The 'Camo Economy' Hides Military Costs and Exacerbates Inequality


Pentagon contractors like Lockheed Martin exploit their political connections to maintain a system that generates huge corporate profits and executive pay at taxpayer expense.

STATE CAPITALISM THE AMERICAN WAY

SOCIALISM FOR THE MILITARY INDUSTRIAL COMPLEX

DEBT AND POVERTY FOR THOSE WHO FOOT THE BILL

by Heidi Peltier



In 2018, Lockheed Martin Corporation earned $8 billion in profits. About 85 percent of their business was government contracts. (Photo: Lockheed Martin)


Military contracting was sold to the American people as a way to reduce the cost of military operations, yet the result has been quite the opposite. Recent research of mine has shown that rather than reduce costs, military contracting—or what I call the “Camo Economy” because it camouflages human and financial costs—has resulted in higher costs to taxpayers. It has also distorted labor markets and contributed to rising inequality, as military contractors earn excessive profits that enable them to pay their employees and particularly their top executives much more than their counterparts in the public sector and most other private sector jobs.

Military contracting serves a public purpose and uses public funds, while contractors earn profits at the taxpayer’s expense and are often not subject to the competitive pressures of private markets.

In 2019, $370 billion—more than half of all Department of Defense (DOD) spending—went to contractors. While contracting is sometimes called "privatization," I think this is an inaccurate description, since military contracting serves a public purpose and uses public funds, while contractors earn profits at the taxpayer’s expense and are often not subject to the competitive pressures of private markets.

Many contractors operate more as monopolies than as competitive firms. Last year, 45 percent of DOD contracts were classified as "non-competitive." And even among competitive contracts, many of these are "cost-type" contracts, which means that the firm will be reimbursed all its reasonable costs, and therefore has no incentive to reduce costs as competitive, non-monopolistic firms would. Additionally, firms such as Lockheed Martin have created monopolies for themselves by selling weapons systems (like the F-35 fighter aircraft) and other equipment to the DOD that come with “lifetime service agreements” in which only Lockheed can service the equipment.




Military contractors, then, act more as commercial monopolies than as competitive private firms. And using their monopoly powers they are able to earn excessive profits. In 2018, Lockheed Martin Corporation earned $8 billion in profits. About 85 percent of their business was government contracts.

High profits allow military contractors to pay high wages, which contributes to rising inequality. While the average wage across all occupations in the U.S. last year was about $53,000, at Lockheed Martin the average wage was about $115,000, over twice as much. KBR, a contractor that provides various services in the Middle East, had an average wage of $104,000, nearly twice the national average. The CEO of Lockheed earned nearly $2 million in base pay, well above the national average of $193,000 for CEOs; once we include stock options and other compensation, however, Lockheed’s CEO earnings shoot up to over $24 million.
The Camo Economy has made war more politically palatable by camouflaging its various costs. Contractors now outnumber troops in the Central Command (CENTCOM) region that includes Iraq and Afghanistan, 53,000 to 35,000. Deaths of U.S. contractors since September 2001 are approximately 8,000, compared to 7,000 troops. Yet contractors receive neither the public recognition nor the honor of serving abroad, despite the increased risks they face. The Camo Economy is politically useful, as the White House can claim troop reductions while at the same time increasing U.S. presence abroad by relying more heavily on contractors.

The financial costs of military contracting are also opaque. While we know some top-line numbers, we know very few details about where our tax dollars go once they are paid out to contractors. We do know that contracting is more expensive, as contractors have limited incentives to reduce costs and they build profits into their contract agreements. As contractors then use sub-contractors, who also build in profits, there can be multiple layers of guaranteed profits built into a contract between the sub-contractors performing the work and DOD paying the prime contractor. Add in the waste, fraud, and abuse in addition to the excessive profits, and the costs to government quickly balloon.

It will not be easy to reform the Camo Economy. Firms such as Lockheed Martin, Northrop Grumman, and Raytheon each spent about $13 million on lobbying last year. Political connections operate alongside high profits and paychecks to keep the Camo Economy entrenched and growing. But reforms can be made. Reducing the size of the military budget is a vital first step. The National Priorities Project at the Institute for Policy Studies has detailed various ways to do this.

Next, the portion of military spending that is paid to contractors should be reduced and some services should be brought back in-house, including those on and near the battlefield. And third, the contracting process itself should be reformed, so that more contracts are legitimately competitive and create incentives for firms to reduce costs.

Heidi Peltier is Director of "20 Years of War," a Costs of War initiative based at Boston University’s Pardee Center for the Study of the Longer-Range Future. She is also a board member of the Institute for Policy Studies

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State, Capital and World Economy: Bukharin's Marxism and the “Dependency/Class” Controversy in Canadian Political Economy*
Paul Kellogg 

Canadian Journal of Political Science/Revue canadienne de science politique
Volume 22, Issue 2
June 1989 , pp. 337-362

DOI: https://doi.org/10.1017/S0008423900001335
Published online by Cambridge University Press: 10 November 2009

Abstract


In the late 1960s and early 1970s, “left-nationalist” dependency theories dominated Canadian political economy. However, Canada defied the predictions of dependency theory and developed all the class relations appropriate to advanced capitalist societies. The origins of Canadian industrial capitalism were not such that the country was locked into a staple-trap, notwithstanding the very real reliance of the economy on staple-export. In recent years, a number of political economists have offered an “orthodox” Marxist critique of dependency to account for these and other weaknesses in its overall framework. This article first summarizes the dependency arguments, then the arguments of its Marxist critics, and finally introduces a summary look at the ideas of Nikolai Bukharin, a little-examined but nonetheless important theorist whose insights on the relationship between the state as a capitalist and the growing internationalization of economic life are key to a Marxist re-theorization of Canadian political economy.



Vers la fin des années soixante et le début des années soixante-dix, les théories de la dépendance « nationalistes de gauche » dominaient l'économie politique du Canada. Le Canada a pourtant défié les prévisions de ces théories et développé tous les rapports entre les classes qui caractérisent les sociétés capitalistes avancées. Les débuts du capitalisme industriel au Canada n'étaient pas au point de nous rendre totalement dépendants des produits de base, même s'il ne faut pas ignorer l'importance de l'exportation de ces produits. Dans les dernières annees, un certain nombre de spécialistes en économie politique ont présenté une critique marxiste de type orthodoxes des théories de la dépendance afin d'expliquer certaines faiblesses de son cadre générale d'analyse. Cet article résume d'abord les arguments portant sur les théories de la dépendance, puis ceux des critiques marxistes et présente enfin un bref aperçu des idées de Nikolai Bukharin, un théoricien important mais relativement peu connu. Ses théories du rapport entre l'État vu comme capitaliste et l'internationalisation croissante de la vie économique sont présentées comme étant la clé d'une re-théorisation marxiste de l'économie politique du Canada.

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References Hide All


1 Cited in Clement, Wallace and Drache, Daniel, A Practical Guide to Canadian Political Economy (Toronto: Lorimer, 1978), 43.Google Scholar


2 Carroll, William, “Dependency, Imperialism and the Capitalist Class in Canada,” in Brym, Robert J. (ed.), The Structure of the Canadian Capitalist Class (Toronto: Garamond Press, 1985), 42.Google Scholar


3 Porter, John, The Vertical Mosaic (Toronto: University of Toronto Press, 1965), 273.CrossRef | Google Scholar


4 See Lumsden, Ian (ed.), Close the 49th Parallel Etc. (Toronto: University of Toronto Press, 1977)Google Scholar; Teeple, Gary (ed.), Capitalism and the National Question in Canada (Toronto: University of Toronto Press, 1973)Google Scholar; and Laxer, Robert (ed.), (Canada) Ltd. (Toronto: McClelland and Stewart, 1973).Google Scholar


5 Resnick, Philip, “The Maturing of Canadian Capitalism,” Our Generation 15, (1982), 11–24.Google Scholar


6 Carroll, “Dependency, Imperialism and the Capitalist Class in Canada.”


7 Moore, Steve and Wells, Debi, Imperialism and the National Question in Canada (Toronto: S. Moore, 1975), 113.Google Scholar


8 Panitch, Leo, “Dependency and Class in Canadian Political Economy,” Studies in Political Economy: A Socialist Review 6 (autumn 1981), 7–33CrossRef | Google Scholar; David McNally, “Staple Theory as Commodity Fetishism,” Ibid., 35–63; and Ray Schmidt, “Canadian Political Economy: A Critique,” Ibid., 65–92.


9 This will not involve a complete survey of all Marxist political economy. In particular, I shall not refer to the numerous and important contributions of Niosi, Jorge including The Economy of Canada: A Study of Ownership and Control (Montreal: Black Rose Books, 1979)Google Scholar; Canadian Capitalism (Toronto: Lorimer, 1981); and Canadian Multinationals (Toronto: Garamond Press, 1985). While it does not deal directly with Canada, Niosi's work co-authored with Bellon, Bertram, The Decline of the American Economy (Montreal: Black Rose, 1988)Google Scholar, is also relevant. I have restricted my horizons to those Marxists who have directly taken up the dialogue with the dependency theorists.


10 Marx, Karl, A Contribution to the Critique of Political Economy (Moscow: Progress Publishers, 1970), 20.Google Scholar


11 Levitt, Kari, Silent Surrender (Toronto: Macmillan of Canada, 1970).Google Scholar


12 In saying this, I do not wish to imply that the dependency theorists were by and large elite theorists. However, in developing a society-centred framework to understand the Canadian economy, many dependency theorists did use elite theory (whose classic Canadian formulation is found in John Porter's The Vertical Mosaic) as a starting point and developed their analysis through a critique of this approach. The attitude of the dependency theorists to elite theory was fraternal (agreeing that society was in fact based on manifest inequalities) but critical. Dependency theorists disagreed with the purely descriptive bias of this type of sociology and with its acceptance of the inevitability of inequality. They posited an explanation of the inequalities inside Canadian society that implicitly or explicitly contained a prescription—independence and socialism.


13 Porter, The Vertical Mosaic, 557, 54 and 166.


14 John Hutcheson, “Class and Income Distribution in Canada,” in Laxer, (Canada) Ltd., 59.


15 Panitch, “Dependency and Class in Canadian Political Economy,” 7.


16 Drache, Daniel, “The Crisis of Canadian Political Economy,” Canadian Journal of Political and Social Theory 7 (1983), 25, 34–36.Google Scholar


17 See Baran, Paul, The Political Economy of Growth (New York: Monthly Review Press, 1957)Google Scholar; Emmanuel, Arghiri, Unequal Exchange: A Study of the Imperialism of Free Trade (New York: Monthly Review Press, 1972)Google Scholar; and Frank, André Gunder, Dependent Accumulation and Underdevelopment (New York: Monthly Review Press, 1979).Google Scholar


18 Carroll, “Dependency, Imperialism and the Capitalist Class in Canada,” 21.


19 Ibid., 22–23.


20 See Moore and Wells, Imperialism and the National Question in Canada, 115.


21 Cited in Penner, Norman, The Canadian Left (Toronto: Prentice-Hall, 1977), 86–87.Google Scholar


22 Ibid., 91, 100.


23 Ibid., 103.


24 Cited in Ibid., 104.


25 Resnick, Philip, The Land of Cain (Vancouver: New Star Books, 1977), 202–03, 70.Google Scholar


26 Ibid., 203.


27 Moore and Wells, Imperialism and the National Question in Canada, 112. Moore and Wells here do not mean to argue that this unity is a “good” thing. While there might be one central Canadian state, there is very definitely more than one nation. According to their analysis, the historic oppression of the Quebec nation is intensified precisely because the central state is independent and unified.


28 Panitch, “Dependency and Class in Canadian Political Economy,” 8.


29 Ibid., 9, 13.


30 Ibid., 14.


31 Levitt, Silent Surrender, 24.


32 McCallum, John, Unequal Beginnings (Toronto: University of Toronto Press, 1980).CrossRef | Google Scholar


33 Panitch, “Dependency and Class in Canadian Political Economy,” 15.


34 Ibid., 10. For a more extensive discussion of this approach to the early years of Canadian industrialization, see Paul Kellogg, “The Early Years of Capitalism in Canada: A Defence of the Home-market Approach,” unpublished paper, York University, 1987.


35 Panitch, “Dependency and Class in Canadian Political Economy,” 16.


36 Ibid., 17, 19.


37 Drache, “The Crisis of Canadian Political Economy,” 28.


38 McNally, “Staple Theory as Commodity Fetishism,” 44.


39 Drache, “The Crisis of Canadian Political Economy,” 25–43.


40 To be fair, Panitch has recently developed his analysis in a somewhat different direction, one which is more complex than simply a “branch-plant” approach that makes much of the location of head office. See Panitch, Leo, “Class and Power in Canada,” Monthly Review 36, 11 (1985), 1–13Google Scholar, which makes a coherent case for his rich dependency approach, developing an argument that incorporates dependency from an angle that does not rely on the “Frank school.” In “terms of the extent of foreign ownership and control over the economy and of Canada's international trade pattern… Canada looks more like belonging in the company of Venezuela or Nigeria” (Ibid., 1). He argues that “the material foundations for a centralized Canadian state simply do not exist.” In Canada, industrial and financial capital have not merged into a unified and concentrated national bourgeoisie to form “finance capital”; rather, “Canada's commercially oriented bourgeoisie… entered into a partnership with American industrial capital in Canada.” This has resulted in the “implantation within the social formation of a powerful fraction of foreign industrial capital on a scale unmatched anywhere in the developed capitalist world” (Ibid., 4–5). Canada has a “neo-colonial relationship” with the United States and “nothing approaching a national bourgeoisie with its own political, ideological and economic unity vis-à-vis other national capitals has emerged” (Ibid., 10–11). This allows Panitch to theorize a dependent relationship with the United States that does not rest on the assumptions of the underdevelopment school. The crux of the case is the weakness in Canada of a national bourgeosie. While this phenomenon has not led to the underdevelopment predicted by the Frank school, it has held important implications for the ability of the state to direct the economy. This is an interesting approach, one that merits detailed examination in a separate paper. It does not, however, detract from the thrust of the argument presented here. Dependency in the sense of the Frank school was intimately bound up with a notion of underdevelopment. This underdevelopment was rooted in several structures of the relationship between the centre and the periphery, all of which have been shown by Marxist critics of dependency to be empirically and theoretically weak.


41 Porter, The Vertical Mosaic, 266.


42 Ibid., 269.


43 Ibid., 269–70.


44 Ibid., 271–72.


45 Ibid., 273.


46 Resnick, “The Maturing of Canadian Capitalism,” 12.


47 Ibid., 17, 22.


48 For a compilation of the various official statistics which attempts to prove just that, see Kellogg, Paul, “Canada as a Principal Economy: A Comparative Critique of the ‘Counter-discourse’ of Political Economy,” paper presented to the annual meeting of the Canadian Political Science Association, McMaster University, Hamilton, 1987.Google Scholar


49 Resnick, “The Maturing of Canadian Capitalism,” 15.


50 This framework is extensively developed in Carroll, William, Corporate Power and Canadian Capitalism (Vancouver: University of British Columbia Press, 1986).Google Scholar


51 Carroll, “Dependency, Imperialism and the Capitalist Class in Canada,” 31.


52 Ibid., 42–43.


53 Ibid., 25.


54 Ibid., 27, 28.


55 Ibid., 32.


56 Ibid., 35. This conclusion is directly opposite to the one drawn by Panitch (“Class and Power in Canada”). See footnote 40. Has finance capital developed in a more or less “classical” form in Canada, with the oddity of a high degree of head offices being located in the United States (as Carroll argues) or did Canadian banking interests fuse their interests with those of American industrial capital, leading to a “Canadian-exceptionalist” view (as Panitch argues) where indigenous Canadian industrial capital was left out in the cold? As the Marxist critique of Canadian political economy develops, this should prove to be one of the key areas of controversy.


57 Ibid., 35.


58 Friedman, Jonathan, “Crisis in Theory and Transformations of the World Economy,” Review 2 (1978), 143.Google Scholar


59 Warren, Bill, Imperialism, Pioneer of Capitalism (London: New Left Books, 1980), 176.Google Scholar


60 Carroll, “Dependency, Imperialism, and the Capitalist Class in Canada,” 37.


61 Bukharin, Nikolai, Imperialism and World Economy (New York: Monthly Review Press, 1973), 157.Google Scholar


62 Some recent scholarship has begun to reverse this trend. See, for example: Haynes, Mike, Nikolai Bukharin and the Transition from Capitalism to Socialism (Kent, UK: Croom Helm, 1985)Google Scholar; Coates, K., The Case of Nikolai Bukharin (Nottingham: Spokesman, 1978)Google Scholar; Cohen, Stephen F., Bukharin and the Bolshevik Revolution (New York: Vintage Books, 1975)Google Scholar; and Lewin, M., Political Undercurrents in Soviet Economic Debates (London: Pluto Press, 1974).Google Scholar


63 Cohen, Bukharin and the Bolshevik Revolution, 12.


64 Bukharin, Imperialism and World Economy, 17.


65 Cited in Trotsky, Leon, The Revolution Betrayed (New York: Pathfinder Press, 1972), 291.Google Scholar


66 Bukharin, Imperialism and World Economy, 24–26.


67 Ibid., 126, 127.


68 See especially Cliff, Tony, State Capitalism in Russia (London: Pluto Press, 1974).Google Scholar Cliff argues on this basis that the Soviet Union is best understood as bureaucratic state capitalist. For a recent and iconoclastic examination of perestroika from this perspective see Harman, Chris and Zebrowski, Andy, “Glasnost—Before the Storm,” International Socialism 2 (1988), 3–54.Google Scholar International arms competition has another related impact on national economies which we will be unable to develop here. Briefly, three related concepts must be linked very closely—state-capitalism, world economy and the permanent arms economy. One of the principal thrusts behind the expansion of the state sector has been the competition between national-capitals which at a certain point becomes military competition. This military/state sector in turn becomes an economic factor in its own right, accelerating the very forces that brought it to birth—the concentration and centralization of capital. This argument is developed in the international context by Harman, Chris in Explaining the Crisis (London: Bookmarks, 1984).Google ScholarMcNally, David has developed its implications in the Canadian context in a provocative paper, “The Permanent Arms Economy and the Crisis of Canadian Capitalism,” paper prepared for the 1976 convention of the International Socialists, Toronto, 1976.Google Scholar


69 Bukharin, Imperialism and World Economy, 26.


70 Ibid., 61–62.


71 Ibid., 73.


72 This line of argument has been superbly developed by Harris, Nigel in Of Bread and Guns: The World Economy in Crisis (Markham: Penguin, 1973)Google Scholar which develops the general argument that the great levelling effect of the world market has overrun the ability of nation-states—communist or non-communist—to counter the pressures towards homogenization and, therefore, crisis; and The End of the Third World (Markham: Penguin, 1987) which develops the implications of this approach for dependency theories of the Third World and its development prospects.


* Ken McRoberts and Leo Panitch of the Department of Political Science, York University, and George Perlin and Grant Amyot of the Department of Political Studies, Queen's University, may not agree with everything in this article; but they were all invaluable over the years in helping these ideas come to fruition. The comments of the three anonymous reviewers for this Journal were extremely useful. The completion of this article was made possible by a grant from the Social Sciences and Humanities Research Council of Canada.

PERMANENT ARM$ ECONOMY

SIPRI: Saudi Arabia largest importer of arms, US biggest exporter

Over a third of the global weapons sold worldwide during the past five years came from the United States. About half of US arms transfers went to the Middle East



About 50% of weapons sold by the US went to the Middle East


The US accounted for 37% of global arms sales during the 2016-2020 period and sold arms to 96 countries. Almost half of its sales went to the Middle East, the Stockholm International Peace Research Institute (SIPRI) said in a report on Monday. US exports increased 15% compared to the 2011-2015 period.

International deliveries of arms were flat in the period 2016-2020, ending more than a decade of increases, SIPRI said. It was the first time since 2001–2005 that the volume of deliveries of major arms between countries — an indicator of demand — did not increase from the previous five-year period.

The United States, France and Germany — three of the world's biggest exporters — increased deliveries but falls in exports from Russian and China offset the rise, SIPRI said.

Russia is the world's second-largest arms exporter, while France stood third, according to the report. Russia's sales were dented by a drop in imports from India.

Saudi Arabia tops as largest importer

Middle Eastern countries accounted for the biggest increase in arms imports, up 25% in 2016–20 from 2011–15.

Saudi Arabia, the world's biggest arms importer, increased its arms imports by 61% and Qatar by 361%.

The United Arab Emirates recently signed an agreement with the United States to purchase 50 F-35 jets and up to 18 armed drones as part of a $23 billion package.

Asia and Oceania were the largest importing regions for major arms, receiving 42% of global arms transfers in 2016–20. India, Australia, China, South Korea and Pakistan were the biggest importers in the region.

"For many states in Asia and Oceania, a growing perception of China as a threat is the main driver for arms imports," said Siemon Wezeman, a senior researcher at SIPRI.

COVID impact too early to tell

SIPRI said that it was too early to tell whether a recession stemming from the COVID-19 pandemic could slow down arms deliveries.

"The economic impact of the COVID-19 pandemic could see some countries reassessing their arms imports in the coming years. However, at the same time, even at the height of the pandemic in 2020, several countries signed large contracts for major arms," said Wezeman.

am/sri (dpa, Reuters)

Global Arms Trade Plateauing Amid COVID-19 as Sales Gap Between US, Russia Widens – SIPRI

 

Global Arms Trade Plateauing Amid COVID-19 as Sales Gap Between US, Russia Widens – SIPRI

Lance Cpl. Juanenrique Owings

MILITARY & INTELLIGENCE

06:13 GMT 15.03.2021Get short URL

by Igor Kuznetsov

 

Substantial increases in arms sales by three of the top five exporters (the US, France, and Germany) were largely offset by declining Russian and Chinese exports, as the COVID pandemic is yet to take its economic toll on nations and affect their arms procurements.

International trade in major arms has levelled off over the past two five-year periods, with the exception of the Middle East, where there has been a sharp increase, the Stockholm International Peace Research Institute SIPRI has said in a fresh report.

Nevertheless, global arms trade has remained close to the highest level since the end of the Cold War in the early 1990s, when the Soviet Union collapsed. Whether there has been a break in trends on the global arms market, SIPRI's researchers are still hesitant to say.

"It is too early to say whether the rapid growth of arms transfers in the last two decades is over, Pieter Wezeman of SIPRI's research programme for weapons and military spending in the city of Solna, told national broadcaster SVT.

SIPRI, however, did not rule out the coronavirus pandemic possibly affecting the statistics for an entire five-year period.

"The economic effects of the COVID-19 pandemic may, for example, cause some countries to re-evaluate their arms imports in the coming years. At the same time, however, several countries have signed major arms contracts in the midst of a burning pandemic", Wezeman said.

With 96 client states, the US remains the world's largest arms exporter, increasing its global share of arms exports from 32 to 37 percent. Almost half (47 percent) of US arms transfers went to the Middle East. Substantial increases in transfers by three of the top five arms exporters (the US, France, and Germany) were largely offset by declining Russian and Chinese arms exports, SIPRI noted.

One major outlier is the Middle East, which clearly went against the trend and greatly increased its arms procurements by 25 percent during the same period. The spike is mostly due to major acquisitions by Saudi Arabia (up by 61 percent), Egypt (up by 136 percent) and Qatar (up by 361 percent).

"Ongoing wars in Yemen and Libya, rivalries between countries in the Gulf region, threats against Iran, and rising tensions over oil and gas reserves in the Mediterranean are important drivers of demand for weapons in the region", Pieter Wezeman commented.

Based in the Swedish capital, the Stockholm International Peace Research Institute was founded in 1966 to provide data, analysis, and recommendations for armed conflict, military expenditures, and arms trade as well as disarmament and arms control. Their research is based on open sources and is directed at decisionmakers, researchers, the media, and the public.

To avoid statistical glitches, the researchers compare five-year stretches. This model has been in use since 1981, when the superpowers were locked in the Cold War and armed themselves to unprecedented levels.

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Nazanin Zaghari-Ratcliffe: Iranian arms dealing continued in the UK even after notorious tank deal fell apart in 1979

Published: March 22, 2022 

THE CONVERSATION

Following her release from detention in Iran, Nazanin Zaghari-Ratcliffe, held hostage since 2016, said: “what happened now should have happened six years ago”. She was referring to the fact that her release had been secured at the same time as the British government paid Iran a debt it had owed since the first day of her detention – and had in fact owed since the 1970s.

Zaghari-Ratcliffe was tragically used as a pawn in this decades-long dispute over almost £400 million.

My research has explored the history of the Anglo-Iranian arms trading relationship and has found that London continued to be a global hub for Iran’s arms purchasing efforts even after the 1979 Iranian revolution. This is perhaps surprising given what we know about Zaghari-Ratcliffe’s case. Received wisdom is that the UK failed to follow through on arms deals with Iran due to concerns over the politics and provocative actions of the new Iranian regime. These revelations from the archives make this narrative harder to swallow.
A contentious tank deal

Iran was a major customer for British weapons in the 1970s. Between 1971 and 1976, the Iranian government ordered 1,500 Chieftain tanks and 250 armoured recovery vehicles from Britain at a cost of around £650 million. These orders – and the associated funds – were lodged with British state-owned arms company International Military Services Ltd (IMS Ltd).

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At the time, Iran was dramatically expanding its arms purchases, having cashed in on the 1973 oil crisis that saw prices quadruple. The Shah of Iran – the monarch ruling the country – was using the proceeds to pursue domestic modernisation, including through defence and arms procurement. Journalist Anthony Sampson described Iran in the mid-1970s as “the salesman’s dream”. The country spent over US$10 billion on tanks, aircraft, missiles and all manner of weaponry between 1974 and 1976, and planned a further US$10 billion spend by 1981.

When the Shah of Iran was toppled in 1979, Britain did not see through on its arms deal. Alamy

The 1979 revolution that toppled the Shah saw the US halt arms sales to Iran. The UK – at least in some regard – followed suit. British tank transfers ceased and the bulk of the 1970s contract went unfulfilled. Only 185 of the Chieftain tanks ordered by the Shah had been delivered.

However, IMS Ltd held onto the Iranian government’s money – eventually said to be around £400 million when interest is taken into account. A long series of legal battles have been fought over these funds.

Zaghari-Ratcliffe was detained nearly four decades later and, over the years, the link to the 1970s tank debt has gradually emerged. Zaghari-Ratcliffe was first told that the connection was being drawn between her imprisonment and the debt by her Iranian interrogators in 2016. Meanwhile, the British government remained cagey and avoided the question of a link. Now, however, it has formally confirmed that it paid the debt in the same statement announcing the release of Zaghari-Ratcliffe and fellow detainee Anoosheh Ashoori.

The post-revolution arms network

While Britain halted the transfer of the Chieftain tanks when the Shah fell, the arms trading relationship with Iran did not cease entirely during the 1980s.

Indeed, by the time Iran was fighting a bloody war with Iraq that would last for most of the decade and claim up to a million lives, Britain, and London in particular, had a central role in Iran’s arms procurement networks.

My research shows that Iran was running a military procurement office in the heart of Westminster to supply its war machine. The office, hosted in the National Iranian Oil Company building, was located over the street from the Department for Trade and Industry, and a stone’s throw away from Westminster Abbey and the Houses of Parliament.

British government documents from 1985 note 60 to 70 arms dealers worked to broker arms deals in the building alongside over 200 oil company representatives. Contemporary press reports suggested millions of dollars of business flowed through the office, although British officials were reluctant to specify how much of Iran’s alleged US$1.2 billion annual arms purchases were handled in Westminster.

While few actual weapons systems appear to have been transferred through the offices, a search of the building in 1982 by the Metropolitan Police did uncover explosive fighter jet ejector seat parts in the basement.

Some evidence even suggests a link between IMS Ltd, the Chieftain tank deal and the Iranian offices. In the mid-1980s some spare parts for the tanks were supplied to Iran, with the name of Iran’s London office found on some leaked paperwork linked to the transaction.

The official British rules on arms transfers to Iran and Iraq during the war were complicated. Guidelines from 1984 suggested that Britain would not supply “lethal” equipment, that existing contracts should be fulfilled where possible and that transfers should not exacerbate or lengthen the conflict.

Richard Ratcliffe, pictured during his hunger strike towards the end of his wife’s captivity. Alamy

British officials were well aware of the Iranian office, and were frequently pressured to act against it by the US government. However, British intelligence struggled to understand what exactly was going on inside the building, and no clear evidence could ever be found of a breach of British law.

The desire to avoid a diplomatic spat with Iran but also the potential for a flourishing commercial relationship with Iran in other areas –- particularly supplying the National Iranian Oil Company – prevented British action.

It was only in 1987, following a series of Iranian provocations, including attacks on oil tankers and British diplomats in Tehran, that Margaret Thatcher’s government pulled the plug on Iran’s arms dealing operations in Westminster.
Insights from the archives

It is clear that challenging diplomatic relations and international sanctions on Iran over recent decades have made resolving the tank debt complicated. But the largely forgotten story of Iran’s London arms procurement office makes the British government’s unwillingness or inability to pay somewhat challenging to comprehend. Any narratives that suggested it was impossible to engage with the question of the debt skip over rather a lot of other activities that continued throughout the period in question.

I’ve been able to scrape together information about Iran’s audacious 1980s procurement operation at the heart of Westminster thanks to the rules that make government records public after 30 years. In another 30 years’ time, the archives might help to shed some further light on the events of 2022, as well as the years Zaghari-Ratcliffe and Ashoori spent imprisoned. They might tell us why it took so long for them to be reunited with their families.

Author

Daniel Salisbury
Senior Research Fellow at the Centre for Science and Security Studies, King's College London
Disclosure statement
Daniel Salisbury receives funding from the Leverhulme Trust.

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Russia Can’t Afford To Continue Exporting Arms

By RFE/RL staff - Mar 13, 2023

• Russian arms exports have collapse in recent years. 
• 
  
• The Kremlin’s need to conserve weaponry for its war in Ukraine, along with western sanctions are crushing its ability to sell arms.
• 
  
• The United States has increased arms sales, with its share rising to 40%.

Russia’s share of global arms exports declined sharply in the most recent five-year period, as Western sanctions against Moscow and the Kremlin's own need to conserve weaponry for its ongoing war effort in Ukraine limited sales abroad, new data from an influential research group showed.

Russia’s share of global arms exports declined from 22 percent in the 2013-17 period to 16 percent in 2018-22, according to a report by the Stockholm International Peace Research Institute (SIPRI) published on March 13.

Meanwhile, the United States remained the global leader in arms exports, with its share rising to 40 percent from 33 percent in the same five-year period.

"It is likely that the invasion of Ukraine will further limit Russia's arms exports," said Pieter Wezeman, a senior SIPRI researcher.

“This is because Russia will prioritize supplying its armed forces, and demand from other states will remain low due to trade sanctions on Russia and increasing pressure from the U.S.A. and its allies not to buy Russian arms,” he added.

SIPRI noted that arms exports worldwide have long been dominated by the United States and Russia, with the two countries ranking first and second over the past three decades.

But Russia’s gap over France, the third-biggest exporter, narrowed, with Paris’s share rising to 11 percent from 7.1 percent.

"France is gaining a bigger share of the global arms market as Russian arms exports decline, as seen in India, for example," Wezeman said. “This seems likely to continue, as by the end of 2022, France had far more outstanding orders for arms exports than Russia.”

U.S. arms exports rose 14 percent from the 2013-17 period to 2018-22, while Russia’s exports tumbled 31 percent. France’s exports rose 44 percent, mainly to states in Asia, Oceania, and the Middle East.

India received 30 percent of France’s arms in the recent five-year period, surpassing the United States as the second-largest supplier of weaponry to New Delhi.

Russian remained the largest supplier to India of arms exports and managed to increase sales to two large nations -- China by 39 percent and Egypt by 44 percent over the period.

Ukraine became the third-largest arms importer globally in 2022 as Kyiv continues to battle against the full-scale invasion by Russian forces, a major change from the nation’s actions over previous decades.

“From 1991 until the end of 2021, Ukraine imported few major arms,” the report said. “As a result of military aid from the U.S.A. and many European states following the Russian invasion of Ukraine in February 2022, Ukraine became the third-biggest importer of major arms during 2022 [after Qatar and India].”

It said Ukraine accounted for 2 percent of global arms imports in the five-year period.

European NATO nations hiked their arms imports 65 percent “as they sought to strengthen their arsenals in response to a perceived heightened threat from Russia,” the report said.

“Following Russia’s invasion of Ukraine, European states want to import more arms, faster,” Wezeman added.

The European increase came as the global level of international arms transfers dipped 5.1 percent over the five-year period.

SIPRI, an independent international institute focusing on research into conflict, armaments, arms control and disarmament, was established in 1966.

By RFE/RL

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