The US Remains the World's Leading War Economy -- Building, Selling and Using Weapons to Profit from Conflict
January 5, 2016
World Beyond War & The New York Times & The Congressional Research Service
Following an effective grassroots campaign, Congress has resumed reporting on foreign weapons sales -- after a three-year gap. The latest survey shows the US remains the world's top exporter of deadly weapons. The US exports roughly half the weapons shipped around the world while its European allies are responsible for another 25%. Well over half of weapons shipped to the Middle East come from the US. The US also is the major weapons source for ISIS.
US Resumes Reporting on Weapons Sales
After a Three-year Gap
World Beyond War
(December 29, 2015) -- A great big thank you to everyone who helped by demanding that the US Congress resume reporting on weapons sales. It has now resumed that reporting after a three-year gap. Here is the new report and [see below] a New York Times article about it. The data included in the new report is radically different from that included in reports by SIPRI and, as far as we know, by anyone else.
* International weapons sales are down since 2011 but up in 2014 from 2013. Most sales are still to the governments of poor countries.
* The top exporter is still the United States and its share is increasing. The United States exports roughly half the weapons shipped around the world, and its European allies another 25%.
* Well over half of weapons shipments to the Middle East are still from the United States. This does not include weapons given to "moderates" or used by the United States itself.
* The top weapons source for ISIS, Iraq, has a top weapons source: the United States.
* Every region of the globe has the same top weapons source: the United States.
* Three-quarters of US weapons shipments are to the Middle East. Top recipients of US weapons include:
Saudi Arabia, Iraq, U.A.E., Israel, Kuwait, Oman, and Egypt.
* The human-rights respecting liberal democracies among top recipients of US weapons include . . . no nations whatsoever.
US Foreign Arms Deals Increased Nearly $10 Billion in 2014
Nicolas Fandos / The New York Times
WASHINGTON (December 25, 2015) -- Foreign arms sales by the United States jumped by almost $10 billion in 2014, about 35 percent, even as the global weapons market remained flat and competition among suppliers increased, a new congressional study has found.
American weapons receipts rose to $36.2 billion in 2014 from $26.7 billion the year before, bolstered by multibillion-dollar agreements with Qatar, Saudi Arabia and South Korea. Those deals and others ensured that the United States remained the single largest provider of arms around the world last year, controlling just over 50 percent of the market.
Russia followed the United States as the top weapons supplier, completing $10.2 billion in sales, compared with $10.3 billion in 2013. Sweden was third, with roughly $5.5 billion in sales, followed by France with $4.4 billion and China with $2.2 billion.
South Korea, a key American ally, was the world's top weapons buyer in 2014, completing $7.8 billion in contracts. It has faced continued tensions with neighboring North Korea in recent years over the North's nuclear weapons program and other provocations.
The bulk of South Korea's purchases, worth more than $7 billion, were made with the United States and included transport helicopters and related support, as well as advanced unmanned aerial surveillance vehicles.
Iraq followed South Korea, with $7.3 billion in purchases intended to build up its military in the wake of the American troop withdrawal there.
Brazil, another developing nation building its military force, was third with $6.5 billion worth of purchase agreements, primarily for Swedish aircraft.
The report to Congress found that total global arms sales rose slightly in 2014 to $71.8 billion, from $70.1 billion in 2013. Despite that increase, the report concluded that "the international arms market is not likely growing over all," because of "the weakened state of the global economy."
It was the second successive year that global sales remained steady, suggesting that the market has begun to level off after several years of extreme fluctuation.
The lack of market expansion has led to greater competition among suppliers. Some arms producers have adopted measures like flexible financing, counter-trade guarantees and coproduction and co-assembly agreements to try to secure sales, according to the report.
"A number of weapons-exporting nations are focusing not only on the clients with which they have held historic competitive advantages due to well-established military-support relationships, but also on potential new clients in countries and regions where they have not been traditional arms suppliers," the author of the report, Catherine A. Theohary, wrote.
Despite the competition, the report concluded that, given its positioning, the United States was likely to remain the dominant supplier of arms to developing nations in coming years.
The annual report by the Congressional Research Service, a division of the Library of Congress, was delivered to Congress this week and analyzes trends in arms sales between 2007 and 2014.
As in previous years, the vast majority of arms were supplied by large, established countries to developing ones, which made $61.8 billion in total purchases in 2014.
The report is considered among the most detailed nonclassified international arms sales data available to the public. To ensure that information is comparable to 2014 dollars, the report adjusts figures from previous years for inflation.
Conventional Arms Transfers to
Developing Nations, 2007-2014
Catherine A. Theohary, Specialist in National Security Policy and Information Operations / Congressional Research Service (December 21, 2015)
This report provides Congress with official, unclassified, quantitative data on conventional arms transfers to developing nations by the United States and foreign countries for the preceding eight calendar years for use in its policy oversight functions. All agreement and delivery data in this report for the United States are government-to-government Foreign Military Sales (FMS) transactions.
Similar data are provided on worldwide conventional arms transfers by all government suppliers, but the principal focus is the level of arms transfers by major weapons supplying governments to nations in the developing world.
Developing nations continue to be the primary focus of foreign arms sales activity by weapons suppliers. During the years 2007-2010, the value of arms transfer agreements with developing nations comprised 74.4% of all such agreements worldwide. More recently, arms transfer agreements with developing nations constituted 75.5% of all such agreements globally from 2011-2014, and 86.0% of these agreements in 2014.
The value of all arms transfer agreements with developing nations in 2014 was $61.8 billion. In 2014, the value of all arms deliveries to developing nations was $20.6 billion.
Recently, from 2011 to 2014, the United States and Russia have dominated the arms market in the developing world, with both nations either ranking first or second for each of these four years in the value of arms transfer agreements. From 2011 to 2014, the United States made nearly $115 billion in such agreements, 46.3% of all these agreements (expressed in current dollars).
Russia made $41.7 billion, 16.8% of these agreements. During this same period, collectively, the United States and Russia made 63.1% of all arms transfer agreements with developing nations, ($156.4 billion in current dollars).
In 2014, the United States ranked first in arms transfer agreements with developing nations with $29.8 billion or 48.2% of these agreements. In second place was Russia with $10.1 billion or 16.3% of such agreements.
In 2014, Russia ranked first in the value of arms deliveries to developing nations at $8.4 billion, or 40.8% of all such deliveries. The United States ranked second in these deliveries at over $7.6 billion or 27.2%.
In worldwide arms transfer agreements in 2014 -- to both developed and developing nations -- the United States dominated, ranking first with $36.2 billion in such agreements or 50.4% of all such agreements. Russia ranked second in worldwide arms transfer agreements in 2014 with $10.2 billion in such global agreements or 14.2%. The value of all arms transfer agreements worldwide in 2014 was $71.8 billion.
In 2014, South Korea ranked first concluding $7.8 billion in agreements. Brazil ranked third in the value of arms transfer agreements among all developing nations weapons purchasers, concluding $6.5 billion in such agreements. Iraq ranked second with $7.3 billion in such agreements.
Conventional Arms Transfers to
Developing Nations, 2007-2014
Introduction and Overview
This report provides Congress with official, unclassified data from US government sources on transfers of conventional arms to developing nations by major suppliers for the period 2007 through 2014. It also includes some data on worldwide supplier transactions. It updates and revises CRS Report R42017, Conventional Arms Transfers to Developing Nations, 2003-2010, by Richard F. Grimmett.
Data in this report provide a means for Congress to identify existing supplier-purchaser relationships in conventional weapons acquisitions. Use of these data can assist Congress in its oversight role of assessing how the current nature of the international weapons trade might affect US national interests.
For most of recent American history, maintaining regional stability and ensuring the security of US allies and friendly nations throughout the world have been important elements of US foreign and national security policy.
Knowing the extent to which foreign government arms suppliers are transferring arms to individual nations or regions provides Congress with a context for evaluating policy questions it may confront. Such policy questions may include, for example, whether to support specific US arms sales to given countries or regions or to support or offset arms transfers by other nations.
The data in this report may also assist Congress in evaluating whether multilateral arms control arrangements or other US foreign policy initiatives are being supported or undermined by the actions of arms suppliers.
The principal focus of this report is the level of arms transfers by major weapons suppliers to nations in the developing world -- where most analysts agree that the potential for the outbreak of regional military conflicts currently is greatest, and where the greatest proportion of the conventional arms trade is conducted.
For decades, during the height of the Cold War, providing conventional weapons to friendly states was an instrument of foreign policy utilized by the United States and its allies.
This was equally true for the Soviet Union and its allies. The underlying rationale given for US arms transfer policy then was to help ensure that friendly states were not placed at risk through a military disadvantage created by arms transfers by the Soviet Union or its allies.
Following the Cold War's end, US arms transfer policy has been based on maintaining or augmenting friendly and allied nations' ability to deal with regional security threats and concerns.
Data in this report illustrate global patterns of conventional arms transfers which have changed in the post-Cold War and post-Persian Gulf War years. Relationships between arms suppliers and recipients continue to evolve in response to changing political, military, and economic circumstances.
Whereas the principal motivation for arms sales by key foreign suppliers in earlier years might have been to support a foreign policy objective, today that motivation may be based as much, if not more, on economic considerations as those of foreign or national security policy.
Nations in the developing world continue to be the primary focus of foreign arms sales activity by conventional weapons suppliers. During the period of this report, 2007-2014, conventional arms transfer agreements (which represent orders for future delivery) to developing nations comprised 77.2% of the value of all international arms transfer agreements. The portion of agreements with developing countries constituted 75.5% of all agreements globally from 2011-2014.
In 2014, arms transfer agreements with developing countries accounted for 86% of the value of all such agreements globally. Deliveries of conventional arms to developing nations, from 2011 to 2014 constituted 62% of all international arms deliveries. In 2014, arms deliveries to developing nations constituted 44% of the value of all such arms deliveries worldwide.
The data in this new report supersede all data published in previous editions. Because these new data for 2007-2014 reflect potentially significant updates to and revisions of the underlying US government databases used for this report, only the data in this most recent edition should be used for comparison of data found in previous reports. The data are expressed in US dollars for the calendar years indicated, and adjusted for inflation (see box note below).
US commercially licensed arms export deliveries values are excluded (see "US Commercial Arms Exports" box note below). Also excluded are arms transfers by any supplier to subnational groups.
The definition of developing nations, as used in this report, and the specific classes of items included in its values totals are found in box notes below. The report's table of contents provides a detailed listing and description of the various data tables to guide the reader to specific items of interest.
Calendar Year Data Used
All arms transfer and arms delivery data in this report are for the calendar year or calendar year period given. This applies to US and foreign data alike. United States government departments and agencies publish data on US arms transfers and deliveries but generally use the United States fiscal year as the computational time period for these data.
As a consequence, there are likely to be distinct differences noted in those published totals using a fiscal year basis and those provided in this report, which use a calendar year basis. Details on data used are outlined in notes at the bottom of Tables 3, 14, 30 and 35.
Arms Transfer Values
The values of arms transfer agreements (or deliveries) in this report refer to the total values of conventional arms orders (or deliveries as the case may be), which include all categories of weapons and ammunition, military spare parts, military construction, military assistance and training programs, and all associated services.
Definition of Developing Nations and Regions
As used in this report, the developing nations category includes all countries except the United States, Russia, European nations, Canada, Japan, Australia, and New Zealand. A listing of countries located in the regions defined for the purpose of this analysis -- Asia, Near East, Latin America, and Africa -- is provided at the end of the report.
Constant 2014 Dollars
Throughout this report values of arms transfer agreements and values of arms deliveries for all suppliers are expressed in US dollars. Values for any given year generally reflect the exchange rates that prevailed during that specific calendar year. This report, in places, converts these dollar amounts (current dollars) into constant 2014 US dollars.
Although this helps to eliminate the distorting effects of inflation to permit a more accurate comparison of various dollar levels over time, the effects of fluctuating exchange rates are not neutralized. The deflators used for the constant dollar calculations in this report are those provided by the US Department of Defense and are set out at the bottom of Tables 4, 15, 31, and 36, where all data are expressed in constant 2014 US dollars. In places in the text and in figures where constant dollars are not used they are so labeled.
For example, all regional data tables that are composed of four-year aggregate dollar totals (2007-2010 and 2011-2014) or when single years are used they are expressed in current dollar terms. Where tables rank leading arms suppliers to developing nations or leading developing nation recipients using four-year aggregate dollar totals, these values are expressed in current dollars. When percentage comparisons are used, they are calculated using current dollars.
General Trends in Arms Transfers Worldwide
The value of all arms transfer agreements worldwide (to both developed and developing nations) in 2014 was $71.8 billion. This was a slight increase in arms agreements values over the 2013 total of $70.1 billion. (Figure 1) (Table 1) (Table 30) (Table 31).
In 2014, the United States led in arms transfer agreements worldwide, making agreements valued at $36.2 billion (50.4% of all such agreements), up from $26.7 billion in 2013. Russia ranked second in 2014 with $10.2 billion in agreements (14.2% of these agreements globally), down slightly from $10.3 billion in 2013.
The United States and Russia collectively made agreements in 2014 valued at over $46 billion, 64.6% of all international arms transfer agreements made by all suppliers (Figure 1) (Table 30) (Table 31, Table 32, and Table 34).
For the period 2011-2014, the total value of all international arms transfer agreements ($312.4 billion in current dollars) was higher than the worldwide value during 2007-2010 ($239.1 billion in current dollars). During the period 2007-2010, developing world nations accounted for 74.4% of the value of all arms transfer agreements made worldwide.
During 2011-2014, developing world nations accounted for 75.5% of all arms transfer agreements made globally. In 2014, developing nations accounted for 86% of all arms transfer agreements made worldwide (Figure 1) (Table 30) (Table 31).
In 2014, the United States ranked first in the value of all arms deliveries worldwide, making nearly $12.2 billion in such deliveries or 26%. This is the eighth year in a row that the United States has led in global arms deliveries. Russia ranked second in worldwide arms deliveries in 2014, making $9.2 billion in such deliveries, and ranked second for six of those eight years.
France ranked third in 2014, making $5.1 billion in such deliveries. These three suppliers of arms in 2014 collectively delivered nearly $26.5 billion, or 56.6% of all arms delivered worldwide by all suppliers in that year (Table 2) (Table 36, Table 37, and Table 39).
The value of all international arms deliveries in 2014 was nearly $46.8 billion. This is a decrease in the total value of arms deliveries from the previous year from $62.3 billion. The total value of such arms deliveries worldwide in 2011-2014 (about $209.7billion) was higher than the deliveries worldwide from 2007 to 2010 (about $168 billion (Table 2) (Table 36 and Table 37) (Figure 7 and Figure 8).
Developing nations from 2011 to 2014 received 62% of the value of all international arms deliveries. In the earlier period, 2007-2010, developing nations accounted for 56.8% of the value of all arms deliveries worldwide. In 2014, developing nations collectively accounted for 44% of the value of all international arms deliveries (Table 2) (Table 15, Table 36, and Table 37).
Worldwide weapons orders increased in 2014. The total of $71.8 billion was a slight increase from $70.1 billion in 2013. The United States' worldwide weapons agreements values increased in value from $26.3 billion in 2013 to $36.2 billion in 2014. The US market share increased greatly as well, from roughly 38% in 2013 to 50% in 2014.
Although the United States retained its position as the leading arms supplying nation in the world, nearly all other major suppliers saw declines. The principal exception was France, whose worldwide agreements increased from $3.4 billion in 2013 to $4.4 billion in 2014.
Meanwhile, Russia posted a marginal decline in its global arms agreements values, from $10.3 billion in 2013 to $10.2 billion in 2014. The collective market share of worldwide arms agreements for the four major West European suppliers -- France, the United Kingdom, Germany, and Italy -- was approximately 11% in 2014.
Although the global total in weapons sales in 2014 represents an increase, the international arms market is not likely growing overall. The US global total for arms agreements in 2011 seems a clear outlier figure. Moreover, there continue to be significant constraints on its growth, due, in particular, to the weakened state of the global economy.
The Eurozone financial crisis and the slow international recovery from the recession of 2008 have generally limited defense purchases of prospective customers. Concerns over their domestic budget problems have led many purchasing nations to defer or limit the purchase of new major weapons systems.
Some nations have chosen to limit their purchasing to upgrades of existing systems and to training and support services. Others have decided to emphasize the integration into their force structures of the major weapons systems they had previously purchased.
Orders for weapons upgrades and support services can still be rather lucrative, and such sales can provide weapons suppliers with continued revenue, despite the reduction in demand for major weapons systems.
As new arms sales have become more difficult to conclude in the face of economic factors, competition among sellers has increased. A number of weapons-exporting nations are focusing not only on the clients with which they have held historic competitive advantages due to well- established military-support relationships, but also on potential new clients in countries and regions where they have not been traditional arms suppliers.
As the overall market for weapons has stagnated, arms suppliers have faced the challenge of providing weapons in type and price that can create a competitive edge. To overcome the key obstacle of limited defense budgets in several developing nations, arms suppliers have increasingly utilized flexible financing options, and guarantees of counter-trade, co-production, licensed production, and co-assembly elements in their contracts to secure new orders.
Given important limitations on significant growth of arms sales to developing nations -- especially those that are less affluent -- competition between European nations or consortia on the one hand and the United States on the other is likely to be especially intense where all these suppliers have previously concluded arms agreements with the more affluent states.
Recent examples of this competition have been the contests for combat aircraft sales to the oil-rich Persian Gulf states, and a major competition for the sale of a substantial number of combat aircraft to India. The more affluent developing nations have been leveraging their attractiveness as clients by demanding greater cost offsets in their arms contracts, as well as transfer of more advanced technology and provisions for domestic production options.
Weapons contracts with more wealthy developing nations in the Near East and Asia appear to be especially significant to European weapons suppliers that have used foreign arms sales contracts as a means to support their own domestic weapons development programs and need them to compensate, wherever possible, for declining arms orders from the rest of the developing world.
At the same time, nations in the developed world continue to pursue measures aimed at protecting important elements of their national military industrial bases by limiting arms purchases from other developed nations. This has resulted in several major arms suppliers emphasizing joint production of various weapons systems with other developed nations as an effective way to share the costs of developing new weapons, while preserving productive capacity.
Some supplier nations have decided to manufacture items for niche weapons categories where their specialized production capabilities give them important advantages in the international arms marketplace. The strong competition for weapons contracts has also led to consolidation of certain sectors of the domestic defense industries of key weapons-producing nations to enhance their competiveness further.
Although less-affluent nations in the developing world may be compelled by financial considerations to limit their weapons purchases, others in the developing world with significant financial assets continue to launch new and costly weapons-procurement programs. Having notable income from oil sales has provided a major advantage for major oil-producing states in funding their arms purchases.
At the same time, dependency on oil imports has caused difficulties for many oil consuming states, and contributed to their decision to curtail or defer new weapons acquisitions. Any possible effects of significant oil declines since the end of 2014 on global arms purchases would not be seen in the period covered by this report.
Despite the volatility of the international economy in recent years, some nations in the Near East and Asia regions have resumed or continued large weapons purchases. These purchases have been made by a limited number of developing nations in these two regions.
Most recently, they have been made by Saudi Arabia and the United Arab Emirates in the Near East -- both pivotal partners in the US effort to contain Iran. India in Asia is another large arms purchaser. For certain developing nations in these regions, the strength of their individual economies appears to be a key factor in their decisions to proceed with major arms purchases.
A few developing nations in Latin America, and, to a much lesser extent, in Africa, have sought to modernize key sectors of their military forces. In recent years, some nations in these regions have placed large arms orders, by regional standards, to advance that goal. Many countries within these regions are significantly constrained by their financial resources and thus limited in the weapons they can purchase.
Given the limited availability of seller-supplied credit and financing for weapons purchases, and their smaller national budgets, most of these countries are forced to be especially selective in their military purchases. As a consequence, few major weapons systems purchases are likely to be made in either region.
General Trends in Arms
Transfers to Developing Nations
The value of all arms transfer agreements with developing nations in 2014 was $61.8 billion, a substantial increase from the $54.3 billion total in 2013 (Figure 1) (Table 1) (Table 3) (Table 4). In 2014, the value of all arms deliveries to developing nations ($20.6 billion) decreased slightly from the value of 2013 deliveries ($20.9 billion). Deliveries since 2007 peaked in 2011 and are seen declining slightly since (Figure 7 and Figure 8) (Table 2) (Table 15).
The United States and Russia have dominated the arms market in the developing world since 2011. Both nations either ranked first or second among countries for all four years in terms of the value of arms transfer agreements. From 2011 to 2014, the United States made nearly $115 billion of these agreements, or 46.3%. During this same period, Russia made $41.7 billion, 16.8% of all such agreements, expressed in current dollars.
Collectively, the United States and Russia made 63.1% of all arms transfer agreements with developing nations during this four-year period. France, the third leading supplier, from 2011 to 2014 made nearly $14.2 billion or 5.7% of all such agreements with developing nations during these years.
In the earlier period (2007-2010) Russia ranked second with $35.9 billion in arms transfer agreements with developing nations or 20%; the United States made $65.9 billion in arms transfer agreements during this period or 37%. The United Kingdom made $12.1 billion in agreements or 10.3% (Table 3).
In any given year for the period 2007-2014, most arms transfers to developing nations were made by two or three major suppliers. The United States ranked first among these suppliers for all but one year during this period. Russia has been a competitor for the lead in arms transfer agreements with developing nations, ranking first in 2009, and second every year since.
Although Russia has lacked the larger traditional client base for armaments held by the United States and the major West European suppliers, it has been a major source of weaponry for a few key purchasers in the developing world. Russia's most significant high-value arms transfer agreements continue to be with India. Russia has also had some success in concluding arms agreements with clients in the Near East and Southeast Asia.
Russia has increased its sales efforts in Latin America with a principal focus on Venezuela. Russia has adopted more flexible payment arrangements, including loans, for its prospective customers in the developing world generally, including a willingness in specific cases to forgive outstanding debts owed to it by a prospective client in order to secure new arms purchases.
At the same time, Russia continues efforts to enhance the quality of its follow-on support services to make Russian weaponry more attractive and competitive, attempting to assure potential clients that it will provide timely and effective service and spare parts for the weapon systems it sells.
Among the four major West European arms suppliers, France and the United Kingdom have been the most successful in concluding significant orders with developing countries from 2007 to 2014, based on either long-term supply relationships or their having specialized weapons systems available for sale. Germany, however, has shown particular success in selling naval systems customized for developing nations. The United Kingdom has had comparable successes with aircraft sales.
Despite the competition the United States faces from other major arms suppliers, it appears likely it will hold its position as the principal supplier to key developing world nations, especially with those able to afford major new weapons. From the onset of the Cold War period, the United States developed an especially large and diverse base of arms equipment clients globally with whom it is able to conclude a continuing series of arms agreements annually.
For decades, it has also provided upgrades, spare parts, ordnance and support services for the wide variety of weapon systems it has previously sold to this large list of clients. This provides a steady stream of orders from year to year, even when the United States does not conclude major new arms agreements for major weapon systems. It also makes the United States a logical supplier for new- generation military equipment to these traditional purchasers.
Major arms-supplying nations continue to center their sales efforts on the wealthier developing countries, as arms transfers to the less-affluent developing nations remain constrained by the scarcity of funds in their defense budgets and the unsettled state of the international economy. From 2007 to 2010, the values of all arms transfer agreements with developing nations increased from year to year, but declined in 2010.
These agreements reached a peak in 2011 at nearly $77 billion. The increase in agreements with developing nations from 2007 to 2011, and particularly in 2011, was driven to an important degree by sales to the more affluent developing nations, especially key oil-producing states in the Persian Gulf, which actively sought new advanced weaponry during these years, as part of a US effort to enhance the militaries of its key partners there.
More recently, the less-traditional European and non-European suppliers, including China, have been successful in securing some agreements with developing nations, although at lower levels and with uneven results, compared to the major weapons suppliers. Yet, these non-major arms suppliers have occasionally made arms deals of significance, such as missile sales and light combat systems.
Although their agreement values appear larger when they are aggregated as a group, most of their annual arms transfer agreement values during 2007-2014 have been comparatively low when they are listed as individual suppliers. In various cases, these suppliers have been successful in selling older generation or less-advanced equipment. This group of arms suppliers is more likely to be the source of small arms and light weapons and associated ordnance, rather than routine sellers of major weapons systems.
Most of these arms suppliers do not rank very high in the value of their arms agreements and deliveries, although some will rank among the top 10 suppliers from year to year (Table 43, Table 9, Table 10, Table 15, Table 20, and Table 21).
The total value of United States arms transfer agreements with developing nations registered an increase from $18 billion in 2013 to nearly $29.8 billion in 2014. The US market share of the value of all such agreements was 48.2% in 2014, an increase from a 33.2% share in 2013 (Figure 1, Figure 7, and Figure 8) (Table 1, Table 3, Table 4, and Table 5).
In 2014, the total value of US arms transfer agreements with developing nations was comprised primarily of major new orders in the Near East and Asia. The US reached key agreements with Saudi Arabia and Iraq in the Near East and South Korea in Asia. The United States also continued to secure orders for significant equipment and support services contracts with a broad number of US clients globally.
The nearly $30 billion arms agreement total for the United States in 2014 also reflects the continuing US advantage of having well-established defense support arrangements with many weapons purchasers worldwide, based upon the existing US weapon systems that the militaries of these clients utilize. US agreements with all of its customers in 2014 include not only sales of very costly major weapon systems, but also the upgrading and the support of systems previously provided.
It is important to emphasize that US arms agreements involving a wide variety of items such as spare parts, ammunition, ordnance, training, and support services can have significant costs associated with them.
The larger valued arms transfer agreements with the United States in 2014 with developing nations included multiple agreements with Saudi Arabia to provide TOW missiles and a variety of other weapons, missiles, and associated support for over $4 billion. Purchases from Iraq reached $1.8 billion.
By the conclusion of 2014, Qatar had placed orders for items including PATRIOT PAC-3 missiles, Javelin missiles and related support, and AH-64D Apache helicopters for a total of over $9.6 billion. South Korea's orders totaled over $7 billion, including, among other things, contracts for CH-47D aircraft and related support and RQ-4 Global Hawk UAVs.
The total value of Russia's arms transfer agreements with developing nations in 2014 was $10.1 billion, a slight decrease from $10.2 billion in 2013, still placing Russia second in such agreements with the developing world. Russia's share of all developing world arms transfer agreements also declined significantly from 18.8% in 2013 to 16.4% in 2014 (Figure 1, Figure 7, and Figure 8) (Table 1, Table 3, Table 4, Table 5, and Table 10).
Russia's arms transfer agreement totals with developing nations have been notable during the eight years covered in this report, reaching a peak in 2012 of $15.5 billion (in current dollars).
During the 2011-2014 period, Russia ranked second among all suppliers to developing countries, making nearly $42 billion in agreements (in current dollars) (Table 9). Russia's status as a leading supplier of arms to developing nations reflects a successful effort to overcome the significant industrial production problems associated with the dissolution of the former Soviet Union.
The major arms clients of the former Soviet Union were generally less wealthy developing countries. In the Soviet era, several client states received substantial military aid grants and significant discounts on their arms purchases.
Confronted with a limited arms client base in the post-Cold War era and stiff competition from Western arms suppliers for new markets, Russia adapted its selling practices in the developing world in an effort to regain and sustain an important share among previous and prospective clients in that segment of the international arms market.
In recent years, Russia has made significant efforts to provide more creative financing and payment options for prospective arms purchasers. Russia has agreed to engage in counter-trade, offsets, debt-swapping, and, in key cases, to make significant licensed production agreements in order to sell its weapons. Russia's willingness to agree to licensed production has been a critical element in several cases involving important arms clients, particularly India and China.
Russia's efforts to expand its arms customer base elsewhere have met with mixed results. Some successful Russian arms sales efforts have occurred in Southeast Asia. Here Russia has signed arms agreements with Malaysia, Vietnam, Burma, and Indonesia. Russia has also concluded major arms deals with Venezuela and Algeria.
Elsewhere in the developing world, Russian military equipment continues to be competitive because it ranges from the most basic to the highly advanced. Russia's less expensive armaments have proven attractive to less affluent developing nations.
Missiles and aircraft continue to provide a significant portion of Russia's arms exports, less so naval systems. Nevertheless, the absence of substantial funding for new research and development efforts in these and other military equipment areas has hampered Russia's longer- term foreign arms sales prospects.
Weapons research and development (R&D) programs exist in Russia, yet other major arms suppliers have advanced much more rapidly in developing and producing weaponry than have existing Russian military R&D programs, a factor that may deter expansion of the Russian arms client base.
This was illustrated by Russia's decision to acquire French technology through purchase of the Mistral amphibious assault ship, rather than relying on Russian shipbuilding specialists to create a comparable ship for the Russian Navy. However in August 2015, France canceled the Mistral agreement.
Nonetheless, Russia has had important arms development and sales programs, particularly involving India and, to a lesser extent, China, which should provide it with sustained business for a decade. During the mid-1990s, Russia sold major combat fighter aircraft and main battle tanks to India, and has provided other major weapons systems through lease or licensed production.
It continues to provide support services and items for these various weapons systems. More recently, Russia has lost major contracts to other key weapons suppliers, threatening its long- standing supplier relationship with India. Russian sales of advanced weaponry in South Asia have been a matter of ongoing concern to the United States because of long-standing tensions between Pakistan and India.
The United States has been seeking to expand its military cooperation with and arms sales to India as part of the US strategic shift to the Asia-Pacific region.1
A key Russian arms client in Asia has been China,2 which purchased advanced aircraft and naval systems. Since 1996, Russia has sold China Su-27 fighter aircraft and agreed to their licensed production. It has sold the Chinese quantities of Su-30 multi-role fighter aircraft, Sovremenny- class destroyers equipped with Sunburn anti-ship missiles, and Kilo-class Project 636 diesel submarines.
Russia has also sold the Chinese a variety of other weapons systems and missiles. Chinese arms acquisitions seem aimed at enhancing its military projection capabilities in Asia, and its ability to influence events throughout the region.
One US policy concern is to ensure that it provides appropriate military equipment to US allies and friendly states in Asia to help offset any prospective threat China may pose to such nations.3 There have been no especially large recent Russian arms agreements with China.
The Chinese military is currently focused on absorbing and integrating into its force structure the significant weapon systems previously obtained from Russia, and there has also been tension between Russia and China over China's apparent practice of reverse engineering and copying major combat systems obtained from Russia, in violation of their licensed production agreements.
In 2014, Russian arms agreements with developing nations included two Kilo submarines for more than $1.2 billion and around 200 T-90 battle tanks for approximately $1 billion with Algeria. Russia also signed an agreement with China for S-400 air defense systems totaling nearly $3 billion, and an agreement with India for anti-tank shells at over $432 million.
It was not until the Iran-Iraq war in the 1980s that China became an important arms supplier, one willing and able to provide weaponry when other major suppliers withheld sales to both belligerents. During that conflict, China demonstrated that it was willing to provide arms to both combatants in quantity and without conditions. Subsequently, China's arms sales have been more regional and targeted in the developing world.
From 2011 to 2014, the value of China's arms transfer agreements with developing nations has averaged over $3 billion annually. During the period of this report, the value of China's arms transfer agreements with developing nations was highest in 2013 at $4.2 billion (in current dollars). China's arms agreements total in 2014 was $2.2 billion.
China's totals can be attributed, in part, to continuing contracts with Pakistan, a key historic client. More broadly, China's sales figures reflect several smaller valued weapons deals in Asia, Africa, and the Near East, rather than especially large agreements for major weapons systems (Table 43, Table 10, and Table 11) (Figure 7).
Comparatively, few developing nations with significant financial resources have purchased Chinese military equipment during the eight-year period of this report. Most Chinese weapons for export are less advanced and sophisticated than weaponry available from Western suppliers or Russia.
China, consequently, does not appear likely to be a key supplier of major conventional weapons in the developing world arms market in the immediate future.
That said, China has indicated that increasingly it views foreign arms sales as an important market in which it wishes to compete, and has increased the promotion of its more advanced aircraft in an effort to secure contracts from developing countries.
China's weapons systems for export seem based upon designs obtained from Russia through previous licensed production programs. Nonetheless, China's likely client base will be states in Asia and Africa seeking quantities of small arms and light weapons, rather than major combat systems.
China has also been an important source of missiles to some developing countries. For example, China has supplied battlefield and cruise missiles to Iran and surface-to-surface missiles to Pakistan. According to US officials, the Chinese government no longer supplies other countries with complete missile systems. However, Chinese entities are suppliers of missile-related technology.
Such activity raises questions about China's willingness to fulfill the government's stated commitment to act in accordance with the restrictions on missile transfers set out in the Missile Technology Control Regime (MTCR). Because China has military products -- particularly its missiles -- that some developing countries would like to acquire, it can present an obstacle to efforts to stem proliferation of advanced missile systems to some areas of the developing world.4
China continues to be the source of a variety of small arms and light weapons transferred to African states. The prospects for significant revenue earnings from these arms sales are limited. China likely views such sales as one means of enhancing its status as an international political power, and increasing its ability to obtain access to significant natural resources, especially oil.
The control of sales of small arms and light weapons to regions of conflict, especially to some African nations, has been a matter of concern to the United States and others. The United Nations also has undertaken an examination of this issue in an effort to achieve consensus on a path to curtail this weapons trade comprehensively.
During July 2012, the United Nations attempted to reach agreement on the text of an Arms Trade Treaty (ATT), aimed at setting agreed standards for member states regarding what types of conventional arms sales should be made internationally, and what criteria should be applied in making arms transfer decisions.
At the end of the month- long period, set aside for negotiations, this effort failed to achieve the necessary consensus on a treaty draft. China, while not a member of the group of U.N. states negotiating the final draft, made it publicly clear that it did not support any treaty that would prevent any state from making its own, independent, national decision to make an arms sale.5
The UN adopted the treaty as a resolution following a vote on April 2, 2013; China and Russia abstained. The treaty entered into force on December 24, 2014. To date, 78 states have ratified the treaty, with the United States as a signatory.
Major West European Suppliers
France, the United Kingdom, Germany, and Italy -- the four major West European arms suppliers -- have supplied a wide variety of sophisticated weapons to a number of purchasers. They are potential sources of armaments for nations that the United States chooses not to supply for policy reasons.
The United Kingdom, for example, sold major combat fighter aircraft to Saudi Arabia in the mid-1980s, when the United States chose not to sell a comparable aircraft. More recently, India made European aircraft suppliers finalists in its competition for a major sale of combat aircraft -- a competition ultimately won by France. The contending US and Russian aircraft were rejected.
France also contracted with the Egyptian navy for frigates valued at approximately $1.4 billion. Moreover, Saudi Arabia recently purchased 72 Eurofighter Typhoon fighter aircraft from the United Kingdom, an aircraft built by four European nations -- the U.K, Germany, Italy and Spain.
During the Cold War, NATO allies of the United States generally supported the US position in restricting arms sales to certain nations. In the post-Cold War period, however, their national defense export policies have not been fully coordinated with the United States.
Key European arms supplying states, especially France, view arms sales foremost as a matter for national decision. Economic considerations appear to be a greater driver in French arms sales decision-making than matters of foreign policy. France has also frequently used foreign military sales as an important means for underwriting development and procurement of new weapons systems for its own military forces.
The potential for policy differences between the United States and major West European supplying states over conventional weapons transfers to specific countries has increased in recent years because of a divergence of views over what is an appropriate arms sale. Such a conflict resulted from an effort led by France and Germany in 2004-2005 to lift the arms embargo on arms sales to China adhered to by members of the European Union.
The United States viewed this as a misguided effort, and vigorously opposed it. Ultimately, the proposal to lift the embargo was not adopted. However, this episode proved to be a source of significant tension between the United States and some members of the European Union.
The arms sales activities of major European suppliers, consequently, will continue to be of interest to US policymakers, given their capability to make sales of advanced military equipment to countries of concern in US national security policy.6
The four major West European suppliers (France, the United Kingdom, Germany, and Italy), as a group, registered a significant decrease in their collective share of all arms transfer agreements with developing nations between 2013 and 2014. This group's share fell from 25.4% in 2013 to 9.5% in 2014.
The collective value of this group's arms transfer agreements with developing nations in 2014 was $5.9 billion compared to a total of nearly $13.8 billion in 2013 (in current dollars). Of these four nations, France was the leading supplier with $4.3 billion in agreements in 2014. Italy, meanwhile registered $800 million in arms agreements in 2014. (Figure 7 and Figure 8) (Table 3 and Table 5).
In the period from 2007 to 2014, the four major West European suppliers were important participants in the developing world arms market. Individual suppliers within the major West European group have had notable years for arms agreements during this period: France in 2009 ($9.3 billion) and in 2008 ($5.6 billion);
the United Kingdom in 2007 ($9.8 billion) and 2012 ($5.7 billion);
Germany ($7.1 billion) in 2013, and in 2012 ($4.8 billion);
and Italy in 2008 ($1.7 billion).
In the case of all of these West European nations, large agreement totals in one year have usually resulted from the conclusion of large arms contracts with one or a small number of major purchasers in that particular year (Table 3 and Table 5).
The major West European suppliers, individually, have enhanced their competitive position in weapons exports through strong government marketing support for their foreign arms sales. All of them can produce both advanced and basic air, ground, and naval weapons systems.
The four major West European suppliers have sometimes competed successfully for arms sales contracts with developing nations against the United States, which has tended to sell to several of the same major clients, especially to the Persian Gulf states that see the United States as the ultimate guarantor of Gulf security.
The continuing demand for US weapons in the global arms marketplace, from a large established client base, has created a more difficult environment for individual West European suppliers to secure large new contracts with developing nations on a sustained basis. Yet, as the data indicate, the major West European suppliers continue to make significant arms transfer contracts each year.
An effort to enhance their market share of the arms trade in the face of the strong demand for US defense equipment, among other considerations, was a key factor in inducing European Union (EU) member states to adopt a new code of conduct for defense procurement practices. This code was agreed on November 21, 2005, at the European Defense Agency's (EDA) steering board meeting.
Currently voluntary, the EU hopes it will become mandatory, and through its mechanisms foster greater cooperation within the European defense equipment sector in the awarding of contracts for defense items.
By successfully securing greater intra-European cooperation in defense program planning and collaboration in defense contracting, the EU hopes that the defense industrial bases of individual EU states will be preserved, thereby enhancing the capability of European defense firms to compete for arms sales throughout the world.
Some European arms companies have begun, and others completed the phasing out of production of certain types of weapons systems. These suppliers have increasingly sought to engage in joint production ventures with other key European weapons suppliers or even client countries in an effort to sustain major sectors of their individual defense industrial bases -- even if a substantial portion of the weapons produced are for their own armed forces. Examples are the Eurofighter and Eurocopter projects.
A few European suppliers have also adopted the strategy of cooperating in defense production ventures with the United States such as the Joint Strike Fighter (JSF), rather than attempting to compete directly, thus meeting their own requirements for advanced combat aircraft while positioning themselves to share in profits resulting from future sales of this new fighter aircraft.7
Regional Arms Transfer Agreements
The leading markets for arms in regions of the developing world have been predominately in the Near East and Asia. Latin American and African nations, by contrast, have not been major purchasers of weapons, with rare exceptions. The regional arms agreement data tables in this report demonstrate this.
US policymakers have placed emphasis on helping to maintain stability throughout the regions of the developing world. Consequently, the United States has made and supported arms sales and transfers it has argued would advance that goal, while discouraging significant sales by other suppliers to states and regions where military threats to nations in the area are minimal.
Other arms suppliers do not necessarily share the US perspective on what constitutes an appropriate arms sale, and in some instances the financial benefit of the sale to the supplier overrides other considerations. The regional and country specific arms-transfer data in this report provide an indication of where various arms suppliers are focusing their attention and who their principal clients are.
By reviewing these data, policymakers can identify potential developments that may be of concern, and use this information to assist a review of options they may choose to consider, given the circumstances. What follows below is a review of data on arms-transfer agreement activities in the two regions that lead in arms acquisitions, the Near East and Asia. This is followed, in turn, by a review of data regarding the leading arms purchasers in the developing world more broadly.
The Persian Gulf crisis of August 1990-February 1991 was the principal catalyst for major new weapons purchases in the Near East made during the last twenty-five years. This crisis, culminating in a US-led war to expel Iraq from Kuwait, firmly established the US as the guarantor of Gulf security and created new demands by key purchasers such as Saudi Arabia, Kuwait, the United Arab Emirates, and other members of the Gulf Cooperation Council (GCC) for a variety of advanced weapons systems.
Subsequently, concerns over the growing strategic threat from Iran, which have continued into the 21st century, have become the principal basis of GCC states' advanced arms purchases.
Because GCC states do not share a land border with Iran, their weapons purchases have focused primarily on air, naval, and missile defense systems. Egypt and Israel have also continued their military modernization programs by increasing their purchases of advanced weaponry, primarily from the United States.
From 2007-2010, Saudi Arabia was the largest purchaser with an agreements value of $29.6 billion. In 2011-2014 Saudi Arabia again held the largest number of agreements with a total value of $56.4 billion (in current dollars). India was again second with $38.1 billion (Table 11 and Table 12).
The Near East has generally been the largest arms market in the developing world. In the earlier period (2007-2010), it ranked first with 49.5% of the total value of all developing nations arms transfer agreements ($87.9 billion in current dollars). The Asia region ranked second in 2007- 2010 with 30.8% of these agreements ($54.8 billion in current dollars).
During 2011-2014, the Near East region again placed first with 60.1% of all developing nations agreements ($148.5 billion in current dollars). The Asia region ranked second in 2011-2014 with $72.4 billion of these agreements or 29.3% (Table 6 and Table 7).
The United States ranked first in arms transfer agreements with the Near East during the 2007- 2010 period with 53.5% of their total value ($47 billion in current dollars). The United Kingdom was second during these years with 12.2% ($10.7 billion in current dollars).
Recently, from 2011 to 2014, the United States dominated in arms agreements with this region with almost $86.9 billion (in current dollars), a 58.5% share. Russia accounted for 14.4% of the region's agreements in the most recent period ($21.4 billion in current dollars) (Figure 5) (Table 6 and Table 8).
The data on regional arms-transfer agreements from 2007 to 2014 reflect that Asia, after the Near East, is the second largest region of the developing world for orders of conventional weaponry. Throughout Asia, several developing nations have been upgrading and modernizing their defense forces, and this has led to new conventional weapons sales in that region.
Beginning in the mid- 1990s, Russia became the principal supplier of advanced conventional weaponry to China for about a decade -- selling it fighters, submarines, destroyers, and missiles -- while establishing itself as the principal arms supplier to India.
Russian arms sales to these two countries have been primarily responsible for much of the increase in Asia's overall share of the arms market in the developing world during much of the period of this report. Russia has also expanded its client base in Asia, securing aircraft orders from Malaysia, Vietnam, Burma, and Indonesia.
It is notable that India, while the principal Russian arms customer, during recent years has sought to diversify its weapons supplier base, purchasing the Phalcon early warning defense system aircraft in 2004 from Israel and numerous items from France in 2005, in particular six Scorpene diesel attack submarines. In 2008 India purchased six C130J cargo aircraft from the United States.
In 2010, the United Kingdom sold India 57 Hawk jet trainers for $1 billion. In 2010 Italy also sold India 12 AW101 helicopters. In 2011, France secured a $2.4 billion contract with India to upgrade 51 of its Mirage-2000 combat fighters, and the United States agreed to sell India 10 C-17 Globemaster III aircraft for $4.1 billion.
This pattern of Indian arms purchases indicates that Russia will likely face strong new competition from other major weapons suppliers for the India arms market, and it can no longer be assured that India will consistently purchase its major combat systems.
Indeed, India in 2011 had eliminated Russia from the international competition to supply a new- generation combat fighter aircraft, a competition won by France.
Asia has traditionally been the second-largest developing-world arms market. In 2011-2014, Asia ranked second, accounting for 29.3% of the total value of all arms transfer agreements with developing nations ($72.4 billion in current dollars). In the earlier period, 2007-2010, the Asia region ranked second, accounting for 30.8% of all such agreements ($54.8 billion in current dollars) (Table 6 and Table 7).
In the earlier period (2007-2010), Russia ranked first in the value of arms transfer agreements with Asia with 31.2% ($17.1 billion in current dollars) -- primarily due to major combat aircraft and naval system sales to India and China. The major West European suppliers, as a group, made 15.71% of this region's agreements in 2007-2010.
In the later period (2011-2014), the United States ranked first in Asian agreements with 32.9% ($23.8 billion in current dollars); Russia ranked second with 24.9% ($18 billion in current dollars). The major West European suppliers, as a group, made 17.8% of this region's agreements in 2011-2014. (Figure 6) (Table 8).
Leading Developing Nations Arms Purchasers
Saudi Arabia was the leading developing world arms purchaser from 2007-2014, with agreements totaling $86.6 billion. India was the second largest developing world arms purchaser from 2007 to 2014, making arms transfer agreements totaling $38.1 billion during these years (in current dollars).
These increases reflect the military modernization efforts by India, underway since the 1990s. In the 2007-2010 period, Saudi Arabia ranked first in arms transfer agreements at $29.6 billion (in current dollars).
In 2011-2014 Saudi Arabia ranked first in arms transfer agreements, with $56.4 (in current dollars). The total value of all arms transfer agreements with developing nations from 2007 to 2014 was $425.6 billion (in current dollars). (Table 3, Table 6, Table 12, and Table 13).
Weapons Types Recently Delivered to Near East Nations
Regional weapons delivery data reflect the diverse sources of supply and type of conventional weaponry actually transferred to developing nations.
Even though the United States, Russia, and the four major West European suppliers dominate in the delivery of the 14 classes of weapons examined, it is also evident that the other European suppliers and some non-European suppliers, including China, can be leading suppliers of selected types of conventional armaments to developing nations (Tables 25-29).
Weapons deliveries to the Near East, historically the largest purchasing region in the developing world, reflect the quantities and types delivered by both major and lesser suppliers.
The following is a summary of weapons deliveries to this region for the period 2011-2014 from Table 27:
80 tanks and self-propelled guns
419 APCs and armored cars
32 supersonic combat aircraft
406 surface-to-air missiles
190 tanks and self-propelled guns
40 APCs and armored cars
10 supersonic combat aircraft
5,410 surface-to-air missiles
70 surface-to-surface missiles
70 anti-ship missiles
650 surface-to-air missiles
Major West European Suppliers
280 APCs and armored cars
5 major surface combatants
13 minor surface combatants
20 supersonic combat aircraft
50 surface-to-surface missiles
170 anti-ship missiles
All Other European Suppliers
60 tanks and self-propelled guns
430 APCs and armored cars
3 major surface combatants
33 minor surface combatants
20 supersonic combat aircraft
All Other Suppliers
10 tanks and self-propelled guns
140 APCs and armored cars
1 minor surface combatant
270 surface-to-air missiles
40 anti-ship missiles
These data indicate that substantial quantities of major combat systems were delivered to the Near East region from 2011-2014, in particular, tanks and self-propelled guns, armored vehicles, supersonic combat aircraft, helicopters, air defense and anti-ship missiles.
Although the United States, Russia, and the European suppliers were the ones who delivered the greater number of these significant combat systems, other suppliers provided important naval systems and ground equipment as well. Both aircraft platforms and naval craft are particularly expensive, and constitute a large portion of the dollar values of arms deliveries of all suppliers to this region during the 2011-2014 period.
Although not necessarily as expensive as aircraft or naval vessels, other weapon systems possess significant capabilities and create important security threats in the Near East region. Such systems include anti-ship and surface-to-surface missiles.
In these categories, Russia delivered 70 anti-ship and 70 surface-to-surface missiles to the Near East from 2011-2014. The four major West European suppliers collectively delivered 50 surface-to-surface missiles and 170 anti-ship missiles.