POLITICS and international alliances have always played a key role in determining where countries buy their defence equipment. With the exception of an occasional order, the GCC states have always shopped in the west for their weapons. Today, they are being courted as never before by suppliers who are increasingly desperate to secure overseas sales. As they scour export markets for contracts, the companies are backing their sales campaigns with pledges of political support from their governments, elaborate offset arrangements, long-term maintenance and training packages and bargain prices. And the contest is becoming increasingly bitter; allies on the battlefield are enemies in the arms bazaar.
The incentive behind the hard sell is the shrinking domestic defence equipment market which has compelled companies to look abroad for sales they can no longer secure at home. Companies in the three leading defence exporting countries - the US, France and the UK - all need to compensate for declining domestic sales with overseas orders.
The US defence budget has fallen from a peak or 6.5 per cent of gross domestic product (GDP) in 1985 to around 3.2 per cent today, and will decline to 2.8 per cent in 1998-99. In February France announced sweeping changes to its defence strategy and a major reorganisation of the defence industry which will see its own procurement spending falling to the lowest level for nearly 30 years. In the UK, defence spending is set to fall below 3 per cent of GDP by 1997.
At the same time, the cost of programme requirements is rising steeply, opening up a yawning gap between the funding available and the costs of upgrading. Governments everywhere are looking to healthy defence export sales to help bankroll their domestic defence spending and compensate for the huge costs of developing new weapons and upgrading military capabilities.
The GCC market is a prime target for their efforts. In the wake of the Gulf war in 1990-91, defence analysts expected regional arms purchases to rise to some $20,000 30.000 million a year as the six states armed up to counter any future threat.
Even more extravagant claims were made for potential sales to the Far East where newly rich countries are developing their defence capabilities with a watchful eye on China's potential. Such estimates have turned out to be wildly optimistic. Spending in the Gulf has not exceeded $10,000 million a year over the past five years, including transfers to pay for previously concluded contracts.
Before, during and after the Gulf war, the US was rewarded with a flood of orders from Saudi Arabia and Kuwait. The efficiency of US equipment was proven by an impressive performance on the battlefield and the Gulf states had a clear political debt to pay to the country that had masterminded the liberation of Kuwait. Contracts worth about $30,000 million were initialed with Riyadh. In 1992, Kuwait agreed to buy 256 M1-A2 tanks from the US. The lobbying for this deal assumed unprecedented proportions with President Bush, chairman of the joint chiefs of staff General Colin Powell and Defence Secretary Dick Cheney intervening directly with the Kuwaiti authorities to promote the General Dynamics tank.
With the Gulf war victory to its credit, the US is in a powerful position to promote its products. Only the US has the aircraft carriers and airlift capability to guarantee the future security ot tne Gulf states. There is also a powerful argument to be made for standardising equipment, encouraging all the GCC states to buy US systems for easier integration to enable effective operations alongside US forces in the future. But to many observers, not least their European rivals, the tac tics employed by the US to Lobby for their hardware are simply overwhelming.
Not that the Europeans are shy of pressing their claims for a piece of the action. The UK countered US pressure on Kuwait over tanks by lobbying successfully for an APC order. It overcame disappointment that the Vickers Challenger 11 failed to impress the Kuwaitis - only Oman has bought it, in very modest numbers - when an order was won by GKN to supply Desert Warrior APCs. The order was doubtless helped by the Kuwaitis desire to thank all three of the western powers that sent substantial forces to the Gulf in 1990-91.
The US had offered a combination of the M1-A2 and the M-2 Bradley fighting vehicle but Kuwait opted for the UK alternative to the Bradley.
In Kuwait, France was disappointed not to win any orders for land and air systems, but was rewarded in March 1995 with a $529 million order for eight fast patrol boats and an air defence radar system. Paris took the view that while the US would get the air contracts, and the land systems sales were split between the US and the UK, the naval contracts would be a French preserve. Kuwait has still to decide on the armaments for the patrol boats and France is lobbying hard to ensure it gets the ordet to equip the boats as well.
In February, President Chirac intervened personally to support the French bid to supply missiles for the patrol boats and stressed his understanding that all naval orders would be coming to France.
The UK and France have traditional clients in the Gulf, but no market is safe in the predatory atmo sphere that has descended on the cletence industry. To date the UK has almost monopolised the Omani market, while Qatar and Abu Dhabi had both tended to favour the French. In Oman, France is devoting more resources to developing civilian and military business and funding French lan guage schools and cultura centres. French systems have been demonstrated to th Omanis even if there is n formal competition for prospective order. Trials have taken place of Euro copter helicopters, Matra missiles and GIAT armoured vehicles France offered credit packages to Muscat to equip their two corvettes built by the UK's Vosper Thornycroft in 1991-92, and was rewarded for its persistence the following year when Oman broke with tradition and ordered three ocean-going gunboats from Constructions Mecaniques de Normandie (CMN).
The UK turned the tables on France in a similar style in Qatar which ordered four fast strike craft from Vosper Thornycroft in the early 1990s. The UK has also been lobbying in Qatar for an order for training aircraft and a new surface to air missile system.
The US is also spreading its wings, offering used F-16 fighters to Oman and surplus frigates to meet Muscat's requirement for improved anti-submarine warfare capabilities. In Qatar as well, the M1-A2 Abrams is being offered to replace ageing French AMX-30 tanks and surplus ships may also be proposed for a possible Qatari frigate/corvette requirement. Doha agreed last year to allow equipment for a US Army brigade to be stored in Qatar and Washington is keen to persuade the Qataris of the virtues of commonality.
The UAE is also the target of a stronger US sales drive for US aircraft. The air force needs a replacement for its Mirages and the US is offering the F-16 and F-15s, while France is promoting the Dassault Rafale. British Aerospace has proposed the Tornado under a leasing arrangement until the Eurofighter becomes available towards the end of the decade.
The US remains the leader in regional sales by a wide margin, but France has emerged as the second most successful supplier, at the expense of the UK. French lobbying over Kuwait naval requirements demonstrated a finesse that UK sales efforts have lacked. In Abu Dhabi, the UK seemed well placed to win some orders in 1991-92, but French promises of protection, including the possible despatch of 75,000 troops enshrined in the Defence Cooperation Treaty, have trumped British efforts to gain a foothold.
The competition between the defence industries in the two European countries is intense. In January 1996, UK Defence Secretary Michael Portillo's tour of the Gulf states was followed within days by similar visits from French Defence Minister Charles Millon, accompanied by a huge military delegation.
The biggest change of the post-Gulf war period has been scale of the US sales effort.
The US is intent on extending sales to the smaller markets that were once left to the French and the British who face an uphill struggle to persuade their regional clients that they offer as reliable, if not as powerful, a partnership as the US, The UK and France risk being marginalised by the Americans and reduced to scrapping over a smaller share of a shrinking market.
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