Dominance of Arms Market
Recent Government Publications
"Conventional Arms Transfers to the Third World, 1986-1993," CRS
Report for Congress (94-612F), Richard F. Grimmett, Congressional
Research Service: 29 July 1994, 92 pp.
You may freely reproduce and cite this material. The ASM is available
from the FAS Fund at 307 Massachusetts Avenue, NE
Washington, DC 20002 phone (202) 675-1018; fax (202) 675-1010; e-
mail llumpe@fas.org for $20 per year.]
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