Tuesday, February 6, 2018

State Interests and the Business side of Arms

How do we measure the impact of non-state actors on state policy? I ask because I am generally curious.  I am curious because the answer that question is essential to understanding the complexity of the issue of arms in international relations. I think that the disconnect between the firms that produce weapons, and the states that regulate their sales and purchase them is one of the biggest barriers to really building general theories of arms transfers.

My most recent work on arms transfers relies on a constructivist/role theoretical framing of the state as a corporate actor.  The state has interests and acts deliberately (not always rationally, but deliberately) to advance those interests. Personifying states and accounting for the effects that come through the interaction of these agents is not necessarily new.  However, trying to account for many moving pieces beneath the surface and how they interact to produce the actions and outcomes we can see is still necessary for some degree of understanding.

How does this all relate to arms sales?  Well there are two stories that appeared in my reader this week that have made me think about this issue more deeply than I have for years - probably since I was drafting the first chapter of my dissertation six years ago.

The first story is about the struggles of the Italian defense firm Leonardo.  The firm was recently renamed (previously it was Finmeccanica) after it had troubles with scandals.  Now it is having trouble with orders and generating revenue, and its stock has plunged.  This particular line from the article really jumped out at me:

Leonardo, Europe's largest maker of military hardware after BAE Systems and Airbus, said it hoped to return to "sustainable growth" over the next five years thanks to a new sales strategy, accelerating orders, strict cost control and a better financial strategy.
I wonder about the model for sustainable growth in a defense firm that operates independently. It also operates in an environment where government (both Italian and EU) control over exports can limit the potential sales of the firm. Others have studied this economic paradox regarding arms before - and the original SIPRI arms classifications of hegemonic, industrial, and restrictive supplier accounted for the government policies regarding arms.  Italy is an industrial supplier.  It needs to sell arms in order to support internal business.

The tension is that the Italian government and the EU code restrict arms exports. In deciding how to allow firms to operate and to sell weapons, governments are faced with choices about what the most salient state interest is.  Is it to have a strong defense industry (or any industry) and to generate employment and exports, or is it to operate "responsibly" on the world stage?

The set of choices for state interests is also not simply a dichotomous choice between native industrial capacity and responsible action.  State interests in alliances and other relationships, security for client states, preferences for regional leadership in areas outside their own, or simply state prestige can affect the state's desire to control arms outflows.

That brings me to the second article.  This is a follow up to my post from last week about Trump's new "Buy American" plan.  The United States is sending a State department official to a defense expo in Singapore to promote the sale of US weapons - especially aircraft and missiles.

Whether it is misguided or not [and I am not convinced either way], the Trump administration has determined that it is in America's interest to sell weapons.  The export, balance of trade, and American manufacturing arguments will play well domestically and I think that is one of the primary drivers of the policy. However, the international implications of expanding arms sales could be just as significant - and those implications could be either positive or negative.  US arms purchases can signal greater cooperation with states in the future.  It can signal a willingness by states to improve their own defense capabilities.  Such a signal may make the US more willing to extend further security guarantees, or negate the need for the US to provide the majority the security for particular states or regions (Yarhi-Milo et al 2016).

Whatever the reason for the new emphasis, the outcome will likely be more arms sales.  Researchers will certainly be looking at the effects of those transfers in the years to come.
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Yarhi-Milo, Keren, Alexander Lanoszka, and Zack Cooper. (2016) To Arm or to Ally?: The Patron’s Dilemma and the Strategic Logic of Arms Transfers and Alliances. International Security 41: 90–139.

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