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Defence industry

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Defence industry

The arms industry is a global business which manufactures weapons and military technology and equipment. It consists of commercial industry involved in research, development, production, and the service of military material, equipment and facilities. Arms producing companies, also referred to as defense contractors or military industry, produce arms mainly for the armed forces of states. Departments of government also operate in the arms industry, buying and selling weapons, munitions and other military items. Products include guns, ammunition, missiles, military aircraft, military vehicles, ships, electronic systems, and more. The arms industry also conducts significant research and development.

It is estimated that yearly, over 1.5 trillion dollars are spent on military expenditures worldwide (2.7% of World GDP).[1] This represents a decline from 1990 when military expenditures made up 4% of world GDP. Part of this goes to the procurement of military hardware and services from the military industry. The combined arms sales of the top 100 largest arms producing companies amounted to an estimated $315 billion in 2006.[2] In 2004 over $30 billion were spent in the international arms trade (a figure that excludes domestic sales of arms).[3] The arms trade has also been one of the sectors impacted by the credit crunch, with total deal value in the market halving from US$32.9bn to US$14.3bn in 2008.[4] Many industrialized countries have a domestic arms industry to supply their own military forces. Some countries also have a substantial legal or illegal domestic trade in weapons for use by its citizens. An illegal trade in small arms is prevalent in many countries and regions affected by political instability. The Small Arms Survey estimates 875 million small arms in circulation worldwide, produced by more than 1,000 companies from nearly 100 countries.[5]

Contracts to supply a given country's military are awarded by the government, making arms contracts of substantial political importance. The link between politics and the arms trade can result in the development of what US President Dwight D. Eisenhower described as a military-industrial-congressional complex, where the armed forces, commerce, and politics become closely linked. The European defence procurement is more or less analogous to the U.S. military-industrial complex. Various corporations, some publicly held, others private, bid for these contracts, which are often worth many billions of dollars. Sometimes, such as the contract for the new Joint Strike Fighter, a competitive tendering process takes place, where the decision is made on the merits of the design submitted by the companies involved. Other times, no bidding or competition takes place.


History

Trade in arms and technological diffusion is as old as the history of war itself. During the early modern period, France, England, Netherlands and some states in Germany became self-sufficient in arms production, with diffusion and migration of skilled workers to more peripheral countries such as Portugal and Russia.

The modern arms industry emerged in the second half of the nineteenth century as a product of the creation and expansion of the first large military-industrial companies. As smaller countries (and even newly industrializing countries like Russia and Japan) could no longer produce cutting-edge military equipment with their indigenous resources and capacity, they increasingly began to contract the manufacture of military equipment, such as battleships, artillery pieces and rifles to foreign firms.


In 1854, the British government awarded a contract to the Elswick Ordnance Company of industrialist William Armstrong for the supply of his latest breech loading rifled artillery pieces. This decision galvanised the private sector into weapons production, with the surplus being increasingly exported to foreign countries. Armstrong became one of the first international arms dealers, selling his weapon systems to governments across the world, from Brazil to Japan.[6] In 1884 he opened a shipyard at Elswick to specialise in warship production; - at the time, it was the only factory in the world that could build a battleship and arm it completely.[7] The factory produced warships for many navies, including the Imperial Japanese Navy - several Armstrong cruisers played an important role in defeating the Russian fleet at the Battle of Tsushima in 1905.

In 1885, France decided to capitalize on this increasingly lucrative form of trade and repealed it's ban on weapon exports. The regulatory framework for the period up to the First World War was characterized by a laissez-faire policy that placed little obstruction in the way of weapons exports. Due to the carnage of WW1, arms traders began to be regarded with odium as 'merchants of death', and were accused of having instigated and perpetuated the war in order to maximise their profits from arms sales. An inquiry into these allegations in Britain failed to find evidence to support these allegations. However, the sea change in attitude about war more generally, meant that governments began to control and regulate the trade themselves.

The volume of the arms trade greatly increased during the 20th century and it began to be used as a political tool, especially during the Cold War where the US and the USSR supplied weapons to their proxies across the world, particularly Third World Countries (see Nixon Doctrine).[8]

Sectors


Land-based weapons

This category includes everything from light arms to heavy artillery, and the majority of producers are small. Many are located in Third World countries. International trade in handguns, machine guns, tanks, armored personnel carriers and other relatively inexpensive weapons is substantial. There is relatively little regulation at the international level, and as a result, many weapons fall into the hands of organised crime, rebel forces, terrorists, or regimes under sanctions.[9]

Small arms

The Control Arms Campaign, founded by Amnesty International, Oxfam, and the International Action Network on Small Arms, estimated in 2003 that there are over 639 million small arms in circulation, and that over 1,135 companies based in more than 98 different countries manufacture small arms as well as their various components and ammunition.[10]

Aerospace systems

Encompassing military aircraft (both land-based and naval aviation), conventional missiles, and military satellites, this is the most technologically advanced sector of the market. It is also the least competitive from an economic standpoint, with a handful of companies dominating the entire market. The top clients and major producers are virtually all located in the western world and Russia, with the United States easily in first place. Prominent aerospace firms include Dassault Aviation, Sukhoi, Mikoyan, EADS, Finmeccanica, Thales Group, Lockheed Martin, Boeing, and BAE Systems. There are also several multinational consortia mostly involved in the manufacturing of fighter jets, such as the Eurofighter. The largest military contract in history, signed in October 2001, involved the development of the Joint Strike Fighter.[9]

Naval systems

All of the world's major powers maintain substantial maritime forces to provide a global presence, with the largest nations possessing aircraft carriers, nuclear submarines and advanced anti-air defense systems. The vast majority of military ships are conventionally powered, but some are nuclear-powered. There is also a large global market in second-hand naval vessels, generally purchased by developing countries from Western governments.[9]

World's largest defense budgets

This is a list of the ten countries with the highest defence budgets for the year 2011, which is $1.29 trillion or 74% of total world expenditures. The information is from the Stockholm International Peace Research Institute.[11] Total world spending amounted to $1.74 trillion USD in 2011.

Rank Country Spending ($ b.) World Share (%) % of GDP, 2011
1  United States 711.0 41.0 4.7
2  Chinaa 143.0 8.2 2.0
3  Russiaa 71.9 4.1 3.9
4  United Kingdom 62.7 3.6 2.6
5  France 62.5 3.6 2.3
6  Japan 59.3 3.4 1.0
7  India 48.9 2.8 2.5
8  Saudi Arabiab 48.5 2.8 8.7
9  Germanya 46.7 2.7 1.3
10  Brazil 35.4 2.0 1.5
World Total 1735 74.3 2.5
^a SIPRI estimates
^b SIPRI: "The figures for Saudi Arabia include expenditure on public order and safety and might be slight overestimates"

World's largest arms exporters

The units in this table are so-called trend indicator values expressed in millions of US dollars at 1990s prices. These values do not represent real financial flows but are a crude instrument to estimate volumes of arms transfers, regardless of the contracted prices, which can be as low as zero in the case of military aid. Ordered by descending 2000–2010 values. The information is from the Stockholm International Peace Research Institute.[12]

2001–12 Rank Supplier 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1  United States 5908 5229 5698 6866 6700 7453 8003 6288 6658 8641 9984 8760
2  Russia 5896 5705 5236 6178 5134 5095 5426 5953 5575 6039 7874 8003
3  Germany 850 916 1713 1105 2080 2567 3194 2500 2432 2340 1206 1193
4  France 1297 1368 1345 2219 1724 1643 2432 1994 1865 1834 2437 1139
5  China 499 509 665 292 303 597 430 586 1000 1423 1354 1783
6  Turkey - - - 196 337 352 420 576 670 634 817 1262
7  Italy 880 191 526 314 538 432 366 454 383 806 1046 847
8  Israel 203 239 342 209 583 1187 1326 530 545 503 531 533
9  Sweden 216 426 341 212 774 502 684 417 514 806 686 496
10  Ukraine 700 311 442 200 290 553 728 330 320 201 484 1344
11  Spain 7 120 150 56 108 843 590 610 998 513 927 720
12   Switzerland 193 157 181 243 246 285 301 482 255 137 297 210
13  Canada 129 170 263 265 226 226 334 227 169 258 292 276
14  South Korea 165 N/A 100 29 48 94 220 80 163 95 225 183

The information is also from the Stockholm International Peace Research Institute or from the national defence commissions where available and is updated at least once a year.


Next to SIPRI there are several other sources that provide data on international transfers of arms. These include national reports by national governments about arms exports, the UN register on conventional arms and an annual publication by the Statistisk sentralbyrå (Norway state statistics), Norway exports a greater value (in USD) of arms than many of the nations listed above.

Some of the differences are possibly due to deliberate over- or under-reporting by some of the sources. Governments may claim high arms exports as part of their role in marketing efforts of their national arms industry or they may claim low arms exports in order to be perceived as a responsible international actor.

As of 2008, Britain has become the worlds leading developer of arms with British company BAE Systems.[14] Defence group BAE Systems is the first company outside the U.S. to reach the top position,thanks to a deal with the Pentagon for mine-resistant vehicles to be used in Iraq and Afghanistan. According to the Stockholm International Peace Research Institute, a defence think tank, the former British Aerospace group's arms sales are ahead of American market leaders Lockheed Martin and Boeing. The report reveals BAE's U.S. subsidiary was alone responsible for 61.5 per cent of the group's arms sales and around 58.5 per cent of total group sales. This demonstrates BAE's increasing reliance on orders for conventional weapons as the U.S. cuts back on its nuclear arsenal. The British figures were also boosted by orders for Eurofighter Typhoon jets from Saudi Arabia.

World's largest arms importers

The units in this table[15] are so-called trend indicator values expressed in millions of US dollars. These values do not represent real financial flows but are a crude instrument to estimate volumes of arms transfers, regardless of the contracted prices, which can be as low as zero in the case of military aid.

Current Rank Importer 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
1  India 911 1242 1872 2802 2227 1036 1257 2179 1810 2116 3337
2  Australia 364 1191 647 798 505 470 682 629 380 757 1677
3  South Korea 1262 623 461 680 986 686 1650 1758 1821 1172 1131
4  Singapore 622 220 235 88 384 543 52 368 1123 1729 1078
5  United States 301 449 453 533 512 501 581 731 808 831 893
6  Algeria 418 553 237 197 272 156 308 471 1518 942 791
7  Saudi Arabia 158 397 533 592 385 332 262 613 939 1146 2580
8  Greece 710 725 491 2241 1528 389 598 1796 563 1269 703
9  China 2015 3366 2819 2207 3080 3511 3831 1474 1481 595 559
10  United Arab Emirates 243 186 213 695 1246 2198 2026 938 748 604 493
11  Pakistan 80 59 555 159 1161 148 185 64 115 626 787
12  Turkey 1170 553 1009 438 187 1005 422 585 578 675 468
13  Malaysia 30 26 131 135 48 51 410 546 541 1494 411
14  Norway 263 148 92 4 6 14 469 494 536 576 205
15  Indonesia 171 27 63 398 82 31 58 577 241 452 198

[15]

List of major weapon manufacturers

For a complete list, see List of modern armament manufacturers.
For a Top-Ten list, see Defense contractor.

Private military contractors are private companies that provide logistics, manpower, and other expenditures for a military force.

Major arms industry corporations by nation

Institutes participating in weapon research and warfare simulation

Arms control

Oscar Arias Sanchez President of Costa Rica (awarded the Nobel Peace Prize in 1987 for his efforts to end civil wars across Central America through the Esquipulas II Accords) has stated:

Template:Cquote

International treaties for arms control

  • The Arms Trade Treaty is the name of a potential multilateral treaty that would control the international trade of conventional weapons. The treaty is in the preliminary stages of development and has not yet been officially negotiated.
  • The Missile Technology Control Regime (MTCR) is an informal and voluntary partnership between 34 countries to prevent the proliferation of missile and unmanned aerial vehicle technology capable of carrying a 500 kg payload at least 300 km.
  • The Limitation of Naval Armament included many separate treaties. In general, the treaties involved the United States, United Kingdom, Japan, and France.
  • The Convention on Cluster Munitions (CCM) is an international treaty that prohibits the use of cluster bombs, a type of explosive weapon which scatters submunitions ("bomblets") over an area.
  • The Outer Space Treaty, formally known as the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies, is a treaty that forms the basis of international space law.
  • The Ottawa Treaty or the Mine Ban Treaty, formally the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on their Destruction, completely bans all anti-personnel landmines (AP-mines).
  • The New START Treaty (for Strategic Arms Reduction Treaty) (Russian: СНВ-III) is a bilateral nuclear arms reduction treaty between the United States and the Russian Federation that was signed in Prague on April 8, 2010.
  • The Protocol for the Prohibition of the Use in War of Asphyxiating, Poisonous or other Gases, and of Bacteriological Methods of Warfare, usually called the Geneva Protocol, is a treaty prohibiting the first use of chemical and biological weapons. It was signed at Geneva on June 17, 1925 and entered into force on February 8, 1928. It was registered in League of Nations Treaty Series on September 7, 1929.
  • The Chemical Weapons Convention (CWC) is an arms control agreement which outlaws the production, stockpiling and use of chemical weapons.
  • The Biological Weapons Convention (or Biological and Toxin Weapons Convention) was the first multilateral disarmament treaty banning the production of an entire category of weapons. It was the result of prolonged efforts by the international community to establish a new instrument that would supplement the 1925 Geneva Protocol.

The European Council stated to the United Nations General Assembly: Template:Cquote

See also

References

External links

  • Defense Sector Investment Benchmark – SPADE Defense Index (AMEX: DXS)
  • World Security Institute's Center for Defense Information
  • Campaign Against Arms Trade (UK)
  • Dean Peter Krogh Foreign Affairs Digital Archives
  • SIPRI arms industry reports and database
  • SIPRI list of Top 100 arms-producing companies
  • The Guardian's arms trade report
  • List of participators of the Defense System and Equipment international conference in London, 2003
  • Viktor Bout arms trade case
  • FAS's Arms Sales Monitoring Project
  • UN Office for Disarmament Affairs
  • ControlArms.org
  • Defense Industrial Base Blog
  • Amnesty International: Arms Trade Treaty
  • The British Library – Defence Industry Guide (sources of information)
  • Z. Yihdego, Arms Trade and International Law, Hart: OXford, 2007
  • World Map and Chart of Arms exports per country by Lebanese-economy-forum, World Bank data

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