VIEW: War for prosperity —Andleeb Abbas - Sunday, March 13, 2011

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The US may be revamping the financial sector and restructuring the auto industry to revive the economy, but to revive the defence industry the only strategy is to make the world more frightened, vulnerable and scared 

The White House never changes its colours. This, unfortunately, seems true if you consider the dominant strategies the American leadership has been utilising in the last century or so. The reliance on military might to prove its supremacy has been a tested and tried strategy for the Americans starting from the massive world wars in the beginning of the 20th century, sustained through mid-century military incursions in mini nations like Vietnam or Grenada, and ensuring continuity with Iraq and Afghanistan to end the century. The US, long upheld as a model of innovation and opportunity based on human values, is now a model with clay feet and nervous jitters of losing its position of dominance. Its economy has been in dubious shape for the last two decades thanks to its totally inept response to an Asian emergence on the world economic map, firstly through Japan and the Asian tigers, and now due to the rise of the dragon from China.

The industrialisation model of the US after the Second World War was greatly helped by the ravaged Japanese economy due to the Hiroshima/Nagasaki bombings and a weak Europe fighting desperate wars to save itself. When nations like Japan, Germany, England and France were submerged under the after-effects of the world wars, the US stood out as the economy of abundance with industries like the auto industry creating innovating waves and, more importantly, the defence industry that works overtime to fulfil the demand of various nations to cope with post war uncertainty. While American consumer goods industries flourished in response to an affluent domestic consumer market, the American defence industry thrived on the growing demand of arms and ammunition in the Middle East and Asian markets. However, as the Asian economies recovered and sped up their industrialisation, the American industries like auto and electronics discovered that their home-based production made them not only unsuitable for foreign markets but also left them on the losing end of their own market as it opened to increasing competition from the rest of the world. The American government has tried putting quotas and tariffs to protect their industry. However, this protection retarded their international growth as they could not measure up to the diverse requirements of the global market. Finally, the recession battered many other industries like banking, etc, to create huge deficits in the economy. They may be revamping the financial sector and restructuring the auto industry to revive the economy, but to revive the defence industry the only strategy is to make the world more frightened, vulnerable and scared.

A recent article published in Fortune magazine titled ‘America’s hottest export — weapons’, explicitly details the planned sale of weapons and accessories to the Middle East. In the last two years, weapons sales approved to countries like Egypt, Saudi Arabia and Iraq have amounted to over $ 100 billion. The Department of Defence, last year, told Congress of plans to sell up to $ 103 billion in weapons to overseas buyers, a staggering rise from an average of $ 13 billion a year between 1995 and 2005, according to Deutsche Bank analyst Myles Walton. Signed agreements have tripled since 2000. The sales have been so amazing that factories that had been lying idle for years and were on the verge of closure are working at full capacity to meet the demand. The F-15 by Boeing is an example of a junk product that is getting a huge sales boost by none other than the faithful saviour, Saudi Arabia. Even Pakistan has agreed to buy more secondhand F-16s. The surprising part of all this focus on weapons is that they are initiated by Barack Obama whose opposition to war was one of the reasons the Americans and the rest of the world preferred him over George Bush. Obama initiated a $ 4 billion deal with India and is now trying to make the rules of arms export more malleable to boost up sales. This loosening of the strings according to experts may erode oversight requirements, thus endangering safety regulations. But who cares as sales have not only been good internationally but domestically as well due to the huge demand by the Pentagon to fund their unending war appetite. The US defence budget for 2011 is $ 725 billion, more than the budget of all other countries combined.

Why this huge demand by the Middle East: the threat of terrorism worldwide and some unpredictable neighbours like Iran, India and Pakistan. As the American media every now and then declares the imposition of sanctions on the dangerous nuclear designs of Iran, the American weapons salesmen come scurrying down to New Delhi, Islamabad and Riyadh capitalising on their scare and sell strategy. How do they handle Israeli apprehensions at this strengthening of the opposition? Israelis, of course, are sold even more of them but at highly concessionary terms to make them look away from deals that are no match in terms of exorbitant costs. In 2007, the year in which the Saudi deal was announced, the US boosted its military aid to Israel by about 25 percent annually to $ 3 billion a year. Last October, right before the announcement of the F-15 sale, Israel ordered 20 F-35 planes, Lockheed’s top-of-the-line fighter. As long as Israel leads in the arm’s sale, it is win-win for them and the US.

The justification behind all these strategies is that the US is a nation state safeguarding its own interests to sustain its super power status. That justification itself is at fault. They are definitely endangering their self-interests in the process. Any economy not based on a balanced production of goods and services adapted to global requirements is a sure loser in this competitive world. With an overemphasis on weapons to produce jobs and money, they have to manufacture enough terror and war in the world to keep their factories running. This strategy may have served them well in the 20th century but in today’s world, the youth of the Middle East are toppling rogue regimes that have been willing buyers of obsolete American technology. The uprising in the Muslim world is not only a revolt against the oppression of despotic rulers but a declaration that subservience, whether to their own rulers or US designs, is null and void. For their own sake, the US president must learn from the Asian powers and rediscover the fruits of fiscal discipline and industrial innovation. But with two years lost and two years left, Obama is trapped in his own urgency of developing economic steroids that will give an artificial boost to the economy at the cost of irreparably damaging the US’s ability to recover fully and rule the world.

The writer is a consultant and can be reached at

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