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US corners Third World arms market: Controls brushed aside in race for sales

AT A MOMENT when Washington is seeking to restrain Russian arms sales, the US has achieved dominance of the Third World arms market. Of the dollars 23.9bn (pounds 16bn) in arms supply agreements signed by Third World countries in 1992, the US share rose to 57 per cent compared with only 13 per cent five years before.

The US has taken over the Third World arms market largely by replacing the former Soviet Union, and through its political strength in the Middle East in the wake of the Gulf War, according to a report by the Congressional Research Service. Russia has terminated its credit and discount arrangements with its former customers and is trying to win contracts with Third World countries which pay in hard currency such as Iran, China and India.

The report, based on data from the US Defence Department and intelligence services, says the end of the Cold War has led to a change in the priorities of US defence industries. It says that because of the fall in defence procurement by the US armed forces 'American arms producers focused greater attention on obtaining additional foreign arms sales contracts to compensate, to the degree possible, for lost domestic orders.'

The imperative for US arms companies to sell abroad led to the virtual collapse of the attempt by the permanent five members of the UN Security Council to limit the size of arms sales to the Middle East. At the height of the presidential election campaign last year President Bush suddenly announced the sale of 150 F-16 fighter aircraft to Taiwan, leading to a boycott of the permanent five's discussions by China.

Saudi Arabia and the Gulf oil states continue to be the most important markets for US arms. New orders from Saudi Arabia were worth dollars 4.2bn and from Kuwait dollars 1.1bn in 1992, the biggest orders being for Patriot anti-missile missile batteries which are in demand because of their use against Iraqi Scud missiles during the Gulf war. French and British officials both expressed concern last year that they were losing their best arms markets in the Gulf to the US.

The league table of arms suppliers to the Third World shows dramatic changes over the last five years. The US won 57 per cent of the market in 1992, France was second with 16 per cent and Britain third with 10 per cent, while Russia had only 5 per cent of sales. China which won 12 per cent of global sales in 1987 had almost no new sales last year. The Chinese, like the Russians, were badly hit by the embargo on Iraq, formerly an important market. Russia is still owed some dollars 8bn by Iraq, according to diplomats in Baghdad.

Richard Grimmet, the defence specialist who prepared the report, says the Russians are trying to sell advanced weapons systems at competitive prices but 'Russia currently suffers from concerns by potential buyers that the industrial and political turmoil it has gone through during the break up of the Soviet Union, and still in prospect, may have made it an unreliable supplier of the spare parts and support services required to maintain its weaponry.' At the same time the highly publicised success of US weapons in the Gulf war has encouraged Middle East countries to buy them.

Arms deliveries to the Middle East have gone up and down as a result of two wars: the Iran-Iraq war and the Gulf war. The report says that in the seven years to 1992 arms exports to the Third World were dominated by Russia/Soviet Union with total sales of dollars 108bn, followed by the US (dollars 45bn), Britain (dollars 22bn), France (dollars 20bn) and China (dollars 12bn). The biggest customers over the same period were Saudi Arabia (dollars 52bn), Iraq (dollars 27bn) and India (dollars 19bn).