Britain aims to boost arms sales

Christopher Bellamy reports on tougher competition in a shrinking market

Britain is planning to increase to 22 per cent its share of the total world arms trade by the end of the century, capitalising on the disintegration of the former Soviet Union. It wants to maintain its arms exports at their present value of about pounds 5bn a year through its increasing share of a shrinking market.

The United States, Britain and France are the three main arms exporters in the world, accounting for 90 per cent of all the new defence equipment, although Charles Masefield, the head of the Defence Export Sales Organisation does not believe that position will be sustained. Russia has committed itself to regaining some of the sales of the former Soviet Union, and east Asian countries, particularly Japan, may soon have the potential to challenge the traditional arms exporters.

The British and French arms industries are each about a third of that of the US, so their increased collaboration could have an impact on US exports. So could Britain joining the Franco-German arms agency, as proposed by the Secretary of State for Defence, Michael Portillo, last week.

In some areas, the Europeans are gaining ground against the US. Although the US can produce more advanced armaments more cheaply, it is losing out because it will not allow countries in the Middle East and the Pacific rim - the two main arms-purchasing areas - to have the most up-to-date equipment, whereas Britain and France will.

But the purchase of ready-made arms is being supplanted by the sale of know-how and "dual use" technologies which can be applied to military or civilian products. The Europeans are also more willing to transfer technology and let other countries produce their designs under licence. The US arms industry employs about 800,000 people directly and a similar number indirectly. Britain and France each employ 230,000 directly and the same number indirectly. The shares of the global arms market are comparable: between 1990 and 1994 the US received export orders totalling $116bn (pounds 77bn) as against $40bn for the UK and $39bn for France. Britain provides 19 per cent of the world's arms exports. Its target is 22 per cent by 2000. Russia recently set itself a target of reviving arms exports to $5bn a year.

Mr Masefield says the Middle East will remain the largest market for Western arms for the next five to 10 years. Meanwhile, the Asia-Pacific region will increase in importance. This has led to concern that there could be trouble in a region undergoing rapid industrial growth which could pay for an unrestricted arms build up, and where there are many flash points but no regional security structures comparable with those in Europe.

According to a new study by the Saferworld foundation on the transfer of arms and military technology to east Asia, the "new-found wealth and buoyant trade" in the area has placed a stress on maritime forces to patrol supply routes and protect natural resources. A feature of the arms market on the Pacific rim is the role of technology transfer in building up the economies in general and defence industries in particular.

Most arms sales revenue does not come not from the sale of equipment but from contracts to maintain and support it, Mr Masefield said. For this reason, purchasers are expected to be reluctant to buy Russian arms. After sales service is seen as unreliable because of the country's instability.