Monday, January 2, 2012

Global Arms sales are set to explode in 2012...

Global Arms sales are set to explode in 2012, including Japanese Defense industries'....

The Japanese government’s decision to relax rules on defense exports has the potential to give the country a much-needed national security boost....

By deciding this week to relax its rules prohibiting the export of defense equipment, the new Japanese administration of Yoshihiko Noda has done something that local defense industry and the country’s security experts have for many years been crying out for.

Until now, the numbers just didn’t add up for Japan’s big defense firms, such as Mitsubishi Heavy Industries and Kawasaki Heavy Industries. Their only customer, the Japanese government, has stubbornly held defense spending below 1 percent of GDP, with much of that money going towards imported American weaponry; indeed, the defense budget has generally been declining in recent years. And with hi-tech defense equipment becoming ever more expensive to develop, Japan’s defense industry was facing an unenviable life away from the cutting edge of military technology. In another business sector that might not have been so disastrous, but the death of a country’s defense industry brings with it considerable security risks – especially when you live in a neighborhood as uncertain as Japan’s....

Chief Cabinet Secretary Osamu Fujimura, who announced the policy shift, stressed that the Three Principles on Arms Exports, which govern defense sales, would remain in place. This means that arms export opportunities will still be restricted and subject to government approval on a case-by-case basis; most importantly, companies will still be prevented from selling equipment that might end up being used in anger. However, new “criteria regarding overseas transfers of defense equipment” will enable Japan to jointly develop military equipment with other countries.

It’s grimly ironic that this decision, which is an important tonic for Japan’s increasingly moribund defense industry, came within days of Tokyo’s announcement that it is to procure the Lockheed Martin F-35 Lightning II fighter aircraft. The F-35 is exactly the kind of collaborative project that Japanese industry needs to be a part of – an opportunity to draw on technological expertise from the cream of the global defense industry, and to share in the work of developing and building an advanced new aircraft. Unfortunately, the government’s rethink came too late for Japanese industry to participate meaningfully in this important international project: as it is, none of the systems in the F-35 will be Japanese, and Japan’s own F-35s will merely be assembled in Japanese plants....

Having already missed out on the biggest international defense collaboration currently out there – and perhaps the biggest that will ever be – Japanese industry can at least now focus on the positives of this week’s decision. The government will of course be slow, as Japanese governments are, to ease its restrictions on defense exports. However, opportunities to sell kit overseas should now increase. Precedents already exist. In 2006 Japan sold patrol vessels to Indonesia: a benign and sensible sale to a country that needs help in building up its under-strength navy. And just last month, Tokyo gave the green light for ShinMaywa Industries to respond to an Indian government RfI for a search-and-rescue seaplane. Japan should be able to sell this kind of equipment to scores of countries around the world without compromising its pacifist principles, and for the sake of its domestic industry it needs to start doing so aggressively.

No less important is the prospect of engaging in meaningful development programs with other countries. Importing weaponry does nothing for local industry, while developing advanced systems yourself is becoming prohibitively expensive. Japan can now build on its existing security relationships to start developing defense technology with its allies and so get the most out of its defense dollars. An obvious opportunity is coming up imminently in the form of the development of Japan’s indigenous stealth fighter, the Shinshin ATD-X. If Tokyo is genuine about wanting to develop the Shinshin – something that many aviation analysts continue to question – it can now call on the expertise of Boeing, which is frozen out of the F-35 program, or a second-rank F-35 participant like BAE Systems. Better still, it could follow the South Korean-Indonesian model and find a friendly country to share the development costs with.

Pacifism will remain at the heart of Japanese government policy, but there’s now a sense that not even pacifism should be allowed to stand in the way of national security. The Noda government has made the right decision. If Japan wants to be able to defend itself adequately in the years to come, it’s now important that his government and the ones that come after not only stick to it, but also build on it....

President Obama's weakest issue in the 2012 election cycle is the U.S. economy .... specifically unemployment. Arms sales do generate jobs .... and for President Obama .... he needs every job to be created if he wants to extend his stay in the White House for another 4 ZOG years....

Booming Middle East purchases of U.S. fighter jets will be a bright spot in what is expected to be a sluggish economy in 2012, possibly paying dividends for President Barack Obama's bid for a second term.

Beneficiaries include Lockheed Martin Corp and Boeing Co, whose respective F-16 and F-15 production lines are being extended by U.S. government sales to Iraq, Saudi Arabia and Oman, among other rich arms deals announced in recent weeks.

The foreign sales will help offset expected cuts in big-ticket purchases by the Defense Department, which is set to lose at least $450 billion in previously projected funding through 2021 as part of a deficit-reduction push. Additional cuts totaling another $500 billion to $600 billion over the same period are scheduled to kick in next year unless a new deficit-reduction plan is adopted by Congress.

The sales of fighters, missiles and other advanced U.S. weapons will help provide jobs as the United States heads into an election campaign expected to focus on the domestic economy. It has been growing at only half the pace needed to get the jobless rate down from 8.6 percent, a problem for Obama as the incumbent.

The Obama administration announced last week it had finalized a record $29.4 billion Boeing F-15 sale to Saudi Arabia, dwarfing previous individual U.S. arms deals and supporting jobs by increasing exports.

Deliveries of 84 of the most advanced F-15 fighters are expected to start in 2015 with upgrades to 70 others expected to start in 2014, the administration said. Congress had cleared the sale in the fall of 2010, setting the stage for the freshly completed negotiations on the government-to-government contract.

Josh Earnest, a White House spokesman, portrayed the deal as shoring up Saudi air defenses in a region rattled by Iran's disputed nuclear program as well as supporting more than 50,000 U.S. jobs at a time of high unemployment.

The deal was signed December 24 and unveiled by the White House on Thursday in Hawaii, where Obama has been vacationing.

The program involves roughly 600 suppliers in 44 of the 50 U.S. states and give the economy a $3.5 billion annual boost, Assistant Secretary of State for Political-Military Affairs Andrew Shapiro told reporters at a State Department briefing.

"This will support jobs not only in the aerospace sector but also in our manufacturing base and support chain, which are all crucial for sustaining our national defense," he said.

The deal is worth about three times more than any other single U.S. arms sale to date, according to a March 10 report on U.S.-Saudi ties by Christopher Blanchard of the nonpartisan Congressional Research Service.

It will extend Boeing's F-15 production line about five years to late in this decade, Dennis Muilenburg, head of the company's military, space and security business, said in a telephone interview with Reuters.

"Having that hot production line gives us the base to invest in technology advancements for that platform going forward, he said. "Obviously, that creates a lot of momentum for us on our international growth."


Workers on the F-16 fighter production line at Lockheed Martin's Fort Worth, Texas plant also have received good news for their job prospects. The Defense Department awarded Lockheed a $600 million contract on December 14 to build 12 late-model F-16s for Oman, the second firm order in two weeks.

Lockheed received an $835 million Pentagon contract on December 5 to build 18 F-16C/Ds for Iraq. Only months earlier, the company, the Pentagon's No. 1 supplier by sales, had warned it would have to start shutting down its supplier base by year end absent new F-16 orders.

On top of the contracts for Iraq and Oman, the Obama administration told the U.S. Congress on December 12 that it was proposing to sell Iraq another 18 F-16s, advanced munitions and related gear for an estimated $2.3 billion. Analysts have questioned whether adding U.S. arms into Iraq could heighten growing sectarian tensions there since the U.S. completed its troop withdrawal last month.

Fighter jets are not the only pricy arms deals, long in the works, to have been brought to a conclusion by the Obama administration as the president prepares to swing more into campaign mode. On Friday, the Defense Department said the United States had reached a $3.5 billion agreement to supply an advanced antimissile interception system to United Arab Emirates.

The U.S. Congress had been notified of the proposed sale of the Lockheed Martin system - known as Theater High Altitude Area Defense -- in September 2008 by former President George W. Bush's administration.


Lockheed and its supporters had sought to play on the election calculus in pushing to meet Taiwan's request, over China's objections, for 66 new F-16C/Ds valued at more than $8 billion.

Pushing the sale in October, Rupert Hammond-Chambers, president of the U.S. Taiwan Business Council, a trade group that includes Lockheed, wrote that F-16 associated jobs "could have an important positive impact on local communities around the country - particularly in California, Connecticut, Florida, Maryland, Ohio, Texas and Utah," possible electoral swing states.

But the Obama administration, apparently in an effort to placate Beijing, has been unwilling to meet that request. Instead, the president offered a $5.3 billion upgrade of Taiwan's 145 existing F-16A/Bs.

F-16s played a role in a previous U.S. election. George H.W. Bush announced during the 1992 presidential campaign that he would sell Taiwan 150 of the A/B models. He signaled an intent to do so during a campaign rally at the General Dynamics Corp plant then producing them in Texas where jobs had been in danger....

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