Foreign Policy Association: International Defense Industry|Defense Ind.

Three features differentiate the international defense industry from most others. First and foremost is its sheer size. Over a trillion dollars is now spent each year by the world's countries on national defense, with the U.S. defense budget constituting roughly 45% of that figure. While much of it is used to finance standing military forces, a substantial amount is spent on technology and hardware, particularly in the aerospace sector. Second, while the defense industry is highly globalized, arms trade that crosses borders can be quite controversial for political reasons, if not illegal outright. Finally, the defense industry involves a unique blend of governmental and economic forces. Both private companies and public institutions shape supply and demand in this dynamic market.

This page will analyze the defense industry from three perspectives:

1. Political: proliferation and counter-proliferation; arms control regimes; diplomacy of arms sales; national acquisition policies

2. Economic: significant defense contracts; mergers and other corporate developments within the industry; defense spending patterns

3. Technological: research and development; relevant scientific discoveries; new and noteworthy military technologies

Key Facts

Non-conventional weapons

Nuclear, biological and chemical weapons represent the three types of weapons of mass destruction. Multinational conventions have banned the development or ownership of biological and chemical arms, but several nations are suspected of illegally possessing them. The legitimate market for nuclear arms is small, given that only five nations (USA, UK, France, Russia and China) lawfully own them, while four others (India, Pakistan, Israel and North Korea) are unofficial nuclear powers. Nuclear proliferation, defined as the illegal spread of nuclear technology or materials to states that do not currently possess them, remains an issue of great concern. Iran is suspected of attempting to acquire nuclear capability. Also worrisome is the prospect of terrorist groups, such as al-Qaeda, acquiring radioactive or toxic materials.

Guide to nuclear forces worldwide (Federation of American Scientists)

Guide to chemical and biological weapons worldwide (Henry L. Stimson Center)

Aerospace systems

Encompassing military aircraft (both land-based and sea-based,) conventional missiles, and satellites, this is the most technologically advanced sector of the market. It is also the least competitive from an economic standpoint, with a handful of companies dominating the entire market. The top clients and major producers are virtually all located in the West, with the United States easily in first place. Prominent aerospace firms include Lockheed Martin, Boeing, and BAE Systems. There are also several multinational consortiums mostly involved in the manufacturing of fighter jets, such as the Eurofighter. The largest military contract in history, signed in October 2001, involved the development of the Joint Strike Fighter.

Aerospace industry news (Air Force Technology)

Naval systems

All of the world's major powers maintain substantial maritime forces to provide a forward presence and enhance overall mobility, with the largest nations possessing aircraft carriers, nuclear submarines and advanced anti-air defense systems. The vast majority of military ships are conventionally powered, but some are nuclear-powered. The U.S. Navy is by far the largest in the world, and most of the large contracts in this sector are awarded to American firms, such as Newport News Shipbuilding, a subsidiary of Northrop Grumman. There is also a large global market in second-hand naval vessels, generally purchased by developing countries from Western governments.

Naval industry news (Jane's Information Group)

Land-based weapons

This category includes everything from light arms to heavy artillery, and the majority of producers are small. Many are located in Third World countries. International trade in handguns, machine guns, tanks, armored personal carriers and other relatively inexpensive weapons is substantial. There is relatively little regulation at the international level, and as a result, many legitimately produced weapons fall into the hands of rebel forces, terrorists, or regimes under sanctions.

Land-based arms industry news (Army Technology)

News Updates

Nuclear Disputes Likely to Flare Up at NPT Meeting

4/29/07

On Monday, April 30, 188 nations that have signed the Nuclear Non-Proliferation Treaty (NPT) begin a two-week long summit in Vienna, at the headquarters of the International Atomic Energy Agency (IAEA). Similar meetings of the Preparatory Committee, or PrepCom, will be held in 2008 and 2009, ahead of the full NPT Review Conference in 2010. While no major decisions are commonly taken at PrepCom meetings, the latest one is expected to underscore wide divisions among the NPT signatories on pressing topics, including, of course, Iran and North Korea.

Because all but four of the world's acknowledged independent nations have signed the NPT, PrepCom debates are akin to those at the UN General Assembly, where stark divisions can be routinely seen between the industrialized world and the developing world, the latter given institutional form through the Non-Aligned Movement (NAM). The NAM has consistently maintained that the five “official” nuclear powers permitted to own nuclear weapons by the NPT, which are also the permanent members of the UN Security Council, are in violation of their treaty obligations by not pursuing good-faith negotiations on the issue of nuclear disarmament. In the past several months, for example, NAM countries have criticized Britain for voting to develop the next generation of the Trident nuclear missile system.

A more immediate sticking point between the major nuclear powers (especially the three NATO members) and the NAM has to do with what the NAM perceives as the double-standard between Iran and North Korea on the one hand, and Israel, India and Pakistan on the other. The latter three countries – all U.S. friends or allies – never signed the NPT and nonetheless possess nuclear arsenals. Under international law, their status as nuclear powers is ambiguous: They are neither expressly authorized to own nukes nor banned from owning them. However, Western pressure on any of these three countries to commit to nuclear disarmament is currently negligible. By comparison, the NAM points out, the West is exerting massive pressure on North Korea and Iran; the former is being cajoled to disarm, while the latter is being persuaded – with carrots as well as sticks – to halt uranium enrichment, a potential precursor to the development of nuclear weapons. North Korea pulled out of the NPT in 2003, while Iran remains a party to the treaty and insists that its nuclear program has purely civilian purposes.

While many NAM countries have condemned North Korea's recent nuclear test and Iran's lackluster cooperation with the IAEA, and indeed participated in unanimous Security Council resolutions imposing sanctions on the two countries, there remains a basic tension between the NAM and the West with regard to enforcement of non-proliferation. As the latest PrepCom meeting gets underway, it is more than likely that the intensity of this tension will be in plain view.

International Atomic Energy Agency (official site)

IAEA's relations with Iran (official site)

Non-Aligned Movement (official site)