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| June 18,1998 |
| June 18,1998 |
U.S. Leads World As Top Arms Exporter
by Rachel Stohl, Research Analyst, Center for Defense Information,
rstohl@cdi.org
Last week, the Stockholm International Peace Research Institute (SIPRI) released its annual publication, the SIPRI Yearbook 1998: Armaments, Disarmament, and International Security. This book, among other topics, contains statistics on world military and arms spending.
According to the SIPRI report, total worldwide military and arms spending was approximately $740 billion in 1997 - one-third lower than 10 years ago at the end of the Cold War.
The most dramatic cuts in military spending since 1987 have come from Russia and other states of the former Soviet Union. SIPRI reports that the while the U.S. share of deliveries of major conventional weapons has grown to 43%, Russia’s share has fallen to 14%.
Although world-wide there have been significant declines in overall military and arms spending, some countries continue to increase their spending and contribute to region-wide instability. In North Africa, which has seen a 45% increase over 10 years, Algeria tripled its purchases to $1.5 billion in 1997. The Middle East region has seen expenditures increase by 9% over 10 years, and South and East Asian spending has risen 25% in the last decade.
The following tables represent the world’s largest exporters and importers of conventional weapons in 1997, according to SIPRI’s research.
Top Arms Exporters
Top Arms Importers
In addition to being the world leader in arms transfers, the U.S. continues to dominate the development of military technology. The U.S. military research and development budget is more than seven times that of second- place France, according to SIPRI. Researchers found that of the $58 billion spent for military research and development in 1997, $37 billion was spent by the United States. SIPRI theorizes that this U.S. dominance of new technology will make the rest of the world increasingly dependent on the U.S. for advanced weapons, thereby further increasing the U.S. share of the global arms market.
Although U.S. leadership in the world’s arms market is unquestionable, the United States is still searching for a definitive arms transfer policy. At a Stimson Center Conference on June 10, Secretary of State Madeline Albright commented on current U.S. policy regrading arms transfers. She said, "Legitimate exports of conventional arms can support our interests and foreign policy. But in the wrong hands, such exports can endanger our people and empower our adversaries."
Albright also said that the "U.S. will work to ensure better coordination of our respective policies" and made reference to the efforts of European Union countries to harmonize their rules for arms transfers. But she refused to articulate support for similar initiatives in Congress, such as the Code of Conduct, which would set guidelines for determining the legitimate end users of U.S. weapons. Instead, Albright focused on the Wassenaar Arrangement saying, "We want that arrangement to be recognized as the institution where responsible nations take practical steps and address dangers arising from irresponsible arms exports." Unfortunately, Albright did not give any concrete suggestions as to how this can be accomplished, with the predictable result that U.S. policy remains murky.
Further confusing the U.S. position on arms transfers is the Clinton Administration’s 1995 official arms sales policy pronouncement. This policy states that in determining whether permission should be granted for a weapons manufacturer to sell to a foreign market, "the impact on U.S. industry and the defense industrial base" should be considered. The following year an advisory committee recommended that this policy be discontinued because "arms transfers made for economic reasons would undercut and perhaps even preclude restraint efforts." Nonetheless, the policy still stands.
Because the U.S. continues to be the dominant force in the world's arms market, it cannot afford to take a back seat on the issue of setting standards for responsible arms transfers if it also wants to mitigate instability in volatile regions. Yet continued uncoordinated and short- sighted policies can only add to instability and tensions in such areas.
Additional information about SIPRI and the SIPRI Yearbook 1998: Armaments, Disarmament and International Security, can be found at http://www.sipri.se
For more information about Albright’s comments at the Stimson Center and follow-up comments by James Rubin, please see Ruppe, David, "Albright Calls for Increased Arms Export Control," Defense Week, June 15, 1998, 7.
Caspian Oil: Great Riches or a Great Quagmire
by Jared Feinberg, Scoville Fellow, Center for Defense Information
jfeinber@cdi.org
The State Oil Company of the Azerbaijani Republic (SOCAR) recently stated that it was considering pursuing international arbitration against the Azerbaijan International Operating Company (AIOC), an international consortium of 11 oil companies, to force compensation payments for recent cost increases related to the construction of the Baku-Supsa pipeline. AIOC originally estimated that the pipeline would cost $315 million, but it is now estimated at $590 million due to "previously unforeseen" construction costs.
The disagreement between SOCAR and AIOC is but the latest squabble among the private and public parties in the Caspian Sea region. It follows close on the heels of a June 14th statement by Shamil Basayev, acting premier of Russia’s Chechnya region, that the flow of oil from Baku in Azerbaijan to Novorossiisk in Russia may be halted until Russia pays the oil transport fees and war reparations it owes Chechnya.
These two problems once again draw attention to long term concerns associated with the project's political and economic viability and the wisdom of relying on the potential riches of the Caspian basin to invigorate the Caspian states’ economies. Many analysts believe that once the main export pipeline (MEP) route to transport the oil from the Caspian region is selected, the conflicts in the region (e.g., Abkhazia and Nagorno-Karabakh) will be resolved; prosperity will lift all the states, and trade will flourish. History, however, provides examples of energy rich states that actually encountered new economic and political difficulties precisely because of the new-found oil and gas riches (Nigeria and the Netherlands). These past failures behoove the West and the Caspian states to reevaluate expectations that oil will be a panacea for the Caspian states’ economic and political woes.
The current lack of focus on other economic sectors, the record low price of oil, weak government institutions, and inter- and intra-state conflict are each contributing to a disaster scenario for the Caspian states.
One threat to all the states in the Caspian region is the so-called "Dutch disease." This refers to an over reliance on large gas exports which then causes other sectors of a nation's economy to atrophy -- as happened to the Netherlands. Large volume exports of a high valued commodity, such as gas or oil, can result in the local currency becoming overvalued, which then hurts all other export products. Given the condition of the economies of the Caspian states, this danger is very real.
Perhaps a more pressing challenge in successfully exploiting the Caspian region’s oil resources is the current record low oil prices. When the oil companies created their business plans for transporting oil out of the region, they obviously took into account the relatively depressed state of world oil prices. Current prices, however, are now at their lowest in 20 years. Some analysts believe that prices will not rebound significantly. If in fact the low oil prices become a long term feature of the market, this will affect the number of pipelines and the scale of the projects undertaken. In turn, the potential immense wealth may not materialize -- or may be quite retarded -- for the Caspian economies.
In the political realm, the states of the Caspian region have strong but elderly leaders with little or no genuine opposition. Over the next decade or so, it is likely that several of these current leaders will disappear from power due to advanced age. In light of the current regional conflicts such as Nagorno-Karabakh and Abkhazia, it is not implausible to speculate that these conflicts will intensify (or new ethnically-based ones begin) if central governments are weakened substantially by succession crises.
While some Caspian states such as Azerbaijan can bank on the production and transport of oil to fuel future prosperity, other Caspian states are in danger of being excluded from key developments in the energy sector such as pipeline routes. For example, it now appears that the MEP will completely bypass Armenia which is currently in a stalemate with Azerbaijan over the disputed, ethnically Armenian enclave of Nagorno-Karabakh (located within Azerbaijan).
Various U.S. laws further complicate the Caspian development picture. Iran is a country that potentially could play a large role in transporting Caspian oil. However, the Iran-Lybia Sanctions Act (ILSA) prohibits U.S. companies from investing in Iran, effectively cutting off this potentially vital trade route for many of the companies and consortiums working in the Caspian region. On another front, while the United States tries to strengthen its ties with Azerbaijan in order to help U.S. companies gain contracts, Section 907 of the Freedom Support Act prohibits most forms of foreign aid to Azerbaijan. Conversely, due to the strong Armenian lobby in the United States, Armenia reaps U.S. largesse as the third largest per capita recipient of US aid.
Western governments and corporations, as well as the governments of the Caspian region, must look beyond narrow, short term perspectives. With the decision on MEP set for October it is tempting to declare the sighting of the proverbial "light at the end of the tunnel" for the economic and political problems of the Caspian region. This simply is not the case. The problems are real, even if many do not manifest themselves until the new millennium.
For sure, Armenia must be engaged economically in the Caspian and not shunned, as Azerbaijan wishes, if the region is to fully develop its resources. International investors and local governments must concentrate on strengthening other sectors of the indigenous economies in conjunction with energy. Finally and perhaps most importantly, democratic institutions and regional conflict resolution mechanisms must be enhanced so that the potential economic wealth from oil will not be squandered in further inter- and intra-state conflict. Unfortunately, the recent passage of a rather non- democratic presidential electoral law in Azerbaijan bodes ill for these urgently needed changes and the correct use of the Caspian region’s potential wealth.
To Intervene or Not to Intervene: A Legal Question
by Tomas Valasek, Research Analyst, Center for Defense Information
tvalasek@cdi.org
NATO is stepping up plans for a military operation in Kosovo after most allies rejected the Moscow-brokered peace agreement with Yugoslavia’s Slobodan Milosevic. But apart from logistical issues, NATO has yet to reach an agreement on whether the alliance needs a UN Security Council resolution to intervene. Secretary of Defense Cohen and Secretary of State Albright maintain that a UN Security Council blessing is "desirable but not necessary."
A NATO offensive in Yugoslavia without UN authorization would be unprecedented. To date NATO has never violated the borders of a sovereign country based on nothing more than the decision of its own political superstructure. Most NATO allies are reluctant to cross this line. The European Union, which includes 13 of NATO’s 16 countries, affirmed Wednesday that an intervention would "require an authorisation by the UN Security Council under Chapter VII of the UN Charter."
U.S. officials cite Article 51 of the United Nations Charter as legal justification for a Kosovo intervention. Application of this article may require more than a little creativity. Article 51 gives all UN members the "right of individual or collective self-defence if an armed attack occurs against a Member of the United Nations, until the Security Council has taken measures necessary to maintain international peace and security." But Kosovo can hardly evoke this provision. It is neither a member of the United Nations nor an independent country. Even the Clinton Administration has specifically rejected the option of granting independence to Kosovo, suggesting a "higher degree" of autonomy for the province within the Yugoslav Federation.
U.S. officials may be looking for a way around this hurdle, in both a legal and a geographic sense. On several occasions, fighting in Kosovo spilled into Albania. An Albanian citizen was allegedly shot on Albanian territory, and a Serb helicopter was reported to have violated Albania airspace. NATO thus conceivably could claim the right to enter Kosovo in order to defend Albania. Secretary Albright has already warned against "internationalization" of the Kosovo conflict, to which U.S. Balkans envoy Robert Gelbard added, "we would regard it as extremely grave if there are cross-border operations."
Ultimately, of course, Article 51 shifts responsibility for "defense" to the UN Security Council. "Measures taken by Members in the exercise of this right of self-defence...shall not in any way affect the authority and the responsibility of the Security Council under the present Charter to take at any time such action as it deems necessary in order to maintain or restore international peace and security." Given this language, it seems clear that no amount of legal creativity would justify a NATO intervention without a Security Council Resolution.
More so than in Bosnia, the conditions under which NATO conceivably might act in Kosovo will have far reaching implications for the future of the alliance in post-Cold War Europe. At stake is the extent to which the Alliance can actively intervene to maintain "stability" in and around NATO territory without losing its cohesiveness or engendering opposition among non-NATO countries. A Kosovo operation without UN Security Council approval would cross the line between peacemaking and interventionism. Not only is this a step many NATO members are reluctant to take, such Alliance intervention without prior UN approval would be a red flag for Russia and other countries concerned with NATO expansion.
These technical disputes may seem mundane in the face of the violence and ethnic cleansing in Kosovo. In the end, it may well be necessary to undertake military intervention to stop the killing, and NATO may be the organization best situated to carry out such an operation. But a unilateral NATO military operation can only give credence to the charge that NATO is an offensive alliance out to impose its will on those that do not toe its line. In this possibility lies the seeds of new discord and division in Europe - something neither the Europeans nor the U.S. need or can afford.