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.

Humor - More F-35s and Photoshop!

US Air Force photo.

Pentagon Requests 500 Gold-Plated F-35s

Read more: http://www.duffelblog.com/2015/09/pentagon-requests-500-gold-plated-f-35s/#ixzz3o2uHjFdN

This added to the Red Baron (LINK) post from a few weeks ago made my day!



The barrage of photoshop memes in response to REN-TV in Russia photoshopping the US Ambassador onto a Kremlin protest is hilarious.

Russia and Syria - Arms Related Issues

Russia is now involved in the war in Syria.  Air strikes and naval bombardment along with cruise missile launches, along with the addition of ground troops as advisers is serious business.  The potential for adverse international incidents has increased.  The fighting in Ukraine is contained.  The fighting in Syria is taking place in the context of continued Western and US airstrikes.  The potential for a direct military confrontation between the US and Russia is higher than it has been for a long time.

I am interested in Russia's endgame here.  I am curious as to what Putin thinks he will gain. I just started reading a great book that analyzes Putin's actions, and this quote really jumped out at me:

"...we cannot take any story or so called fact at face value when it comes to Vladimir Putin ... we are dealing with someone who is a master at manipulating information, suppressing information, and creating pseudo-information...In today's world of social media, the public has the impression that we know, or can easily know, everything about everybody.  Nothing, it seems, is private or secret.  And still, after 15 years, we remain ignorant of some of the most basic facts about a man who is arguably the most powerful individual in the world, the leader of an important nation.  When there is no certifiably real and solid information, any tidbit becomes precious." [1]

This jumped out to me again when I watched the Daily Vertical podcast about Putin challenging the western world's way of thinking and facts (LINK).  While I don't think I have any really new insights into what Russia is doing and thinking, I can at least make some observations about the effects of what they are doing in an area that I do have some insights into: arms transfers.

Negative and Potential Negative Consequences for Russian Arms Sales

I have already covered the issue of the Mistral ships.  Russia lost these ships as a direct result of their actions in Ukraine.  The latest word is that Egypt is going to purchase these ships, which is good for France (LINK). Is there a potential that Russia will lose out on other purchases?  Yes, but Russia doesn't import a lot of equipment, so for them, this is just a temporary setback.

The more serious setback for Russia would be if states began cancelling orders for weapons after seeing their actions.  This is a real possibility.  Turkey is very upset at Russia over incursions into its air space as Russia began its air actions over Syria.  This has already had an effect on a joint pipeline project (LINK), and has the potential to damage other relations.  Russia and Turkey have cooperated on helicopter manufacturing in the past (a case study from my dissertation), and if Turkey sees Russia becoming a security risk, it will likely move away from such relations.

The performance of Russian equipment in Syria is also a potential negative side effect.  If Russian equipment performs poorly (like reports of four cruise missiles crashing in Iran instead of hitting targets in Syria (LINK)), then potential customers may decide to look for other options.

Potential Positive Consequences for Russian Arms Sales

There are two potential positive consequences of Russian actions in Syria from the point of view of Russian arms sales. The first is the converse of the last point made above: positive performance by Russian equipment is free advertising for Russian arms.  Seeing weapons tested in combat and working is a great selling point to potential customers.

Other current and potential customers will take note of the point above and may also see the arms relationship becoming a proxy for more formal alliances, thus making continued arms purchases, or new arms purchases more attractive to buyers.  Venezuela recently expanded its arms deal with Russia (LINK), as has Thailand (LINK).  Interestingly, the deal with Thailand appears to be a barter deal for rubber.  This could be an effect of sanctions.  Thailand has been diversifying its arms portfolio in recent years.

Potential Positive Effects for US Arms Sales

For the US, Russia being seen as an aggressor may potentially make arms sales to neighboring states a higher priority.  States will see this as a way to further integrate with existing US-led defense pacts (NATO), and a way to strengthen and emphasize military ties. Norway, for instance, recently added more planes to its F-35 order because of Russian aggression and escalation in the Baltic and North Sea areas (LINK).  This will be dependent on whether states are satisfied with US military hardware, however, which in some recent cases doesn't appear to be the case (LINK).

Other Geopolitical Consequences

Just because I am not going to spend time trying to figure out Putin's motivations, does not mean that I won't point out some geopolitical consequences of Russian military adventurism. The most obvious is that Russia's fears of NATO are now becoming a self-fulfilling prophecy as NATO moves to bolster its powers along Russia's borders and to strengthen commitments to states bordering Russia's active military adventures (Poland, Turkey) (LINK).  It is also leading, it appears, to a strengthening of the US resolve on the issue of Ukraine (LINK).

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[1] Hill, Fiona and Clifford G. Gaddy. 2015. Mr. Putin: Operative in the Kremlin. Brookings Institution. p 7.

The Politics and Economics of Arms Sales

I have been doing a lot of thinking lately about the nexus between the politics and the economics of arms sales.  It is a question that lies at the heart of my dissertation, but one which is mostly inadequately appreciated by both economists and political scientists.  I had my class (Politics of Arms in International Relations) read some pieces this week which relate to this decision-making nexus and it has brought some of these issues back to the forefront in my own thinking.

First off is a great quote from Smith, Dunn, and Fontanel (1985) about the problems of politics in the transfer of arms [1]. (Emphasis is mine)

"Although arms transfers comprise a significant component of world trade, they have received little attention from mainstream economists.  This partly reflects the data difficulties which inhibit accurate estimation and quantification, and partly the contamination of the topic by political and strategic elements beyond the economists' expertise."

The idea that an issue is contaminated by political and strategic elements is an interesting perspective of political science.  It is refreshing to see economists admit that there may be something that is beyond their expertise as well!

Smith et al (1985) argue that there are three primary reasons for states to wish to sell weapons:

1.     Strategic: governments wish to maintain an indigenous arms industry ins order to ensure weapons designed exactly to their requirements, national independence of supply, and access to the latest military technology. There is an incentive to export, even if exports are below the average cost. (242-3)
2.     Political leverage in foreign policy: nation can assist their "friends" by strengthening their military position while at the same time having potential to influence their behavior (Kinsella tie-in) or that there is a prohibition that weapons not used aggressively or for internal repression (tie-in with Blanton). (243)
3.     Economic benefits: these include technological spin-offs, employment benefits, economic momentum (243-44)

Caverley and Kapstein [2] look at similar arguments in the case of the United States arms production. They argue that the US lost its advantage in arms exports because of the domestic demands of the pentagon.  The penchant for the US military to ask for the nicest, highest spec equipment means that the finished product is priced out of range for non-domestic buyers.  They give the example of the F-35, which was designed to be a low-cost high tech fighter that would be good enough for most missions and which would be eminently exportable.  The rising costs of that aircraft have meant that many staunch allies have reduced or cancelled orders for the aircraft. The increased design specifications have made the aircraft less suitable for the domestic role that it was originally meant to fill.

This is an interesting dilemma.  The world's superpower which has the advantage of a strong domestic market is being squeezed out because of the unrealistic demands of that same market. This echoes the findings of Smith and colleagues in the case of decreased military spending by Britain, GDR, and the US means fewer exports, while the opposite was true for France and Italy.  They note that it was the civilian oversight of the procurement process in those states - with an eye toward exports - that caused this result.

I had some articles in my newsfeed about aircraft sales that made me think of these arguments today.

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Links

First F-35 built in Europe goes for its maiden Flight: LINK

Making F-35s more quickly can lead to problems: LINK

Kuwait is buying the Eurofighter.  LINK

Brazil is buying a Swedish fighter: LINK  LINK2

__________________________
REFERENCES

[1] Smith, Ron, Anthony Humm, and Jacques Fontanel. 1985. “The Economics of Exporting Arms.” Journal of Peace Research 22(3): 239–47.
[2] Caverley, Jonathan, and Ethan B. Kapstein. 2012. “Arms Away.” Foreign Affairs 91(5): 125–32.

Arms related Humor

There are two pieces that I've seen in the past week or so that have me laughing.  The first is from the Onion, which is always fun.  The headline is the funniest part:

Lockheed Martin Sales Staff Instructed To Really Push Tactical Air-To-Surface Missiles This Week

and here is one of the quotes from the article:

“Do whatever it takes to unload this stuff: place a few cold calls to foreign defense agencies, offer to throw in a couple Stalker drones for free. I don’t care what you have to do, just so long as we can hit our numbers and make way for the anti-aircraft shipments we’ve got coming in at the end of the month.” 

Pure awesomeness! LINK

From Duffel Blog

For Sale: AGM-114K Hellfire Missile, Slightly Damaged. Asking $1000 OBO. Location: Fort Drum, NY LINK

And my personal favorite (with picture!)

Lockheed Upbeat Despite F-35 Losing Dogfight To Red Baron

LINK to the hilarious full post.

More Arms Round Up - Strategic Bombers and Navy for Russia and United States

US Aircraft News

I have been following the development of the F-35 with interest for the past few years.  It represents a new way of building aircraft, but seems like it may be a model that is not sustainable, or feasible.  I didn't know the US was looking at creating a third generation strategic bomber, but that seems to be the case.  This article gives some details about the development and testing of this new aircraft.  It will be some time before it is ready for production - if it is chosen as an option.  LINK  LINK2

US most Advanced Fighters, the F-22 raptor, deployed (kind of) to Europe as a reassurance against more aggressive Russian maneuvers in Europe's airspace.  The problem with this power projection is the weakness that it represents because of the low numbers of aircraft in service. LINK

Russian Bombers and MiGs

Meanwhile, Russia's strategic bombers the TU-160 is being modernized.  LINK  With new avionics: LINK

Russia's new smart bombs to go on those updated bombers. LINK

Russian MiGs owned by Bulgaria to be repaired in Poland.  LINK

This is a fascinating look at dependence (my students will have read Kinsella (1998) and should know about dependence) and using an outside state to provide maintenance.  This can't be good for Russia's long-term arms sales.  I am wondering about the long-term implications for arms sales if the supplier is seen as being too pushy.  That's a take on things that I don't think I've seen in the literature before.

Ukraine Crisis News Roundup

Background

I have been working on a paper about covert action.  The paper relies on an extended case study of Russia's various actions in Ukraine since the crisis began in November 2013.  I lived in Ukraine from April 1998 through February 2000 and spent most of my time (12 months) in Donetsk.  I spent another three months in Gorlovka and the remainder of my time in Zaporozhye.  The war in Ukraine is one that has touched the lives of people that I know and love.  My wife is from Russia and my mother-in-law still lives in Russia.  I get a lot of different views on the war living in Kazakhstan and watching Russian news and hearing my students' views of the events.

I won't outline my paper here in full, but the main argument is that states will react to revelations of their covert actions in different ways depending on whether the action was covert to protect the regime from internal pressures, or covert to avoid problems with external states.  I believe that the events in the Donbass have followed a pattern of deliberate misinformation by the Russian state to its own people primarily because Russian involvement in a ground war, civil war, was unpopular to begin with.  The reaction of the government to revelations of Russian involvement have been completely different than reactions to the events in Crimea - which has become a celebrated accomplishment of the regime.

I am collating a collection of information about the conflict that I can use in my own writing.  Maybe it will be useful to others that are looking for more information about what is happening in Ukraine this summer.

Links

Russia Annexing Donbass De facto?

This fascinating article discusses the consequences of Europe supporting Ukraine's position in the Donbass, specifically the need for special status for the Donbass territories to come only after Russia has removed its troops, the rebels have disarmed, and some semblance of order has been restored to the territories. 

Kyiv is insisting that the pro-Moscow rebels disarm, Russia withdraw its troops from Donbas, and that separatist-controlled areas of the border be returned to Ukraine's control before there can be any discussion about the territories' status. 

This puts Moscow in a tough position, which is being called a soft annexation.  

The moves to formally introduce the ruble in the separatist regions, the threats to hold a referendum on joining Russia, and the noise about issuing Russian passports are a last-ditch effort to pressure Kyiv. And Kyiv isn't budging.

Which leaves Moscow stuck taking its least worst option: call it a soft annexation.
And this removes the last bit of leverage Russia has over Kyiv.

"Ukraine will never now be a gray neutral territory between East and West," Ukrainian political analyst Serhiy Taran told Nezavisimaya Gazeta. "Either we won't emerge alive from this hell or else we will emerge very strong. I am convinced it will be the latter, if only because this is what everyone except Russia wants." 

Intelligence in the Conflict

Russia is said to be reactivating Soviet Area European spy networks. 

The Czech Republic's counterintelligence agency says the number of Russian spies remains high and the Kremlin is building a spy network in Europe similar to the Soviet network before World War II.

Link