AMERICA’S WEAPONS EXPORTS ARE FALLING:

Sarah,

Let’s talk about guns.  America has the largest military on Earth.  It is also the largest exporter of weapons.  However, that title is fading.  This week, Foreign Affairs magazine gave an interesting account of why:

Background:

After the fall of the Soviet Union, America became the undisputed leader in arms exports.  This reputation was further enhanced by America’s performance during its first war against Iraq. (can you believe that war happened 22 years ago?)

Since then, America’s market share has dropped from 60% of the world’s weapons sales to 30%.

Why the Drop?

1. Our Weapons Cost Too Much:

America still produces the best weapons available.  The problem is that they are extremely expensive.  After the attacks of 9/11, Congress poured money into the military and cost efficiency went out the window.  America’s newest fighter, the F-35, costs 75% more than its original estimate.

Although some countries still pay for the best weapons money can buy, others are having second thoughts.  Recently, India decided to buy its fighter jets from France instead of America.  Asa result, American contractors lost out on a billion dollar contract.  Even our most reliable buyer, Saudi Arabia, recently chose to buy some of its planes from Great Britain.

Other countries simply can’t afford what we have to offer. 

2. The Competition Is Growing:

Other countries understand that there is a market for cheaper weapons and are cashing in.  Here are some examples of recent arms sales:

-Sweden sold fighter jets to Hungary and Thailand.

-Russia sold fighter jets to Indonesia and Malaysia.

-France sold battleships to Singapore.

Additionally, China is now Pakistan’s largest arms supplier and South Korea has transitioned away from buying our weapons and is producing more of its own. 

Does This Matter?

You could argue it.

Selling weapons to your allies is a win-win.  Your allies grow stronger and you get paid.  The American defense industry employs hundreds of thousands of Americans and more contracts means more business. 

Retaining a monopoly on arms sales also gives America a strategic edge.  Countries are more amenable to our suggestions if they rely on us for their weapons.  In 2005, America threatened to cut off Israel’s supply of jet fighters if Israel continued to sell certain aerospace parts to China.  Additionally, we have used our leverage over Spain and Brazil to stop them from selling weapons to Venezuela.

Bottom line: I’m really curious if these “cheap” but modern jet fighters that are made in Sweden could beat the “expensive” but older fighter planes made in America from Top Gun.  Leave your opinion in the comment section below.

Source: Foreign Affairs, “Arms Away”, September/ October 2012