U.S. Expands Lead in Shrinking Arms Market

By Fisher, Andrew | Arms Control Today, October 2009 | Go to article overview

U.S. Expands Lead in Shrinking Arms Market


Fisher, Andrew, Arms Control Today


In the midst of a global recession that reduced the global demand for weapons, the United States managed to expand its share of worldwide arms agreements significantly in 2008, according to a September report by the Congressional Research Service (CRS). Last year, developing countries continued to be the most important markets for arms sales, the report said.

The report, "Conventional Arms Transfers to Developing Nations, 2001-2008," is the 2009 edition of the CRS's annual analysis, authored since 1982 by international security specialist Richard Grimmett. It analyzes arms transfer agreements worldwide while giving particular attention to sales to developing countries.

The total value of all arms transfer agreements in 2008 was $55.2 billion, the lowest level since 2005, the report said. The peak was $59.7 billion in 2007.

In 2008 the United States concluded $37.8 billion worth of arms transfer agreements, representing 68.4 percent of all such agreements globally. That is up significantly from the U.S. total of $25.4 billion in 2007, which represented only 42.5 percent of global agreements. (See ACT, December 2008.)

During 2008, the United States also made worldwide deliveries of $12.2 billion, continuing eight years of dominance as the world's top deliverer of arms. Grimmett defines arms deliveries as "items actually transferred," while arms transfer agreements represent contracts signed between supplier and recipient countries. Due to their complexity, arms deals can take years to implement and can be adjusted over time, leading to figures for agreements and deliveries that rarely match.

Several other countries are significant arms sellers, although none on the scale of the United States. Italy was a distant second, with $3.7 billion in agreements, up from $1.2 billion in 2007, followed by $3.5 billion for Russia, down from $10.8 billion in 2007. These top three suppliers collectively made 81.5 percent of all international arms transfer agreements in 2008.

Worldwide weapons orders in 2008 were down 7.5 percent from 2007. A main factor in the drop was the decision by some purchasing countries to forgo major new systems because of budgetary restraints imposed by the global recession and rising oil prices, the report said. Those countries opted to limit purchases to the upgrading of existing systems, training and support services, or the integration of already purchased weapons into their forces, Grimmett said.

Continuing a trend that can be seen since 2001, developing countries, defined in the report as all countries except Australia, Canada, Japan, New Zealand, Russia, the United States, and European countries, have increasingly been the major market for arms from the world's largest suppliers. Arms sales to developing countries comprised 76.4 percent of worldwide arms sales in 2008, with the United States generally finding its largest markets in the Near East, a region stretching from Morocco to Iran. Russia found its largest markets in Asia, the report said.

In 2008 the United States made 70.2 percent of its agreements with developing countries. Russia and France each made more than 90 percent of its agreements with such countries; for China and the United Kingdom, the figure was 100 percent.

Between 2007 and 2008, the value of arms transfer agreements with developing countries increased slightly, from $41.1 billion to $42.2 billion. The decrease in global arms sales during this time came from developed countries, where total arms sales decreased from $18.6 billion in 2007 to $13.0 billion in 2008. Deliveries to developing countries in 2008 were equal to $18.3 billion, slightly lower than the 2007 level of $18.4 billion and the lowest level during the 2001-2008 reporting period.

Oil Price Effects

Spiking oil prices squeezed budgets devoted to arms purchases in many countries in 2008, but increased oil revenue swelled defense budgets in oil-exporting developing countries and allowed them to devote huge sums of money to arms purchases, Grimmett said. …

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