Proposed FMS Deals in 1997 Reflect Tight Markets, Economic Woes

By Boese, Wade | Arms Control Today, January/February 1998 | Go to article overview

Proposed FMS Deals in 1997 Reflect Tight Markets, Economic Woes


Boese, Wade, Arms Control Today


DURING 1997, the Department of Defense notified Congress of requests from 18 countries for military equipment and services worth $10.6 billion. These requests came through the Pentagon's Foreign Military Sales (FMS) program, which conducts U.S. government-to-government military sales. The proposed deals, $1.3 billion less than in 1996, reveal a continuing demand for equipment upgrades and support services, a steady market for air-to-air and anti-ship missiles, and limited purchases of "big ticket" conventional weaponry.

Asia's economic crisis will likely forestall any increase in the amount of advanced conventional arms purchased for the near future as some states in the region, which only recently was considered to be the next major arms market, alter their procurement plans. South Korea has already delayed its 1997 request for four Airborne Warning and Control Systems (AWACS) surveillance aircraft and related support services valued at $3 billion. Facing a contracting global arms market, which has dropped from a Cold War high of $73 billion in 1985 to $32 billion in 1995, according to the latest edition of World Military Expenditures and Arms Transfers, published by the Arms Control and Disarmament Agency (ACDA), U.S. defense manufacturers are exploring new markets for 1998 and beyond.

Under the Arms Export Control Act, Congress must receive notification of proposed FMS, which currently account for a majority of U.S. arms transfers, and commercial sales if the equipment is identified as "major defense equipment" on the U.S. Munitions List and the value of the deal is $14 million or more. Congress has 30 days (15 in the case of NATO members, Australia, Japan and New Zealand) to block a sale with a joint resolution of disapproval, but it has never successfully used this authority. Notified FMS deals do not always result in finalized transactions and there can be a substantial delay between notifying Congress and signing an agreement.

Proposed 1997 FMS Deals

Ten states (Egypt, Greece, Israel, Italy, Japan, Kuwait, South Korea, Taiwan, Turkey and the United Arab Emirates) requested various types of missiles, torpedoes and missile systems totaling at least $1.4 billion in 1997. Other demands for advanced conventional weaponry included Kuwait's appeal for 16 Apache attack helicopters, Taiwan's bid for 21 Super Cobra and 13 Kiowa Warrior attack helicopters and Thailand's request for 107 M60-A3 tanks.

Nearly $3 billion (28 percent) of the proposed FMS deals involved states seeking upgrades and training and support services. France, Japan and Saudi Arabia requested equipment to upgrade their reconnaissance and surveillance aircraft, while Bahrain, Portugal and Singapore asked for modification kits and support services for their F-16 fighter aircraft. Both South Korea and Taiwan requested the establishment of supply arrangements to acquire spare parts for their aircraft. Taiwan also asked for, as did the Netherlands, training for their F-16 fighter pilots.

Impact of Asia's Economic Woes

Arms exporters recently viewed Asia as the market with the most growth potential as East Asia's arms imports alone rose to $6.4 billion in 1995, an increase of 50 percent from 1993, according to the ACDA report. Moreover, the most recent Congressional Research Service report, Conventional Arms Transfers to Developing Nations, 1989-1996, shows that Asia (all regions) accounted for 33.6 percent ($28 billion) of all arms agreements from 1993 to 1996.

Initially, the proposed 1997 FMS deals showed that the Asian market appeared to be meeting expectations as Asian states requested $5.9 billion worth of equipment, while Middle East states sought equipment totaling $3.5 billion. However, South Korea's postponement of its AWACS purchase and decisions by Indonesia, Malaysia and Thailand to delay or revise procurement plans indicate that the Middle East will likely remain the largest arms market for the near future. …

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