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| June 4,1998 |
| June 4,1998 |
The most tangible evidence of a nuclear weapons capability is a nuclear explosion. With their respective tests last month, India and Pakistan have demonstrated the potential for - if not the actual fact of - having nuclear weapons.
Since the May nuclear tests on the subcontinent, four questions have been asked repeatedly: What drove India and then Pakistan to test? Did the U.S. have another intelligence failure? What could the U.S. (and the rest of the world) have done to stop the tests? Where do we go from here?
Although the "intelligence failure" is likely to draw the most attention from Congress, this is probably the least serious and most easily corrected problem. The other three questions are closely related and more complex.
Many cite nationalistic political campaign rhetoric by the recently elected BJP party in India as a major internal factor that propelled India's tests. The initial reaction of the Indian population when they learned of the tests was jubilation. Similarly, and in spite of numerous calls from President Clinton and other world leaders to Pakistan's prime minister, pressure from the Pakistani military to "settle the score" impelled that government to "go nuclear."
What is less well known is that on March 25 of this year, the U.S. conducted "Stagecoach," a subcritical (that is, nonself-sustaining nuclear chain reaction) test at the Department of Energy's (DoE) Nevada Test site. This, the first of four planned events this year, is part of the DoE's "Stockpile Stewardship Program" designed to ensure the "safety and reliability" of the U.S. nuclear arsenal. In plain English, this means testing some plutonium to make sure it will explode should nuclear weapons ever be used. While technically not violating the Comprehensive Test Ban Treaty signed by President Clinton in 1996, these tests are contrary to the spirit of the Treaty.
Furthermore, under the 1994 Nuclear Posture Review (NPR), the U.S. has maintained the capability to manufacture plutonium "pits" (weapons cores) to replace those that DoE destructively tests and to replace "aging" pits in warheads atop submarine launched ballistic missiles. In addition, DoE is planning to resume production of tritium, a gas that boosts the power of nuclear weapons.
Finally, as India pointed out at the time of its tests, the U.S. and the other four original nuclear weapons states - Russia (in place of the old Soviet Union), China, France, and the UK - have not lived up to their commitments under the 1968 Nuclear Non-Proliferation Treaty (NPT) (reaffirmed in 1995) to actively work to mutually reduce and eventually eliminate their nuclear arsenals. In 1968 the five nuclear weapons states had 39,000 weapons; today they still have 35,000 - and these are more accurate and more destructive.
India has consistently opposed the NPT because it believes that treaty is an attempt by the original five nuclear weapons states to preclude other countries from acquiring nuclear arms. New Delhi uses terms such as "discriminatory" and "arbitrary" and "not in the security interest" of India when describing the NPT.
In this regard, given Stagecoach, one sentence of the official Indian government statement after its tests is most significant: "The Government would like to reiterate its support to efforts to realise the goal of a truly comprehensive international arrangement which would prohibit underground nuclear testing of all weapons as well as related experiments described as 'subcritical' or 'hydronuclear'." This unmistakenly points a finger at the U.S.
If nothing else, the Indian statement ought to jolt the U.S. from the complacency in which we have lingered in the thirty years since the NPT was signed. Together with the other four original nuclear powers, the U.S. needs not only to continue to reduce the number of deployed and reserve strategic warheads (and push the Russians to follow suit with both their tactical and strategic stockpiles) but also to alter the policy promulgated in the 1994 NPR.
While the U.S. no longer speaks of "winning" a nuclear exchange, little else seems to have changed in terms of U.S. nuclear weapons policy. As part of its 1994 NPR, the Clinton Administration asserted that the U.S. would (1) retain nuclear weapons as a cornerstone of U.S. security; (2) retain its nuclear weapons "triad" of bombers, land based, and sea based missiles; (3) not give a "no first use" pledge; and (4) not rule out the use of nuclear weapons to respond to a chemical or biological weapons attack on the United States.
On February 4, 1998, President Clinton stood at Los Alamos, New Mexico and called for an end to the nuclear arms race. But subsequent U.S. actions have not matched the rhetoric. Failure to act forcefully now will give India and Pakistan a continuing excuse to move forward with their nuclear testing programs and even weaponizing - and leave open the door for other nations to assert their prerogative to enter the "nuclear club."
India’s New Military Budget: A Dangerous Proposal
by Jaya Tiwari, Research Intern, Center For Defense Information
Jtiwari@cdi.org
After shocking the world with a series of nuclear tests and igniting a dangerous nuclear race with rival Pakistan, India’s ten week old Hindu nationalist government has pulled yet another rabbit from its hat - a baffling 14 percent increase in India’s defense spending for Fiscal Year (FY)1998-99. As one of the largest peacetime increases in India’s defense budget, the move will have profound consequences for the country and the region as a whole.
In the new Bhartiya Janata Party (BJP)-led government’s first budget, Finance Minister Yaswant Sinha allocated 412 billion rupees (Rs.) ($988 million) to the Defense Ministry for FY 1998-99, a 14 percent increase over last year’s spending. The Indian Army stands to benefit most from this hike, enjoying 18 percent more than last year’s allocation - some 59 percent of the country's total defense budget. Spending for Indian Navy went up 17 percent in the current budget, which is about 14.5 percent of the total defense allocation. The military research and development (R&D) budget showed a considerable increase as well, receiving Rs. 1.776 billion this year compared to Rs. 1.298 billion in 1997-98. The Indian Air Force’s budget of Rs. 9.369 billion, about 22 percent of the total defense spending, remained roughly the same as last year.
Domestically this budget aims to initiate the process of creating a more nationalized and self sufficient economy, a promise of the BJP’s election agenda. As part of its budget, the government proposed an 8% increase in tariffs to provide better protection to domestic industries. Such a move is part of New Delhi’s attempts to create a "swadeshi" economy, which emphasizes protecting the domestic corporate sector from foreign competition. However, Sinha’s plan to create a more self sufficient economy appears to be in serious trouble when considered against the trend of India’s declining annual growth rate, which dropped to 5.0% from 7.5% last year. Experts have predicated a continuation of this decline with the drying up of foreign investment. Given the economic slowdown, how New Delhi hopes to pay for the higher defense spending is a mystery.
Regionally, this budget has much more dangerous consequences. The unprecedented steep increase in Indian military spending will further fuel the arms race between India and Pakistan. This danger becomes even clearer when coupled with huge increases in spending on New Delhi’s atomic energy and space programs. The FY 1998-99 budget calls for a 68% increase in the Atomic Energy Commission’s allocation, while the Space Department is projected to receive a 62 percent increase. Both of these departments have played crucial roles in the country’s nuclear weapons program. The Atomic Energy Commission heads India’s civilian and military nuclear program, while the Space Department is responsible for India’s ballistic missile developments.
Even more disturbing is the aggressive posture which these increases represent. Finance Minister Sinha said that the new budget, in combination with last month’s nuclear tests, comprise a "defining moment in history." In justifying higher spending, Sinha told the Indian Parliament that "there can be no compromise in our defense preparedness" and promised that he would request additional funds if necessary.
This major surge in Indian defense budget and the prospect of even further increases will undoubtable be seen in Pakistan as yet another sign of India’s military adventurism. In fact, following the Indian move, Pakistani officials have announced that they are considering a 5% to 10% increase (in real terms) in defense spending in their national budget which is due to be presented on June 15, 1998.
DD-21The Future of Navy Ship Contracting?
by Chris Hellman, Senior Research Analyst, Center for Defense Information
chellman@cdi.org
On May 13 the Navy announced that it was delaying by one month the deadline for bids on development of its next-generation destroyer, the DD-21. Why? Because it has only received one bid on the $25 billion program. A team comprised of current destroyer manufacturers Bath Iron Works and Ingalls Shipbuilding, with industry giant Lockheed Martin as systems integrator, have presented the only package to the Navy.
What makes this situation even more surprising is that it is occurring as the number of Navy construction contracts, the life-blood of the U.S. shipbuilding industry, is dwindling to a trickle. The DD-21 represents the only major new ship construction contract planned by the Navy until well into the next century. One would think that the six major U.S. shipbuilders who contract with the Navy would be falling over themselves in efforts to win this program. Yet the opposite is true.
It is not, however, the partnership of Bath and Ingalls that has Navy officials concerned but the fact that only one company is in the running for systems integration on the project. The DD-21 is expected to carry a crew of no more than 95, less than one-third the size of current destroyer crews, and will rely heavily on computers and sophisticated electronic systems to operate the ship. The Navy feels that the success of the vessel lies in development and seamless integration of these systems, and thus is pushing for competition in this segment of the contract to promote innovative thinking. According to assistant Navy secretary John W. Douglass, the service's acquisition chief, by teaming with both the Navy's destroyer builders, Lockheed Martin has made it impossible for other electronics firms to compete.
Raytheon Corporation, Lockheed Martin's biggest competitor in defense electronics, agrees. While they are interested in the DD-21 program and have held discussions with Newport News Shipbuilding and Avondale Industries about teaming arrangements, they are staying out of the DD-21 process. Raytheon representatives have complained to Navy and Pentagon officials that the Bath-led team leaves them unable to compete.
John Douglass has stated that he can't imagine the Navy going forward with the program as a sole source program from the very outset, adding that without additional bidders a new acquisition strategy may have to be developed. In fact, the Navy has already begun looking at alternative acquisition plans.
Concerned that the Navy might adopt a strategy not to their liking, or that Congress might mandate a different acquisition plan, Bath and Ingalls officials are working with the Navy to develop alternatives. And according to Pentagon sources, an alternative sponsored by the two shipyards has the widest service support.
Under the plan, two shipbuilding teams would be formed, each with a separate systems integrator. However, since the Navy has already stated that both firms will have a chance to bid on DD-21 construction contracts, as is the current arrangement with DDG-51 destroyer construction, design engineers from both companies must be present on each team. Each company will lead one team and make up 20 percent of the other team, while one system integrator will pair with each team. Thus, regardless of which team wins, both shipbuilders will be in a position to bid on construction contracts. On the other hand, the company bidding for systems integration on the losing team will be left out in the cold.
According to media reports, this plan was devised by the shipbuilders without the knowledge of their current partner, Lockheed Martin. Needless to say, Lockheed officials are crying "foul," even as Navy and Raytheon representatives are lobbying key members of Congress in favor of the compromise.
One of the factors that has contributed to the dearth of competitive bids is the increasing specialization of individual shipyards as the industry has consolidated and Navy contracts have dwindled. In an effort to assure its long term health, each yard has attempted to carve itself a niche. For example, Newport News focuses on nuclear aircraft carriers and, along with Electric Boat, on nuclear submarines. Bath and Ingalls are the source of all new destroyer construction. Avondale specializes in amphibious and support vessels. By pointing to their proven track record in these areas each shipyard has a "leg up" in bidding on additional work, and this discourages other yards from trying to compete. They also become less willing to risk bidding on new programs, stifling innovation in the industry and reducing competition on development of new weapons systems.
In the end, changes in the current acquisition system which result from situations like the DD-21 may aid the military and defense contractors in adjusting to life after the Cold War. What is clear, however, is that industry consolidation has created circumstances that the existing contract and bidding system is ill-equipped to address. It is also likely that further consolidation without careful oversight by the government will worsen the situation.
Abkhazia: Where did all the Peacekeepers Go?
by Jared Feinberg, Scoville Fellow, Center for Defense Information
jfeinber@cdi.org
During May 20-26, the 1,500 strong CIS Peacekeeping Force (CISPKF) in Georgia’s Gali district stood by while intense fighting raged between Abkhaz Interior troops and ethnic Georgian groups such as the White Legion and the Forest Brothers. The CISPKF clearly ignored their mandate and failed to follow orders issued by Russian Defense Minister Igor Sergeyev to intervene.
Many analysts trace this fighting, the latest and most intense to occur since the end of the war in 1993, to the CIS resolution "On Additional Measures to Resolve the Conflict in Abkhazia" adopted at the CIS Summit in late April. The intent of this document was to better reflect the security concerns of displaced Georgians trying to return to the Gali district. To this end, it called for the CISPKF to expand its security zone to Gali and condemned the slow pace at which the Abkhazians are repatriating the internally displaced Georgians who had fled the 1993 fighting. It also linked the lifting of economic sanctions imposed on the Abkhazians to this further repatriation of ethnic Georgians and spoke of a joint Georgian/ Abkhazian body to administer Gali.
The Abkhazians rejected this CIS resolution, claiming that they were not consulted about the final document and pointing out that it was not unanimously approved by the CIS heads of state. Some analysts feel that the Russians may have presented the document knowing that it would upset the Abkhazians and create the potential for a new and larger conflict in Gali. This would create the perception of instability in Georgia at a time when critical decisions are being made about competing oil pipeline routes, one running north through Russia and the other west to Georgia’s Black Sea coast. Obviously, warfare in Georgia would hurt that Republic's chances for capturing this lucrative trade - and could also explain why the CISPKF (i.e., Russian forces) did not prevent or intervene to quell the current hostilities.
As early as May 6, the Abkhaz had reported to the CISPKF that several hundred members of the White Legion had entered Gali and that tensions in the security zone could escalate. Some analysts believe that the CISPKF simply is incapable of deterring conflicts. In light of the 57 peacekeepers who have been killed over the past four years and countless others wounded, it is little wonder that the young, poorly trained Russian conscripts seem more concerned with their own well-being than maintaining an already tenuous peace.
Attempting to hide the dubious effectiveness of the peacekeepers, the Russian Defense Ministry released a statement asserting that the CISPKF acted within its mandate, showing courage and endurance in the face of hostilities. Lev Mironov, head of the Russian Ministry’s task force for settling conflict in Georgia, said, "The conflict died down like a fire without firewood." He added that Russian forces helped diffuse the situation by preventing Abkhazian and Georgian armored vehicles from entering the zone of conflict.
All this contradicts several reports by both Georgians and Abkhazians that the CIS took no preventive action either before or during the hostilities. Referring to the White Legion and Forest Brother’s entry into Gali, the Abkhazian leader Vladislav Ardzinba accused the CISPKF of violating the clause in its mandate regarding joint work with Abkhaz police to stop penetrations of saboteur and terrorist groups.
Georgian Foreign Minister Iraki Menagharishvili echoed the Abkhaz viewpoint, declaring that the CISPKF acted "completely irresponsibly and took no measures to stop the violence." Georgia has accused the CISPKF of failing to halt Abkhaz armored vehicles and heavy weaponry from deploying within the security zone as the Russian Defense Ministry had boasted.
Today, over 30,000 internally displaced Georgians face an uncertain future. Unable to return home, they are refugees again. Many of the Gali villages were burned to the ground by withdrawing Abkhaz forces. Furthermore, the Abkhaz have declared a state of emergency in Gali and surrounding areas, allowing only the very young and old to return. Clearly, this time the Abkhaz will severely restrict the ethnic Georgians permitted to reenter the Gali area, fearing continued raids by the White Legion and the Forest Brothers.
More importantly, it appears that both the Abkhaz and the Georgians have lost confidence in the CISPKF to maintain peace. Both sides believe the CISPKF aided the other and therefore compromised itself as a neutral intermediary.
Over the past four years, as up to 50,000 displaced Georgians returned to the region, it looked as if Georgia would regain its previous position in Gali in spite of terrorist attacks on the CISPKF and small skirmishes between the ethnic Georgians and Abkhazians. Now the balance has swung back to the 1993s. The Abkhaz are firmly in control and over 150,000 Georgians are waiting to go home again.
Weapons Production: Welfare For Executives?
by Oscar Lurie, Associate Research Analyst, Center for Defense Information
olurie@cdi.org
One of the contentious issues surrounding the recent string of mergers in defense industries is who pays the cost associated with them. In July 1993, DoD began to allow companies to charge some restructuring costs to the government if the newly formed businesses would reduce DoD’s costs or preserve a "critical defense capability."
In April 1998, the General Accounting Office reported the results of its review of the costs of seven of these mergers, including Northrop Grumman and Lockheed Martin. The seven businesses had estimated restructuring costs of $1.2 billion through February 1998. DoD had estimated it would have a net saving of $3.3 billion, but the GAO cautioned that this total, which is spread over five years, may include amounts that are not "attributable to restructuring," especially those that were already in progress or that would have been implemented anyway as good business practice.
A separate equally contentious result of these mergers has been the bonanza for the top executives involved in the combinations. The size of actual and potential gains for the top five executives of firms acquired during the recent merger mania is illustrated in the following table.
| Compensation Before Merger | Post Merger Stock Gain | Potential Gain From Post-Merger Options | |
|---|---|---|---|
| McDonnell Douglas | $4,891,000 | $52,292,000 | $8,568,000 |
| Northrop Grumman | $7,810,000 | $46,000,000 | $44,436,000 |
| Martin Marietta | $8,000,000 | $10,247,000 | $18,862,000 |
| Rockwell | $8,238,000 | $43,310,000 | $33,196,000 |
| Loral | $12,360,000 | $95,931,000 | $64,113,000 |
| General Dynamics | $62,361,000 | $38,420,000 | $665,426,000 |
The virtually guaranteed flow of taxpayers’ dollars into these firms for hyper-expensive weapons systems in turn generates a flow of investor money into the stocks of these companies. Thus the taxpayer is paying in two ways: for weapons not needed, and in the managerial and other overhead costs "attributed" to merger and take-over activity.
Compare these levels of compensation with the compensation of the five top men at two well known non-defense companies:
| Exxon | $8,479,000 |
| Lucent | $8,823,000 |
Exxon conducts five different businesses in 30 countries on all continents, generating sales almost double the DoD budget for Procurement and RDT&E combined. Lucent, with its Bell Laboratories, is at the forefront of the communications revolution. It received 809 patents in 1997.
On a comparative basis, allowing for size of business, diversity of operations, and contribution to technological advance, the top men in many post-merger defense firms appear to be overcompensated, especially in light of the fact that it is private industry, not defense industry, that now leads the way in virtually every technology making life better for Americans.
The defense firms want to assure the flow of taxpayer’s money to their order books. A look at the Federal Elections Committee records (as tabulated by the non-partisan Center for Responsive Politics and Common Cause) tells us one of the ways the firms involved in these mergers obtain such assurance. This is a summary of how the Political Action Committees ("PACs") sponsored by the defense contractors contributed to influence congressional and other federal candidates in the 1996 campaigns:
| Loral | $322,000 |
| Rockwell | $357,000 |
| McDonnell Douglas | $389,000 |
| General Dynamics | $397,000 |
| Northrop Grumman | $795,000 |
| Raytheon | $386,000 |
| Boeing | $341,000 |
| Lockheed Martin | $1,222,000 |
Chairmen and members of the Armed Services and Appropriations Committees in both House and Senate received gifts from these PACS ranging from $23,000 to $53,000 The PACs also made "soft money" gifts to the two national political parties ranging from $62,000 to $637,000.
In recent months the public has been repeatedly exposed to disclosures of abusive fund raising for election campaigns and proposals for reform. But Americans have heard nothing about the need to prevent defense contractors from using the taxpayers’ money to influence the flow of that money to their businesses and their executives’ pockets.
Welfare for the poor has been restricted. Welfare for defense executives is protected by the Defense Department’s outlays of taxpayers’ money and the influence these firms exert over members of Congress.