Washington lifts ban, revives arms trade

By Gwynne Dyer

LONDON (JP): They used to be called 'merchants of death', but that's a bit harsh given that 95 percent of the weapons they sell go to the scrapyard without ever being used in anger. Try 'merchants of poverty, tyranny and (occasionally) death'. Because the arms-makers of the world are in trouble, and their only hope is to open up new markets in the developing world.

Two weeks ago Enrique de la Torre, director of international security in the Argentine foreign ministry, urged the U.S. government not to lift its 20-year-old ban on the sale of high- tech weaponry to Latin America. Buenos Aires has cut its own defense spending deeply, he said, and it doesn't want to be forced into an arms race with Brazil and Chile.

Besides, de la Torre said, neither neighbor's armed forces are under full civilian control yet. Letting them have advanced weapons "could have major consequences for the region."

So what did U.S. President Bill Clinton do on Aug. 1? He lifted the ban, thus delighting the Pentagon, American arms manufacturers -- and Latin American military officers. "Thanks for the good news," said one Argentine senior officer. "It means we can enter the circuit once again." It also means some major capital transfers from poor Latin American countries to the United States.

The international arms trade was always a cut-throat business, but since the end of the Cold War it has got positively vicious.

The total size of the market is shrinking, especially in the rich countries that used to be the biggest market for advanced weaponry: NATO's military spending has fallen about 5 percent a year since 1992, and Russia's has dropped even more steeply.

The crisis in the arms trade is even more acute because the only other customers with free-spending ways, the oil-producing states of the Middle East, have pretty well completed the major re-armament purchases they began after the 1991 Gulf War. So if you want new customers, you must seek them among the relatively poor.

Even in the developing countries, military spending is down: arms sales to the Third World fell in 1995 for the fifth year in a row, to only US$15.4 billion. But the Third World is just about the only game in town -- and that is where the United States has been losing market share.

Overall, the U.S. is still by far the world's biggest arms dealer. Its 1995 share of global sales was 43 percent, down from 56 percent in 1994 but still more than Russia, China, France, Britain and Germany combined. However in 1995, after an almost total collapse of arms exports when the Soviet Union broke up in 1991, Russia finally got back in the game in a big way.

The Russian arms industry, a vital source of jobs and foreign exchange for the limping Russian economy, restructured, cut its prices -- and in 1995 it roared back into the global market, quadrupling its market share to 17 percent. More importantly, in terms of its psychological impact, Russia actually overtook the United States in arms sales to the developing countries: Russia $6 billion, $3.8 billion.

Now, the truth is that the Russians achieved this success mostly by selling weapons to countries that were its traditional customers (like India, which bought forty Sukhoi-30 fighters for between $1.5 and $2 billion), or to countries the U.S. refuses to sell arms to, like China and Iran. But American arms manufacturers were still shocked -- and then there arose this curious combination of insult and opportunity in Latin America....

President Jimmy Carter originally banned sales of advanced U.S. weaponry to Latin America in the 1970s, when most countries in the region were suffering under brutal military regimes. That's no longer true, but the ban has survived the restoration of democracy in almost all of those countries because it made such good sense.

No Latin American country really plots to conquer its neighbors, so they don't actually need the high-tech toys. Military professionals always use the neighbors' military hardware as an excuse to demand more for themselves, but if nobody in the region is buying advanced weaponry, then their argument evaporates.

No law prevented Latin Americans from shopping elsewhere for arms, but the disciplines of the Cold War froze the Russians out, and London's close relationship with Washington kept Britain out. The French and Israelis made a few sales, but over two decades the Carter ban probably saved Latin America tens of billions of dollars. And then came the Peru-Ecuador border war of 1995.

It was the smallest and silliest of wars: 80 soldiers killed along a stretch of unmarked jungle frontier where the local tribes neither knew nor cared which country they were in. But in the aftermath both Peru and Ecuador went shopping for arms -- and when Ecuador bought some Israeli-made Kfir fighters, Peruvian President Alberto Fujimori went to the Russians.

More precisely, he went to the Belarussians, who had some ex- Soviet MiG-29 fighters sitting around that they were willing to sell at a knock-down price. The Russians were so cross at being cut out of the deal by Belarus that they refused to provide Peru with spares and service, which makes the long-run usefulness of the MiG-29s pretty doubtful. But that was precisely the lever that the U.S. arms industry needed: Russian arms being bought by Latin Americans!

So the lobbyists in Washington did their work, and Clinton buckled under the pressure, and McDonnell Douglas is already offering to sell F-16s to Chile.

"This decision puts U.S. arms transfer policy toward Latin America on a par with our policy towards other regions of the world and will be implemented in a way that serves our policy of promoting stability, restraint, and cooperation in the region," said White House spokesman Mike McCurry.

But if everybody in Latin America is going to be stable, restrained, and cooperative -- as they very likely will be -- then exactly what are all those arms actually for? Why, to transfer wealth from Latin America to the United States, of course.