US Doesn't Need to Boost Subsidies for Arms Sales Money Would Be Better Spent on Job Training and Defense Conversion

Article excerpt

THREE years after the fall of the Berlin Wall, the US military industry's response to new post-cold-war economic realities is to keep pushing old answers: an all-out effort to capture the weapons export market. And to ensure that the market remains an open one, it is campaigning for the creation of an arms-export subsidy fund.

Last February, the chairman of Raytheon and eight other major defense contractors wrote to Secretary of Defense Les Aspin urging him to set up a credit guarantee program for arms exports on the ground that it would reap economic benefits.

When a proposal to use $5 billion out of defense conversion coffers for export loan guarantees was rejected, the defense industry began to lobby for a compromise proposal by Sen. Dirk Kempthorne (R) of Idaho diverting $1 billion from non-conversion accounts within the Defense Department budget for loans to subsidize arms sales to NATO, Australia, Japan, South Korea, and Israel. The amendment, included in the Senate's defense authorization bill, will be decided upon in a House-Senate conference in the fall.

Supporters of the amendment argue that it would make United States arms manufacturers more competitive and merely "level the playing field" with America's main industrial competitors, most of which have export credit agencies that finance military sales. Yet without any additional financing mechanism, the US already is the world's No. 1 arms dealer. According to the Stockholm International Peace Research Institute, the US delivered more than 45 percent of all major combat systems sold worldwide in 1992, more than four times higher than that of its two closest competitors, Russia and Germany. Its share of the third-world arms market is even greater, doubling over the last five years from 28 percent to 57 percent.

Even without loan guarantees the US has what Rep. Howard Berman (D) of California calls "a military assistance program that dwarfs any other country's foreign-export financing." Most of this fiscal year's $3.4 billion program is in the form of direct grants to foreign governments, generally restricted to purchases of US-built weapons. Another $2.5 billion in economic-support funds also can help overseas clients buy US weapons.

The arms industry also claims that an export loan guarantee program is a good jobs program. Touting Senator Kempthorne's provision as a "blue-collar amendment," defense contractors argue that it holds the promise to maintain jobs and reduce unemployment compensation while arms manufacturers make a transition to commercial endeavors. The Aerospace Industries Association boasts that for every $65 million in budget authority (necessary for $1 billion in loan guarantees) 35,000 jobs will be generated or maintained. …