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A windfall for US Department of Defense,
Inc
By Michelle Ciarrocca
(Posted with permission from Foreign Policy in Focus)
The highly anticipated Quadrennial Defense
Review (QDR), an assessment of the US's defense needs
mandated by Congress, was released on September 30 last
year, but as Senate Armed Services Committee Chairman
Carl Levin quickly noted, the QDR "seems to me to be
full of decisions deferred".
None of the weapons
systems mentioned as a candidate for elimination during
the Bush campaign was canceled. Instead, Defense
Secretary Donald Rumsfeld set the stage for major
increases in military spending, arguing that "the loss
of life and damage to our economy from the attack of
September 11, 2001, should give us a new perspective on
the question of what this country can afford for its
defense".
The increases in defense spending due
to September 11 have allowed the Pentagon to avoid
reform and transformation. More than one-third of the
Pentagon’s US$68 billion weapons procurement budget for
this year will go to big-ticket, Cold War-era weapons
systems. The failure of policy makers and defense
officials to cancel unnecessary weapons programs is, in
large part, due to the undue influence exerted by the
top defense contractors.
Despite a slowing
economy and Bush’s $1.35 trillion tax cut, notions of
fiscal conservatism have been brushed aside to fund the
fight against terrorism. Boeing Vice Chairman Harry
Stonecipher got to the heart of the matter when he told
The Wall Street Journal that "the purse is now open",
and the Pentagon would no longer have to make "hard
choices" among competing weapons projects.
Unfortunately, no hard choices were being made
in the first place. Defense spending for FY 2002 totaled
$343.2 billion, a $32.6 billion increase above 2001
levels. Congress is currently debating President George
W Bush’s $396 billion FY 2003 military budget request, a
$52.8 billion increase. Long-term plans envision the
national defense budget increasing to $469 billion in FY
2007, 11 percent higher than the Cold War average.
The failure of policymakers and defense
officials to cancel unnecessary weapons programs is in
large part due to the undue influence exerted by the top
defense contractors. More than any administration in
history, the Bush team has relied on the expertise of
former weapons contractors to outline US defense needs.
Thirty-two major Bush appointees are former executives,
consultants or major shareholders of top weapons
contractors. Seventeen administration appointees had
ties to major defense contractors Lockheed Martin,
Northrop Grumman or Raytheon prior to joining the Bush
team. These include former Lockheed Chief Operating
Officer Peter B Teets, now undersecretary of the Air
Force and director of the National Reconnaissance
Office; Secretary of the Air Force James Roche, a former
Northrop Grumman vice president; and Secretary of the
Navy Gordon England, a former General Dynamics vice
president.
The theory behind Rumsfeld's reliance
on former corporate executives was that they would be
more willing to cut costs and try new approaches than
the average Pentagon bureaucrat. However, that clearly
has not been the case.
The geopolitical reach of
the defense megafirms is reinforced by millions of
dollars in campaign cash. In 2000, the top six military
companies spent more than $6.5 million in contributions
to candidates and political parties. In addition to
these hefty campaign donations, defense contractors
spent an astonishing $60 million on lobbying in 2000,
the most recent year for which full statistics are
available.
In the wake of September 11, Bush
requested the largest increase in defense spending in
two decades. The potential for an open-ended war poses
great opportunities for weapons makers and great
challenges for those who seek to curb wasteful military
spending.
Major defense contractors are figuring
out new ways to tap into the homeland defense market.
Bush’s military budget increase and the wartime "unity"
on Capitol Hill have created an environment in which
weapons makers can enjoy the best of both worlds -
continuing to make money on the weapons systems of the
Cold War while reaping the benefits of a wartime bonanza
of new defense contracts.
In order to replace
weapons used in Afghanistan and in preparation for
possible military action in Iraq, many US weapons makers
have increased production. Boeing added a second shift
of workers to boost production of its Joint Direct
Attack Munitions, the most widely used smart bomb in the
Afghan war. Raytheon, best known for its Tomahawk
missile, added a third shift and announced that
production for its laser-guided bomb has been
accelerated by five months "to support the warfighter in
the war on terrorism". Alliant Techsystems, the largest
supplier of ammunition to the US military, was awarded a
$92 million contract to make 265 million rounds of
small-caliber ammunition for the army.
Additionally, with the new influx of money for
homeland defense ($38 billion for FY 2003), virtually
all of the big defense contractors - Boeing, Lockheed
Martin, and Raytheon - have adapted their marketing
strategies and are repackaging their products for use in
domestic security. Boeing is looking into how its
sensors designed to track enemy missiles could be used
to locate and identify hijacked planes. Lockheed is
trying to adapt military simulators to train local
emergency response teams. And Raytheon is pitching its
hand-held thermal-imaging devices, designed for the
military, as useful for firefighters searching through
collapsed buildings.
But it’s not just the
traditional military contractors who are fighting for a
piece of the Pentagon pie. Smaller companies, too, are
"dusting off old domestic security proposals and
developing new ones in an attempt to cash in on what
they hope will ultimately be hundreds of billions of
dollars in new spending on homeland security", according
to The Wall Street Journal. Air Structures is
introducing fortified vinyl domes for quarantining
infected communities in the aftermath of a potential
bioterror attack, Visionics is looking into designing
facial recognition technology, and PointSource
Technologies is developing a sensor to detect biological
agents in the air or water.
In July, the world’s
top defense contractors gathered in the United Kingdom
for the Farnborough International Air Show, which
convenes CEOs, generals and heads of state every two
years. At the last show $52 billion in orders were
announced. Although contractors didn't anticipate that
much this time around, they were keen to show off the
latest developments in antiterror weapons and homeland
defense.
Raytheon showcased its role in missile
defense and precision strike munitions. Boeing exhibited
its tried-and-true 767 tanker transport, its C-17
Globemaster and its JDAM - all of which have been on
display in Afghanistan. TRW, Northrop Grumman, Lockheed
Martin and Boeing all focused on new approaches to
developing unmanned aerial vehicles, another star weapon
of the Afghan war.
The big boost in the defense
budget is good news for major Pentagon contractors, who
were among the few companies to show increases in their
stock prices when the market re-opened after the
September 11 attacks. Among the top gainers for the week
of September 17-21, 2001, were military and space
contractors like Raytheon (+37 percent), L-3
Communications (+35.8 percent), Alliant Techsystems
(+23.5 percent), and Northrop Grumman (+21.2 percent).
As of May 1, 2002, Aviation Week's Aerospace 25
stock index had climbed past the level at which it was
trading in May 2001 and compared favorably to the 5.4
percent decline for Standard & Poor's 500. Northrop,
Boeing and General Dynamics all reported
better-than-anticipated earnings for the second quarter
of 2002 due to increases in weapons spending and
homeland security. And with expected annual increases in
defense spending of 10 percent or more, most analysts
are banking on a gradual, long-term boost for the
defense industry.
As Loren Thompson, a defense
analyst with the Lexington Institute remarked: "The
whole mind set of military spending changed on September
11. The most fundamental thing about defense spending is
that threats drive defense spending. It’s now going to
be easier to fund almost anything."
The most
widely used items in Afghanistan to date have been
Raytheon’s Tomahawks, Boeing's JDAMs, and Northrop
Grumman’s UAVs. But only about $3.2 billion in the
president's budget request will go for more of these
systems. Much of the new Pentagon funding will be used
to bankroll longstanding pet projects of the
military-industrial lobby.
Although many
analysts had assumed that defending against long-range
ballistic missiles might take a back seat to other more
urgent defense priorities in the wake of September 11,
the Bush administration has moved full speed ahead with
missile defense. Spending on missile defense increased
by 43 percent in FY 2002, and the Bush administration
plans to spend at least $32.7 billion on the missile
defense program between now and 2005. Total costs for
the deployment and maintenance of a multitiered system
could top $200 billion over the next two decades.
Despite campaign promises by President Bush to
"skip a generation" in weapons procurement, all three of
the Pentagon’s advanced fighter plane programs are
moving forward. This year alone, close to $12 billion
will be allocated to the Air Force’s F-22 Raptor, the
Joint Strike Fighter/F-35, and the Navy’s F-18E/F
fighter plane. The F-22 has been described as a costly
Cold War relic designed for an enemy that no longer
exists. The Super Hornet, as the F-18E/F is known, has
not been able to meet key performance goals that were
used to justify its development. The JSF (also called
the F-35) was viewed as a likely program to be cut or
scaled back, but within weeks of September 11 Lockheed
Martin was awarded a $19 billion development contract,
and international partners signed on.
The debate
over the Crusader artillery system indicates just how
difficult it is to cancel a weapons system. Both
President Bush and Defense Secretary Rumsfeld criticized
the $11 billion Crusader program for being outmoded
because it was designed to fight a land war with the
Soviet Union. However, the Army - and members of
Congress from Oklahoma, Minnesota and a dozen other
states where parts of the Crusader would be built, put
up a tough fight. And for the moment, they seem to have
won. Although the Pentagon did officially terminate the
program in May, there's still $475 million in the 2003
budget for the Crusader system and, as Congress puts the
finishing touches on the defense bill, it is expected
that the money will go to the Army to develop
alternative artillery systems.
Efforts to reform
the military should not be abandoned because of
September 11. The Pentagon and Congress must set real
defense priorities, not just throw money around under
the guise of fighting terrorism. Washington’s policies
must promote, rather than undermine, human rights and
democratic institutions abroad.
Instead of
seizing the historic moment to establish new defense
priorities after September 11, the Bush administration
appears to be doing exactly what candidate Bush promised
not to do - fund two military strategies at once, one
for the Cold War and one for the future. A recent
Defense News article noted, "Unfortunately, the Pentagon
is still dominated by Cold Warriors, obsessed with big,
expensive weapons programs. Congress is still addicted
to the jobs and political contributions that can only
come from defense contractors with massive hardware
programs ... At the Pentagon, specific personnel changes
are required, in particular closing the revolving door
that rewards senior military leaders with the promise of
future civilian employment if they 'play the game'."
The potential for conflicts of interest
involving former weapons industry executives and their
former companies has been substantially increased as a
result of Rumsfeld’s corporate management style, which
one Pentagon insider has described as "Department of
Defense, Inc". These links between the Bush
administration and arms manufacturers raise a critical
question: If the majority of top policymakers have
longstanding ties to the companies that will benefit
from increases in military spending, who will represent
the public interest? At a time when corporate scandals
are making headlines, the administration's reliance on
individuals with ties to the arms industry deserves far
greater scrutiny than it has received to date.
Another logical approach to retooling the
Pentagon would be to set some real priorities. Canceling
systems like the costly F-22 fighter plane, the bulky
Crusader artillery system, and the administration’s
fantastic missile defense program - all of which seem
largely irrelevant to dealing with low-tech threats like
the September 11 attacks - would be a good place to
start. To do so means challenging not only Pentagon
planners but also members of Congress who are wedded to
their states' military projects.
One senator
who’s been willing to do just that is Republican John
McCain of Arizona. Year after year, McCain points out
the billions of dollars of pork barrel projects tagged
on to the defense bill. This year alone, the Defense
Appropriations Bill includes $5.2 billion for 581
programs not requested by the president and unrelated to
the war on terrorism. This vicious circle of pork barrel
politics and special interest money has been a regular
feature of defense budget politics for decades,
resulting in higher levels of Pentagon spending than
might be justified by an objective assessment of the
security threats facing the United States.
Unfortunately, few members of Congress have been willing
to challenge the status quo like McCain.
Beyond
the issue of whether it funds too many obsolete systems,
the Bush administration’s war budget raises a more
fundamental question: Is the use of military force
likely to solve the problem of terrorist violence? There
needs to be a much more vigorous national debate about
how best to protect Americans and prevent violence
against civilians, both in the US and around the world.
Washington's policies must promote, rather than
undermine, human rights and democratic institutions
abroad. The narrow, military focus of the Bush
administration can be seen most vividly when comparing
the FY 2003 military budget request of $396 billion to
the $25 billion requested for international aid. The
administration’s unwillingness to increase spending on
diplomacy or foreign economic aid underscores the extent
to which it is treating the war on terrorism as
primarily a military enterprise, in which the US rounds
up a series of ad hoc "posses" to go after the enemy of
the moment. This go-it-alone attitude is at least as
dangerous as the military buildup that is being
justified in the name of fighting terrorism.
As
former Secretary of State Madeleine Albright noted
recently, foreign aid should be thought of not as a gift
that the rich give to the poor but as something that
enriches poor and rich nations alike. Foreign aid, she
continued, should be re-termed "national security
support", recognizing how successful it could be at
dismantling the real axis of evil - poverty,
desperation, and disease - that is often a root cause of
terrorism.
Michelle Ciarrocca
is an analyst with the Arms
Trade Resource Center.
(Posted with
permission from Foreign
Policy in Focus)
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