Dissident Voice

September 30, 2003

The United States retained its dominance of the Third World arms market for the eighth year in a row in 2002, according to the latest in an annual series of reports produced by the Congressional Research Service.

Washington accounted for close to one-half of all new arms transfer agreements concluded during the year, as well as actual arms deliveries. Altogether, arms sales from all sources to developing countries made up about two-thirds of arms sales worldwide during 2002, according to the report, which is based on the most comprehensive data compiled by the US government.

New arms agreements with developing nations totaled US$17.7 billion, a 10 percent increase over new deals in 2001. Of that total, US sales came to $8.6 billion, or almost 48 percent of all arms transfers to Third World countries, up from 41 percent the previous year.

Washington was followed by Russia, which sold $5.7 billion worth of arms; Ukraine ($1.6 billion); Italy ($1.5 billion); and Germany and France ($1.1 billion each).

China was the leading recipient of conventional arms transfers in 2002, accounting for $3.6 billion in purchases; followed by South Korea ($1.9 billion); India ($1.4 billion); and Oman ($1.3 billion).

Of the 10 top recipients, five were in the Middle East - Egypt, Kuwait, Saudi Arabia and Israel, in addition to Oman - and four in Asia, with Malaysia ranking eighth behind China, Korea and India.

Chile, which ranked tenth on the strength of a major purchase of advanced fighter jets from the US, was the only country outside the other two regions, which have been the developing world's biggest customers for conventional arms for the past decade.

While the Middle East proved the bonanza market of the 1980s - particularly when warring Iran and Iraq, as well as Saudi Arabia, were making huge purchases - Asia, particularly China and India, has been the big buyer of the past seven years, according to the report, "Conventional Arms Transfers to Developing Nations, 1995-2002".

In that period, China ranked number one, with $17.8 billion worth of purchases; the United Arab Emirates (UAE) ranked second at $16.3 billion; and India third at $14.1 billion, suggesting the emergence of a new arms race between the world's two most populous nations that could dominate the market for some time, particularly if purchases in the Middle East continue to decline in relative terms.

The US, which has sharply upgraded its military relationship with India in the past several years, particularly since the beginning of Washington's "war on terrorism", has made little secret of its hopes of integrating Delhi into a containment strategy against Beijing.

The 84-page report, whose graphs and tables are ritually pored over by intelligence analysts around the world to glean key trends and possible future military threats to their governments, tracks both actual deliveries of arms, as well as new agreements that will result in eventual deliveries. The time between the signing of an agreement and actual delivery can stretch beyond a decade, depending on many factors.

In addition to covering the value of sales and deliveries each year and over periods as long as seven years, the report also tracks the transfer by various countries and categories of countries of specific weapons systems.

It found, for example, that a total of 60 surface-to-surface missile systems were transferred last year, none of which was supplied by the US, Russia, China, the four major West European countries (France, Britain, Germany, and Italy) or "all other European countries".

Suppliers of the missiles were found in a category called "all others", which includes North Korea, South Africa and Israel.

The report does not identify the individual suppliers in a category because that information remains classified.

In the introduction, Richard Grimmett, who has authored the report since it was first published some two decades ago, stressed that the overall trend in arms purchases by the developing world has been downward since the early 1990s, when countries that could afford them bought large quantities of advanced US weapons systems that were displayed during the 1991 Gulf War.

While arms transfers were up in 2002 compared to the previous year, the $17.7 billion in new agreements was still the second lowest in the last seven years.

Grimmett stressed that it was still too soon to assess the impact, if any, of the "war on terrorism", including the ouster of the Taliban regime in Afghanistan and this year's war in Iraq.

Economic conditions in specific countries as well as the state of the world economy continued to be a major factor constraining arms buying, according to Grimmett. "Economic as well as military considerations have factored heavily in [developing country] arms purchasing decisions, a circumstance likely to continue for some time," he wrote.

This has benefited both wealthier developing countries vis-à-vis their rivals, as well as those arms suppliers that can provide credit or are willing to provide offset arrangements or joint-production ventures with buyer states in what has become a more competitive market.

The report noted that Russia, which has encountered strong competition for the number two spot on the arms suppliers' list since 1995, intends to offer more flexible credit and payment arrangements than it has in the past in order to secure its ranking.

While China has been the fourth biggest supplier over the same period, "its role is more as a consumer than a buyer," Grimmett told Inter Press Service, noting that over the past seven years the combined sales of the big four European suppliers rival Russia's sales.

Indeed, as a group, the four countries claimed 12 percent of total sales in 2002, up from 5 percent in 2001.

Two major buyers of the past decade - Saudi Arabia and Taiwan - are fading as consumers in more recent years, the report says. Riyadh has faced financial constraints and, in fact, is still absorbing weapons systems worth some $64.5 billion that it purchased in the early 1990s.

Taiwan, which ranked second to Saudi Arabia with respect to deliveries since 1995 ($20 billion) has dropped out of the top 10 in purchasers, much to the frustration of anti-China hawks in the Bush administration.

Different suppliers also penetrated different regional markets over the same seven-year period. Asia - particularly China, India and Malaysia - accounted for 82 percent of Russia's arms sales, or about one-half of all arms sold to the region.

US sales to Middle Eastern clients has accounted for 76 percent of its total arms sales since 1999 and about the same percentage of all sales to the region in that period. It has also became the dominant supplier to Latin America in the past three years, primarily on the strength of the warplanes for Chile.

Germany (due to a big sale to South Africa) and Russia have been the biggest single arms sellers to Africa in the past three years, at 16 percent and 15 percent, respectively. By contrast, Washington accounted for only 1 percent of sales to that continent.

On the other hand, "all other European" countries - mainly Central and Eastern Europe - accounted for a whopping 37 percent of total weapons transfers to Africa, giving a clue to the source of small arms that are fueling the region's many civil conflicts, according to Grimmett.

Jim Lobe is a political analyst with Foreign Policy in Focus (online at www.fpif.org). He also writes regularly for Inter Press Service. He can be reached at: jlobe@starpower.net

Dissident Voice

September 30, 2003

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