U.S. Cluster Bomb Maker Gets Stock Upgrade As Saudi Levels Yemen
A top American manufacturer of cluster bombs was upgraded by Citigroup from 'neutral' to 'buy'
The stock of one of the United States’ few cluster bomb producers was upgraded this week from ‘neutral’ to ‘buy’ by a Citigroup analyst, in part because of continuing instability in the Middle East. Textron, a Massachusetts-based contractor that makes helicopters and jets as well as cluster bombs, has sold the controversial weapons to the U.S. government and allies like Saudi Arabia and the United Arab Emirates. A report in May from Human Rights Watch found that Saudi Arabia has deployed Textron-made cluster bombs in its five-month-long military campaign against Houthi rebels in Yemen, though it was not clear how many civilian casualties they directly caused, if any.
Cluster bombs are a type of weapon that can be launched either from the air or ground and unleash “bomblets” that are released in mid-air. If they do not explode immediately on impact they lie dormant on land, acting essentially as land mines. In 2013, Textron won a $641 million contract to provide Saudi Arabia with 1,300 cluster bombs.
— Ole Solvang (@OleSolvang) May 3, 2015
Citi analyst Jason Gursky made the upgrade on Wednesday in a report issued to clients and subsequently reported in business media outlets. The sunnier outlook for the weapons-maker was due to “stability in the business jet market and defence spending growth in the Middle East and Asia-Pacific,” as reported by the Financial Times. It was not immediately clear what effect, if any, Saudi’s airstrike campaign had on Citi’s analysis. Textron’s stock price increased immediately following the news, reversing a decline over the course of August. (Spokespeople for both Citigroup and Textron did not immediately respond to requests for comment.)
A ten-country coalition, led by Saudi Arabia and with backing from the U.S., began an aerial assault on Yemen in late March, following the ouster of President Abdu Rabu Mansour Hadi earlier in the year by Houthi rebels. Devastating Saudi airstrikes and protracted fighting between the Houthis, fighters loyal to Hadi, and al-Qaeda in the Arabian Peninsula militants, has plunged Yemen into what the UN calls an “untenable humanitarian situation.” At least 6,631 civilians have been killed as a result of the fighting since March.
There are 117 countries which have signed an international treaty banning the use of cluster munitions, though neither the United States nor Saudi Arabia are signatories. The United States permits the sale of cluster bombs as long as they are reported to have a less than one percent failure rate—that is, “duds” that don’t explode when they’re supposed to and become what HRW calls “de facto land mines.” Textron cluster munitions—called CBU-105 Sensor Fuzed Weapons—purportedly meet that standard, though they are banned by the international treaty.