Arms: Weathering the Crisis
By Paul Holtom, Mark Bromley for ISN
New data on international transfers of major conventional weapons external pagereleased by the Stockholm International Peace Research Institute (SIPRI) show that the impact of the financial crisis is unlikely to be uniform.
Among the biggest arms importers, there are few signs that the global financial crisis is affecting decision-making in any notable way. Rather, domestic and regional security concerns, as well as acquisitions of foreign technologies for their own domestic arms industries, appear to be outweighing any potential need to shrink procurement budgets.
Among the smaller importers, the picture is more mixed, and there are signs that states may cancel or delay purchases of big ticket items, as happened in Asia following the 1997 financial crisis.
On the other hand, concerns that the financial crisis will increase global instability may serve as a justification for boosting acquisitions, as occurred during the Great Depression of the 1930s.
For the period 2004-2008, SIPRI shows the three biggest arms buyers to be China, India and the UAE.
China was the largest recipient of major conventional weapons for the period 1999-2008, although with a dramatic decline in the volume of imports since 2007. This decline has little to do with the global financial crisis. It reflects China's shift from importing complete weapons systems to securing the technology needed to produce weapons systems for itself. Russia will feel the impact of this decline as more than 40 per cent of its arms exports have gone to China in the last 10 years.
Despite the financial crisis, India is still reported to be pressing ahead with $50 billion worth of arms acquisitions over the next five years. Russia has accounted for 75 percent of India’s imports over the last decade. Yet there are signs that its dominant position is under threat. A recent $2 billion deal for 8 P-8A marine patrol aircraft reflects the warming of ties between the US and India. Israel also continues to capture significant orders, including a recent $1.5 billion for Barak missiles.
The UAE has emerged as the third largest importer of major conventional weapons over the last five years, rising from 16th place for the period 1999-2003 in SIPRI’s rankings. The entry of the UAE into the upper tier of importers is mainly due to the import of 80 F-16E combat aircraft from the US and 50 Mirage-2000-9 combat aircraft from France.
Although one might have expected the steep drop in oil prices and the financial crisis to have hit the procurement plans of this oil-rich Gulf state, the UAE placed a number of significant orders in 2008 and announced almost $5 billion worth of new orders at the IDEX 2009 defense show.
Several states that have emerged as important buyers in recent years appear to be delaying or cancelling planned acquisitions. For example, Morocco’s multi-billion orders of combat and transport aircraft, ships and other weapons may be cancelled or delayed. Venezuela is stalling on a range of orders, after rising dramatically on the list of importers following major acquisitions from Russia over the last 5 years.
There is speculation that the financial crisis may also impact upon the procurement plans of European nations, particularly in the field of advanced combat aircraft. Orders may be delayed, downsized or cancelled as a result of the global financial crisis. For example, prospective recipients of the US-built F-35 including Australia, Israel, Italy, the Netherlands and the UK are looking to reduce numbers of units purchased.
The impact of the current economic crisis has yet to reveal itself in the external pageinternational arms trade. Despite the need for cooperative solutions to global problems, this thriving market points to states continuing willingness to squander resources which the international community can ill afford to lose. While major recipients are pressing ahead with large-scale acquisitions, some smaller recipients have indicated plans to cut or delay acquisitions. This could lead to increased competition and a further straining of control and disarmament efforts.