Tag Archives: weapons markets

The Weapons Business

An XM25 airburst grenade launcher in July 2009.  Image from wikipedia

The United States has taken a firm lead as the major arms exporter globally, according to new data on international arms transfers published by Stockholm International Peace Research Institute (SIPRI) on March 16, 2014. Overall, the volume of international transfers of major conventional weapons grew by 16 per cent between 2005–2009 and 2010–14.

The volume of US exports of major weapons rose by 23 per cent between 2005–2009 and 2010–14. The USA’s share of the volume of international arms exports was 31 per cent in 2010–14, compared with 27 per cent for Russia. Russian exports of major weapons increased by 37 per cent between 2005–2009 and 2010–14. During the same period, Chinese exports of major arms increased by 143 per cent, making it the third largest supplier in 2010–14, however still significantly behind the USA and Russia.  ‘The USA has long seen arms exports as a major foreign policy and security tool, but in recent years exports are increasingly needed to help the US arms industry maintain production levels at a time of decreasing US military expenditure’, said Dr Aude Fleurant, Director of the SIPRI Arms and Military Expenditure Programme.

Arms imports to Gulf Cooperation Council (GCC) states increased by 71 per cent from 2005–2009 to 2010–14, accounting for 54 per cent of imports to the Middle East in the latter period. Saudi Arabia rose to become the second largest importer of major weapons worldwide in 2010–14, increasing the volume of its arms imports four times compared to 2005–2009.

‘Mainly with arms from the USA and Europe, the GCC states have rapidly expanded and modernized their militaries’, said Pieter Wezeman, Senior Researcher with the SIPRI Arms and Military Expenditure Programme. ‘The GCC states, along with Egypt, Iraq, Israel and Turkey in the wider Middle East, are scheduled to receive further large orders of major arms in the coming years.’

Asian arms imports continue to increase.  Of the top 10 largest importers of major weapons during the 5-year period 2010–14, 5 are in Asia: India (15 per cent of global arms imports), China (5 per cent), Pakistan (4 per cent), South Korea (3 per cent) and Singapore (3 per cent). …

African arms imports increased by 45 per cent between 2005–2009 to 2010–14.Between 2005–2009 and 2010–14 Algeria was the largest arms importer in Africa, followed by Morocco, whose arms imports increased elevenfold.  Deliveries and orders for ballistic missile defence systems increased significantly in 2010–14, notably in the GCC and North East Asia.

More information at SIPRI

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Germany’s Weapons Industry: how to make weapon sales invisible

heckler & koch g3 rifle

Germany.. exports a lot of weapons: more than Britain, France or any other country besides America and Russia. Some German makers of military gear are part of civilian industrial giants, such as Airbus Group (which has dropped its ungainly old name, EADS, to adopt the brand of its commercial-aircraft business), and ThyssenKrupp, a steelmaker. But the biggest German company known mainly for weapons, Rheinmetall, is just 26th in the world league of arms-exporting firms. And Krauss Maffei Wegmann (KMW), which makes the Leopard 2 tank, is 54th.

Germans are, in general, proud of their export prowess. But although foreign sales of weaponry bring in almost €1 billion ($1.4 billion) a year, they are a delicate subject, and lately beset by bad press. Several German firms are accused of bribery in Greece. A former defence official there has said that of €8m in bribes he took, €3.2m came from German firms, including Wegmann (now part of KMW) and Rheinmetall. On January 3rd KMW’s alleged middleman was detained after a court hearing. The firm itself denies any bribery. Atlas, a maker of naval weapons owned jointly by Airbus and ThyssenKrupp, is under fire too. A former representative in Athens has reportedly admitted to bribery; the company says it is investigating the matter.

On another front, the industry faces criticism over the countries it sells to—most recently over a deal to sell Leopard 2s to Saudi Arabia. Arms sales to anywhere other than NATO and “NATO-equivalent” countries are in principle forbidden. But the Federal Security Council, headed by Chancellor Angela Merkel, can approve exceptions when foreign policy dictates, as long as they do not harm human rights.

Peace campaigners fear that the exceptions are becoming less exceptional. NATO countries’ budgets are being squeezed, so Germany’s armsmakers are looking farther abroad. Rheinmetall, for example, has a target of 50% of exports outside Europe by 2015. Asia is a growing target: Singapore recently signed a €1.6 billion deal for ThyssenKrupp submarines.

German small arms are also popular. Heckler & Koch’s G3 rifle (together with its variants) is the world’s most popular after the Russian AK-47….But Germany’s arms exports are probably in little danger, since they have the same reputation for reliability as its cars and other industrial goods.

Moreover, there are ways to lessen the controversy of selling things used to wage war. For example, making guns for a fighter jet assembled elsewhere is less visible than selling a German-made tank. Military transport, logistics, surveillance and protective equipment together account for five times as much of German defence firms’ output as weapons and ammunition—and are less likely to be blamed for civilian casualties. Stephan Boehm, an analyst at Commerzbank, sees such non-lethal materiel as a bright spot for German exporters. The flagging fortunes of Rheinmetall, in particular, should be restored by strong sales of the armoured transporters it produces in a joint venture with MAN, a lorry-maker.

Critics say the government is too willing to let arms firms export to dodgy regimes. The Federation of German Security & Defence Industries argues that strong exports are crucial to spread the development costs of the equipment Germany needs to defend itself. This would be less of a problem, the lobby group admits, if Europe’s fragmented defence industry were consolidated; it says the government should not have vetoed a proposal last year to merge EADS with BAE Systems of Britain. Weapons account for less than 1% of Germany’s exports. But it is a 1% that it, like other countries, is loth to give up.

German weapons firms: No farewell to arms, Economist, Jan. 11, 2014, at 56

How to Recycle Tanks: the global armored vehicle market

Cougar MRAP

The international armoured vehicles market is facing challenging times, especially as the US and its partners withdraw from Afghanistan, potentially flooding the market with used vehicles, according to  [a South African] company [called] DCD Protected Mobility…A recent Frost & Sullivan report said the world military land vehicle market would only grow at .7% until 2021 as the US cuts back its requirements and western defence markets shrink. Certain market segments, such as armoured fighting vehicles, are projected to actually shrink over the next decade.

However… a market does still exist for armoured vehicles. “There is a requirement out there for more MRAPs [Mine-Resistant Armour Protected vehicles].” Addressing the threat of an ex-US armoured vehicles glut, he pointed out that ex-US Army vehicles are not always suitable for other customers as they are still fairly expensive to maintain and operate and are do not always meet user requirements….

That DCD Protected Mobility intends “becoming owners of the route clearance space internationally,” notably with its Husky vehicle mounted mine detection system…. The system comprises of two Husky vehicles: the first acts as a Mine Detection Vehicle (MDV) (previously a Meerkat). The second vehicle (a Husky) tows a mine-detonating trailer..Hundreds of Huskies have been sold to Canada, the USA, UK, France, Australia, Angola, Kenya, Uganda, Spain and Turkey….[T]he Husky programme has made a significant contribution to poverty alleviation in South Africa, creating 1 320 jobs across the supply chain and earning R10.3 billion in foreign exchange for the South African economy… On the sixth of November, DCD and its partners will demonstrate an unmanned version of the Husky system to the US government, developed in partnership with its partners Critical Solutions International (CSI) and Torc Robotics.

With CSI, DCD is looking at international markets like the European Union and Nato. Austria wants to buy four to six two-seat Husky vehicles through the US Foreign Military Sales (FMS) system to provide a route clearance capability they can offer to Nato.  Turkey recently bought four Huskies and… will purchase more. Turkey will “hopefully” buy around 50 more vehicles sometime next year, he told defenceWeb. Other countries that show great promise regarding the vehicle are India and Iraq.

DCD is also trying to focus on Africa and emerging markets, and places where customers do not want any US components in their vehicles. In Africa, the company is pinning some of its hopes on the Springbuck A202 armoured personnel carrier. This is selling well and is aimed at developing countries that need an “affordable but not inferior” vehicle.

Excerpt,  Guy Martin, Budget cuts, Afghanistan withdrawal negatively affecting MRAP market, DefenceWeb, Oct. 31 2013

The Global Arms Trade Treaty and the $70 billion Weapons Market

image from wikipedia

[T] global Arms Trade Treaty (ATT) … was overwhelmingly approved by 154 countries on April 2nd, 2013 by the General Assembly of the United Nations.  The next stage is for those countries which voted for the treaty to begin formally signing up to it in early June. Each signatory country will then have to ratify it at home. The treaty will come into legal force 90 days after the 50th country has ratified it—perhaps as soon as the end of this year. For some, ratification will be a simple process; for others it could prove harder.

The Obama administration is a strong supporter and likely to sign up soon. But getting the two-thirds majority in the Senate needed for ratification will be a struggle, even though the American Bar Association has confirmed the treaty does not infringe any constitutional right to bear arms (as the NRA claims). America’s defence industry also supports it, hoping to bring other countries’ arms

Whatever difficulties may lie ahead, supporters of the treaty to regulate the $70-billion-a-year trade in arms are jubilant. It is the climax of a campaign that began a decade ago. It had especially strong support from African and Caribbean countries where society has been torn apart by civil war or transnational crime, both stoked by the illicit trade in small arms. The deal involved compromises: for example, a weaker section on munitions. But what a senior diplomat close to the negotiations describes as “the heart” of the treaty—the prohibitions section—is alive and beating.

The ATT requires states to establish regulations for arms imports and exports in eight main categories: battle tanks, armoured combat vehicles, large-calibre artillery, combat aircraft, attack helicopters, warships, missiles and missile launchers, and small arms and light weapons. They must assess whether their transfer could lead to serious violations of international humanitarian law, terrorism or organised crime. They must take into account the risk of serious acts of violence against civilians, particularly women and children. An overriding risk of any of these consequences means states must block the deal.

States must also report annually on all their arms transfers to a UN-run “implementation support unit”. The aim is to shine a light on a previously murky business and make governments accountable under the terms of the treaty. The main sanction is embarrassment. That may seem feeble, but previous treaties on landmines and cluster bombs have set a new global norm which makes it shameful to use such weapons indiscriminately.

The abstainers include big arms exporters (China and Russia) and importers (India, Saudi Arabia, Egypt and Indonesia). But they may sign up later. Russia says it needs more time, while China (surprising some) played a constructive role, apparently influenced by the African countries with which it has forged close commercial ties. Both may find they pay an economic price if their arms industries are increasingly excluded from global supply chains. It will take time for new standards of behaviour to establish themselves, but the push has begun and the treaty can be further strengthened over time. For the moment, says a diplomat involved with the treaty over many years, what has been achieved is “pretty damn good”.

Regulating the weapons trade: A Killer Deal, Economist, April 6, 2013, at 69

Regulating the Weapons Markets

Finland Selling Weapons to Saudi Arabia–a dictatorship after all

The Verkkouutiset news website, affiliated with the ruling National Coalition, said the weapons deal by state-controlled arms producer Patria would provide Saudi Arabia with mortars worth 150 million euros ($204 million), the biggest arms deal for Finland in over a decade.  An official at Finland’s defence ministry confirmed the government was reviewing the Patria mortar deal and would soon decide whether to allow it. It would not confirm the value of the sale or which country was buying the mortars.  Verkkouutiset said politicians from the Social Democrats and the Green party had raised questions about whether the mortars could at some stage be used against civilians, as pro-democracy uprisings continue to sweep across the Arab world.  It did not say if any minister would oppose the deal and quoted one Social Democrat member as saying it should be approved.  Patria, in which European Aeronautic Defence and Space Company (EADS) owns a 26.8 percent stake, announced last year it signed a deal to deliver 36 mortar systems, but did not disclose the customer or the value of the agreement.  Saudi Arabia, a key ally of the United States, is ruled by an absolute monarchy which applies an austere version of Sunni Islam. Finland’s foreign ministry website says Saudi Arabia’s human rights situation is “poor”.

Jussi Rosendahl, Finland reviews Saudi arms deal on rights worries-report, Reuters, Nov. 11, 2011