The Globalization of the U.S. Defense Industry
Report of the Federation of American Scientists
A United States government task force has released its final report to the
public recommending globalization of the U.S. defense industry, even if it
results in proliferation of conventional weapons.
The Defense Science Board's (DSB) Task Force on Globalization and Security
is a 27-member appointed board, composed mostly of Department of Defense
(DoD) and private industry representatives. The DSB encourages the Pentagon
to facilitate transnational mergers of defense corporations in order to
avoid eventual conflicts with European countries over global arms market
shares. Overall, the DSB task force advocates reducing DoD's role in
controlling arms exports, and holds little or no confidence in multilateral
arms control agreements. The DSB recommends that the Pentagon automatically
allow the export of military equipment, except when the United States is the
sole possessor of the technology. However, since current U.S. practice
allows arms exporters to outsource high-tech weaponry abroad before it
enters the U.S. arsenal, such Pentagon exceptions would probably be rare.
The task force recommends that the U.S. government stop worrying about
protecting American military technologies since, in its judgment, most
military technology will inevitably become available elsewhere in the
future.
The DoD, State Department, and Congress lack consensus on these
controversial issues. The Pentagon has conducted a variety of studies on
globalization and related export control issues, and the State Department,
anxious not to let its authority over arms export controls be usurped, has
reportedly also done its own evaluations.
The DSB does acknowledge that its steps to maximize U.S. military capability
may create tensions with other U.S. foreign policy objectives, particularly
those achieved by limiting foreign access to U.S. defense technology,
products and services. Yet the DSB feels that "military dominance," rather
than the promotion of U.S. foreign policy objectives and security, is the
DoD's "core responsibility." The DSB considers U.S. State Department efforts
to prevent or control conventional weapons proliferation as naive at best.
The DSB report describes international efforts to control conventional
weapons proliferation, such as the Wassenaar Arrangement, as only
"marginally successful."
A few large companies already dominate the American arms industry, and
Europe's defense firms are rapidly consolidating as well. Germany's
Daimler-Chrysler and France's Aerospatiale announced a planned merger to
form the European Aeronautics, Defense and Space Co. (EADS), and BAE Systems
now monopolizes the U.K. defense industry. Increased partnership between
U.S. and EU defense corporations is needed, DSB warns, to avoid a
protectionist "Fortress America" from going to war with a hostile "Fortress
Europe" over market share.
The Federation of American Scientists is concerned that transnational arms
mergers would create very powerful defense companies, further shifting
control away from governments and toward private industry. Transnational
companies will be eager to market their arms to many different countries,
and will adopt the lowest common standards for exporting arms to others
nations. With fewer controls and diffused production capabilities,
conventional weapons will likely proliferate, posing long-term security
risks around the world. Globalizing production of weapons is easy;
globalizing responsibility for arms is a real challenge.
While embracing the idea of a globalized defense industry, the Pentagon and
U.S. arms makers have claimed that cumbersome U.S. export-licensing rules
hinder exports to, and joint projects with, European and other allies. The
Pentagon alleged that an overhaul of the U.S. arms export system was needed
to avoid the creation of Fortress Europe, wherein consolidating European
arms companies would shut American arms and technology out of the European
market. With lightning speed and, according to the GAO, an inadequate
analysis based on faulty anecdotal evidence, the Pentagon developed a set of
17 initiatives to expedite the arms export licensing process, especially to
NATO members, Japan, and Australia. Despite protest by the State Department,
which has the legal authority to decide arms export policy, the
administration approved the Defense Trade Security Initiative (DTSI) in late
May 2000.
The administration's initiatives will fundamentally alter the U.S. export
licensing system, endangering a process that has helped control weapons
diversion, unauthorized re-exports, and misguided sales. The most far-
reaching of the changes would grant to certain allies (beginning with the UK
and Australia, with the possibility of including other countries) a license
waiver for exports of unclassified weapons systems, effectively ending U.S.
control over the transfer of arms to those countries. A similar arrangement
with Canada had to be suspended in 1999 after Canadian firms transferred
U.S. military technology to Iran and China. Other ill-advised reforms
include loosening the rules on third-party transfers of U.S. weapons;
creating broader export licenses to cover entire weapons systems (munitions,
engines, and other sub-components were previously approved individually to
allow for greater scrutiny); and speeding up the licensing process for NATO
members (including making greater use of exemptions for transfers of
technology and training). All will reduce the level of scrutiny of arms
export decisions in the U.S. and oversight of U.S. weapons abroad.
The administration approved these major policy changes with little public
debate or consultation of arms control experts. The mainstream media ignored
the issue until the announcement of the completion of the reform package at
the May, 2000 NATO Defense Ministerial meeting. At that point, the coverage
was minimal and presented the official view that the DTSI would promote
bureaucratic efficiency and boost the defense industry's European business
opportunities. Only the trade press covered the story throughout the spring,
though again, the articles were geared toward their main audience, the arms
industry. The arms control perspective was only provided in op-eds and
newsletters written by the Federation of American Scientists and other arms
control organizations.
Back to Peace Talk Index, Summer, 2001