How to Get a Breakthrough in Ukraine
The Case Against Incrementalism
J. Thomas Moriarty
According to Jonathan Caverley and Ethan Kapstein ("Arms Away," September/October 2012), the United States' domination of the global arms market is disappearing, and as a consequence, Washington is squandering an array of economic and political benefits it has enjoyed as the foremost weapons dealer in the world. They argue that although the U.S. defense industry spent the last decade developing expensive, high-tech systems, such as the Joint Strike Fighter, also known as the F-35, foreign customers actually want cheaper, less advanced weapons. For Caverley and Kapstein, simpler is better.
Even if that were true, it would be a secondary concern. First and foremost, U.S. defense firms need to serve their most important client: the Pentagon. The U.S. military should not have to forgo stealth technologies, for instance, which better protect pilots and allow them to attack complex air defense systems, because the rest of the world is supposedly more interested in old airplanes equipped with outdated technology.
Moreover, the United States' declining market share in recent years is not a result of the Pentagon's pursuing cutting-edge technology, as Caverley and Kapstein argue. The landscape of global arms sales is shifting because medium-sized powers, such as India, South Korea, and Turkey, have enjoyed robust economic growth lately and are using that growth to reduce their dependence on Washington for military technology. Dozens of countries have built their own weapons-manufacturing industries in order to create high-paying jobs, generate profits, and address domestic security concerns, despite the fact that cheaper, more reliable systems are already for sale on the international market.
India, for example, has spent billions developing its own light combat aircraft, the Tejas, even though more economical alternatives are available from foreign sources. And Israel is producing its own precision-guided munitions and unmanned aerial vehicles, even though it could buy U.S. systems at discounted rates. Much of the decline in U.S. arms sales is a byproduct of foreign governments' decisions to do more business at home, not the result of misguided strategy in Washington. As a consequence, the United States should keep doing what it does best: building state-of-the-art weapons equipped with the latest technology.
Caverley and Kapstein point to France's success in selling its Rafale fighter jet in a $11 billion deal with India as proof that states aren't interested in "gold-plated" aircraft. The Rafale is indeed less expensive and less capable than the F-35, but it is by no means simple or cheap. The difference in price is negligible: recent estimates put the flyaway cost of a Rafale at $100 million, whereas the U.S. Government Accountability Office has estimated the F-35's price tag at around $108 million. India's decision to purchase the Rafale over the F-35 had more to do with geo-strategic concerns -- such as a desire to avoid an overreliance on U.S. advanced weaponry -- than financial or technological considerations.
Meanwhile, France has sold Rafales to just one country. Even if it wins pending contracts in Brazil and the United Arab Emirates, Paris will export only about 200 aircraft. By comparison, ten countries have pledged to buy the F-35 from the United States, and it is also expected to win contracts in Malaysia, Singapore, and South Korea. If all goes according to plan, Lockheed Martin will export at least 500 F-35s in the coming decades.
More misleading than the Rafale example is Caverley and Kapstein's reference to Sweden's Gripen. The Gripen's flyaway cost is only about $60 million, but the plane lacks the advanced capabilities of both the Rafale and the F-35. In the 1980s, Sweden bet that there would be a healthy market for a simple and cheap aircraft, because the United States and western Europe were focusing on expensive, high-tech models. If the Gripen had managed to capture a substantial part of the global combat-aircraft market, it would serve as conclusive empirical evidence that the "simpler is better" strategy works. But Sweden's projected buyers have not materialized: only three countries have purchased the Gripen, together buying about 60 of the planes from Sweden, and another two countries are leasing about 28 additional planes. In fact, the program has been such a flop that Stockholm is now debating whether it should spend several billion dollars more to upgrade the jet's technology. Meanwhile, Lockheed Martin is expected to export more F-35s to more countries and for more profit than sales of the Rafale and the Gripen combined.
Caverley and Kapstein are wise to caution against overindulgence in technology. Cutting-edge weapons systems are difficult to develop, as the case of the F-35 has shown, and this problem is hardly confined to the last decade. But the real dilemma for U.S. defense firms is that because they have become so adept at innovation, military officials are often overly ambitious in what they ask for. The solution is not to produce simpler weapons systems, as Caverley and Kapstein suggest, but rather to rationalize the procurement process so that it leads to useful innovations. Technology gives the United States its competitive edge today, and it will continue to do so in the future. It would be folly for Washington to relinquish its foremost advantage.
J. THOMAS MORIARTY is a Visiting Scholar at the Institute for Security and Conflict Studies at George Washington University's Elliott School of International Affairs.
Still on Top
Recently, the U.S. arms industry has enjoyed a string of banner years. So it was surprising to read Jonathan Caverley and Ethan Kapstein's claim that Washington has lost its dominance in the global arms market. Reports on conventional arms transfers from the Congressional Research Service contain the best public data on this topic, and the numbers reveal that the authors' core assertion is simply not true.
Some history is in order. In the early 1990s, with the Russian economy in disarray and the Gulf states rearming, the United States' share of the global arms market soared, peaking at 60 percent in 1993. Over the next decade, Russia's defense industry recovered, and Moscow ramped up its arms exports to China and India, whose economies were booming. At the same time, falling oil prices and the Asian financial crisis of 1997-98 took a toll on U.S. allies, and Washington's market share fell to somewhere between 30 and 50 percent. Finally, by 2005, it hit bottom, at 27 percent.
But contrary to what Caverley and Kapstein suggest, since 2007, the United States' market share has increased. As Beijing began illegally copying Russian technology and Washington broke into the Indian market, Moscow's exports declined. Meanwhile, U.S. customers in the Middle East and Asia increased their imports. Over the last five years, the U.S. weapons industry has accounted for 52 percent of global sales; in 2011, the U.S. share reached 77 percent, a record high.
Caverley and Kapstein see signs of dissatisfaction with U.S. weapons everywhere: Saudi Arabia's purchasing the Eurofighter, Pakistan's importing more arms from China, and India's selecting the Rafale. But in truth, none of these decisions stemmed from displeasure with U.S.-made equipment. Riyadh has long maintained defense ties to Europe, and the Eurofighters it purchased are replacing the Panavia Tornado, which is also European. The rest of Saudi Arabia's arms come almost exclusively from the United States, so the Eurofighter deal hardly threatens Washington's position as the kingdom's top weapons supplier.
Pakistan, likewise, has long maintained defense ties with China. In light of the recent tensions in U.S.-Pakistani relations, it should come as no surprise that Islamabad is increasing its imports from Beijing. As for India, seven years ago Washington did almost no business with New Delhi, which at the time purchased almost all its materiel from Russia. But since 2006, U.S. contractors have inked more than $8 billion in weapons deals with India, including for major purchases of aircraft, such as the C-17, the C-130, and the Apache.
Caverley and Kapstein concede that Washington dominates the Middle Eastern market, but they do not fully appreciate the region's strategic importance. If the White House decides it must strike Iran, heavily armed allies in the Gulf will help the United States defend its partners against Tehran's retaliation. The same logic holds true with regard to defending U.S. allies against potential aggression in Asia. Malaysia and Indonesia have purchased fighters from Russia, and Singapore imports ships from France, but the authors neglect to mention that during the last 15 years, Malaysia has bought F-18s, Indonesia has bought F-16s, and Singapore has bought F-15s, F-16s, and Apaches from the United States. In fact, according to the Congressional Research Service, during the last several years, Washington has regained its position as the top weapons supplier to developing countries in Asia.
Controlling 77 percent of the global arms market yields innumerable benefits for the United States: it decreases the costs of equipping American forces, emboldens U.S. allies to stand up to common enemies, and facilitates joint operations. Although the theme of U.S. decline has gained popularity of late, in the case of weapons sales, at least, the facts do not bear it out.
DANIEL KATZ is a former analyst with the U.S. Department of Defense. The opinions expressed here are his own.
The Less, the Better
Lawrence J. Korb
Jonathan Caverley and Ethan Kapstein are correct that lax management and shortsighted decisions in the Pentagon have bloated the U.S. defense budget. But their proposed solution is misguided. Contrary to their argument, flooding the world with more weapons would not serve U.S. security interests.
Caverley and Kapstein fail to note the numerous downsides to Washington's global arms sales. They neglect to mention that the vast majority of the United States' more than 100 customers are developing countries, many of which are headed by authoritarian regimes that are both unpredictable and prone to instability. An unfortunate few, including allies such as Bahrain, are liable to use their American-made weapons against their own people.
Moreover, because the United States now leads the world in arms deliveries by such a wide margin, Washington has little credibility when it chides other governments for transferring weapons to U.S. enemies, such as Bashar al-Assad's regime in Syria. And although many countries buy U.S. arms using their own revenues, about one in every five dollars that Washington earns from arms exports is actually paid for by U.S. taxpayers (via foreign aid programs). That money could be better used to deal with global challenges such as disease, poverty, and malnutrition.
There is a solution on the table. The Arms Sale Responsibility Act, which awaits a vote by the House Committee on Foreign Affairs, would prohibit weapons transfers to countries where there is a substantial risk that the arms could facilitate human rights abuses. As the bill's supporters rightly point out, such a policy not only is morally sound but also would enhance long-term U.S. security strategy, which invariably relies on partnerships that can be undermined by resentment and anger born of shortsighted decisions about arms sales. These long-term concerns, not Washington's share of the global arms market, are what Caverley and Kapstein should be most concerned about.
LAWRENCE J. KORB is a Senior Fellow at the Center for American Progress. He served as U.S. Assistant Secretary of Defense in the Reagan administration.
Caverley and Kapstein Reply
We appreciate our critics' feedback, but all three responses are deeply misguided, largely because each fails to understand the available data.
J. Thomas Moriarty agrees with our recommendation for a reformed procurement process for U.S.-made weapons systems. But the errors and contradictions underpinning his case make us hesitant to embrace his support. If middle-tier countries are successfully developing indigenous arms industries, why is the sum of global arms transfers increasing? Moriarty's description of India as a success story only underscores the shallowness of his case. New Delhi's light combat aircraft program, begun in 1983 and still under development, has been an unmitigated disaster, marred by cost overruns and performance failures. And India's inability to develop a domestically produced engine means that the plane will be powered by General Electric. Missteps such as this help explain why India is now the world's largest arms importer.
Moreover, Moriarty's use of flyaway costs to compare the French Rafale and the F-35 is grossly misleading. This metric excludes the F-35's development costs, which will keep rising as technicians continue to refine the aircraft. The Rafale, by contrast, is a largely mature jet. Moriarty's low-ball price tag for the F-35 is based on a projected order of 3,159 planes, a number few believe will actually be realized. A more realistic price is therefore the Government Accountability Office's current F-35 flyaway cost estimate of $154 million per jet. As Moriarty himself states, "If all goes according to plan, Lockheed Martin will export at least 500 F-35s." That is a far lower number than the 716 planes slotted for export in the current plan and considerably less than the 2,000-3,000 originally envisioned. And when it comes to the F-35, little has ever gone according to plan.
Unlike Moriarty, we offer a solid policy recommendation to make the procurement process more efficient. If simply "rationalizing" the process were sufficient, the United States would have fixed its problems decades ago. We do not expect the Pentagon and the defense industry to reform if they do not have to face the competition that comes from a mandate to export and outperform possible imports.
Daniel Katz's mistaken reliance on arms agreements, rather than arms deliveries, reflects the government complacency we are trying to overcome. The eye-popping sums cover varying numbers of years, frequently get revised downward, and are therefore useless for analyzing trends. Statistics about weapons deliveries provide a more accurate picture, because they are based on actual exchanges of goods and cash. Looking at the data on real transfers, there is clear evidence of a steady decline in the U.S. market share over the past decade.
Furthermore, arms deliveries can be compared with other measures, such as the Stockholm International Peace Research Institute's weapons transfer data, to show that over time, U.S. clients have paid increasingly more for the same capability. This finding -- coupled with the fact that, as Katz points out, Washington's share of the global arms market is tightly tied to oil prices -- speaks volumes about the United States' Gulf-dependent export model. The current strategy merely ensures plum profits for major U.S. contractors and allows U.S. allies to recycle petrodollars for jets that, given the historically low levels of Saudi and Emirati participation in U.S. military operations, will do little more than gather dust.
If the United States wants to increase its influence in Asia, it should reconsider this approach. In terms of Asian deliveries, U.S. market share has dropped from 27 percent to 24 percent between the periods of 2004-7 and 2008-11. If U.S. grand strategy is really making a "pivot" to Asia, Washington's arms export policy there needs to change.
Lawrence Korb's concern about the proliferation of weapons to undesirable regimes is legitimate. Indeed, that danger served as one of the reasons we wrote our original essay. But instead of cutting exports, the policy we recommend is more likely to keep American weaponry out of the wrong hands.
The Congressional Research Service's data on both deliveries and agreements contradict Korb's assumptions about what types of states buy weapons. Of the world's top ten importers in 2007-11, five were mature democracies. Four of the remaining states -- Egypt, Pakistan, Saudi Arabia, and the United Arab Emirates (with China being the lone outlier) -- are U.S. allies and do not use U.S.-made weapons to wage civil wars. On the contrary, these states' dependence on imports from Washington constrains their ability to resort to such activities.
We never suggested that the United States should sell weapons to a regime such as Bashar al-Assad's in Syria. However, Assad has bought and will continue to buy weapons from suppliers that do not care how those weapons are used. Our policy objective is to ensure that the large importers, such as those listed above, buy products from the United States rather than China, Russia, or even western Europe. If they do so, the United States can prevent competitors from developing and producing top-of-the-line weapons and selling them to smaller, dangerous rogue regimes.