By Barry Schweid AP Diplomatic Writer Thursday, August 15, 2002; 3:38 PM
WASHINGTON -- International arms sales declined substantially last year to almost $26.4 billion compared with about $40 billion in 2000. It was the first decrease since 1997.
The United States retained its position as the world's biggest arms dealer, but its arms transfer agreements declined to nearly $12.1 billion from $18.9 billion in 2000, the Congressional Research Service reported. http://www.fas.org/asmp/resources/govern/crs-rl31529.pdf
American arms sales last year accounted for nearly 46 percent of all weapons sales. Russia was second with $5.8 billion and France third with $2.9 billion.
India and China are Russia's main customers. Notice given by Russia in late 2000 that it would pursue sales with Iran, a principal customer of Russian fighter aircraft, tanks and attack submarines in the early 1990s, could result in sales worth billions of dollars, the report said.
The United States has tried to dissuade Russia from selling sophisticated weapons and technology to Iran, but "a series of ongoing discussions" suggests lucrative deals are in the works, according to the report.
Russia also would pursue new weapons sales to Iraq, once one of its largest customers, if current U.N. sanctions that ban Iraqi arms purchases were lifted, the report said.
Explaining the overall drop in weapons contracts, Richard F. Grimmett, an analyst who wrote the report for the arm of the Library of Congress, said "the general economy worldwide has suppressed demand."
"Many would-be buyers have fulfilled some of their weapons requirements and are in the process of absorbing prior year purchases," he said in an interview. "Put those two things together and you have a reason why you have such a dramatic dropoff in orders," he said.
In the developing world, the United Arab Emirates was the leading purchaser and India was second. Purchases by Saudi Arabia dropped from $12.4 billion over the years 1994-1997 to $1.7 billion in the years 1998-2001.
Debts accumulated during the Persian Gulf war, when the Saudis sought a tougher defense against possible aggression from Iraq, and a significant decline in the price of oil accounted partly for the decrease in Saudi weapons contracts.
A contract with France to upgrade the Saudis' Shahine SAM missile system helped ease a decline in French weapons sales to developing nations, which dropped, nonetheless, to $400 million from $2.2 billion in 2000.
Germany's sales to developing nations declined from more than $1 billion in 2000 to nearly zero. Britain and Italy did almost no business with those countries in 2001 or 2000.
An uncertain economic outlook is likely to limit purchases of new and costly weapons by developing countries over the next few years, and the United States appears to be in the best position to deal, the report said.
Still, U.S. weapons agreements with developing nations fell significantly in 2001 to $7 billion from $13 billion in 2000. Israel bought 52 combat fighter aircraft for more than $1.8 billion, Egypt reached an agreement worth more than $500 million to coproduce Abrams tanks and Singapore agreed to purchase 12 Apache helicopters for $379 million.
Russia sold 310 tanks to India for about $700 million; about 40 fighter aircraft to China for more than $1.5 billion; and about $600 million in helicopters and other military equipment to South Korea.
With Western nations and Russia able to provide sophisticated weapons, China's is not a major supplier - except of missiles, the report said.
Published reports of surface-to-surface missile sales to Pakistan and of missile technology sales to Iran and North Korea "raise important questions about China's commitment to the restrictions on missile transfers" in international accords and about China's pledge not to assist other countries in building missiles that could deliver nuclear weapons, the report said.