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Raytheon benefits from surge in US arms exports

Secretary of State John F. Kerry has been active in efforts to help US defense contractors sell more military supplies to allies overseas as a way to bolster their role in international security.

Czarek Sokolowski/Associated Press

Secretary of State John F. Kerry has been active in efforts to help US defense contractors sell more military supplies to allies overseas as a way to bolster their role in international security.

WASHINGTON — The Obama administration is making an aggressive push to help US weapons manufacturers sell more arms overseas, including lobbying foreign leaders to purchase warships, aircraft, and missiles, and relaxing some controls on the transfer of military components, according to administration and industry officials.

Since 2009, when President Obama took office, the United States has led a surge in global arms deals, accounting for nearly a third of the roughly $30 billion in weapons transfers completed last year, according to the Stockholm International Peace Research Institute.

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Its share was up from a little more than a quarter of the global market four years ago, according to the Swedish group, which has tallied arms sales worldwide since 1966.

US arms transfers went from $6.9 billion in 2009 to $8.7 billion last year, according to the institute’s database, a 25 percent increase. The statistics for this year are not yet available, but specialists say they expect to see the steady upward trend continue.

Top administration officials credit a coordinated effort by the White House and active participation by Secretary of State John F. Kerry with helping American companies ink more weapons contracts. Officials also are lowering regulatory barriers to companies looking to export arms.

The policy is driven, the administration says, by a key US foreign policy goal: helping the country’s allies shoulder more of the burden of international security. It is not about trying to boost company profits and protect jobs in the United States, they insist, though they acknowledge economic benefits are a byproduct of the policy.

“We are very keen to have allies and partners step up to the plate,” said Gregory M. Kausner, deputy assistant secretary of state for regional security and arms transfers, and a former Navy fighter pilot. He described arms sales as a “fundamental tool of foreign policy.”

‘It is going to be a happy new year for the defense industry, which is going to make a lot of money.’

Richard Grimmett, retired government analyst  
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Yet a number of human rights and international security experts are raising alarms that the more aggressive approach, which has received scant attention in Congress, could fuel tensions with Iran and China, and make it easier for potential adversaries to gain access to sensitive US military technologies.

Matthew Staver/Bloomberg

Kerry advocated for Massachusetts-based Raytheon Co.’s bid to provide an air defense system to Oman. Above, Raytheon chairman and chief executive William Swanson spoke at the National Space Symposium in April 2012.

They also worry that not enough consideration is being given to the possibility that some allies who are buying record amounts of high-tech arms, especially in the unstable Middle East, could end up using American weapons to stifle dissent or commit other human-rights abuses. They cite Egypt as a recent example.

“The floodgates are going to open and it is going to be a happy new year for the defense industry, which is going to make a lot of money,” said Richard Grimmett, who recently retired after more than 30 years as the leading international security analyst for the Congressional Research Service, a nonpartisan legislative branch agency. “But you didn’t have oversight hearings explaining, ‘Here is why it is a good idea, here is why it is a bad idea.’ ”

One of the biggest beneficiaries has been Waltham-based Raytheon Co., the largest employer in Massachusetts and the world’s fifth-largest defense contractor. It reported earlier this month that as much as 30 percent of its annual business will come from foreign sales — the highest it has reported. The company expects in coming weeks to complete deals in the Middle East worth $5 billion.

Raytheon can thank, in part, Kerry, who has final authority over international arms sales by US companies and in recent months has taken on a significant role as booster.

For example, earlier this year Kerry personally advocated for a $2 billion proposal from Raytheon to outfit the Persian Gulf emirate of Oman, which is adjacent to Iran, with a new air defense system. Kerry’s advocacy in effect continued the lobbying campaign he began several years earlier as a Massachusetts senator.

“I wanted to come here to be able to thank you and to celebrate with you the Raytheon initiative,” Kerry remarked in May as he met Oman’s defense minister.

Kerry declined to be interviewed for this story. A senior US official directly involved in the review process said the increase in arm sales to the Middle East and Asia is a reflection of the government’s new approach.

“In the past, there wasn’t a very coherent strategy to do advocacy,” said the official, who was not authorized to speak publicly. “Slowly over the years there’s been a recognition that there has to be a greater governmentwide thought process. This administration has focused on it.’’

The official explained that US defense company proposals are now a consideration in virtually all diplomatic dealings with foreign officials. For example, top government officials traveling to particular countries are now regularly prepared to advocate for US firms who are seeking to sell arms there.

“Who, at what level, is going where and when?” the official described the approach, saying the advocacy effort is aimed at “how to get the biggest bang for the buck.”

US defense companies have two primary avenues to sell weapons internationally. There are foreign military sales, which are government-to-government deals and managed by the Pentagon, and direct commercial sales to foreign governments. Those are overseen by the Department of State, which grants export licenses.

Administration officials insist that security, not economics, is what drives the push to sell more US arms. Providing key allies with American hardware, they say, will ensure the United States has partners in containing Iran and North Korea, as well as deterring China from taking a more aggressive posture toward US allies Japan and South Korea.

“We don’t make these decisions as a jobs program,” said the State Department’s Kausner.

In a sign of the growing global competition, China’s volume of arms exports climbed a whopping 162 percent in 2008 to 2012, compared with 2003 to 2007, according to the Stockholm Peace Research Institute tally. For the first time China placed in the top five of global arms providers, behind the United States, Russia, Germany, and France, and displacing the United Kingdom.

But numerous experts see financial considerations — not security strategy — as the key factor in the surging US arms trade. They point out that the Pentagon’s buying power is shrinking substantially with budget cuts.

“The most important thing is the US down trend,” said Richard Aboulafia, vice president for analysis at the Teal Group, a defense and aerospace consulting firm in Fairfax, Va. “To keep production lines alive, you have to focus on the international market.”

For instance, he noted that a number of key weapons systems that are being purchased in fewer numbers by the US military are now major offerings overseas, including F-15 and F/A-18 fighter jets and C-17 military transport planes.

Another factor is that the US military presence in both Iraq and Afghanistan is drawing to a close, said Siemon Wezeman, a senior researcher at the Stockholm Institute.

“Business was up during the wars, which gave US companies quite a lot of possibilities to sell equipment and services and spare parts,” he said. “That, of course, will be gone.”

The Obama administration also is shifting approval power for the sale of some military components from the State Department to the Commerce Department, which requires less oversight.

The new arrangement will streamline the export of thousands of components that officials say would not provide a significant military edge, such as aircraft parts and satellite technologies that are available on the commercial market. The list also will include “military vehicles, vessels, submarines, and auxiliary military equipment,’’ the White House announced this fall.

Leading industry advocates say the Obama administration could go even further to coordinate overseas sales.

“We just want to start a process where it is done even more, and make it as much of a machine as possible,” Remy Nathan, vice president for international affairs at the Aerospace Industries Association, a defense trade group, said of industry-government coordination.

Among the critics of this trend is the American Bar Association’s Center for Human Rights, which has raised concerns that the United States will be introducing a flood of small arms and ammunition into areas ripe for conflict.

“I have not seen any meaningful analysis of the human rights component,” said Brittany Benowitz, the center’s chief counsel, who noted worries about “people who obtain arms from the US and then go out and do horrible things with them.”

Even some of the architects of the Obama administration’s approach acknowledge there are potential consequences.

“There are downside risks,” said Michele Flournoy, who served as undersecretary of defense for policy in the president’s first term. “You can have governments change, or governments misuse US weaponry.”

She also said that by transferring some military components to the Commerce Department’s export licensing process, there will be less tracking of where those parts go and how they are ultimately used.

“There is certainly less reporting after the fact,” Flournoy said, though she maintains the benefits outweigh the risks for US foreign policy.

A few members of Congress are calling for restoration of stronger export controls.

Representative Ileana Ros-Lehtinen, a Florida Republican and member of the House Foreign Affairs Committee, said she believes more oversight is needed “to ensure that our military equipment and technology are not transferred to a third party without our knowledge, and that they cannot be used to threaten our interests.”

Longtime observers said they are surprised by how little attention has been paid to the arms sales bonanza.

“There have been times when there has been a surge in US arms sales and the issue has been debated,” said William Hartung, a researcher at the Center for International Policy, a Washington think tank. “This time it doesn’t seem to be the case.’’

Grimmett, who has watched the process for nearly four decades, said few seem to care about the potential risks.

“There is no opposition anymore,” he said.

Bryan Bender can be reached at bender@globe.com. Follow him on Twitter @GlobeBender.
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