Arms trade promotion compensating for declining domestic demand

With military budgets declining or frozen in most of Europe, arms producers are increasingly looking abroad to fill their shrinking order books. And increasingly they are relying on a helping hand from the government, either through active diplomacy at the highest level to speed up potential deals, or with the military showing their hardware for potential foreign customers. And any sale preferably backed up with state-guaranteed loans.

While big business generally is not too fond of government interventions in their work, when it comes to export promotion no effort is ever big enough.

And their efforts appear to be proliferating, with even more examples over the past year - be it UK prime minister Cameron promoting Typhoon fighter aircraft in Saudi Arabia and the Emirates or his colleague across the Channel doing much the same to massage major arms deals with Brazil and India.

In Germany, the Merkel government has brushed aside previous reluctance to sell to Middle Eastern dictatorships. Major secret deals with Saudi Arabia and the Emirates are in the making, with government backing.

While in the Netherlands everything happens on a smaller scale, similar support is visible.

Over the past year there were for example two trade missions to Turkey. In May the Ministers of Defence and Economic Affairs witnessed the signing of a number of contracts on board of the Dutch Navy’s frigate Hr. Ms. Evertsen, which had embarked in the Bosporus for the occasion. The three main Dutch military companies - Damen, Thales NL and Fokker - were all present.

  

In November Prime Minster Mark Rutte, together with the new Foreign Trade and Development Cooperation Minister Lilliane Ploumen [a new post, very much reflecting current views that trade is the dominant form of development cooperation] were leading another trade mission to Turkey. Ploumen signed a contract to foster cooperation between the Turkish and Dutch aerospace industries.

And the new Trade Minister went on another two trade trips in November, both to so-called BRIC countries (Brazil, Russia, India and China). Led by crown prince Willem Alexander and princess Maximá, she went to Brazil, together with 157 companies – the largest such delegation ever. Thales Nederland was one of them, seeing major opportunities to get involved in the modernisation and expansion of Brazil’s navy.

After completing an anti-piracy mission along the east African coast, 166 meters long amphibious transport ship Hr. Ms. Rotterdam embarked in the Indira Dock in Mumbai, India later in November to support another mission: arms trade. Again Thales Nederland, along with a number of other military companies, both Dutch and Indian. Being the world’s largest arms importer again major opportunities are looming. After India and Pakistan conducted nuclear tests in 1998 the Dutch imposed an arms embargo that held for a number of years, but all such concerns appear long forgotten now. Billions of euro’s will be spent over the next years to build dozens of new warships. Thales Nederland has long supplied radar and fire control systems to India and aims to get involved in these new contracts too. Other Dutch companies are also working closely together with India’s naval industry.

Export control restrictions aimed to prevent arms transfers to repressive regimes, conflict zones or regions involved in major arms build-ups, have little use if governments at the same time actively engaged in export promotion. Still the two go well together according to most governments. In France the same inter-ministerial committee responsible for export controls is also in charge of export promotion.

Back in 1966 the U.K. government stated that “while the government attach[es] the highest importance to making progress in the field of arms control and disarmament, we must also take what practical steps we can to ensure that this country does not fail to secure its rightful share of this valuable commercial market”.

Almost fifty years later little appears to have changed.

 

[FS, 21 Dec 2012]