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The U.S. Defense Industry Is Making Billions From Record Arms Sales

Foreign military sales by the U.S. have surged to record highs, but some argue the arms-deal bonanza is fueling regional conflicts

Oct 23, 2015 at 4:02 PM ET

As the United States continues to draw troops down around the world, it’s replacing those boots on the ground with a record number of advanced weapons sales to allied nations. Foreign military sales rose to nearly $47 billion in fiscal year 2015, a 30 percent increase from last year’s $32 billion, and more than double the $23.6 billion from 2013’s fiscal year, according to figures released by the Defense Security Cooperation Agency. Ten years ago, U.S. arms deals with foreign countries totaled a mere $8.6 billion.

“We’ve had to double down contracting officers just to keep up the pace, and they barely make the pace,” said Vice Adm. Joseph Rixey, director of the DSCA, the Pentagon agency charged with shepherding those deals.

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The surge in foreign arms sales coincides with a slump in domestic military spending, as well growing instability around the world. It also underscores a shift in U.S. foreign policy under President Obama, who has preferred to provide regional allies at war with fighter jets and other high-grade weapons instead of committing U.S. troops on the ground. 

The U.S. government subsidizes a portion of these foreign weapons deals.  Of the $47 billion in sales agreements reached in fiscal 2015, $11.7 billion came from money tied to U.S. security assistance programs, a State Department spokesman told Vocativ. Nations paid the remaining $35.3 billion out of pocket. 

No region has benefited as much in recent years as Washington’s allies in the Persian Gulf. Arms deals to Gulf Cooperation Council states, which include Saudi Arabia and the United Arab Emirates, totaled $68 billion during President Barack Obama’s first five years in office. That’s more than triple the $22 billion in defense sales brokered with these countries during the entire George W. Bush administration, an analysis by Vocativ found. The Middle East as a whole now accounts for 32 percent of the U.S. weapons export market, data compiled by the Stockholm International Peace Research Institute showed.

Among these wealthy Gulf monarchies, Saudi Arabia is in a league of its own. Arms agreements between the United States and the oil rich kingdom topped $35 billion in 2012, a record figure for an individual country, and included everything from Gatling guns to Apache helicopters. With its sights set on a more muscular role in the region to counterbalance Iran, its longtime rival, Saudi Arabia continued its American weapons splurge through 2015, snapping up MH-60R helicopters and advanced Patriot missiles. In mid-October, it closed in on an $11.25 billion deal to buy U.S. warships and missile technology.

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“The perception of an Iranian threat and the Saudi’s desire to exert more military influence in the region persist as reasons to buy more U.S. arms.” said William Hartung, a senior adviser to the Security Assistance Monitor, a watchdog group.

Hartung and other military experts believe the Iranian threat in the region is overstated. Iranian military spending was about $15 billion in 2014, a fifth of Saudi Arabia’s $80 billion and even less than the $25 billion spent by the United Arab Emirates, a country that has 1.4 million citizens. Overall, the Gulf Cooperation Council states of Bahrain, Oman, Saudi Arabia, and the UAE outspent Iran on arms in 2014 by a factor of about eight, Foreign Policy reported

Still, experts and industry analysts say the diplomatic rift between the White House and Arab Gulf states over the Iran nuclear deal this year will propel the region’s arms-buying bonanza into the foreseeable future. It also dovetails with Obama’s foreign policy agenda as he seeks to avoid committing American troops to future conflicts in the region, a prospect that remains widely unpopular following the long wars in Iraq and Afghanistan.

Foreign military sales are overseen by the State Department, which ultimately approves or rejects a given proposal. Each request undergoes a rigorous vetting process to determine whether it fits with national security priorities, said David McKeeby, a spokesman for the department’s Bureau of Political-Military Affairs. Once approved, a weapons deal can sometimes take years to contract, produce and deliver to the country. 

McKeeby said these decisions are never driven by industry or business interests. “This is not a financial venture,” he said. “It’s fundamentally an act of foreign policy.”

Critics who disagree point to slumping military sales in the U.S and Europe. Companies secured $284 billion in Defense Department contracts in fiscal year 2014, down 25 percent from the $375 billion they were awarded in fiscal year 2011, according to industry reports. Defense giants like Lockheed Martin and Raytheon, meanwhile, are increasingly eyeing lucrative foreign markets like the Middle East to buck falling western sales, analysts say. 

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Some also fear that U.S.-supplied arms are fueling the conflicts in the Middle East and other unstable regions, which could ultimately pose a threat to American national security. U.S. arms intended for Syrian rebels have already wound up in the hands of ISIS fighters. Meanwhile, fighter jets, ballistic missiles and even cluster bombs supplied by the United States have been liberally used by Saudi Arabia in the punishing airstrikes it is conducting with its Arab coalition in Yemen. Multiple experts and analysts believe the conflict in Yemen could be the prelude to a larger Sunni-Shiite war in the Middle East. A political vacuum created by that conflict has already allowed al-Qaeda and ISIS flourish, say military officials. 

“This is the wrong time to be stepping up U.S. arms exports,” said Hartung.

Industry experts, however, believe the momentum might not last due to falling oil prices. Richard Aboulafia, a defense-industry analyst at the Teal Group Corp., told Vocativ that a decline in the value of crude could put an end to the bonanza. “We’ve had two drivers behind this recent trend,” he said. “One is regional tensions. The other has been high oil prices.”

Aboulafia also said that despite several years of increased foreign arms sales, $47 billion still paled in comparison to annual military spending in the U.S. “Look, the DoD’s budget is hundreds of billions of dollars,” he said. “Every single year.”