Trends in Arms Acquisitions

– Dr Arvind Kumar, President, India Water Foundation, New Delhi.

In recent years, the domains facilitating all international interaction – sea, air, space, and cyberspace – have progressively become congested, contested, and complex. These domains constitute the connective tissue of an ever more interconnected international system. According to Shawn Brimley, the level of activity and investment by both state and non-state actors is rapidly increasing in these domains where satellites are being launched, submarines are being built, long-range aircraft procured, and powerful cyberspace capabilities are being maintained by states that only two decades ago were just beginning to employ rudimentary computer systems.1 This scenario is further complicated by non-state actors, ranging from pirates off Somalia to cyber ‘‘hacktivists’’ to the growing number of commercial players that own and operate satellites.

The scope and scale of the shifts taking place in these domains are suggestive of the late Cold War period, when Moscow could truly comprehend what emerging U.S. prowess in long-range and precise weaponry represented – a military-technical revolution that threatened to rapidly erode its perceived military advantages. The reality of U.S. military dominance was on full display during the 1991 Gulf War.

According to Brimley, many in the United States triumphantly embraced these developments as evidence of a unique and enduring ability to project and sustain power. Yet, some countries were spurred to embark on a path of military modernization and doctrinal development that, with time, would be able to hold this ability at risk. Brimley opines that time has now arrived, because at a time when the United States continues to hold clear advantages in sea, air, space, and cyberspace capabilities, other actors are and will be positioned to credibly contest them in a wide range of contingencies – from insurgencies and state failure, to major conventional warfare, to the ever expanding ‘‘hybrid’’ possibilities in between.2 While cautioning that the challenges posed by this emerging reality should not be overestimated, experts feel that yet, they cannot be ignored.

According to a US National Intelligence Council report, possible adversaries will employ methods designed to offset U.S. strengths.3 Potential challengers have powerful incentives to invest in systems designed to threaten the primary means that the United States utilizes to project power – essentially military bases, sea and air assets, and the networks that support them.4 Such systems include but are not limited to: ballistic missiles that can threaten bases and potentially ships; anti-satellite systems; cyber warfare capabilities; long-range aviation forces; anti-ship cruise missiles; and a range of enabling radar and satellite technology.

These types of systems are most likely be employed in what the US Department of Defense (DOD) terms as an ‘‘anti-access’’ strategy – one designed to blunt or deny U.S. power projection capabilities. Significantly, the acquisition and posture of such systems in sufficient numbers by a potential adversary can add complexity to the decisionmaking calculus of Washington.

Continued market integration and technological openness has spurred a range of actors to make substantial investments in these areas. Besides, it has become cheaper and easier to acquire or develop advanced technology. These dynamics are most clearly at play in cyberspace, as small groups or individuals can have an outsized impact, but are also present in other domains. The ability of terrorist groups to acquire sophisticated weaponry via state sponsors or the black market can pose significant threats to modern militaries, as can the ability to easily purchase detailed satellite imagery from commercial providers.

Many countries are pursuing their rational self-interest in a world in which dynamics in the sea, air, space, and cyberspace domains are increasingly central to the security and prosperity of all nations. The post-Cold War assumption that U.S. military dominance would dissuade both allies and competitors from making investments in capabilities designed to facilitate long-range power projection has seemingly been eroded. From the perspective of a rising power like India or China, it makes perfect sense to develop the ability to not only protect critical airspace, coastlines, or space and cyberspace assets, but also to project and sustain power and influence abroad.5

Whether it is to protect critical sea lanes, participate in multilateral peacekeeping and antipiracy operations, maintain the ability to credibly project power against possible adversaries, or hold the capabilities of potential rivals at risk, the twenty-first century international system will require great powers to create and maintain these capabilities. This thinking has led many countries, including the United States to augment acquisitions of modern and sophisticated arms.
Financial Crisis and Arms Race

The 2008-2009 international financial crisis did not affect the growing trends in acquisitions of arms by many countries. The data on international transfers of major conventional weapons released by the Stockholm International Peace Research Institute (SIPRI) showed that the impact of the financial crisis was unlikely to be uniform.6
Among the biggest arms importers, domestic and regional security concerns, as well as acquisitions of foreign technologies for their own domestic arms industries, appeared to be outweighing any potential need to shrink procurement budgets. Among the smaller importers, the picture was more mixed, and there were signs that states could cancel or delay purchases of big ticket items, as happened in Asia following the 1997 financial crisis.

On the other hand, concerns that the financial crisis could increase global instability entailed the potential of serving as a justification for boosting arms acquisitions.
For the period 2004-2008, SIPRI data show the three biggest arms buyers to be China, India and the UAE. China was the largest recipient of major conventional weapons for the period 1999-2008, although with a dramatic decline in the volume of imports since 2007. This decline has little to do with the global financial crisis. It reflects China’s shift from importing complete weapons systems to securing the technology needed to produce weapons systems for itself. Russia will feel the impact of this decline as more than 40 per cent of its arms exports have gone to China in the last 10 years.

Despite the financial crisis, India was still reported to be pressing ahead with $50 billion worth of arms acquisitions over the next five years. Russia has accounted for 75 percent of India’s imports over the last decade. Yet there are signs that its dominant position is under threat. A recent $2 billion deal for 8 P-8A marine patrol aircraft reflects the warming of ties between the US and India. Israel also continues to capture significant orders, including a recent $1.5 billion for Barak missiles.

The UAE has emerged as the third largest importer of major conventional weapons over the last five years, rising from 16th place for the period 1999-2003 in SIPRI’s rankings. The entry of the UAE into the upper tier of importers is mainly due to the import of 80 F-16E combat aircraft from the US and 50 Mirage-2000-9 combat aircraft from France. Although one might have expected the steep drop in oil prices and the financial crisis to have hit the procurement plans of this oil-rich Gulf state, the UAE placed a number of significant orders in 2008 and announced almost $5 billion worth of new orders at the IDEX 2009 defense show.

Several states that have emerged as important buyers in recent years appear to be delaying or cancelling planned acquisitions. For example, Morocco’s multi-billion orders of combat and transport aircraft, ships and other weapons may be cancelled or delayed. Venezuela is stalling on a range of orders, after rising dramatically on the list of importers following major acquisitions from Russia over the last 5 years.

There is speculation that the financial crisis may also impact upon the procurement plans of European nations, particularly in the field of advanced combat aircraft. Orders may be delayed, downsized or cancelled as a result of the global financial crisis. For example, prospective recipients of the US-built F-35 including Australia, Israel, Italy, the Netherlands and the UK are looking to reduce numbers of units purchased.

Despite the worst global economic downturn, U.S. arms sales surged in 2008 and 2009.8 In 2008, U.S. arms dealers signed new weapons contracts worth approximately $37.8 billion, a considerable increase from previous years. The surge was remarkable given that the total volume of new arms orders in 2008, $55.2 billion, was billions of dollars below the comparable figures for 2007 and 2006.

The United States also fortified its position as the leading arms-exporting country. In 2007, the volume of global defense contracts involving the United States exceeded those of all other countries combined. The nearest competitors were Italy, with $3.7 billion in global arms sales agreements, and Russia, with $3.5 billion in weapons contracts. In 2007, the United States accounted for only 41 percent of the value of all weapons orders, with an estimated value of $ 24.8 billion.

Americans defence firms also retained their dominant position in sales to developing countries. Of the $42.2 billion worth of weapons purchased by developing countries in 2008, over 70 percent ($29.6 billion) involved the United States. The United Arab Emirates ($9.7 billion), Saudi Arabia ($8.7 billion), and Morocco ($5.4 billion) were the leading arms purchasers among the developing countries.

Many countries prefer to procure arms from the United States for two reasons:  new weapons systems as well as after-sales transactions for maintenance, spare parts, and upgrades. The two processes tend to be mutually reinforcing. Complex new weapons, such as fighter aircraft or major warships, require extensive servicing and are often deliberately designed to allow for continuous upgrading of their platforms with the latest armaments, computers, and other hardware and software. In addition, everything else being equal, countries tend to buy new weapons that are compatible with their existing systems. If a foreign military already has many American weapons, it will typically find it easiest to incorporate additional U.S.-made systems into its inventory, since they should have high degrees of interoperability with its existing force and be best able to leverage current training and logistics services.

While arms sales figures for the Unites States soared during 2008, there was sharp downturn of Russia’s arms sales contracts. Whereas Russian weapons contracts for 2007 amounted to $10.8 billion, in 2008 figure was only $3.5 billion, of which $3.3 billion went to developing countries.

In terms of arms transfer agreements worldwide, the value of Russian contracts amounted to $14.3 billion in 2006 and $10.4 billion in 2007. The Russian firms captured only 7.8 percent of the new arms contracts negotiated in 2008 by developing countries.  The main reason for the decrease is that Chinese arms purchases from Russia have declined precipitously in recent years. China’s defense industry has become capable of producing much more sophisticated armaments that China previously imported from Russia. Moscow now confronts the choice of either accepting a greatly diminished share of the Chinese arms market or agreeing to sell even more advanced weapons to Beijing. In addition to threatening existing force balances in East Asia, such transfers could further strengthen China’s ability to compete for sales on third-party markets.

In the past, Russian arms exporters have expressed confidence in their ability to compensate for falling sales to China with comparable increases in exports to new markets in Latin America, East Asia, and the Middle East. The threat to Russian arms exports presented by the global recession could cause Russian policymakers to accept selling more sophisticated weapons systems to China despite the associated risks.

American Military Spending

The United States dominates the globe militarily. The threats facing America pale compared to its capabilities, still Washington spends so much on the military. In 2010 the U.S. will spend roughly $700 billion on the military. This is an increase of 2 percent (after inflation) from the Obama administration’s original nonwar defense budget of $534 billion.
Despite initial plans for zero growth in defence spending in coming years, there are reports that the Department of Defense will receive a 2 percent increase in real outlays through 2015. America spends more inflation- adjusted dollars on the military today than at any time since the end of the Second World War. Figured in 2000 dollars, the U.S. devoted $774.6 billion to the military in 1945, the final year of the Second World War. In 1953, the final year of the Korean War, military outlay ran to $416.1 billion. Expenditure during the Vietnam War peaked at $421.3 billion in 1968.9

By contrast, in 2010 — even before the Afghan surge and other unplanned expenditure — the administration expected to spend $517.8 billion. That’s more than during the lengthy, but often warm, Cold War.

Expenditure as a percentage of GDP has fallen because the U.S. economy has grown. GDP in 2010 (in 2000 dollars) will run to about $11.7 trillion. That is almost twice as much as in 1986, more than three times as much as in 1968, and nearly six times as much as in 1953.10
The U.S. has no great power enemies. Relations with China and Russia are at times uneasy, but not confrontational, let alone warlike. Washington is allied with every other industrialized state.

America possesses the most sophisticated nuclear arsenal and the most powerful conventional force. Washington’s reach exceeds that of Rome and Britain at their respective peaks. Other nations, most notably China, are stirring, but it will take years before they match, let alone overtake, the U.S.

Even subtracting the costs of the Afghanistan and Iraq wars leaves American military outlay around five times that of China and 10 times that of Russia. Combine a gaggle of adversaries, enemies and rogues — Burma, Cuba, Iran, North Korea, Syria — and the U.S. spends perhaps 25 times as much.

The United States is not alone. The European Union has 10 times the GDP and three times the population of Russia. Military outlay by the U.S. plus its NATO allies accounts for about 70 percent of world military spending. Add in America’s other allies and friends, such as South Korea, and the total share of global military outlay hits 80 percent.

In short, Washington spends what it spends not to defend America but to maintain the ability to overpower other nations. But it will become increasingly expensive for America to preserve the ability to attack countries like China.

Conclusion

The rising trends in military spending and mad race for arms acquisition are not signs of maintaining credible peace and stability in the world. On the one hand, poverty ratio is increasing in view of growing economic disparities between the rich and the poor. Almost all countries lag behind in realizing the targets of the UN Millennium Development Goals (MDGs). The funds for socio-economic projects are shrinking because of their diversion to procurement of arms. It is high time that the developed countries and fast developing economies as represented in G-20 take lead in curtailing their defence spending and make commitments to deliver those funds to the developing countries to achieve the target of MDGs by 2015.

Notes

• For details see Shawn Brimley, “Promoting Security in Common Domains”, The Washington Quarterly, Vol. 33, No. 3, July 2010, pp. 119-132.
• Ibid, p. 120.
• See National Intelligence Council, ‘‘Global Trends 2025: A Transformed World”, November 2008, available athttp://www.dni.gov/nic/PDF_2025/2025_Global_Trends_Final_Report.pdf .
• See Department of Defense (DOD), ‘‘Quadrennial Defense Review”, February 2010, pp. 8-9, available athttp://www.defense.gov/QDR/images/QDR_as_of_12Feb10_1000.pdf .
• According to one assessment of US Department of Defense, while China’s emerging military capabilities have allowed it to contribute cooperatively in areas such as peacekeeping, humanitarian assistance and disaster relief, and counter piracy, some of these capabilities, as well as other, more disruptive ones, could allow it to project power to ensure access to resources or enforce claims to disputed territories. See Office of the Secretary of Defense, ‘‘Annual Report to Congress: Military Power of the People’s Republic of China”, 2009, p. 1, available at http://www.defense.gov/pubs/pdfs/China_Military_Power_Report_2009.pdf .
• For further details see http://books.sipri.org/product_info?c_product_id=375 .
• For more information see http://www.sipri.org/contents/armstrad/at_db.html .
• New York Times, 7 September 2009, available at http://www.nytimes.com’2009/09/07/world/07weapons.html .
• Dong Bandow, “Military spending – for what?”, Japan Times, 19 January 2010, available at http://search.japantimes.co.jp/mail/eo20100119db.html .
•  Ibid.