US arms exports show sharp decline. Fierce competition for a shrinking market cuts into sales
For Sale: F/A-18 Hornet aircraft. One seat. Bubbletop. Custom paint job. Low down payment, easy terms. Buy now or wait for new improved model. Sound like a good deal? The United States government offered it to France and West Germany earlier this year. Both replied, ``No thanks. We'd rather build our own.''
Hornets have been exported in the past. Canada flies them, among other nations. But the 1988 frustration of F/A-18 salesmen in Western Europe illustrates a little-noticed trend: Over the last five years, US arms sales to foreign nations have plummeted.
In fiscal year 1982, US military exports totaled just short of $22 billion, according to Department of Defense figures. In 1987, after a steady downward slide, they stood at about $9 billion.
No single cause lies behind the drop in arms sales, government officials and other experts say. They cite a number of factors, including restrictions by Congress, a shrinking world market, and fierce competition.
``Large sales agreements ... have virtually disappeared,'' says Defense Secretary Frank Carlucci's recent annual report to Congress.
The US still has some strong military product lines. The F-16, a small and relatively inexpensive fighter, continues to be popular worldwide. Last month, the 2,000th F-16 to be exported was delivered to the Air Force of Singapore.
But the boom years of the early 1980s, characterized by such deals as the $8.5 billion sale of AWACS radar planes to Saudi Arabia, have clearly ended.
American arms merchant magazines are now filled with stories about markets lost - such as Jordan's decision two weeks ago to buy Tornado aircraft from Britain.
``Multibillion-dollar sales, for the foreseeable future, are over,'' says Richard Grimmett, a defense analyst at the Congressional Research Service.
Even weapons that have sold well for years are no longer moving.
In recent decades, Ford Aerospace has exported more than 40,000 Sidewinder air-to-air missiles to about 20 countries. Last year, they exported ``very few,'' a Ford spokesman says. ``Basically, all we sold was a couple million dollars' worth of spares and test sets.''
Factors behind the drop in arms sales include:
Political restraints. The Middle East has long been one of the world's most lucrative arms markets - but in recent years Congress has been increasingly reluctant to allow US weapon sales to Arab nations.
Under US law, Congress can vote to halt major government-to-government weapon sales. Last year, opposition from Capitol Hill stopped a proposed sale of Maverick missiles to Saudi Arabia. Saudi leaders were allowed to purchase a package of F-15s, but only by agreeing to leave them in the US as reserves to replace crashed or worn-out planes.
Jordan also wants to buy high-performance US jets, but the administration has been reluctant to bring up the request in the face of congressional opposition.
``These sales all got caught in a political imbroglio,'' a Pentagon official grumbles.
Recently the State Department sent Congress a classified report listing arms sales that are likely to be proposed in 1988. Defense Secretary Carlucci begged lawmakers to view controversial sales ``with an open mind.''
Tight budgets. Flush with oil revenues, a number of third-world nations went on weapons-buying binges in the 1970s and early '80s. As oil prices fell in recent years, so did their defense budgets.
In addition, some countries that are still relatively well off, such as Saudi Arabia, have cut back purchases of new arms and are instead focusing on integrating their weapons into a coherent defense structure, Mr. Grimmett says.
In the US, tight budgets have meant cuts in special types of foreign aid that are used for purchase of US weapons.
Total funds for the US Foreign Military Sales and the Military Assistance Program declined 17 percent between 1985 and 1988, according to the Defense Department.
Increased competition. Even as the world arms market shrinks, US arms merchants are facing much stiffer competition from foreign makers. This is particularly true in Europe, long the world's most lucrative arms export market.
Britain's Tornado aircraft, for instance, has become a top seller in the world market and will be part of the Saudi as well as the Jordanian Air Force.
The US is lobbying hard to sell NATO allies upgraded F-16 or F-18 aircraft in coming decades, to keep Western air forces modern.
But a number of European nations are instead pressing ahead with their own fighter projects. France's Rafale is slated to enter service in 1996, for instance; West Germany, Britain, Italy, and Spain are pressing ahead with their joint European Fighter Aircraft, despite development delays.
The late 1980s have also seen the maturation of an indigenous third-world weapons industry. Israel has now exported more than $1 billion worth of its Gabriel ship-to-ship missiles; Indian factories churn out their own versions of Soviet MIG planes.
Brazil is perhaps the most successful third-world weapons exporter. Its armored vehicles are tough, easy to maintain, and much cheaper than Western models.
``A lot of third-world countries would rather buy from another third-world nation. It prevents the stigma of being associated with a superpower,'' notes Paul Ferrari, an arms sales analyst with the Investor Responsibility Research Center.