DTN News: President Barack Obama Focus On Coalitions May Aid Arms Sales
*Sources: DTN News, Int'l Media & Reuters By Andrea Shalal-Esa
(NSI News Source Info) WASHINGTON - June 11, 2009: The Obama administration's focus on building coalitions may spur more global arms sales for the world's leading weapons exporter, a welcome prospect for U.S. defense contractors facing a shrinking defense budget at home.
The global recession may dampen or delay the foreign appetite for weapons orders somewhat, but many countries' arsenals are in urgent need of modernization.
The U.S. Air Force estimates it would cost Japan as much as $250 million per plane to buy dozens of radar-evading F-22 fighter jets, a U.S. senator told Japan's ambassador in a letter, saying he hopes to reverse a current U.S. ban on such exports.
Even in tough economic times, countries generally view defense accounts as a top priority, particularly given mounting concerns about enemy missile attacks and other threats, said Eric Edelman, who served as undersecretary of defense for policy during the Bush administration.
Edelman, a former U.S. ambassador to Turkey and Finland, said demand would likely remain high for cutting-edge U.S. products such as precision munitions, unmanned aerial vehicles and missile defense capabilities.
"A lot of countries are going to be looking for American goods and services," said Edelman, a fellow at the Center for Strategic and Budgetary Assessments. "There is a good market out there."
U.S. defense cuts announced by Defense Secretary Robert Gates in April are also spurring American companies to pursue foreign orders more aggressively, he said.
BIG-TICKET COMPETITIONS
U.S. companies are already vying for huge fighter and helicopter orders from India, helicopter work in Australia and shipbuilding work for Saudi Arabia and others.
Exports should also be buoyed as orders materialize from Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway -- the partner countries helping to develop Lockheed Martin Corp's F-35 fighter jet. The radar-evading plane is the world's biggest weapons program, valued at over $200 billion.
Israel, Singapore, Japan and Spain were also interested in ordering the fighter, said Marine Corps Brigadier General David Heinz, head of the F-35 program. Work could start on pricing airplanes for Israel by the end of the year, he said.
Chris Raymond, vice president of business development for Boeing Co's military arm, said the Obama administration's interest in building the military capabilities of potential coalition partners seems to be "more of a conscious thought and discussion right now than maybe it has been in the past."
"So I think that all bodes well for our allies and the discussions that would take place on things they'd like to have -- on releasability around some of those things," he told a pre-Paris Air Show briefing on Wednesday.
Some lawmakers, keen to maintain production of the F-22 fighter, also built by Lockheed, have revived the idea of exporting that fighter to a select few allies, such as Japan.
At the same time, Lockheed's C-130 transport plane and Boeing's C-17 could pick up extra orders in Europe, given delays in the A400M plane developed by EADS.
Raytheon Co, which says big demand for Patriot missiles from the United Arab Emirates, Kuwait and Taiwan helped global sales account for 20 percent of total revenues last year, forecasts they will comprise 22 percent to 24 percent in 2009.
U.S. arms deals soared nearly 50 percent to $24.8 billion in 2007, accounting for 41.5 percent of all such agreements. The top five buyers were Australia, Turkey, Egypt, the United Arab Emirates and Iraq, according to the nonpartisan Congressional Research Service.
Analysts and industry executives say President Barack Obama is likely to continue the Bush administration's focus on training and equipping foreign militaries. Sales may even get a boost from Obama's drive to build coalitions and partnerships.
Obama "is beginning to realize that we just don't have as much money and power as we used to," said analyst Loren Thompson with the Virginia-based Lexington Institute.
"That is making him start to think, how can I improve my trade balance? How can I get other countries to carry some of the burden of global security? How can I reduce the price tag of my defense establishment?"
More sales of U.S. weapons systems would make it easier for American troops and partner countries to operate together on the battlefield, using common systems to share data, communicate and coordinate any strikes, Thompson said.
Michele Flournoy, the current undersecretary of defense for policy, last month underscored the growing importance of concerted action. She said Washington could use targeted arms sales to help U.S. partners increase their capacity to deal with emerging threats, such as Iran's missile program.
"When we look at the full range of security challenges that we face -- terrorism, proliferation, economic security issues, climate change -- there is not a single one that the United States alone can deal with effectively," Flournoy said. "You need coalitions and partners to deal with these challenges."
The Pentagon is assessing allies' needs to establish a basis for deciding what weapons are provided to whom.
PROSPECT FOR REFORMS?
Richard Grimmett, a security specialist who compiles the Congressional Research Service's annual report on international arms sales, said the global recession might slow the blockbuster sales of recent years, but there would still be plenty of orders for spare parts and upgrades.
Paul Nisbet, analyst with JSA Research, said Democratic control of Congress and the White House offers an opportunity to reform U.S. export control laws that companies say hamper their ability to compete overseas. Lawmakers often weigh in to keep sophisticated systems like the F-22 solely for U.S. use.
Military services are also sometimes reluctant to export key weapons to protect the American technical edge.
But Edelman notes that it often take years before such weapons are then actually fielded by foreign countries, a lag time that helps protect the U.S. lead.
The next test for the arms trade could be whether the U.S. Senate acts to approve treaties negotiated with Australia and Britain to ease restrictions on defense trade.
But getting those treaties ratified by the Senate would take a "certain amount of political capital," and it was not yet clear that the Obama administration viewed the issue as a top priority, he said.
