Why Arms Sales are Complicated - Purchaser Edition

I have spent a lot of time in the past decade researching arms transfers. There are a few of us who study this particular subfield of international relations/economics and sometimes I wonder if there is a really a lot more to say about the subject.  Then I read a bit more and realize that we are really only scratching the surface in terms of the complexity of the subject matter of arms sales.  I am working on some projects now that work to better integrate arms transfers with wider research in IR and that has me thinking more about the motivations of importing states.

I think that many of the models of arms sales think mostly of supplier considerations. There is a lot to commend in thinking of models of how states use arms as a foreign policy tool. Richard Johnson and I published an article last year in International Studies Quarterly (LINK) where we tested whether major democratic arms suppliers take human rights into consideration in their arms sales. Despite some evidence for this a decade ago (Blanton 2005) in the US context, it doesn't appear that human rights are really a major driver in states' decision-making.  That is important information to know, but rather than simply knowing what does not motivate sales, we need to think about what does.

It is often said that the end of the Cold War signaled a shift from a sellers' to a buyers' market in terms of weapons.  There is some truth to that, but states do not usually simply purchase arms "off the rack." The considerations for states in terms of replacement parts, continued supplies, ammunition, training, etc. especially for complex weapons systems also plays a role.  In other words, this is not simply an economic transaction.  Arms sales by their nature are political - and they often involve top-level government involvement in making the deals.  This is especially true of the most complex weapons systems - combat aircraft and ships.

Caverly and Kapstein (2012) argued a few years ago that the US was making a mistake focusing its research and development and arms sales policy on selling the most complex equipment. Their argument was that many states needed cheaper, reliable arms and that the US would push customers towards rivals (Russia and China) by focusing only on the latest generation of equipment.

I thought about that when I read a recent post in The National Interest that discussed Taiwan's decision to stop seeking access to the US F-35 fighter.  Taiwan's strategy has been to collect the most advanced weapons system that it could in order to deter potential future Chinese aggression.  The authors suggest that a better strategy would be one of denial that relies on abundant cheap resources such as anti-ship and anti-aircraft missiles to make any potential aggression costly. Rather than going toe-to-toe in terms of quality, to beat the Chinese by using multiple cheap technologies.  The strategic consideration of customers (especially for those that are allies) will do a great deal to determine the types of weapons required. This is to say nothing about budgets and the finite resources that states have to acquire weapons.

A second complication that I have been thinking about is one that came up in an article about India's attempt to upgrade its own air force.  Internal politics of this deal have been extremely heated and complicated.  The Indian supreme court refused to get involved in a case about Modi's deal to purchase French Rafale fighters. Modi changed the terms of the deal - abandoning the licensing and construction of aircraft in India in favor or purchasing aircraft built entirely in France.  Licensing, financing, and other considerations along with long-standing political cleavages and battles within purchasing states can also seriously affect the ability of a state to sell arms, and limit the types of equipment (and therefore the number of potential suppliers) available.

All this means is that there needs to be more work that examines qualitative details of arms sales from both the purchaser and seller perspective. Our quantitative models of arms sales need more accurate inputs and theories to become more reliable.  I am looking forward to an exciting year of digging into arms sales details.

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Blanton, Shannon Lindsey. (2005) Foreign Policy in Transition? Human Rights, Democracy, and U.S. Arms Exports. International Studies Quarterly 49: 647–668.

Caverley, Jonathan, and Ethan B. Kapstein. (2012) Arms Away. Foreign Affairs 91: 125–132.

Johnson, Richard A. I., and Spencer L. Willardson. (2018) Human Rights and Democratic Arms Transfers: Rhetoric Versus Reality with Different Types of Major Weapon Systems. International Studies Quarterly 62: 453–464.

The complexity of Arms Sales

A recent article about India's pursuit of advanced aircraft illustrates the complicated world of arms transfers.

The article itself is correcting some misinformation that India was going to purchase the F-35 and open up some joint manufacturing facilities for the aircraft there.  It turns out that initial inquiries into the possibility of F-35s in the future was confused with a current bid for the purchase of F-16 fighters.  India is looking to upgrade its aircraft but is in the bidding stage with both Saab and Lockheed Martin.

In both cases, the Indians will open factories to perform final assembly.  Such licensing and joint production is common.  F-16s are manufactured in Turkey under a similar agreement, for example.  The F-35 is a unique program because it is being built on licensing and co-production from the very beginning with partners all over the world.  It is a complex and collaborative endeavor that relies on pre-existing alliance ties and mutual trust and support. 

India is not approved for the purchase of the F-35 at this time.  The authors of the article noted that the issues of technology transfer that are more acute with this particular advanced aircraft.  The components are more advanced and there is a real worry that the technology could fall into the wrong hands.

For me this article is fascinating because it touches on so many of the complex and fascinating aspects of arms sales that I have been thinking about for the past few years.  The first is the importance of relations and relationship building.  There is a great deal of high-level negotiation that takes place for these arms deals - because they must be approved (in the case of the US) by the State Department working with the Department of Defense.  It is not just a mater of defense firms going out and making sales.

The complexity of licensing and production deals is another aspect of arms transfers that is unique.  There is an incentive for many states to build their own capacity while they purchase weapons systems.  This makes sense from a realist perspective of anarchy and fits with the logic of internal balancing outlined by Morrow (1993).  States don't want to be too dependent on arms imports because it limits their own actions.  States that wish to play a more independent role in international relations will avoid becoming too dependent on a supplier.

Even if the production facilities are mainly symbolic, they offer some work, build native capabilities, and establish the state as being less dependent than a state that simply imports finished arms. My current thinking about arms is about the ways that they are used to socialize states, and the use of licensing deals is an avenue that needs to be explored in more depth.
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Morrow, James D. (1993) Arms Versus Allies: Trade-Offs in the Search for Security. International Organization 47: 207–233.

Arms Procurement Links: Japan Jumps in and India Sinking

One area that I neglected (out of ignorance and not deliberately) in my dissertation was the effect of domestic arms arms procurement procedures on arms exports and imports.  This is an area that I covered recently in a course that I am teaching on the Politics of Arms in International Relations.  I think that I have been primed to see problems of acquisitions because of the readings that we did in class - along with my own personal epiphany about the lack of such thinking in my earlier work. At the bottom of this post I'll post the readings that I had my class look at that turned my own view on the subject.  First, however, I am linking to two stories about domestic arms acquisitions that caught my attention in the past few weeks.

1. Japan to Launch a Defense Procurement Agency (LINK)

Japan's Ministry of Defense will use its new constitutional powers to set up an agency to manage international trade of weapons and military equipment. 

The ministry confirmed with IHS Jane's that the new agency will be named the Acquisition, Technology and Logistics Agency, and will begin operations on October 1. 

The agency's key objectives will include promoting international cooperation on the procurement of defense equipment, enhancing project management, and enhancing development for Japanese defense production and technology bases. 

The Acquisition, Technology and Logistics Agency is set to become one of the most powerful wings of the Japanese Ministry of Defense, and will employ 1,800 people.

It is interesting to think that Japan did not have this agency earlier.  The country obviously has the capacity to engage in defense acquisitions, but those functions were not concentrated in a ministry that was part of the defense establishment.  This new move may not necessarily make acquisition more rational (Caverley and Kapstein), but it will make the Ministry of Defense more powerful.  This will be an interesting subject to follow over the next few years.

2. India's acquisitions process is corrupt and broken (LINK)

In a long and interesting story, the details of India's decades-long failure to replace its rapidly aging and diminished artillery is still not complete.  Problems of corruption meant that the acquisition agency changed its rules.  These rules have negative consequences:

The other problem involved India’s Ministry of Defence. India’s defense procurement establishment has shown an extreme risk-averse behavior and Defense India observes external link that when a competition devolves to a single-vendor solution, the practice is often to re-tender. Soltam and Denel’s exit left just BAE Bofors, until they, too were eliminated by allegations that Bofors had paid INR 640 million (about $16 million) in bribes, trying to secure the order. 

The net effect of corporate blacklists, plus single-vendor prohibitions, is a process that can’t field equipment to India’s military when it’s needed – and sometimes ever. Unfortunately for India’s front-line soldiers, their need for working artillery hasn’t changed.

Things only got worse and weirder.  I recommend that you read the entire article.  The more I think that I understand the dynamics of the arms trade, the more new information like this appears.  I guess I should be happy that there is still plenty of research for me out there!

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Class readings related to (at least tangentially) to domestic arms acquisition processes:

Kovacic, William E., and Dennis E. Smallwood. 1994. “Competition Policy, Rivalries, and
Defense Industry Consolidation.” The Journal of Economic Perspectives 8(4): 91-110.

Mayer, Kenneth R., and Anne M. Khademian. 1996. “Bringing Politics Back in: Defense Policy and the Theoretical Study of Institutions and Processes.” Public Administration Review
56(2): 180-90.

Pearson, Frederic S. 1989. “The Correlates of Arms Importation.” Journal of Peace Research
26(2): 153-63.

Caverley, Jonathan, and Ethan B. Kapstein. 2012. “Arms Away.” Foreign Affairs 91(5):
125-32.

Qingmin, Zhang. 2006. “The Bureaucratic Politics of US Arms Sales to Taiwan.” The
Chinese Journal of International Politics 1(2): 231-65.

Smith, Ron, Anthony Humm, and Jacques Fontanel. 1985. “The Economics of Exporting
Arms.” Journal of Peace Research 22(3): 239-47.

Deals, Corruption, and Leader Involvement in Arms Sales

There have been a number of interesting stories piling up in my reader over the past few days.  I have wanted to get to them, but have also been trying to finish up the last chapter of my dissertation.  Priorities are fun.  This is what I'm doing on my break.

India

As a follow up to my post last week (here) about Russian corruption is an interesting story out of India.  India made a deal for helicopters with Finmeccanica (Italian firm), which now appears to be the result of bribes paid.  Now the Indian government is threatening to cancel the rest of the contract if the allegations prove true. (Read more here)

(And more here)

More from India.  India wants to start producing more of its own arms, particularly aircraft.  However, it is having difficulty because the firm that could potentially produce arms is so inefficient as to make this an untenable prospect.

James Hardy, an analyst at the defence consultancy IHS Jane's, says that HAL is "overextended", expressing an opinion largely shared by observers at home and abroad.

More here

Russia and Syria
Russia is continuing to supply the Syrian government with weapons from contracts that were already in place.

The head of Russia's arms exporter Rosoboronexport, Anatoly Isaikin, said Russian deliveries to the Syrian regime of President Bashar al-Assad included air defence systems but not the advanced Iskander missiles sought by Damascus. 

"We are continuing to fulfill our obligations on contracts for the delivery of military hardware," Isaikin was quoted as saying by the Interfax news agency.

Link

But Russia is not smuggling tank parts into Syria. (Link)

France and India

As part of my dissertation I am looking at the involvement of state leaders in arms deals.  I got a special gift from France's president Hollande on Valentine's Day.  The French President led an entourage to India to "clinch the world's biggest defense deal" in India.  The deal is a $12 Billion sale of 126 aircraft.  Along with this deal there are negotiations about French involvement in to help build a nuclear power plant in Maharashtra.

Link

The Enemy of my Friend - India Pakistan and Russia

This article popped up in my news feed this morning.  It is about Russia's anger that India is purchasing fighters from France. The gist of the argument is that Russia has been India's "true strategic partner" since the 1960s.  The evidence for this is that Russia has voluntarily abstained from selling weapons to India's primary enemy, Pakistan.

Russia now feels betrayed that India is not rewarding that loyalty. India is still the largest customer of Russian arms.  However, if India continues to seek alternatives, Russia could find a lucrative source of income drying up or at least becoming more difficult to assure.

Here is the money quote from the head of Rosoboroneksport:

“We do not sell military equipment to Pakistan, only because of our loyalty to India. But all other nations, with whom India does business, sell their weapons and systems to Pakistan. We are India’s true strategic partners.”

I had the data for arms networks laying around (for my dissertation) so I quickly put together graphs for both India and Pakistan.  These are the ego networks for the two states, which means that these are not the full world arms network, only those states involved in sales to either India or Pakistan.

Neither of these two graphs shows much difference in the composition of states selling weapons.  In the Pakistan network, shown at the bottom, Russia is located at the edge of the graph and is not selling directly to Pakistan.  In all other respects, though the networks are very similar.

I guess the question is now to what extent Russia has deliberately not sold to Pakistan.  If Russia has made a decision not to sell that is one thing.  If Pakistan has not tried to buy because it was being supplied by the US and its allies and wanted to maintain that source for its weapons, then this is a different conversation. The idea that Russia is engaging in a deliberate version of Heidegger's rule (The enemy of my friend if my enemy) is what is most fascinating to me about this entire episode.

Russia and India Arms Relations Redux

Vladimir Putin spent some time in India this past week.  One of the primary deals struck between the two states during the visit, was the sale of $3 Billion worth of Russian helicopters - a tender, which was rumored to be going to the United States earlier in the month.

The Russian Ambassador to India had this to say about plans for further cooperation between the two states: (source)

...the deals that have been struck as part of the ten-year programme of military and technical cooperation between India and Russia are estimated at $30 billion. 

On Monday, during the Russian President Vladimir Putin's visit to India, several important agreements in the military area were signed in New Delhi.

The helicopter and other aircraft deal looks like this:

Under one contract, India will buy 71 Mi-17B-5 Hip helicopters worth $1.3 billion, while the other provides for the delivery of assembly kits for 42 Su-30MKI Flanker fighters, worth $1.6 billion. 

The two countries also signed a number of cooperation agreements in the defense and technology sector, notably between Russian Helicopters and Elcom Systems Pvt Ltd.

Here is the blurb from a BBC story that really highlights the personal role that Putin is playing in getting these deals signed:

In an article in India's Hindu newspaper, Mr Putin described as a "historic step" the declaration of strategic partnership between the two countries signed in 2000. 

The Russian leader also said that the military co-operation between the two nations has reached an "unprecedented level". 

Russia's currently accounts for some 70% of India's arms purchases, the BBC's Sanjoy Majumder in Delhi reports. 

But India has recently signed a number of big defence contracts with the US and other countries, including France and Israel, our correspondent says. 

Russia is concerned, he adds, that its traditional position as India's main arms supplier could be under threat.

And that's the rub.  As I have already pointed out on this blog (11/30/2012 "Are they Related?"), India is one of Russia's primary partners.  China has gained ground recently, but India is still number one or two in all years since the early 1990s - and essentially helped keep Russia afloat in the arms export world in the 1990s.  The fact that Putin is soliciting arms deals and spending his time indicates that to the Russian government (in the form of Putin), arms sales are an important aspect of foreign policy.  This is mostly likely due to the domestic implications of losing the ability to produce arms and shutting down the factories that produce Russia's most sophisticated export materials.

Are they related?

In today's mystery music show we examine two news items from the Russian press and ask the question: are they related?

The first is a stringent denial that Russia has lost a bid to supply India (its second largest customer for arms after China)* heavy helicopters:

MOSCOW, November 28 (RIA Novosti) – Russia’s state arms exporter Rosoboronexport denied on Wednesday media reports that it had lost tenders on the delivery of heavy-lift helicopters and aerial tankers to the Indian air force. 

“Rosoboronexport denies media speculation about Russia’s loss in both tenders as these reports are false,” the company said in a statement. (Link to full article)

The second is a story related to the ongoing corruption scandal in the Russian military.

MOSCOW, November 28 (RIA Novosti) – Companies controlled by the Russian Defense Ministry embezzled more than a combined 10 billion rubles ($257 million) this year, investigators said on Wednesday. 

The alleged sum included 6.7 billion rubles ($215 million) suspected to have been stolen via a corruption scheme that cost Defense Minister Anatoly Serdyukov his job earlier this month, Investigative Committee spokesman Alexander Sorochkin said. The sum in the high-profile case was previously reported to be 3 billion rubles. (Link to full article)

Russia's intertwined military industrial complex may be eating itself.  If the corruption within the system increases to a point where Russia cannot competitively sell its arms to longtime partners, the entire house of cards could come crashing down.

Verdict: Possibly related.


* Here is a fun graph I made to show this relationship: