When arms sales jump by more than a fifth during a global economic downturn, you have to wonder who’s buying, who’s selling and what the implications are for poorer countries.
Richard Norton-Taylor, reporting in the UK Guardian, reports that the average volume of sales of arms — including weapons such as guns, ammunition, missiles, military aircraft, military vehicles, ships and electronic systems — has increased by 22 per cent over five years compared to the previous five. Demand from South America and Southeast Asia has been particularly high.
This worrying trend is happening against a backdrop of growing hunger and poverty – over a billion people (or a sixth of humanity) now suffer from hunger — and may represent the beginning of a vicious cycle linking economic instability and conflict.
It’s the typical dilemma of chicken and egg. Did the recession and the resulting economic instability lead to a growth in the arms trade, or did the arms trade grow despite the economic crisis but with the potential for a lasting effect on economic recovery?
Developing countries are the main focus of sales activities by weapon suppliers. India, for instance, was one of the largest recipients of arms in 2008, while the US and Russia were the leading suppliers.
A murky trade
Understanding the arms trade and its implications is difficult, as it can be a murky business.
While aircraft sales and usage might be easy to monitor, small arms and light weapons often ‘disappear’ — their final use and destination can be a mystery. Matt Schroeder of the Federation of American Scientists explains that hundreds of thousands of small arms in ‘leaky’ government arsenals are vulnerable to theft, loss and diversion.
On top of this, you can’t be entirely sure that the country paying is the final destination. Though the sales figures for arms, offered by research institutions such as the Stockholm International Peace Research Institute (SIPRI), are revealing, there can be hidden elements to the story they tell. The case of the MV Faina, a ship hijacked by pirates in East African waters, neatly demonstrates this point.
The vessel was carrying a significant shipment of arms from Ukraine, and was reportedly destined for Kenya. But after the hijacking, the Kenyan government did not declare it in the UN Register of Conventional Arms.
Soon the government was denying any knowledge of it and with other experts began claiming the ship’s load was in fact destined for a trade-embargoed Sudan. Intermediary countries are often used as the initial recipients for the further transfer of weapons to countries under embargo – and that makes the trade notoriously difficult to monitor.
In looking at the 22 per cent leap, it’s also important to bear in mind that that growth is reportedly in the legal trade. With illegal trade added to the mix, these figures are likely to be much higher and the damage wrought infinitely higher.
The nature of that damage isn’t difficult to unpick. Schroeder argues that illicit arms trafficking fuels civil wars, contributes to skyrocketing crime rates and feeds the arsenals of the world's worst terrorists.
More, small arms bought for one conflict remain in circulation long after the initial fighting ends, fuelling further conflicts and crime in the region, potentially extending violence throughout generations.
The arms trade and development
The arms trade is recognised as a key barrier to development – diverting money from development, creating global insecurity, fuelling conflict, and of course causing injury and death. The UN estimates that armed violence in major conflict zones accounted for US$163 billion in lost productivity worldwide every year.
The arms trade does not just affect people involved directly in conflicts or found in war zones – only 200,000 of the 740,000 people who die each year from armed violence die in war zones. Many victims live in refugee camps, or are murdered in urban areas or by family members. Arms cause devastation and damage far beyond war zones.
This is a recession when some 100 million more people are now thought to suffer from hunger. The need for government spending on welfare and providing safety nets for the poorest is the real necessity. When times are tough for the governments of developing countries, surely it’s people, not arms, that are the priority?
The numbers, sadly, suggest otherwise. From 1998 to 2001, the US, the UK and France earned more income from arms sales to developing countries than they gave in aid. In 2001, Pakistan spent more of its GDP on its military than its health sector by a ratio of 4:1. In low-income countries, health expenditure typically hovers below military expenditure.
Guns and growth
That military spending tops that for development and could be siphoning off funds for health and other key areas isn’t a surprising thought. But the relationship between economic growth and military expenditure is still widely debated.
In examining this issue, SIPRI shows that military expenditure can create a so-called Keynesian stimulus effect, boosting an economy with underutilised labour and capital.
If, therefore, for the sake of this exercise we look at the issues without actually weighing up the true cost of the arms trade, we can see that a defence industry may support jobs and high-tech manufacturing capability, while military R&D may generate civil spinoffs. However, this assumes military expenditure occurs within countries, rather than being spent on arms produced in other countries.
Many countries import large amounts of arms, which leads to a ‘leakage’ of any direct economic benefit from producing them. In addition, where military expenditure occurs within countries, this expenditure may crowd out private investment through its effect on government deficits, and displace more productive forms of government spending.
It may divert skilled labour and research capacity from civil areas with greater direct positive impact and less negative impacts for wider society. The nature of employment in the arms trade also means jobs are typically out of reach of many poor people in the developing world.
Experts claim that job creation in the arms industry (job creation is typically used as a rationale for brushing aside ethical issues and wasteful public spending) is grossly exaggerated in any case.
The pattern of trade in arms is especially revealing and has repercussions for the complex relationship between military expenditure and development. The key exporters of arms are China, France, Russia, the UK and the US. The major importers of arms are China, Egypt, India, Pakistan, Saudi Arabia and the United Arab Emirates.
That China features in the list of both top exporters and top importers may reflect the fact that it does not produce all of the arms (or parts for arms) it has demand for. It may specialise in the production of a smaller variety of arms, export any excess in production of these, and import other varieties it does not produce from elsewhere. However, there is a lack of data concerning China’s trade in arms.
Perhaps unsurprisingly, these data could imply that the majority of benefits in terms of economic growth due to military production accrue to developed countries.
However, most studies exploring the relationship between economic growth and military spending show that military expenditure has a negative or insignificant impact on economic growth. And for developing countries in particular, the relationship has been shown to be negative.
One study found that in relatively secure countries, military spending has a negative effect on economic growth, while this pattern is reversed for countries subject to major security threats. This is presumably because economic growth is difficult to achieve in a conflict-prone country, rather than because military expenditure is a positive thing.
The two factors (economic growth and arms spending) are correlated but the causal links in the relationship aren’t completely clear.
Military expenditure typically adds to external debt, and debt affects poverty reduction. A recent SIPRI study of Turkey (a middle-income country) has demonstrated the role of military expenditure in contributing to external debt and financial instability there.
Arms imports between 2000 and 2007 are estimated to have contributed US$13.2 billion to Turkey’s accumulated debt burden. The country’s lack of investment in health and education has been attributed to this financial instability.
Conflict and crisis
That the arms trade is booming in the recession is cause for concern. We don’t yet fully grasp the complex ways the global economic crisis has actually contributed directly to growing conflict and insecurity, although experts suggest the global financial crisis will exacerbate the growing threats to security, stability and peace. This could lead to a further boost to the arms trade.
Increasing the world’s stockpile of weapons by arming new groups to counter existing security threats is counterproductive in the long term. The history of the 20th century is littered with examples of countries arming their enemy’s enemy only to see those arms then create a new security threat against them.
For arms control to be effective, it needs not only to control the flow of new weapons but also to look for ways to decommission existing stocks.
The recession may therefore have emphasised both the need for a comprehensive, binding international treaty on the trade in conventional arms and the need for truly sustainable development – one that reinforces peace and stability rather than undermines it. To achieve this alleviating poverty will be essential and the arms trade seems to take us further and further from this goal.