Chapter 5

the K Street Crowd

The methods of the arms lobby are profiled here, along with tips for researching what the manufacturers are selling to whom. Also included is information on foreign lobbies pressing for-and sometimes against-arms deals.

Just north of the White House in Washington, DC is K Street, the center of corporate and legal lobbying firms which represent a host of special interests (those which stand to gain directly-usually financially-from policy decisions). Given its preponderant clout, many view this cavernous boulevard as the fourth wing of the federal government.

Dozens of K Street offices work to influence US arms export guidelines and legislation. The principal clients for this activity are the weapons industry-usually the corporate leadership, but occasionally also labor organizations employed in weapons manufacturing-and foreign governments seeking US arms or military aid. The stakes are high: Weapons export decisions can result in hundreds of millions to billions of dollars of profit annually for the arms corporations, high-paying jobs for workers, and prestige and military benefits for foreign governments. So these concerns pull out all the stops to shape weapons trade policy, expending millions of dollars in political campaign contributions, employing large in-house lobbying staffs and hiring the best public relations help available.

Corporate Giving in 1997

*The lobbying figures cover only the first six months of 1997.

*Source: Money in Politics Alert, Center for Responsive Politics, vol 4/ #7, 23 February 1998

PAC Contributions
Soft Money Contributions Lobbying Budget*
Lockheed Martin $590,960 $87,748 $1,900,000
Northrop Grumman $336,075 $22,825 $3,594,197
Boeing Company $183,119 $240,420 $2,900,000
McDonnell Douglas $195,250 $135,372 $1,600,000
Raytheon $229,950 $83,438 $980,000
Hughes Aircraft $150,000 $6,175 $120,000

 

Follow the Money

Whenever and wherever arms export policy is being made, financially self-interested representatives of the arms corporations are present. Generous campaign contributions from the weaponeer's political action committees (PACs) open doors, providing access and influence on the policymaking process.

According to analysis by the World Policy Institute, the 25 leading weapons exporters contributed a record $10.8 million during the 1995-96 election cycle. Of this, $6.6 million came in federally-regulated PAC donations and $4.2 million in unregulated soft money-donations theoretically targeted for party building activities, but often used to benefit specific candidates. Lockheed Martin was the leading arms corporate giver during this time, providing $1.6 million in PAC funds and soft money. The majority of the arms industries money went to the Republican party and to Republican lawmakers.

The three principal labor unions involved in the manufacture of weaponry-the United Auto Workers, the Machinists/Aerospace Workers Union and the AFL-CIO-nearly matched the corporations' giving. In 1995-96 they donated $7.7 million in hard and soft campaign money-all to Democrats.

The arms merchants (and labor unions) do not just write thousand dollar checks and mail them in. Corporate representatives attend fundraising breakfasts, dinners or even weekend retreats, where the industry lobbyist gets face time with the elected official and staff members. As one lobbyist explained to the Washington Post, the rationale behind his organizations $5,000 contribution is pretty straightforward: "When I call in the future, he will know who I am."

And, of course, the corporations will call in the future, expecting something in return for their money. More on that later. But first, tips on how you can follow the money.

The Federal Election Commission is the government-financed campaign watchdog. Information on election laws, campaign regulations and other services can be found on the FEC's Internet site. Starting in late 1998, this site will also contain disclosure reports for presidential and congressional candidates (but not for the Senate). Researchers may investigate candidate reports which list individual contributions over $200 and all PAC giving, financial information on the PACs themselves, and related subjects. This same information, plus documents for Senate candidates, is available at the FEC's Washington headquarters or at each state's election commission. Alternatively, citizens can submit queries to the Washington office by phone, which the FEC will research for a minimum charge, or by calling the FEC's fax broadcast network.

The Center for Responsive Politics is a private, non-partisan research group that studies the impact of special-interest money on elections and policy. CRP's web page contains candidate and PAC financial disclosure statements.The Best Defense, CRP's 1995 study on the weapons industry and campaign-giving, can be found on the organization's web page or ordered by contacting the office. In addition, the CRP's Internet site includes a database of trips taken by members of Congress and paid for by corporate or other special interests, as well as a searchable database of registered federal lobbyists.

The Arms Trade Resource Center at the World Policy Institute has specifically investigated the relationship between weapons exporters' political donations and votes by congressional recipients of this largesse. Check out the October 1996 study, Peddling Arms, Peddling Influence, as well as an April 1997 update which includes campaign finance data from the 1995-96 cycle. Request the reports by contacting WPI.

Federal Election Commission
999 E Street, NW
Washington, DC 20463
phone 800/424-9530
faxcast network 202/501-3413 www.fec.gov
Center for Responsive Politics
1320 19th Street, NW, Suite 620
Washington, DC 20036
phone 202/857-0044
fax 202/857-7809
www.crp.org
World Policy Institute
65 Fifth Avenue, Suite 413
New York, NY 10003
phone 212/229-5808
fax 212/229-5579
www.worldpolicy.org

 

Lobbying, Lockheed Martin Style

Arms industry lobbying is focused on two principal agendas-domestic and foreign sales. The first, while not the focus of this guide, is the subject of the most intense industry action. Manufacturers are extremely concerned with how many billions of dollars the Pentagon will have to spend on weapons and which ones it will buy. At key decision points during the annual budget cycle, major contractors often take out full page ads in national newspapers and journals and even run TV commercials in key congressional districts promoting their products.

With the downturn in arms purchases by the Pentagon since the demise of the Soviet Union, however, foreign sales have become increasingly important and now account for 25-30 percent of the weapons producers' business (up from 15 percent during the cold war). The industry's foreign sales lobbying agenda in recent years has centered around removing export restrictions (i.e., opening new markets and gaining permis-sion to export newer, more sophisticated weapons) and increasing government support for arms sales. The latter includes gaining more high-level government advocacy by the Secretaries of Commerce, Defense and State, and the President and Vice President to help US arms manufacturers win overseas sales, as well as gaining more public funding to market weapons and finance sales.

These intense lobbying activities have paid off handsomely, with the industry prevailing more often than not (see case studies, p. 73). As a result, the aerospace industry-a large part of the overall arms industry- enjoyed record after-tax profits in 1996 of $7.6 billion. (These profits are due not only to overseas sales, but also to restructuring, corporate mergers and massive layoffs in the industry during the 1990s.)

So how does the arms industry succeed in gaining additional taxpayer subsidies for its exports at a time when the majority of Congress is avowedly anti-corporate welfare? And how, just years after a major war effort was mobilized against Iraq's imported arsenal, have industry lobbyists managed to push multi-billion dollar sales of America's most advanced weaponry to some of the most unstable regions of the world?

Access. In order to make your case to policymakers, you have got to get in the door. The connection between money and access is pretty straightforward, as discussed above. In addition, though, the employment merry-go-round between Congress, the Pentagon, the State Department, arms corporations and trade associations breeds familiarity between industry lobbyists and policymakers, further opening doors for arms exporters. For example, former Defense Secretary William Perry brought a team to the Pentagon that had previously worked together in California, many of them in the weapons and technology industries. As a result, according to one industry representative, "these officials did not have an inherent suspicion of the motivations of industry." In fact, Secretary Perry was a great proponent of military diplomacy-including military training and arms sales. (After leaving the Pentagon, Mr. Perry took up a position on the Board of Directors of Boeing and United Technologies Corporation, two major arms exporters.)

There are plenty of examples of the revolving door helping promote permissive export policies. Norman Augustine, the recently retired CEO and vice chairman of Lockheed Martin, spent the past 40 years steadily ascending the ladder of Washington influence, moving between government and industry. He interspersed his career at aerospace and missile technology firms with stints at the Pentagon-first in the Office of the Secretary of Defense, later as Assistant Secretary and finally as Under Secretary of the Army. Mr. Augustine was (and probably will continue to be) an extraordinarily effective advocate for arms exports. Lt. Gen. Howard Fish is another noteworthy example. Director of the Defense Security Assistance Agency during the Nixon and Ford administrations, General Fish worked to weaken provisions of the Arms Export Control Act as Congress was crafting it. In the late 1980s, he took charge of the American League for Exports and Security Assistance (ALESA) and served as a member of the Pentagon's influential Defense Policy Advisory Committee on Trade. General Fish now works as a consultant for Lockheed Martin and continues to advocate for weapons sales. Don Fuqua, the recently retired President of the Aerospace Industries Association (AIA), was a 12-term member of Congress from Florida. His chief deputy, Joel Johnson, served as a senior staff member on the Senate Foreign Relations Committee before moving to ALESA and finally to AIA.

Because they know and may have even worked with them, Senators and Under Secretaries are apt to take the call when Norm, Howard, Don or Joel rings them up.

Omnipresence. More generally, representatives of arms corporations and their associations build relationships with members and staff through continual communication. As shown in the box on p. 63, the arms corporation's lobbying budgets are enormous. According to financial disclosure statements compiled by the Center for Responsive Politics, six weapons contractors spent over $11 million on lobbying in the first six months of 1997. Probably needless to say, the sheer volume of in-house corporate lobbyists, hired PR hands and trade association staff seeking to shape arms export policy dwarfs that of the human rights/religious/arms control lobby working for restraint. All the more reason, then, that concerned citizens must be active!

Goodies. In addition, although there is a gift ban in place for the House of Representatives and strict limits for the Senate, industry is still able to sponsor receptions and "educational trips" within the US and abroad (oftentimes in tandem with the Pentagon). Thanks to the Center for Responsive Politics, these trips are now documented on the Internet (see p. 64) Through the House member travel database, you can see which members and staff went where, and on whose corporate expense account. Lobbyists for corporate titans can also still provide staff with cheap freebies-little gifts intended to subtly (or subconsciously) impress staffers. Tickets to athletic and social events and promotional trinkets like mouse pads, calendars and note pads are commonplace.

Roots. The arms industry also has at its disposal a national grassroots base, in the network of suppliers, subcontractors and employees spread across the United States involved in weapons production. In recent years, the arms corporations have highlighted the number of jobs in each congressional district associated with the production of a particular weapon system being considered for export. In addition, the workers at McDonnell Douglas and other arms companies have responded to the corporate call for letter-writing campaigns and other grassroots-type initiatives to influence Congress' decisions on arms export policy.

Sometimes members of Congress even gin up pro-military grassroots campaigns. In 1995, for example, Rep. Curt Weldon (R-PA) asked the American Defense Preparedness Association and the National Security Industrial Society to help his Missile Defense Caucus launch a nationwide grassroots campaign to revive support for the idea of deploying a costly and controversial national missile defense system.

And, if there is no real grassroots support for an initiative, weapons corporations turn to public relations firms to create the impression of it! This is easily done, with enough money. One tactic is for a PR firm to call citizens around the country, asking leading questions about national security or the importance of local jobs. If the response is the desired one-which it nearly always is, since the questions are carefully crafted to elicit the right answer-a letter is quickly sent off to that person's representatives in the House and/or Senate, from the citizen, in support of whichever weapon system is employing the PR firm. No effort by the individual is necessary. The newest incarnation of this old tactic taps into the power of the information superhighway. For instance, companies have created political activation sites on the Internet. Simply click onto the site, provide your name, zip code and profession, and a tailored email is sent off to your member of Congress in a show of grassroots support.

Bribery. And, if all else fails, arms corporations have been known to bribe key foreign government officials to make the sale. (Bribery is illegal, however.) Once the appropriate officials are paid off, not only do they become potent advocates within their own government for the sale, but they might also lobby the US government to approve the sale.

 

Agents of Foreign Influence

While congressional budget hawks have consistently targeted foreign aid for cuts in recent years, military aid and arms export programs have shown particular resiliency. The overall amounts appropriated have not suffered the declines of non-military foreign aid programs. In part, this staying power is due to the influential role of lobbyists working on behalf of military aid recipients. With billions of dollars in security assistance and arms sales at stake each year, governments from Albania to Zimbabwe employ Washington law firms, lobbying companies and public relations offices to keep the money and guns coming. Foreign governments and their US embassies make major expenditures to these firms to spin their image, much like a political candidate would during an election year. If a PR firm succeeds in creating a positive image for a country in the eyes of the American public and media, it is often difficult to reverse that image, even in the face of egregious human rights violations or undemocratic behavior.

The Foreign Agents Registration Act requires lobbyists for foreign governments or organizations to register with the Department of Justice. Each year, the Justice Department reports to Congress on the administration of the Act. The report lists the identity of the principal involved, whether it be a foreign government, organization or corporation; the name of the hired lobbyists, lawyers or PR firms; their activities and services; and the amounts paid for this work. You can find out who is working for whom by viewing the Justice Department's report on the Internet, but only the 1995 report is posted at this time. You can order a print copy of the most recent report by calling the Foreign Agents Registration Unit. The published report costs $30. You can also travel to the FARA office and xerox specific information for 50 cents per page.

The Center for Public Integrity investigates special interest influence on many issues, from campaign finance to government waste and abuse. CPIs 1992 report, The Torturers' Lobby, highlighted the public relations firms and lobbyists representing human rights-abusing governments and attempting to put a positive gloss on torture. Some of the governments which spent the most on PR flacks were major recipients of US military and economic assistance. And many of the people receiving money to conduct the PR work were former high-ranking government officials (some of whom went on to serve in the Clinton administration).

In some instances, a powerful ethnic lobby of foreign-born or foreign-descended American citizens presses for arms exports to the mother country. Most active in this regard is the pro-Israeli lobby, epitomized by the American-Israeli Public Affairs Committee. This powerful group and its allies works assiduously to maximize military aid programs to Israel, garnering well over $3 billion a year in grant aid, as well as many other forms of assistance. Americans of Greek and Armenian heritage are also well organized and influential on Capitol Hill. The pro-Greek lobby has succeeded in ensuring that Greece receive amounts of arms and military aid in proportion to its arch rival, Turkey. Similarly, Polish-Americans played an important role in encouraging the Congress and the administration to begin granting military aid to Poland in the mid-1990s, as well as to support the inclusion of Poland in the North Atlantic Treaty Organization. With assistance from American arms corporation lobbyists, Bulgarian, Czech, Hungarian and Romanian-American organizations worked equally hard in pressing for inclusion of these countries in NATO. (Only the Czech Republic, Hungary and Poland were accepted into the alliance.) Many national- based groups sponsor educational and fact-finding trips for members of Congress and staff. The Committee for Responsive Politics' web site makes this information available.

In addition to the influence of domestic ethnic groups and hired guns, the Washington embassies of foreign governments lobby for arms and aid. Take the Saudi Ambassador, Prince Bandar Bin Sultan, for instance. The nephew of King Fahd, Prince Bandar is a very wealthy man. He spreads this wealth lavishly in America, both on charities (which generates tremendously good public relations) and on political events (which generates tremendously good insider relations with political elites). As a result, even though the signs of instability in Saudi Arabia are manifold (bombings of US military outposts, right wing critics protesting the Saudi monarchys liberalism, democrats protesting the Saudi monarchys absolutism, etc.), when the time comes to consider a multi-billion arms deal to the regime, policymakers remember, that Bandar, hes all right. We can deal with the Saudis.

Department of Justice
Foreign Agents Registration Unit
1400 New York Avenue, NW
Washington, DC 20003
phone 202/514-1216
fax 202/514-2836
www.usdoj.gov/criminal/fara
Center for Public Integrity
1634 I Street, NW, Suite 902
Washington, DC 20006
phone 202/783-3900
fax 202/783-3906
www.publicintegrity.org

Hired Guns

Probably not coincidentally, the leading recipients of US military aid and arms spend considerable money on public relations and lobbying assistance in the US.

Bahrain - $150,000 in 1994-95 from the government to Washington International Group, Inc. to contact members and staff of Congress and administration officials to discuss foreign aid, defense and trade issues.

Egypt - $409,500 in 1995 from the government to Bannerman and Associates, Inc. to educate members and congressional staff and administration officials about Egypt's needs and to discuss military, trade and foreign assistance issues.

Indonesia - $230,000 to KCM International, Inc. in 1994-95 to lobby on East Timor and assist efforts to reinstate eligibility for US military training.

Israel - $396,000 in 1995 from the Israeli Ministry of Defense to three groups for weapons contracts and procurement issues. $196,000 in 1995 from various Israeli weapons manufacturers to three groups for procurement advice and military budget issues.

Saudi Arabia - $780,000 in 1995 from Saudi Arabian embassy to Cassidy and Associates and Dutton and Dutton, P.C. for arms sales and political military assistance matters.

Turkey - $3,454,000 in 1995 from the Republic of Turkey to three groups for general public relations work and consulting on various US legislative efforts.

Source: Foreign Agent Registration Act (FARA) Annual Report for 1995

 

 

Trade Associations Multiply Lobbying Clout

Representatives of McDonnell Douglas, Lockheed Martin, United Technologies and other weapons makers also rely on their trade associations for political muscle on Capitol Hill and in the executive branch. These organizations, each of which has its own staff and publications, allow arms manufacturers to double (or triple or quadruple!) their impact and keep up a steady stream of letters, faxes, phone calls and office visits.

The Aerospace Industries Association (AIA), representing 52 manufacturers of military and commercial helicopters, aircraft, engines, missiles and spacecraft, is one of the principal Washington lobby organizations working to promote weapons exports. The AIA has been ably led for the past 10 years by President Don Fuqua, recently retired. Vice President for International Joel Johnson continues to present the exporters' most public face. Often quoted by the press defending arms sales, he is also ubiquitous at forums, congressional hearings and government advisory panels on weapons transfers.

The AIA Newsletter, published 10 times per year, tracks government policy (from an industry perspective, of course), reports production and market trends, and highlights the AIA's policy agenda. The newsletter reveals the association's efforts to minimize export controls, increase subsidies for arms marketing and export financing, and open new markets. Compared to other trade journals, the AIA newsletter is probably the most straightforward-perfect for the activist who wants a quick read on what the industry is up to. You can download AIA publications and get a list of AIA members and other information from the associations homepage. Alternatively, you can call or write and ask to be put on the mailing list for the free newsletter.

The American Defense Preparedness Association and the National Security Industrial Society merged in March 1997 and dubbed the hybrid organization the National Defense Industrial Association (NDIA). The association now represents more than 950 military contractors and over 28,000 individuals around the world. NDIA's 55 regional offices/chapters throughout the United States, providing a grassroots base with which to lobby and target members of Congress. The merger prompted at least one fawning Capitol Hill staffer to tell NDIA, "We will answer your mail faster now."

NDIA comprises some 35 committees which handle policy discussions between industry and the government on a wide array of topics. The International Committee identifies government policy and practices which are detrimental to international arms sales opportunities. It then holds forums and meetings between government agency representatives and NDIA members to address these issues.

A one year subscription to NDIA's monthly publication National Defense costs $35. The journal highlights weapons industry business and technology news and discusses government policies which affect NDIA members. This journal is more technical than AIAs, but it is a valuable resource for those delving into the issue a little more deeply. The magazine and other information about the organization, including NDIA issue briefs, are available on NDIA's web site.

The American League for Exports and Security Assistance, Inc. (ALESA) lobbies Congress and the executive branch in support of military exports and security assistance (appropriations of taxpayer funds to underwrite foreign arms purchases). Several dozen weapons manufactures formed ALESA in 1976 out of fear that President Carter's election would lead to a ban on weapons exports. The group had mixed results in those early years but hit its stride after the 1980 presidential election; ALESA helped the Reagan administration craft its proactive arms sales program.

In the early 1990s, ALESA worked to gain congressional support for surging US arms exports following the Gulf war. The organization produced analysis describing the number of jobs-strategically spread throughout the 48 states and nearly every congressional district-related to foreign sales contracts. To further overcome congressional opposition, ALESA copied basic grassroots strategies, mobilizing people who had a stake in the sale-such as weapons industry workers and subcontractors-to write supportive letters to their elected representatives. In case these folks were too busy to write, ALESA established a toll free number which recorded personal information and transformed it into a personal letter to Congress.

A variety of former Pentagon officials and industry CEOs have served as director of ALESA. Currently, Anna Stout is the executive vice president of the organization. In March 1997, she testified before the House International Relations Committee to advocate more security assistance and also to thank the committee and its chairman for their kind assistance on a number of pro- industry initiatives in 1996.

The Electronic Industries Association (EIA) is a large, powerful trade organization representing manufacturers of military and civilian electronics. EIA defines its mission as enhancing the competitiveness of the American producer, which includes maximizing foreign market share. The Government Division of EIA includes a Defense Trade Committee, focusing on matters related to military electronics and arms exports. The committee holds quarterly meetings which address both congressional legislation and executive branch policies. Speakers from the State Department, the Defense Technology Security Administration, the Defense Security Assistance Agency and other administration and congressional offices attend these meetings to discuss policy issues and brief EIA's members on new developments which may affect them. In addition, the EIA's Legislative Affairs Council works to make this industry's views on military issues known to Representatives, Senators and their aides.

Aerospace Industries Association
1250 I Street, NW
Washington, DC 20005-3922
phone 202/371-8400
fax 202/371-8470
www.aia-aerospace.org
National Defense Industrial Association
2111 Wilson Boulevard, Suite 400
Arlington, VA 22201
phone 703/522-1820
fax 703/522-1885
www.ndia.org
American League for
Exporting Security Assistance
122 C Street, NW, Suite 740
Washington, DC 20001
phone 202/783-0051
fax 202/737-4727
Electronic Industries Assoc.
2001 Pennsylvania Avenue, NW
11th Floor
Washington, DC 20006
phone 202/457-4900
fax 202/457-4985
www.eia.org

 

Special Access for Special Interests

The openness of consecutive administrations to business interests has been critical to sustaining arms industry exports in the 1990s. Several advisory groups and trade councils exist within the government which facilitate industry-government dialogue on US arms trade policy, at taxpayer expense. Weapons manufacturers and trade associations are predominate in all of these bodies, augmenting the already significant access gained through campaign contributions and revolving door relationships. Advocates of restraint do not have similar, formalized meetings with arms export decision makers. In the Republican revolution of 1995, a number of these committees were put on the budgetary chopping block, but due to business support, they all survived.

Established in 1992, the Defense Trade Advisory Group (DTAG) provides a forum for regular consultation between US weapons exporters and the State Department, which bears overall responsibility for arms export policy. US policy, laws and regulations on military exports are the issues on the agenda at DTAG's bi-annual sessions and during its more regular subcommittee meetings. These events, partially closed to the public, are attended by high ranking White House, Commerce, Defense and State Department officials, military attaches from foreign (customer) embassies and DTAG's 40 members. Nearly all of these members are representatives of arms corporations or trade associations. Due to congressional pressure, the State Department has recently invited a few academics or policy analysts onto the advisory body, but they are generally people who are supportive of military programs and military aid, rather than critical voices.

Conflicting Interests

Representatives from DTAG member corporations meet every six months in closed-door sessions with the State and Defense Department policymakers responsible for licensing arms exports. These seminars (and coffee break conversations) provide a formal channel for arms industry representatives to communicate with the very people who determine the fate of their pending arms deals.

Export Licences Granted to DTAG Members

From A Review of Arms Export Licensing, Senate Hearing 103-670.

Member/Company FY 92 Licenses FY93 Licences
 Boeing  141  200
Bulova 24 49
Corning 2 5
E-Systems 167 148
General Dynamics 351 167
General Electric 591 167
General Motors 89 78
Grumman 63 72
Hughes Aircraft 345 703
Litton 1101 1068
Lockheed 177 693
LTV Aerospace 69 3
Martin Marietta 121 336
McDonnell Douglas 356 339
Motorola 958 987
Northrop 107 138
Pratt & Whitney 33 9
Raytheon 365 358
Rockwell 750 856
SAIC 43 37
Smith & Wesson 609 597
Smiths Industries 139 94
Teledyne 325 411
Varian 134 171
Westinghouse 204 149

 

DTAG is subdivided into working groups on policy and regulations. The standing policy group and those created on an ad hoc basis have made recommendations on a variety of subjects, and many of their recommendations have been taken up by officials at Foggy Bottom. For example, a working group on Latin America sought for several years to convince the State Department to overturn a nearly two-decade-old ban on exports of advanced weapons to the region. In this way, the same arms manufactures that would benefit from a policy reversal made the case about how and why to do so. Not surprisingly, given this level of access, the White House eventually chose this course of action. Another group works to streamline and clarify the export rules and guidelines under which they will later do business.

The State Department's Office of Regional Security and Arms Transfers (PM/RSAT) provides administrative support for DTAG. Questions and comments about DTAG should be directed to this office.

The Secretary of Defense and the US Trade Representative (USTR) reestablished the Defense Policy Advisory Committee for Trade (DPACT) in May 1997, after a one year hiatus, to provide policy advice to the USTR concerning arms trade matters. The Pentagon is largely in control of its membership, but the USTR has some influence on the body's makeup. The committee comprises approximately 20 representatives of America's largest weapons producers. While the Pentagon states that the committee will be fairly balanced in terms of the membership, this balance includes one individual from organized labor, and no representation from the arms control, peace or human rights communities. DPACT meets twice a year in sessions which are closed to the public. For more information on DPACT, contact the USTR's office of intergovernmental affairs.

The President's Export Council Subcommittee on Export Administration (PECSEA), which consists of officials from high technology and arms export companies as well as business consulting firms, provides advice on trade matters regulated by the Export Administration Act. PECSEA evaluates US trade promotion policies as well as those that control trade for national security and foreign policy reasons. For instance, this subcommittee assisted the full Export Council in its research and publication of a recent report on the effectiveness of unilateral US sanctions to achieve foreign policy goals. Not surprisingly, the council-whose members suffer the economic impact of sanctions, which can range from a prohibition on weapons sales to a complete embargo of all goods and services-found that sanctions are ineffective, and recommended that their future use be limited. No balancing views, from human rights or religious organizations for instance, were included in this government-endorsed study. Housed within the Department of Commerce, the PECSEA meets 2-4 times annually in sessions which are partially closed to the public. You can obtain further information about PECSEA by contacting the Department of Commerce, Bureau of Export Administration.

DTAG Executive Secretary
US State Department, PM/RSAT
Room 7424
Washington, DC 20520
phone 202/647-2882
fax 202/647-9779
www.pmdtc.org
Intergovernmental Affairs/DPACT
United States Trade Representative
Executive Office of the President
Winder Building 600-17th Street, NW
Washington, DC 20506
phone 202/395-6120
fax 202/395-3692
Department of Commerce
Assistant Secretary for Export
Administration
Technical Advisory Committee/PECSEA
14th Street and Constitution Avenue, NW
Washington, DC 20230
phone 202/482-2583

 

Successful Industry Campaigns

The following three case studies illustrate how the arms export lobbies combine all of the aforementioned tools to affect policy. One example demonstrates the strategy used in support of a particular controversial sale; the second shows how industry inserts technocratic changes into the Arms Export Control Act, resulting in billions of dollars in subsidies; and the third highlights a several-year long campaign by the industry to remove restrictions on the marketing of high-tech arms in Latin America.

Case Study 1: Jobs Now and Bombers for Saudi Arabia Throughout the 1980s, the Saudi government tried to buy F-15E bombers for its air force. The jet is the US Air Force's top of the line tactical bomber, and had never before been exported to any country, not even the United States' closest NATO allies. Prior to the 1991 Gulf war, Congress refused to permit the sale due to concerns over Israel's security. In November 1991, McDonnell Douglas Vice President Bob Trice announced that the Saudis were again seeking 72 of the advanced bombers.

Congress initially reacted negatively. Democratic Senator Howard Metzenbaum and Republican Senator Bob Packwood immediately gathered 67 signatures (two- thirds of the Senate) on a letter expressing concerns about such a sale while the Middle East peace talks were on going.

McDonnell Douglas began pressing hard. The corporation sent members of Congress, the media and trade unions glossy promotional brochures and thick studies outlining the number of jobs in each congressional district that pro-industry economists claimed were tied to the proposed sale. Two videos touting the alleged economic and national security benefits of the deak were produced and played for members of Congress and the media.

In its most innovative move, McDonnell Douglas (MD) formed a "Jobs Now" coalition with six other aerospace corporations and six labor unions, holding rallies around the country in support of this arms-sale-for-jobs. The coalition ran full-page ads in major newspapers to garner support and reportedly generated 20,000 letters to Congress and the White House in favor of the sale. Meanwhile, MD lobbyists dropped off Jobs Now stationary and pens to congressional staff. The campaign was unprecedented; never before had jobs been cited so explicitly as justifying the sale of weapons-especially when the sale represented the introduction of a new level of lethal firepower into a highly unstable region.

To allay congressional concerns about Israel, the company hired a high-powered Jewish defense analyst to serve as a bridge to the pro-Israel lobby and weaken its opposition to the sale. Publicly the Saudi embassy did not get too involved in pushing for the sale, presumably preferring to let McDonnell Douglas clear the way politically (which, for a $9 billion sale is probably not too much to ask). Undoubtedly, however, the Saudi Ambassador held some high-level discussions with key US decision makers on the sale.

All of this was being played out in the context of the 1992 presidential race. Candidate Bill Clinton was the first to endorse the sale, at a campaign rally in St. Louis, where the F-15E is manufactured. Shortly thereafter, President George Bush announced official administration support for the sale, at a campaign rally at the same F-15 manufacturing plant.

By the time the sale was finally sent to Captiol Hill for consideration in September 1992, Congress had been so thoroughly worked over on the jobs issue that only 30 members of the House of Representatives went on record opposing the sale. In the Senate, only Sen. Paul Wellstone (D-MN) was brave enough to even suggest that the decision on the sale should be delayed until after the election, so it could be divested of politics.

(Postscript: A little over a year later, the United States government sold Israel 25 F-15E bombers, with even greater lethal capacity than Saudis received, in order to maintain military balance in the region. Israel paid for the planes with several billions of dollars of US foreign military financing grant aid.)

Case Study 2: Corporate Welfare for Arms Dealers In recent years lobbyists for arms corporations and trade associations have quietly worked several initiatives through Congress which have resulted in increased public subsidization of arms exports. The industry has gained new marketing and financing assistance by burying innocuous- sounding provisions in defense budget bills. Typically, measures dealing with arms exports and military assistance would be written into the foreign aid bills, but the arms industry finds a warmer welcome from the congressional military committees. In addition, the military bills are much larger and more complicated than are the annual foreign aid bills. Thus, it is easier to slip a controversial program in, especially with assistance from allies in the executive branch and friendly members of Congress. Two examples follow.

Since 1990, the arms industry has made obtaining new sources of financing for weapons sales one of its highest priorities. Many foreign governments cannot afford to buy US arms, and several of these governments have such poor credit ratings that they are unable to obtain affordable commercial loans from banks. At the same time, the amount of grant aid provided for weapons purchases (straight out cash transfers from the US Treasury to foreign governments) has been declining since the end of the cold war. After failing to open up the Export-Import Bank to military sales, in 1995 the industry convinced Congress to authorize the establishment of the Defense Export Loan Guarantee (DELG) program at the Pentagon. This program provides US taxpayer-funded guarantees for up to $15 billion in loans made by commercial banks for the purchase of US-manufactured weapons (see p. 21).

The industry touted the DELG as a no cost program, since no initial appropriation of money is being made. If, however, a foreign arms customer defaults on one of these loans, US taxpayers will be liable for 100 percent repayment of the principal and interest. Following Iraq's invasion of Kuwait and the Gulf war, commercial banks sued the US government for $2 billion to cover loans which Iraq defaulted on. The United States government had guaranteed the loans during the late 1980s.

The impetus for this program came primarily from the aerospace industry, which claimed it was necessary to protect American jobs and the defense industrial base. For several years the industry has advocated for loan guarantees in meetings of the State Department's Defense Trade Advisory Group. Now these same companies are assisting in implementing the program and in shaping the regulations governing it. In one of their latest initiatives, the arms merchants are seeking to repeal the minimal protections for taxpayers that Congress built into the program, arguing that these protections make the loan program unattractive to foreign customers.

Similarly, in the 1996 Department of Defense authorization act, Congress effectively abolished a three-decade-old requirement that foreign military sales include "recoupment fees." The fees are a surcharge on weapons exports that serve to recover some of the taxpayer-funded research and development costs for weapon systems being exported around the world. These fees, generally around five percent of the value of the sale, used to return several hundred million dollars to the treasury annually.

The industry lobbied against recoupment fees since at least 1991, arguing that the fees raise the price of US weapons, making them uncompetitive on the international market. US dominance of the global market belied this claim, but corporate lobbyists systematically eroded the requirement year by year, first getting a waiver on the fee for sales to NATO and other close allies, and then exempting industry-direct arms sales from the fee requirement. For several years Congress blocked efforts by the industry to repeal the sole remaining legislative requirement for recoupment fees on some foreign military sales.

The Clinton administration was sympathetic to the industry's claim that this fee constituted an unfair burden, and it supported the repeal of the last of the recoupment fees in 1995. A Presidential advisory board recommended repeal in May 1996 because the US government helps other industries with R&D and does not demand that they recoup the investment through export fees. (Unlike with other industries, however, US taxpayers entirely underwrite the development costs for weapons systems, vastly eclipsing governmental support for any other industry.)

The 1996 law allowed the President to waive all recoupment fees if the added cost of these fees makes it likely that an arms sale will be lost, or if exports of the weapon system will lower the price of Pentagon purchases of the weapon. The waiver could only be exercised, though, if the President proposed and Congress passed as part of the 1997 budget some legislation to offset the several hundred million dollars of revenue which would be lost by ending the recoupment fees during FY 1997-05.

Senator William Cohen (now Secretary of Defense) introduced an amendment to the 1997 defense authorization act which fulfilled this requirement. To offset the lost revenue, the amendment proposed to sell off gems, precious metals, and other materials currently held in a national defense stockpile. The money recovered would be returned to the general fund of the US Treasury, as were the recoupment fees. Senators overwhelmingly approved the measure (74-18) in a late night vote, with no debate and little understanding of what they were voting on. This provision was maintained in the House-Senate conference version of the bill, and the President signed the defense bill into law in September 1996, meaning that the administration may now waive recoupment fees in all cases.

Case Study 3: Opening Up a New Market, Driving US Foreign Policy At the direct urging of the arms industry, on 1 August 1997, the Clinton administration lifted a nearly two-decade-old ban on exports of advanced weaponry to Latin American governments. The restraint policy was implemented in the late 1970s by the Carter administration due to prevalent human rights abuses and military dictatorships in the region.

In announcing the policy reversal, the White House press secretary stated that, "It is in Americas national security interest to promote stability and security among our neighbors in the hemisphere by engaging with them as equal partners as they modernize and restructure their defense establishments." The decision came as little surprise in light of a prior announcement by the White House that it was allowing Lockheed Martin and McDonnell Douglas to compete against European firms in a contest to sell 20 advanced fighter jets to Chile. The administration's review of its Latin arms export policy has centered around this $500 million deal, but the stakes are potentially much higher. Several governments in the region have said that if Chile buys top-of- the-line jets, they will have to respond in kind. American weapons manufacturers estimate that South America holds $7 billion in future combat aircraft orders.

No one in the government or industry ever presented a security rationale for changing the policy, but in order to accommodate the industry's marketing plans, the US government named Argentina as a "major non-NATO ally." This move was necessary to calm its security concerns if/when the sale to Chile goes forward. The United States has conferred this ally status, which brings with it certain military benefits, upon only a handful of states (Israel, Egypt, Jordan, Australia, New Zealand, Japan). The Chilean government was reportedly offended that it had not been named a major non-NATO ally of the United States, and talks were initiated with Chile about this possibility.

Representatives of the Chilean government have made it clear on a number of occasions that Chile did not press for the US policy reversal. Instead, the US weapons manufactures prompted it, after years of lobbying Congress, the Pentagon, State Department and White House. Since the restraint policy was implemented, American arms manufacturers claim they have lost $4 billion in sales to European competitors, hurting them economically and proving the policy's failure. Latin American military spending has been restrained throughout this period, however, and the region has the lowest per capita military expenditure in the world. Supporters of the ban claim, credibly, that the US policy contributed to democratization in Latin America. Increased emphasis on arms procurement now could undermine these gains.

According to Congressional Research Service statistics, even with the restrictive policy on high-tech weapons sales in place, the United States controlled the largest share of the Latin arms market. But while US arms sales worldwide have increased 25 percent in recent years, the industry grouses that sales to Latin America have only increased by 14 percent. William Schneider, an arms industrialist and chairman of the State Department's Defense Trade Advisory Group, said recently, "For some time, I've shared the view that the Latin American market was underserved and neglected by US industry." At a DTAG meeting in 1994, Schneider created a Latin America Working Group to reverse the restrictive policy. With the ban on advanced weapons to the region repealed, industry expects sales of first-tier fighter/ bombers will push the US market share up to about 70 percent. Lockheed Martin, which views Latin America as æa growing market with unlimited potential," has led the industrys efforts for over six years to convince the US government to renounce the restraint policy.

In late June 1997, Sen. Christopher Dodd (D-CT) and Joseph Biden (D-DE) introduced The Latin American Arms Control Act of 1997. Sen. Dodd, generally a supporter of arms exports, accused the Clinton administration of bending to heavy lobbying by companies seeking to open up a new front for high dollar sales of state-of-the-art defense technology. Rep. Nita Lowey (D-NY), warning that Lockheed Martin and McDonnell Douglas ought not dictate our foreign policy, introduced companion legislation in the House. The bills would ban the sale, transfer or financing of any highly advanced weapon-defined as advanced fighter jets and attack helicopters-to any Latin American country, unless the administration certifies that a sale is in the US national security interest, and Congress enacts a joint resolution approving the determination. The bills also call on the administration to negotiate an arms restraint agreement with other arms sellers and states in the region.

But arms control was not on the agenda of the April 1998 "Summit of the Americas" in Chile. Instead, President Clinton reportedly took the opportunity to encourage Chilean President Frei to buy American fighter jets.

The Leading US Arms Exporters, FY 1996*

*These figures include only government-negotiated sales, excluding contracts entered into directly by the arms corporations.

Source: Government Executive (www.govexec.com/top200/topfms.htm)

Rank Company  Amount
1 McDonnell Douglas $5,532,029,000
2 Lockheed Martin $2,450,661,000
3 General Motors $946,217,000
4 United Technologies $663,571,000
5 Raytheon $457,502,000
6 Boeing $401,411,000
7 FMC $192,946,000
8 General Electric $172,344,000
9 Northrop Grumman $141,985,000
10 General Dynamics $133,888,000

 

Researching Arms Corporations

Ever wonder whether there are any arms manufacturers in your community exporting weapons to despots abroad? Gathering information on local exporters can provide an excellent focus for grass roots activism and strategies, including rallies at the company, op-eds or letters to the local paper(s) and boycotts and shareholder actions (discussed in chapter 6). Following are some tips on researching the arms sales activities of weapons producers.

A good place to start is with major regional and national newspapers. Arms corporations are typically covered on the business page or, if locally based, in the metro section. Business magazines also frequently profile arms and aerospace corporations and their exports.

There is also a booming military trade press. Many of these journals print annual membership directories, often with brief descriptions of the companies' products and main operating units. National Defense, the monthly journal of the National Defense Industrial Association, prints a directory of its members every year called "Partners in Preparedness." This special issue lists the areas of expertise, senior corporate officials, addresses and phone numbers of most of NDIA's hundreds of members. Signal, the journal of the Armed Forces Communications and Electronics Association, also prints a listing of its several hundred members, most recently in January 1998. In addition, most contract information and sales notices are communicated through the military trade press in publications like Jane's Defense Weekly, Aviation Week & Aerospace Technology and Defense News. While most normal people do not have subscriptions to these expensive journals and newsletters, public and university libraries do.

There is a smaller-but existent-anti-military trade press, as well. Several public interest organizations publish news-letters, factsheets and activist alerts on US and global arms trade developments. These newsletters often feature reportage on corporate lobbying strategies, shareholder movements and pending arms sales. In the Arms Sales Monitor, we report all public sales notifications, including the name of the primary manufacturer. We also maintain a fairly up-to-date on-line table of US arms sales over the past several years, again usually including the name of the weapons manufacturers. The Arms Control Association and the Council for a Liveable World Education Fund also monitor these sales and periodically publish recent contracts. See chapter 7 for a listing of these publications and information on how to obtain them.

The worldwide web is fast becoming the best, most readily-available source for information on arms corporations and their overseas activities. The military publishing houses nearly all have a presence on the internet. Jane's Defense Weekly (www.thomson.com/janes), Defense News (www.defensenews.com) and Defense Systems Daily (www.defence-data.com) offer current, relevant information on the international arms trade. Most of the anti-military trade press is available on-line, too (see chapter 7).

Each day, the Pentagon's public affairs office publishes on the Internet (www.defenselink.mil/news) all of the military contracts signed that day. These notices indicate the armed service overseeing the contract, the primary contractor and its location, a description of the activity involved and the amount of the contract. This procurement information covers military purchases by US armed forces, as well as foreign military sales. The notices are archived and searchable. This site also contains press releases on foreign military sales notifications to Congress, providing the quickest way to find out about government-negotiated arms deals in the works.

American Arms Exporters on the Web

Alliant Techsystems www.atk.com
Bell Helicopter Textron www.textron.com
Boeing www.boeing.com
Colt www.colt.com
FMC www.fmc.com
FN Manufacturing, Inc. www.fnmfg.com
General Dynamics Land Systems www.gdls.com
General Electric www.ge.com
Lockheed Martin www.lmco.com
Northrop Grumman www.northgrum.com
Raytheon www.raytheon.com
Rockwell www.rockwell.com
United Defense www.uniteddefense.com
United Technologies www.utc.com

The weapons manufacturers are also on the information superhighway (of course). Companies ranging from Colt to Lockheed Martin have web pages which provide information about weapons from the M16 assault rifle to the next-generation F-22 "Stealth" fighter jet. Importantly for local research, the corporate web pages also publish news and background on their subsidiaries, production lines and recent deals. To the benefit of researchers, weapons dealers are not shy about publicizing their activities and strategies.

For more information, contact the companies directly. Public companies (those whose stock is publicly traded) are required to provide certain information upon request. Among this information is the company's annual report, which usually details current operations and future plans, expenses, income and information for stockholders. Another useful report to request is the 10-K report, which has to be prepared for the Securities and Exchange Commission. The annual 10-K reports (and the quarterly 10-Q reports) detail company operations, financial data, legal proceedings and management changes. Information on local subsidiaries can be found in these reports, as well.

It is more difficult to obtain information on private companies. They are not required to provide any information to the public, but some may do so anyway. The direct approach is your best bet. Write or phone the company's public affairs office with your request.

Hoover's Handbook of Corporate America is an annual publication that any business library would have. This volume contains information on more than 11,000 public and private companies worldwide, with profiles detailing each company's history, products and services, strategy and competitors. Hoover's also offers on-line service at www.hoovers.com. Summary capsules of companies are free, but for in- depth information you must pay to subscribe. America's Corporate Families (volumes 1 and 2 annually) can also be found in local libraries. This resource is useful to identify the parent company of subsidiaries.

Finding information on subcontractors for major weapons systems is more difficult. Try contacting the Defense Contract Management Command, which handles all Pentagon contracts-from applesauce to aircraft carriers. Your best bet is to phone the Command and explain your request for information on specific Department of Defense contracts with specific companies, or for audits of particular contractors. A public affairs official with the Command will direct your next course of action perhaps handling the request orally, or perhaps requiring you to send a letter. Make requests as brief and specific as possible.

Eagle Eye Publishers, Inc., is a for-profit company that maintains a database of all federal prime contracts exceeding $25,000 issued over the past five years. Eagle Eye organizes and analyzes data from the Federal Procurement Data Center. This service can be used to track the history of weapons programs and to identify a prime contractor's subsidiaries and subcontractors. Government Executive (www.govexec.com) uses information compiled by Eagle Eye to create a list of the top 15 military companies which signed foreign military sales contracts with the Pentagon (see box, p.78).

Also useful are socially-conscious investment firms. These organizations often research arms corporations to screen their investment portfolios. The Investor Responsibility Research Center is an independent, not-for-profit research firm founded in 1972. In 1987 IRRC published an excellent 342-page guide on arms-exporting corporations, Arms Exports: Policies and Contractors. The book is still available from the office for $25, but it has not been comprehensively updated since publication. In recent years, IRRC has shifted its focus toward assisting institutional investors, and its services are cost prohibitive for most individuals.

The Interfaith Center on Corporate Responsibility is a coalition of 275 Protestant, Roman Catholic and Jewish religious communities, agencies, pension funds and healthcare systems that prepares shareholder resolutions on the environment, equality, human rights, finance, health and militarism. ICCR pools the resources of its constituents and sponsors shareholder resolutions, some of which call for greater transparency by arms corporations in their annual reports concerning arms exports. It publishes the Proxy Resolutions Book annually, available for $30. Unlike IRRC, the Interfaith Center is geared more toward activist individuals. Contact Regina Murphy on military issues.

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