Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Real 'Merchants of Death'

Politics / GeoPolitics Sep 21, 2010 - 05:26 AM GMT

By: FPIF

Politics

Best Financial Markets Analysis ArticleConn Hallinan writes: Accused Russian arms dealer Viktor Bout is a centerpiece for the book Merchant of Death and the model for the Hollywood movie The Lord of War. He is the archetypal bad guy. Washington apparently traded military hardware to the Thais to get him extradited from a Bangkok jail.


Is Bout a major actor in the international arms trade, as Hollywood portrays him? In reality, he’s a penny-ante operator who can’t hold a candle to the real “merchants of death” like Lockheed Martin, BAE Systems, General Dynamics, Dassault Aviation, Finmeccanica, Boeing, Rosoboronexport, and Northrop Grumman. Bout is like the guy who sells you a Saturday night special in a back alley. If you want something that will flatten a village you need a Massive Ordinance Penetrator from Boeing, or a General Atomics “Reaper” drone armed with Lockheed Martin “Hellfire” missiles.

The former Russian naval officer is accused of running guns to the Revolutionary Armed Forces of Colombia (FARC), the Taliban, and anti-government insurgents in Somalia. The United States has sent some $5 billion in military aid to the Colombian government to fight the FARC, has spent over $300 billion trying to defeat the Taliban, and props up the current Somali government.

Exporting Death
The global arms trade is a $60 billion yearly business. The United States controls nearly 40 percent of this trade, defending its turf with the ferocity of a junkyard dog. The 10 biggest arms exporters are — in order — the United States, Russia, Germany, France, the United Kingdom, Spain, China, Israel, the Netherlands, and Italy. Sweden and Switzerland are close behind. This order shifts from year to year, but one thing never changes: The United States is always No. 1.

According to the Congressional Research Service, due to the current economic downturn, world arms sales dipped 8.5 percent in 2009. But “dipped” is a relative term. The price tag was still $57.5 billion, of which the U.S. share of 39 percent came to $22.6 billion. Russia was second at $10.4 billion, and France third with $7.4 billion in sales. Other countries split the rest.

Most of the trade — $45.1 billion — focuses on developing nations. Of the top seven arms purchasers in 2008, four of them — India, Malaysia, Pakistan, and Algeria — are countries that can ill afford to put money into weapons systems. Brazil, Venezuela, Egypt, and Vietnam were also among the bigger arms buyers in 2009, and Iraq is planning to purchase $13 billion in U.S. weaponry. All are countries struggling with poverty.

The United States overwhelmingly dominates arms sales to the developing world. In 2008 it cornered 68.4 percent of such sales, and 45.1 percent in 2009. It is currently negotiating a $60 billion arms sale to Saudi Arabia that will probably cost $120 billion when parts and maintenance is added in.

Arms sales many times parallel the foreign policy of the suppliers. U.S. arms sales to Egypt, Israel, Jordan, Saudi Arabia, Kuwait, the United Arab Emirates, Colombia, Japan, and South Korea arm allies against regional antagonists like Iran, Syria, China, and Venezuela. Arms sales to places like Yemen and Somalia support U.S. allies caught up in civil wars.

Where the Profits Go
The arms trade is also an enormously profitable enterprise for the companies involved, and any effort to curb that trade brings on an assault of lobbyists and political action committees. Lockheed Martin, the world’s largest arms producer, spent over $20 million to lobby Congress in 2009.

The companies have carefully spread their operations to scores of states, so that when an effort is made to cutback or eliminate certain weapons, some local congress member will rise to defend jobs in his or her district. When a move was made to cut the B-2 stealth bomber — an almost useless aircraft that cost $2.1 billion apiece — its manufacturer, Northrop Grumman, mobilized 383 congressional districts in 46 states to successfully save the plane.

In reality, military spending doesn’t create jobs, it kills them. According to a study by the Center for Economic and Political Research, military spending actually has a negative impact on economic growth. A 1 percent increase in defense spending — U.S. Defense Secretary Robert Gates’ current proposal — would, over 20 years, reduce GDP by 0.6 percent. That translates into approximately 700,000 jobs, with construction and manufacturing particularly hard hit.

While Gates talks about “efficiencies,” he is not proposing to cut the military budget, just trim things like health care and bureaucracy and shift those savings to support troops in the field.

“The long-term impact of our increased defense spending will be a reduction in GDP of 1.8 percent,” says economist Dean Baker. “The projected job loss from this increase in defense spending would be close to two million [jobs].”

Unnecessary Systems
The result of PACs and lobbing efforts by the arms companies isn't only continued spending, but also expensive weapons systems that don’t work or are simply unneeded. The United States currently has 11 aircraft carriers, while no other nation possesses even one carrier that can match the huge $6.2 billion Nimitz-class vessels in the U.S. fleet.

Lockheed Martin’s taxpayer funded F-35 Joint Strike Fighter — at $184 million apiece, the most expensive weapons system ever built — is, according to arms analysts Pierre Sprey and Winslow Wheeler, an overweight, underpowered turkey that is so complex it will likely spend most of its time in the repair shop. Lockheed Martin is already taking orders from foreign buyers.

Many companies have responded to the recession by buying up enterprises specializing in defense electronics, cyber security, and the hottest new thing: killer robots.

Countries all over the world are clamoring to buy General Atomics’ Predators and Reapers, BAE’s Tiranis, and Israel’s Harpy and Heron, the latter a mega beast the size of a commercial airliner and capable of carrying a wide range of weapons. Predators run $4.5 million apiece while the larger, more muscular Reaper costs $10.5 million.

Bout on the Margins
The international arms trade will not even notice if Viktor Bout ends up behind bars. Men like Bout are shadowy actors that play on the margins. To have a real impact on the global arms enterprise will require confronting powerful corporations, with their lobbies and their PACs, as well as an immense military establishment. But according to Frida Berrigan of the Arms and Security Project of the New American Foundation, the Obama administration is “investigating” how to make the selling of military technology easier.

A number of NGOs, including Amnesty International, the International Network on Small Arms, and Oxfam, are working on an arms trade treaty that would try to keep weapons out of the hands of human rights abusers.

But “human rights abusers” is a slippery term. For the United States, Venezuela is a human rights abuser and can’t buy U.S. arms, while Honduras and Colombia are okay, even though regimes in both of the latter countries have been accused of working with death squads. The most Venezuelan President Hugo Chavez can be accused of is a certain love of bombast and strong opposition to Washington’s policies in the region.

A UN conference on drawing up an arms trade treaty is set for 2012, although there have been no serious negotiations to date. But such a treaty will need to do more than just get a handle on some of the more odious practices currently underway. It must restrict and then move toward an eventual ban on the trade itself.

By Conn Hallinan

http://www.fpif.org/

Conn Hallinan is a columnist for Foreign Policy In Focus. His writings can also be found on his blog.

© 2010 Copyright Conn Hallinan - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in