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World: Iraq Coverage Helps Arms Exporters


by Renae MerleWashington Post
April 1st, 2003

When the war in Iraq winds down, the U.S. defense industry is likely to launch a major new offensive to sell its battlefield-tested weapons to countries around the world.

If the weapons systems perform in Iraq as Pentagon officials envision -- with power and precision -- then significant commercial benefits probably would follow, industry analysts say. Overseas buyers are expected to have their sights primarily on inexpensive, satellite-guided weapons rather than high-priced tanks and jets, because they've already bought about as many of those systems as they can afford.

The new weapons are being featured in nonstop television coverage, providing the kind of publicity that helped fuel a surge in international arms sales after the 1991 Persian Gulf War.

"It's the best possible marketing tool -- CNN," said Tamar Gabelnick, director of the arms sales monitoring project at the Federation of American Scientists.

After years of development and testing, a weapon proves its value only during "cold, hard combat," said Joel L. Johnson, vice president of international affairs at the Aerospace Industries Association. "You don't know how it's going to perform in large numbers until you put it in the hands of those 19- and 20-year-old" soldiers, he said.

Adds defense industry consultant James McAleese: "You should be able to sell [at least] three times more of any weapon system that has been proven in combat than if you haven't seen it in combat."

Foreign sales raise a sensitive issue, according to some observers. The Pentagon runs the risk of arming unstable regimes or nations sharing tense borders, opening itself up to charges that it is increasing volatility in an already insecure world. The United States also puts itself in the position of supplying sophisticated weaponry to a potential future enemy. In the 1980s, for example, the United States authorized the sale of several products to Iraq that could be used in weapons, including poisonous chemicals and deadly viruses, such as anthrax and bubonic plague.

"It's not clear what a postwar Middle East will look like in terms of who our allies are in the long term. Once you export the weapon you have no control of its use," Gabelnick said. "Maybe we're overly pessimistic, but the risk is still there."

If an ally government is overthrown, "you might be faced with a hostile regime outfitted with the best in U.S. military equipment," she added.

While the defense companies largely refuse to comment on their sales ambitions -- saying it would be inappropriate to discuss such possibilities during wartime -- they do acknowledge that exports have a significant impact on their bottom lines.

Boeing spokesman Walt Rice would not specifically address postwar marketing, saying only that "foreign military sales are important to our long-term success."

The State Department or the Defense Department, or both, must scrutinize every potential sale. When certain major defense systems such as fighter jets are being sold, notification of Congress is required.

In 1993, after the Persian Gulf War, U.S. firms signed contracts to sell an estimated $ 20 billion worth of arms abroad, up sharply from about $ 10 billion in 1992 and $ 11 billion in 1991, according to the Congressional Research Service.

Few observers anticipate the same level of buying after this war, which comes amid a global economic slump that probably will hamper the sale of large-scale systems, industry analysts said. Many Middle Eastern countries are still digesting their purchases of early 1990s and cannot easily buy the latest costly weapons -- no matter how impressive their performance.

The rearmament of Iraq is expected to lead to significant arms sales, though not for some years, industry officials said. When coalition forces leave Iraq, the country will be "secure and strong and that means a significant re-arming," said Brett Lambert, a defense industry analyst for DFI International. "You will see a significant influx of U.S. weapons and munitions."

U.S. allies in the region are also likely to buy arms. The White House's proposed supplemental spending package unveiled last week sets aside $ 2.1 billion for foreign military financing and another $ 1 billion for Israel to "enhance security in light of threats posed by the war with Iraq," according to a White House statement.

"I would find it very strange if Jordan and Pakistan aren't buying U.S. weapons," said McAleese.

The key items are likely to be the comparatively cheap, satellite-guided weapons. The international market for multibillion-dollar fighters and tanks is saturated, industry analysts said, but the United States remains preeminent in sophisticated munitions with precision capabilities. More than 90 percent of the munitions used during this war are precision-guided, up from 10 percent in the Persian Gulf War.

During the first 24 hours of the current conflict, Navy cruisers and destroyers stationed in the Red Sea fired more than 500 of Raytheon Co.'s Tomahawk precision-guided missiles, each costing $ 600,000. The war has also featured the Paveway II, an updated 1970s bomb manufactured by both Raytheon and Lockheed Martin Corp. The Paveway is equipped with a sensor that guides it to a laser-illuminated target selected by the pilot. Bethesda-based Lockheed Martin, a latecomer to Paveway production, spent $ 15 million to gain certification to begin making its version of the bombs, which are seeing their first widespread use in this war. Raytheon has been making the bombs for years.

Raytheon's AGM-154 Joint Standoff Weapon, a $ 150,000 precision-guided glide bomb, is seeing its first widespread action in Iraq, too, though it was used in Afghanistan.

Boeing's Joint Direct Attack Munition bomb is also receiving a lot of attention. It is among the cheapest weapons of its type at $ 25,000 each. A general-purpose, free-fall bomb is converted into a JDAM by strapping a GPS receiver to it to aid in moving its fins and directing it to a target.

But the weapon's simplicity could work against it, industry analysts said, because some countries may decide to build their own. "Everybody has JDAM on the brain right now," said John Pike, director of GlobalSecurity.org. "I think any country with a self-respecting military in fairly short order is going to have to get in line to buy the genuine American article or is going to have to build their own copy."

Beyond munitions, another potential market may be the "command and control" capabilities trumpeted by the Pentagon. These systems pool data from several sources: drone aircraft, satellites and soldiers in the field, for example, to produce a comprehensive picture of a battlefield.

Lockheed Martin's Theater Battle Management Core System coordinates communication between intelligence systems and ground forces. The program is the primary system used for planning, managing and executing air battles, Lockheed said.

"I think the balance will shift to countries being more interested in more of the command and control aspects," said Lambert of DFI International. "The last war equipped our allies with adequate hardware, and the network force is what they don't have." Increasingly, the systems that are important on the battlefield "are the things you can't see and you can't ride."

But the Pentagon remains skeptical about sharing some technology. Even though the Joint Strike Fighter was designed to be shared with several allies, including Britain, the Pentagon probably will not share how it designed the planes' stealth capabilities, he said. "There will be parts that no one will be able to make but us," Johnson said.

"Stealth capabilities are currently one of our silver bullets," he added, and the Pentagon is reluctant to share them.

The boost from the Gulf War came at a good time for the industry. Congress had begun cutting the defense budget in response to the end of the Cold War, sending the industry scrambling for ways to offset the losses. Many oil-rich Middle Eastern countries were concerned about potential security threats from Iran and Iraq. At the same time, the Pentagon saw selling arms overseas as a way to lower its costs by spreading overhead expenses to more customers, industry analysts said.

A frenzy of sales occurred and its impact was almost immediate. Saudi Arabia and Israel placed large orders for Boeing's F-15 fighters after that war, helping Boeing preserve the plane's production plant. Lockheed sold F-16 fighters to Bahrain, Egypt, Israel and Jordan, according to a General Accounting Office report. General Dynamics Corp. sold M1 tanks to Egypt, Kuwait and Saudi Arabia.

But publicity can also cut the wrong way, especially in the current war where the advertising is in real time. In Operation Free Iraq, the Pentagon has trumpeted the return of the Patriot missile after its lackluster performance against Scud missiles during the Persian Gulf War. But in the last two weeks, the updated Patriot has shot down a British Royal Air Force Tornado GR-4 fighter near the Kuwaiti border, killing both crew members. In another incident, a Patriot "locked on" to an Air Force F-16 fighter in preparation to fire before the fighter destroyed its radar dish.

While it is unclear whether the Patriot is to blame, the adverse publicity could reduce its export potential, industry officials said. As Gabelnick of the Federation of American Scientists put it: "When these things happen, it doesn't sell your weapons well."



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