Global Arms Trade: Who are the real winners?

Gurmangeet Kaur Pandey

Gurmangeet Kaur Pandey

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When the world is going through a pandemic, the Governments are busy signing defense deals  and sparking an arms race.

Russian President Vladimir Putin came to Delhi to attend the 21st Russia-India Summit. Although Afghanistan, more engagement in Central Asia, tensions on India’s northern borders were some of the issues which India tried to bring into the limelight, the main focus of the meet remained on the defense deal that included the signing of the agreement for AK -203 assault rifles.

The cost of the production of these rifles would be around 5000 crores. Shipment of the S 400 missile system is also on the way to India from Russia. The agenda of the meeting revolved around these armament deals.

This development shows that amid a pandemic when people are longing for basic social security nets, armament deals are being signed at a swift pace all over the world. Defense deals regarding assault rifles, large missile systems, and submarines are being signed by different countries in the world.

According to Stockholm International Peace Research Institute’s (SIPRI) report, arms sales of the top 100 arms companies in 2020 were 17 percent higher than in 2015 (the first time when data of Chinese companies was included in the study). While the global economy contracted due to Covid, this was not the case with armament industry giants. Demand for military goods and services grew at a considerable pace.

In 2020 sales of arms and military services by the industry’s 100 largest companies totaled $ 531 billion. US companies continued to dominate the ranking. Arms sales of the top 41 US companies were worth $285 billion.

The US was followed by China. Arms sales of Chinese companies which were included in the top 100 amounted to $ 66 billion. 26 European Arms companies in the top 100 accounted for 21 % of the total arms sale i.e $109 billion. But interestingly the aggregate share of arms sales by six French companies in the top 100 fell by 7.7%

According to SIPRI, France’s global share of arms exports rose from 2011 – 2015 to 2016 – 2020 from 5.6% to 8.2% with major purchasers being India (21%), Egypt (20%), Qatar (10%).

rafaleThe United States seemed not very comfortable with a rising share of France in Global Arms Exports. US and UK attempt to breach AUS-France conventional submarine deal and forming a new alliance called AUKUS can be seen as an attempt to snub France growth in the global arms market.

And now the US to support its arms industry is finding markets in those countries whose economies can support arms purchase. For Example, the US is trying to shift the focus from Saudi Arabia whose economy is largely oil-based and due to the advent of renewable energy, its future seems gloomy.

The US wants to shift its target from Saudi Arabia to countries like Australia and ASEAN countries whose geography can also be used to counter China’s growing influence.

The arms race will further aggravate as China, a strong and growing economic power wants to maintain dominance over maritime sea routes.

China has established several overseas ports and military bases like Doraleh multipurpose port in Djibouti located at the strategic Horn of Africa, Khalifa Port in UAE, Hambantota port, and CICT terminal (Colombo) in Srilanka, Gwadar deepwater Port, and Karachi Deepwater Terminal in Pakistan, Sokhna Port in Egypt, Sudan port in Sudan, Darwin port in Australia.

China has also planned several ports like Kyaukpyu Port in Myanmar and Payra port in Bangladesh. Several ports like Dar-e-Salaam port in Tanzania, Lamu port, and Mombasa port in Kenya are under construction. It wants to maintain hegemony on sea routes and break US’s supremacy.

This would lead to or we can say this has led to the procurement of naval defense goods and services. The signing of the nuclear submarine deal between the US, UK, and Australia is the latest example.

This would bring the boom to the Naval Armament industry as the US, China, and their allies in the Indo Pacific region would indulge in a dreadful arms race.

Boom will also come to these Naval armament industries because establishing dominance on the maritime routes situated in regions other than Indo-pacific is also on China’s to-do list.

Target armament buyers of the US and Russia’s defense industry are now the countries located in Indo pacific. The most disputed region in Indo Pacific i.e South China Sea consists of an important world trade route and is also has potential hydrocarbon reserves.

South china sea is blessed with approximately 11 billion barrels of oil reserves and 190 trillion cubic feet of natural gas in proved and probable reserves. One-third of the world’s shipping passes through this route, carrying over $3 trillion in trade each year. It is the second most used sea lane in the world.

These factors make the arms race in this region quite natural. To dominate global resources, one should have control over the world’s strategic routes. These factors lead to the arms race. Because world powers need to have maritime defense equipment to maintain their hegemony on strategic maritime routes.

The US through QUAD wants to get a hold of the Indian arms market though India’s economy cannot support such expensive arms purchases. Japan, also a member of QUAD, acquires more than 90% of its defense imports from the States.

According to SIPRI, Japan’s major supplier of Arms is the US, which supplies 97% of Japan’s total arms imports. A huge chunk of profit goes to the Arms Industry and defense contractors.

Australia, another member of QUAD canceled its conventional submarine deal with France and signed a nuclear submarine deal with the US and UK (AUKUS). It is clear that the arms race is getting severe. Be it the Russian arms Industry or the US arms industry, they are the ones who gain a real profit.

Chinese and Indian armament industries are also trying to jump on the bandwagon. The rise of China in this sphere is visible from the fact that Chinese companies which were included in the top hundred companies in SIPRI’s report amounted to $66 billion in arms sales. Also, combined arms sales by three Indian companies in the top hundred grew by 1.7%. The Indian government also declared a phased ban on arms imports to boost self-reliance in the arms sector.

Before the Vietnam war, the US military built and maintained US bases. Everything was done by soldiers, which included tasks like building the barracks and mundane chores like washing clothes.

US troops in Vietnam – File pic

But the trends changed in the Vietnam war. Private contractors entered the scene and Brown & Root later came to be known as KBR started to build military installations in South Vietnam. Military faced problems as they always needed personnel to have a fighting force but the entry of these companies solved this problem.

To enjoy luxurious lifestyles in war zones as well, the military started to pay contractors huge amounts. In fact, in the gulf war in 1991, one out of every hundred deployed personnel was a contractor. In the second gulf war, half of the deployed personnel were contractors. The Military’s desire to get a luxurious lifestyle in war zones catalyzed the entry of contractors in this arena. But the patterns of contract bidding raised many questions. There were 1.7 million contracts.

After the Vietnam war, the new war zone emerged in Iraq and Afghanistan In which 385 billion dollars taxpayer-funded contracts were dispersed by the pentagon to private companies between 2001 to 2013. The total might be double this number.

The top five beneficiaries of the Pentagon’s contract abroad are KBR ($44.4 billion), Supreme Group ($9.3 billion), Agility logistics ($9 energy billion) Dyncorp international ($ 8.6 billion) Fluor Intercontinental ($ 8.6 billion). Contracts worth $47.1 billion went to miscellaneous foreign contractors.

talibanThe US armament industry earned billions of dollars through these defense contracts as the conflict zones emerged after the Vietnam war. Countries, where the pentagon’s spending was directed, were those countries that are rich in terms of energy and mineral resources.

Iraq topped the list ( $89 billion) followed by Afghanistan ($69.8 billion). Kuwait booked third place with $37.2 billion. Iraq is a country that is famous for its rich petroleum reserves but it also has bounteous sulfur, phosphate, and natural gas. Afghanistan is blessed with rich minerals like lithium, copper, bauxite, etc.

When the world is going through a pandemic where people are yearning for basic facilities like healthcare, livelihood, education and two square meals, the Governments are busy signing defense deals and breaking each other’s hegemonies and sparking an arms race.

Whoever wins this race to hegemony, whoever dominates maritime routes the loser will be the human civilization for sure. The undeclared winner will be the armament industry.

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Gurmangeet Kaur Pandey

Gurmangeet Kaur Pandey

The writer is a student of Political Science and Sociology.

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