- Molly Morgan
A decade after the official end of the Cold War, the Pentagon
budget is still astonishingly bloated and Congress routinely gives
it more than they ask for. Military spending takes up over half
of the discretionary federal budget — $305 billion in 2001. The
next largest category, education, is only $42 billion. The U.S.
military not only has the most advanced weaponry with the biggest
stockpiles, but outspends every other country by an enormous amount.
The combined military spending of Russia, China, and the seven
"states of concern" is still much less than half that of the United
States. While global military spending continues to decline, the
U.S.’s share continues to increase; in 1998 it was up to 36%.
The powerful influence of the corporate war system has everything
to do with why the U.S. still spends so much on the military.
The arms race during the Cold War was very profitable, highlighted
by astonishing stories of $600 toilet seats and $400 hammers.
Contractors paid no penalties for cost overruns or lengthy delays
or technology that didn’t work — they just kept billing the government,
which kept paying. People who shuttle between jobs in the Pentagon,
Congress, and weapons corporations facilitate the complex procurement
process. They pass the laws, negotiate the deals, and make sure
that everyone inside the system makes money. Some examples: Warren
Christopher was a director of Lockheed before he was made Secretary
of State; William Perry promptly joined Boeing’s board of directors
after he resigned as Secretary of Defense and is also on the board
of United Technologies; Idaho’s Governor Dirk Kempthorne was vice
president for governmental affairs at FMC Corporation (now part
of United Defense) and then a Senator who sponsored the bill that
created the Defense Export Loan Guarantee program (see below).
With the end of the Cold War and decreased U.S. military spending,
the weapons industry looked to overseas weapons sales to bolster
production lines and profit margins. This hasn’t worked very well
because runaway costs priced most military technology out of the
world market just as global demand declined. Undeterred, arms
manufacturers heavily lobbied the nation’s decision-makers, spending,
for example, $49.5 million in 1997. As a result, U.S. taxpayers
underwrite a growing share of the cost of military exports.
This corporate welfare to the war industry exceeds $8 billion
a year. Some of the creative programs these corporations and the
U.S. government have implemented include:
Defense Export Loan Guarantee program which provides
$15 billion for sales to fiscally unsound nations.
payments of over $2 billion have been provided to foreign
governments to repay debts incurred to buy U.S. weapons.
bad debts of $1 billion have been written off from U.S.
government-guaranteed loans to foreign importers of U.S. arms.
Export-Import Bank, a federal agency, offers below-market-rate
loans to countries purchasing U.S. goods. Before 1990, it could
only fund civilian products, but its expansion into the military
realm has not-so-coincidentally paralleled Boeing’s arms export
growth. Today Boeing is the second-largest arms contractor and
the largest arms exporter in the U.S.
The Overseas Private Investment Corporation, a low-cost
federal insurance policy, protects U.S. corporations doing business
overseas against fluctuations in local currencies, protests,
insurrections, "interference" from local government environmental
restrictions, and nationalization. OPIC insures loans in 140
countries at rates that are virtually impossible to obtain from
Excess Defense Articles program gives to other countries
"obsolete" weapons, components, spare parts, or anything else
that the Pentagon decides it no longer wants. The EDA is one
way to provide nations with poor cash flow $750 million worth
of arms a year to get them accustomed to the U.S. as a supplier.
diplomats and full-time employees of the State, Commerce, and
Defense Departments promote and finance overseas military
sales under the pretense that arms sales overseas are essential
for preserving U.S. industrial jobs. (According to the Pentagon,
795,000 "defense" workers were laid off between 1992 and 1997.)
From 1993 to 1997, the U.S. government sold, approved, or gave
away $190 billion in weapons to virtually every nation on earth.
are incentives provided to foreign countries in exchange for
the purchase of military goods and services. The programs often
include agreements to manufacture some or all of the products
in the purchasing country, creating jobs there but not in the
sales subsidies of about $500 million are created by not
charging foreign purchasers for the cost of government research
leases of about $63 million are provided when the U.S. government
sends free equipment to foreign trade shows.
and acquisition support is provided by the government to
ensure the economic health of the weapons industry.
The last program helped consolidate corporate wealth and power
into fewer hands. For example, when Lockheed acquired Martin Marietta
it pocketed about $1 billion in taxpayer money for costs related
to employee relocations, plant closures, and associated expenses.
About 30,000 workers lost their jobs after the federally bankrolled
merger, but executives received bonuses of approximately $31 million.
Lockheed Martin is now the largest arms manufacturer in the world.
Another example: in 1996 Northrop Grumman paid about $3.6 billion
to purchase Westinghouse Electric’s defense and electronics business,
but some $600 million of that was provided by the government in
the form of pensions and medical obligations; an additional $600
million (over 15 years) was saved by purchasing tax-deductible
assets from Westinghouse rather than actual stock of the subsidiaries
sold. This means that the government saved North Grumman about
$1 billion of the total cost of acquiring the Westinghouse division
— and that was before the reimbursable restructuring costs.
In addition to all of these programs, the U.S. government ended
the ban on arms exports to Latin America, expanded NATO, and defeated
bills that would have conditioned arms exports on buyers’ human-rights
records. The weapons industry doesn’t have to pay for all of these
expenses, risks, and opportunities because one of every two dollars
in arms export revenues now comes from U.S. taxpayers.
Another component of the system is various advisory groups, whose
ostensible purpose is to make sure the country’s "defense" needs
are adequately addressed. These groups are heavily populated with
executives of arms manufacturers. Some examples:
- The U.S.
Committee to Expand NATO (later renamed the U.S. Committee
on NATO) is headed by Bruce Johnson, director of strategic planning
for Lockheed Martin. Because the three new NATO members are
former Warsaw Pact countries, they will have to spend billions
to upgrade their weapons systems to NATO standards.
- The Defense
Advisory Trade Group, a semiofficial body appointed by the
State Department to advise on arms exports, has 40 current members
representing the most powerful arms exporters and industry trade
groups in the U.S.
- The Defense
Policy Advisory Committee on Trade, an organization comprised
mostly of executives for major arms exporters, meets quarterly
with top Pentagon officials to discuss issues important to key
firms involved in U.S. military modernization. In 1998 they
lobbied to give the arms industry $340 million in tax breaks
over five years.
- The Defense
Science Board is a federal advisory committee formed to
provide "independent" advice to the Secretary of Defense. Its
vice chair, Philip Odeen, runs the Washington operations for
TRW Inc., the Pentagon’s ninth-largest contractor. Odeen heads
a panel that the Pentagon asked to review the health of its
key suppliers, many of whose stock prices and profits are sagging.
Not surprisingly, the Board recommends that the Pentagon find
ways to strengthen incentives for contractors to make weapons
more cheaply while simultaneously enhancing the profitability
of the successful companies.
The rapid growth of transnational corporations is quickly making
a mockery of militarized national defense even for those who believe
in it. A three-way merger in Europe has created the third largest
weapons producer in the world. And as in other industries, U.S.
military corporations are discussing acquisitions of foreign firms.
For these transnationals, the customer who can pay is their priority
— "national defense" is just one more marketing buzzword to ensure
that laws and subsidies keep their production lines open and profits
pouring in. They have no problem with arming both sides of a conflict,
as is increasingly happening, or selling to countries with bad
human rights records. With the dramatic growth in arms exporting,
it shouldn’t surprise anyone that U.S. troops encountered weapons
of U.S. origin the last five times they engaged in combat.
Of course, as more countries around the world acquire current
U.S. technology, the weapons corporations build a perfect rationale
for the Pentagon to order the next generation of technology, like
the not-so-stealthy, high-maintenance B-2 bomber at $2.2 billion
per plane. Or the $34 billion the U.S. spends every year on nuclear
weapons. Or the National Missile Defense that allegedly "protects"
against an almost non-existent threat, was demonstrated again
not to work this July 7, and which could restart the nuclear arms
race. The arms merchants have their sights set on the militarization
of space as an enormous growth industry.
The corporate war system develops technology that has no other
purpose than to kill, maim, torture, and destroy, and these giant
corporations are in competition with each other to see who can
be more deadly — all in the name of profit. This isn’t national
defense. This is a highly effective system of transferring wealth
into the hands of a few at the expense of everyone.
Information sources: Nonviolent Activist, March-April
2000; Reuters, January 21 and May 22, 2000; Global Network Against
Weapons & Nuclear Power in Space (www.globenet.free-online.co.uk);
"Corporate Welfare and Foreign Policy," World Policy Institute
-infocus.org/papers/cw/); Center for Defense Information (www.cdi.org);
"Arms Makers’ Cozy Relationship with the Government," Mojo Wire
(www.motherjones.com /arms/lobbying/html); "100 Companies Receiving
the Largest Dollar Volume of Prime Contract Awards," (DoD); "Nuclear
Missile Deception," (World Policy Institute), "The Pentagon’s
Bomb," Mother Jones, January/February 2000.
This article is from Draft NOtices, the newsletter
of the Committee Opposed to Militarism and the Draft (www.comdsd.org).