Australia Pushes Arms Exports

AUSTRALIA'S first military trade show late last year - billed as the largest in the southern hemisphere with 220 companies from 12 nations - signals Prime Minister Bob Hawke's controversial commitment to boost military exports. Fueling the export drive is a new defense policy of self-reliance. About $25 billion Australian (US$20 billion) has been earmarked for Australia's 15-year reequipment program - the biggest in peacetime. Much of the money is being pumped into Australian factories or local joint ventures with overseas partners. New submarines, aircraft, frigates, and radar systems are all under construction here. Already, the local content of new military hardware has doubled to 60 percent in just five years.

Government-owned weapons plants are being privatized. This year the government relaxed defense export restrictions. Australia now ranks as a relatively minor trader on the global arms scene. Military exports totaled about $250 Australian million (US$200 million) last year. (The US and USSR are the biggest arms suppliers to developing nations, with 1988 sales of US $9 billion to $10 billion each). But Australian defense officials expect sales abroad to double within two years.

Boosting arms exports is seen as offering three benefits:

It can help reduce Australia's huge foreign trade deficit.

It lowers the cost of Australian defense projects by creating bigger production runs.

It diversifies Australia's resource-based economy by feeding defense funds into high-technology sectors such as aerospace, communications, and electronics.

But Australia's export drive faces a few obstacles. Not only is Australia an inexperienced latecomer to a competitive market, but many defense budgets worldwide have shrunken in the 1980s. The thaw in East-West relations reinforces the trend.

``Companies will need to employ a `swords into plowshares' sales strategy; look for civilian as well as military applications for products,'' says Thor Beowulf of Anthor International, a Sydney-based defense consulting firm.

For example, Aerospace Technologies of Australia (formerly Government Aircraft Factories) uses knowledge gained in building military aircraft and missiles to produce components for Boeing, McDonnell Douglas, and Airbus commercial jets. Its Nomad Searchmaster surveillance aircraft, equipped with powerful radar and infrared camera systems, have been instrumental in the US Customs Service catching drug smugglers off Florida's coast this year. The aircraft are also used in Thailand, Indonesia, and Papua New Guinea.

Australia also hopes to capitalize on its internationally competitive engineering and computer software expertise.

But civilian markets are not the only sales avenue still open. Defense budgets in Southeast Asia are growing rapidly alongside prospering economies.

Simultaneously, many countries are becoming less focused on internal security, and more aware of external threats requiring high-technology defense solutions, said speakers at a November conference on regional defense technology at Australian National University.

In particular, India's naval buildup and the April testing of a long-range missile have triggered concern in Thailand, Malaysia, Indonesia, and Australia. Malaysia agreed recently to a multibillion-dollar deal for British fighter jets and assorted military hardware. And France is wooing Malaysia to build submarines in a joint venture. China, too, has embarked on a naval modernization program. And if the US leases on bases in the Philippines are not renewed, the vacuum may prompt a Philippines defense buildup.

``Southeast Asia is one of the planks in our sales platform,'' says Ian Meibusch of the Defense Manufacturers' Council.