Again the Arms Sales Champion

For the nation's arms merchants, it must often seem like the week before Christmas. Customers keep flocking in to inspect the shiny new toys, and sales keep booming. In recent months the U.S. has sold 18 F-4 Phantom jets to South Korea for $164 million, a guided-missile frigate to Australia ($183 million) and antitank missiles to Sweden and Switzerland ($155 million). While Egyptian President Anwar Sadat was pressing at Camp David for up to 120 of America's F-5E Tiger fighter-bombers totaling close to half a billion dollars, Israel was seeking two dozen of the faster and more sophisticated F-15 Eagles, which carry a price tag of $20 million each, plus 160 F-16s at $10 million each.

Scores of such deals pushed U.S. arms "transfers" (an official term that includes military aid as well as sales) to $ 11.2 billion, for the fiscal year ending Sept. 30, 1977. Although this was down somewhat from the preceding year ($12 billion), it still was enough to give the U.S. once again the questionable honor of being, by a very large measure, the globe's champion arms peddler. It accounted for nearly half the 1977 record worldwide armaments trade of about $24 billion. Moreover, U.S. sales are now rising--toward an estimated $13.2 billion for 1978.

During his presidential campaign, Carter declared that he was "particularly concerned by our nation's role as the world's leading arms salesman." Last May, in issuing guidelines to change that role, he declared that the dollar volume of 1978 arms transfers would "be reduced from the fiscal year 1977 total" and that such sales would be "an exceptional foreign policy implement." The guidelines also stated that the U.S. would no longer be a "first supplier to introduce [advanced weapons] into a region." Last week Carter took a more specific step: he placed an $8.6 billion ceiling for 1978 on all weapons transfers to nonallied countries. But the effect of the measure on total U.S. arms exports is questionable. It contains so many loopholes that a deft shuffling of figures will permit an actual increase in sales.

How can the U.S. simultaneously increase arms transfers while claiming to reduce them? By using gimmicks that would do a Las Vegas casino bookkeeper proud. Not counting toward Carter's ceiling, for example, are large categories of transfers that have previously added billions of dollars to the totals: 1) sales to the 14 NATO allies, Japan, Australia and New Zealand; 2) military construction, training and other "services" performed for foreign governments. All reckoning, finally, is to be in 1976 dollars to eliminate the impact of inflation. Such accounting alchemy allows Carter to ignore nearly $5 billion worth of this year's anticipated transfers. Only by doing so will he achieve his $8.6 billion ceiling. This would be about 8% below $9.3 billion--the figure for last year's $11.2 billion in transfers after it is transformed by the same complicated calculations.

Carter last week defended his modest proposals by explaining that sharper cuts "would violate commitments already made ... and ignore the continuing realities of world politics." He has a sound point. Indeed, a number of the Administration's critics have long maintained that Carter's statements on arms transfers ignored the demands of an effective foreign policy (not to mention a $30 billion U.S. trade deficit). The NATO Alliance, to begin with, obviously relies on a substantial supply of U.S. arms.

In the Middle East, to cite a more complex case, the U.S. must support its friends and reinforce its diplomatic moves by supplying military hardware. It is for this reason that Iran, Saudi Arabia and Israel accounted for a whopping $8.16 billion of the arms contracts signed last year by Washington. Among their purchases: a $613 million helicopter base for the Shah, a $420 million naval installation for the Saudis, and hundreds of millions of dollars worth of tanks, armored personnel carriers and antitank missiles for the Israelis. And these same countries are back in the market for an additional several billions of dollars worth of warplanes this year.

The "realities of world politics" are also making it difficult for Carter to apply other aspects of the May guidelines. The Administration's decision to grant Iran's request for seven Airborne Warning and Control System (AWACS) aircraft ignores the ban on transfers of advanced new weaponry into a region. The AWACS, at $109 million, is one of the most sophisticated warplanes in the U.S. arsenal. Complains a congressional research service study: "Rather than being used as an 'exceptional foreign policy implement,' U.S. arms transfers continue to occur on a routine basis."

Administration officials answer that Carter's program has begun working. U.S. diplomats overseas, for example, are no longer giving so much help to Americans trying to land arms deals. Quiet, behind-the-scenes pressure, according to one official, is also being used "to discourage foreign requests for arms before they become public to spare the rejected customer embarrassment. Meanwhile, a number of countries that the Administration has judged human rights violators, such as Nicaragua, Chile and El Salvador, could face an almost complete ban on weapons purchases from the U.S.

The Administration has also attempted to win Moscow's support for an agreement limiting arms sales to developing countries. But the two superpowers' CAT (Conventional Arms Transfers) talks were ended after a three-day inaugural session in Washington in December without any visible progress having been made. Admitted an American participant: "After a preliminary exchange of views, the two sides just read each other their position papers. There is not much overlap in their positions."

Carter's attempt to stem the world's arms traffic may be the labor of Sisyphus. Even if he manages to slash U.S. sales, few other countries are apt to s follow his lead. Says British M.P. Kenneth Warren: "If American defense exporters are going to find it more difficult to sell, then the vacuum is going to be filled by somebody else."

> The Soviet Union, second only to the U.S. as an arms supplier, with sales last year estimated at about $5.5 billion, has eagerly offered weapons where Washington has refused. After the U.S. balked at equipping debt-ridden Peru with supersonic warplanes, for instance, Lima turned to Moscow. The Peruvians bought about $250 million in Soviet arms, including rockets, tanks and 36 Sukhoi-22 fighter-bombers. During the same period, the U.S.S.R. delivered an estimated $850 million worth of tanks, artillery, armored vehicles and other arms to Ethiopia for its war against neighboring Somalia. Syria, Libya, Iraq and Algeria are expected to receive new weapons from Moscow as a reward for their strong opposition to Arab concessions to Israel.

> France in 1976 (the most recent year for complete figures) sold some $3.7 billion worth of arms to more than 20 countries. A favorite item has been Dassault's versatile Mirage III. Fourteen long-range versions of this $8 million Mach 2 fighter were bought by the Sudan and 18 by Ecuador. Peru, Brazil, Argentina, Colombia and Venezuela already fly Mirages.

> British salesmen closed arms deals in 1977 worth $1.9 billion. A bestseller was the Chieftain tank; Iran has bought 1,500 of these powerful fighting vehicles in the past two years, Kuwait obtained 500. Finland's $180 million purchase of 60 British Hawk fighters has prompted experts to predict that the plane's foreign sales could exceed 1,500 by the mid-1980s.

Neither France nor Britain shows any intention of braking its sales drive. The French stage an extravagant biennial "arms supermarket" at Camp Satory, near Versailles, that draws interested officials from dozens of nations. Paris also maintains an elaborate sales apparatus that has been organized into several separate agencies, in order to avoid political problems in providing weapons to both sides of a conflict. Thus one French agency can sell arms to South Africa and Israel, while another can show the latest military gadgetry to black Africans and Arabs.

The British are equally innovative. Not only do they stage a sprawling arms fair at Aldershot, 36 miles from London, but they have converted two ships into floating exhibit halls that cruise from nation to nation, offering military hardware.

The Big Four producers account for about 90% of the world's arms trade. But a number of other nations have also been ringing up hefty sales. Among them:

> Italy last year exported $690 million in arms, including missile frigates to Venezuela and Peru, Chinook helicopters (made under license from Boeing) to Iran, air transports to Argentina and Dubai, and the license to make the Oto Melara naval guns to the U.S.

> Israel now manages to export $400 million of the output of its expanding arms industry to more than a dozen countries, including Taiwan, South Africa, Kenya and Greece. Among the most popular Israeli weapons: Uzi submachine guns, Galil assault rifles and the Gabriel rocket that, Israelis boast, is "the world's only combat-proved surface-to-surface ship-borne missile system."

> West Germany in 1976 sold most of its $317 million in arms (helicopters and Leopard tanks) to fellow NATO states or neutrals. Last week's prize deal: the sale, pending congressional O.K., of the 120-mm. smoothbore gun to the Pentagon for the U.S.'s new XM1 battle tank. Though most would be produced under license by American firms, West Germany could earn at least $62 million. To other countries, Bonn supplies only what it calls "defensive" weapons, such as antitank and antiaircraft rockets to Iran and submarines to Argentina.

The major reward for arms sales by the great powers used to be the diplomatic leverage on the recipient. To an important extent, this is still true for the U.S. and U.S.S.R. If Washington, for instance, assents to Mexico's recent request to buy $150 million worth of F-5E s, it will primarily be to avoid souring the U.S.'s-improving relations with its neighbor.

But for most other industrial countries, arms sales now are primarily a welcome means of improving the chronic balance of payments deficits they have suffered since the astronomic jump in oil prices in 1973. Admits Britain's Sir Ronald Ellis, chief of sales for the Ministry of Defense: "This country is absolutely dependent on exports, and that increasingly includes overseas arms sales."

At a time of uncomfortably high and persistent unemployment, moreover, arms exports create badly needed jobs at home. French economists estimate that such exports keep 70,000 of their countrymen working, while as many as 800,000 Americans may owe their jobs to foreign military sales. Selling weapons abroad also enables producer-countries to regain part of their steep research and development costs and benefit from the economies of large-scale output. France's aviation industry, for example, could not afford to design and manufacture new advanced combat aircraft for the French air force unless it could count on sales to foreigners. According to the Congressional Budget Office, $8 billion worth of U.S. arms exports bring down the Pentagon's cost of weapons by some $560 million.

Except for Carter's new ceiling on some categories of sales, there are no signs of a letup in the international arms market. Japan is about to buy $4.57 billion worth of F-15 Eagles and P-3C Orion antisubmarine patrol planes from the U.S., while Canada is shopping for $2.3 billion in fighter jets. Yugoslavia, Egypt, Chad and the Sudan are already lining up to place their 1978 orders with Washington. London anticipates cultivating Arab customers for more than $1 billion worth of British helicopters, gun sights, radar and other military equipment, and Paris has its eyes on the greatest untapped arms market of all--Communist China. Sums up Frank Barnaby, director of the widely respected Stockholm International Peace Research Institute: "In spite of President Carter's efforts, it is proving extremely difficult to control [arms sales]. One is justified in being pessimistic."

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