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U.S. Defense Exports Still Dominate Market
Aerospace Daily and Defense Report ^ | Dec 2, 2009 | Robert Wall

Posted on 12/02/2009 9:28:36 AM PST by sukhoi-30mki

U.S. Defense Exports Still Dominate Market

Dec 2, 2009

Robert Wall/Dubai, UAE

China, France and Russia are increasingly aggressive in courting customers for their military products, but it is the U.S. that is raking in the big dollars — and increasingly so.

What’s more, the U.S.’s improving relationship with India could signal that record high levels of military exports are not just an aberration but are sustainable. This prospect would bring relief to U.S. defense companies, which face the possibility of shrinking modernization projects when Washington starts focusing on cutting its massive budget deficit.

A decade ago, the U.S. booked about $10 billion in foreign military sales (FMS). When those contracts reached $28 billion in fiscal 2008, many in the Pentagon thought it was an aberration, especially given the $10 billion jump from the year before. But there has been no sign of a letup. Vice Adm. Jeffrey A. Wieringa, director of the Defense Security Cooperation Agency, says the value of FMS commitments signed during the last fiscal year reached $38.1 billion, and this year’s total could top $50 billion based on estimates of deals in the negotiating pipeline.

Bucking a trend

Is the U.S. bucking a trend? Some defense suppliers, such as Saab, have suggested that sales are suffering because potential buyers are holding off on big-ticket spending decisions; others, such as the Stockholm International Peace Research Institute (Sipri), note that nations such as Thailand or Malaysia are curbing expenditures. But at a broader level, Sipri sees “few signs that the global financial crisis is significantly affecting decision-making” among major arms importers.

Moreover, the amount of money being spent under the so-called Section 1206 authority — a mechanism created in the fiscal 2006 budget to train and equip foreign military forces — has risen steadily.

For the U.S., securing arms deals brings many advantages, including the fact that such links make it easier to operate with allies that use similar equipment. These contracts also help shore up the nation’s fragile industrial base. Without procurements from Singapore and South Korea, for example, Boeing would have had to shutter its F-15 production years ago. Similarly, exports are keeping Lockheed Martin’s F-16 line alive, helping the Fort Worth, Texas, facility bridge its work force until F-35 production ramps up.

But the U.S. cannot be complacent. Countries that previously could be counted on to buy what Washington had on offer are becoming more judicious in their procurement processes.

Japan is a case in point. The Eurofighter Typhoon consortium is aggressively courting Tokyo. The group is promising to give extensive work to Mitsubishi Heavy Industries. A few years ago, the notion of Japan buying a front-line combat aircraft from a non-U.S. supplier would have been laughable, but that is no longer the case.

The Europeans acknowledge the challenge. “It is a big task for us to convince them,” says Peter Anstiss, managing director for Typhoon’s export campaigns. While U.S. suppliers remain the odds-on favorite, U.S. military officials recognize it is not a done deal.

Perhaps the most important new market for U.S. industry is India. After years of steering clear of U.S. products, improved ties between Washington and New Delhi have translated into orders — most notably India’s purchase of Boeing P-8 maritime patrol aircraft and Lockheed Martin C-130J transports. A recent meeting between the U.S. and the Indian Defense Procurement and Production Group was the most positive in the series, said Wieringa. This comes at a critical time, since India is considering the purchase of up to 10 C-17s and there is a running competition for at least 126 fighters. The U.S. has the F-16 and F/A-18E/F in the running, which are vying against the Dassault Rafale, Saab Gripen, Typhoon and MiG-35.

However, Washington’s technology-release reputation constitutes a big stumbling block. Such concerns were underscored recently when Brazilian Defense Minister Nelson Jobim raised the issue in the midst of his country’s fighter campaign, in which the F/A-18E/F is squaring off against the Rafale and Gripen.

Previous problems

U.S. officials argue that these types of comments stem from problems during a previous era, and the U.S. is just as ready as other nations to work with foreign partners. In addition, Wieringa points to the Obama administration’s decision to review export control policy, including restrictions on dual-use items, although prior reform efforts had little meaningful impact.

Meanwhile, beyond the perception that Washington is too lackadaisical toward potential international customers, U.S. companies are suffering from the reputation that they are not as aggressive as their European rivals when courting foreign buyers through partnerships. A senior industry representative from the United Arab Emirates recently chastised U.S. executives for not doing enough to help create jobs and build up the UAE industry.

Still, for the near term, the U.S. stands to benefit from several major projects under negotiation. Saudi Arabia and the U.S. are in the midst of high-level discussions over a range of items. These include the sale of F-15s and Patriot air/missile defense equipment, as well as the eastern fleet modernization project. The latter would involve overhauling equipment such as MH-60 helicopters and the sale of Fire Scout unmanned aircraft.


TOPICS: Extended News; Foreign Affairs; News/Current Events
KEYWORDS: armsbuildup; armstrade; miltech; weapons

1 posted on 12/02/2009 9:28:37 AM PST by sukhoi-30mki
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To: sukhoi-30mki

I still say it’s time to restart low-rate F-22 production with an eye to future exports. The export version could be neutered enough to be easy prey for US F-22s if push comes to shove.

The demand is certainly there...


2 posted on 12/02/2009 9:55:03 AM PST by PreciousLiberty (In theory, theory and practice are the same. In practice, they're not.)
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