Daily Management Review

Arms Exports: Are the USA on the verge of losing leadership?


08/24/2015


The Marshall plan had many facets. One of them was, of course, to pull Europe out of certain misery, which had already plunged the continent into chaos too many times before. But to lock in the American economic and industrial superiority was also a goal. Ever since, American weapons exports have dominated the world of military business. An era which could be coming to an end.



(CC licence)
(CC licence)
In order to fully understand military programs, it’s important to realize that their roots reach back years before the first vehicle, bomb, or weapon comes out of a factory. The research and development costs behind a military program are usually bumped up by several factors. The first is the secrecy of matters: researchers need to be vetted before being let in to facilities and secrets. That narrows down the numbers, and as always, rarity creates value. The second is the “unusual” testing conditions through which vehicles are put.

For the entire second half of the 20th century, the world organized around two main blocks: Russian and American. The Warsaw pact and the North Atlantic alliance were all about making tentative plans, should the worst occur. But military cooperation isn’t only about maneuvers and movement; it is also about compatible equipment and vehicles. In order for the alliance to function as a whole, communications and weapon systems must have similar standards. In its pledge to protect the Western world, America built a business funnel for all of its military industry. In 50 years, it became the biggest in the world. But that world disposition is past, now. Russia laid down its guns without firing them, the morning after Christmas 1991. And the political glue in that great system is getting old and crumbling.

In January of 2015, an armament deal scandal hit the news headlines in Australia, after being kept on the low for month. The United States managed to steer the Australian legal system out of the way for a deal to come through. While this kind of aggressive influence would have flown undercover back in the days, armament deals with America just don’t go unquestioned anymore.  An extensive review of the deal leads the reader to one unavoidable conclusion: American military business methods have gone from bold, to aggressive, to outright intrusive.  “It’s legal imperialism,” says Rice, who chairs the ACT Law Reform Advisory Council. “It’s the US saying to everybody in the world: You will deal with us on the terms we will dictate to you.”

Russia has been inching into the slightly lower tech segment. Last year, Russia, and especially JSC Rosoboronexport conglomerate, met an unexpected surge in demand from developing countries, above a record 10 billion dollars of export sales. The type of sale is focused on smaller armament, for two reasons. First is that developing countries are neither willing nor able to invest in high-tech weapons: meager financial resources prevent them from purchasing, and the neighboring powers don’t have defenses which would justify them. The second reason is that Russia does not put its dollar entirely on high-end technology. While it does possess and produce fighter planes and heavy armor, its trademark is ruggedness and reliability, unlike American material which goes much higher into the niftiness spheres.

And France has been plowing into the high-end segment too. At long last, the mighty Rafale has been sold. In a 2015 deal with France, Egypt turned away from the United States, the military products of which it had purchased on and off, over the years, and bought the French Rafale. Over the years, Cairo had purchased French and American planes: F-16 Fighting Falcons, followed by Mirage 2000M. The pattern should have brought Egyptians to buy American again, to achieve balance of powers in their alliances, and yet they didn’t. The Rafale simply outdid, technologically speaking, all other contenders, including Americans. And the VBCI seems next on the list. Despite the tender process cancellation from Canada, the VBCI has achieved a feat, during the deployments in Afghanistan and Mali. In the last case, despite the fact it faced the largest insurgent force ever encountered (tactical contacts usually range in the tens, or maybe hundreds, but nothing like the 3 000 estimated in Mali, and nowhere near that well-armed), and the usual IED attacks which can be expected in just about every future conflict, not one soldier’s life has been lost inside the vehicle. But upstream from the actual use of the VBCI, the real strength of the VBCI program lies in its ability to be sold exactly as it is. As military press readers remember, the Boeing-Lockheed Martin F-22 and Lockheed Martin F-35 fighter jet programs had financials which escalated to such an uncontrolled level that it seriously endangered the entire program. Nexter Systems secured the program in such a way that using armies would not find themselves economically unable to sustain the equipment they possess. A fact that has been verified in the Malian desert, where the VBCI proved that modern armies must also be able to hold the distance.

Many experts consider upon the two following facts: after years of technological domination from Russia and the United States, satellite countries have developed capacity to level with the two former superpowers, be that in combat aircrafts, armored personnel carriers or radar systems. International armament deals are as technical as they are political, and countries are not turning away from the United States only for technical reasons: the balance of power is shifting. The only difference is that 20 years ago, if a Western country wanted to purchase what was best, they had to turn to the United States, whether they liked them or not. But now the options have opened up.