Patriot anti-missile battery in TurkeyPARIS: Every American defense company here wants to sell more weapons to foreign buyers in the Middle East and in Asia as they seek to compensate for flat or declining sales in the United States. Every European defense company wants to sell more weapons to foreign buyers in the Middle East and in Asia as they seek to compensate for flat or declining sales to the United States and to their own governments.

Someone is going to lose in those competitions between EADS, Thales, MBDA, Raytheon, Lockheed Martin, Northrop Grumman and others. Add to this mix the fact that American companies also confront the painful uncertainty caused by the mandatory budget cuts known as sequestration. The major American companies have conducted detailed reviews of the systems they sell to the US government to assess the likely impact over the next two to three years. Dan Crowley, president of Raytheon’s IDS unit, told me his company — intent on boosting its foreign sales to 30 percent of the company’s total from its current 25 percent — has combed through all its programs to estimate the impact of both sequestration and the coming drawdown of US forces from Afghanistan.

Crowley said they estimate the impact at up to 8 percent of domestic sales. The good news is that international sales “partially offset the effects of sequestration.” The bad news is they partially offset those cuts. And the competition will only increase as the French, German, British and Italian defense budgets shrink over the next few years. The only significant defense budget in Europe that is increasing is that of Poland, as it warily watches Vlad Putin and the thuggish Russia he presides over.

Crowley and a host of other defense industry leaders I spoke with here all say the Pentagon’s senior acquisition officials — Ash Carter, deputy defense secretary, John Kendall, undersecretary of defense for acquisition, and Brett Lambert, deputy assistant secretary for manufacturing and industrial base policy — understand the risks faced by the American companies and are scrambling to help.

In the past, senior Pentagon officials were sometimes reluctant to weigh in on behalf of American companies selling weapons overseas. If they did weigh in, they did so as dutiful public servants. But five defense industry sources told me during the show that they’ve seen an impressive shift recently in the alacrity and enthusiasm with which Pentagon, State and White House officials are willing to help them pitch their wares. Several mentioned Beth McCormick, deputy assistant secretary of State for political-military affairs, as particularly helpful. In years past, Pol-Mil was known largely as a big fat pain in the rear for defense companies, the place that said no to arms export license applications and generally regarded the companies as a problem to deal with.

Now, some company leaders are actually willing to speak publicly in praise of McCormick and other senior administration officials.

“They are partners with industry, working side by side,” Crowley told me here, a sentiment I heard echoed by others.

Arms export license applications are being cleared much more quickly than in past years. When questions arise about a license application or a company needs permission to make a formal presentation to a foreign government or get classified information shared, McCormick and her Pentagon colleagues are stepping up and doing what they can to help industry sell overseas. They know, Raytheon’s Crowley said, that the American industrial base will depend increasingly and significantly on foreign sales to remain robust.

For example, Raytheon is pushing Patriot anti-missile systems hard for foreign sales. John Rood, a former Pentagon and National Security Council official now handling American business development for Raytheon, pointed to the company’s deep penetration in a host of countries with partners. The claim offers clear indication of just important foreign sales are to Raytheon and how important Patriot and radar systems like the Surveillance Radar Program recently installed in Taiwan are to its future.

Other US companies depend heavily on foreign sales as well. Lockheed and its F-35 certainly loom large. Boeing sells the P-8 to India, C-17s to an array of countries and hopes to sell 100 V-22s to foreign buyers. You are hearing a great deal about Raytheon because the company made a very public commitment in both executives and spokesmen here, part of the company’s drill to boost foreign sales and its international profile internationally. Raytheon executives were the most willing and available to speak publicly and on the record.

This airshow, marked as it was by the absence of American aircraft (remember that the companies could have paid to lease and fly them at the show but chose not to) and the relatively few American military officials, demonstrated clearly that a vacuum will be filled. All we saw were Russian and European products. Before the show began, Boeing and Raytheon officials said their dance cards were filled for the show and did not expect a decline in sales or expressions of interest. Since the great majority of news coming out of the show centered on civil sales (thank you, Boeing and Airbus) we’ll have to wait and see if staying home is a productive approach for the US government and our aerospace companies or if Raytheon, the Europeans and the Russians are right.

Comments

  • Don Bacon

    SecDef Hagel has certainly been a help in promoting foreign military sales where the biggest buyers are, the Gulf states.

    “But the bottom line is that Iran is a threat. It’s a real threat. And the United States’ policy has been very clear on this. And I think everyone knows it. As other nations, the — the Iranians must be prevented from developing that capacity to build a nuclear weapon and deliver it. And you work out from there.”

    It’s a real threat, so you’d better buy some more planes, tanks and missiles. Yessir, you heard it here. And they do buy — about $60B recently, because of the “Iran threat.”

    • Jack

      I would appreciate any solid proof that Iran wants nuclear weapons and political war mongering propaganda is not solid proof. When you stop and think about it America has been an expansionist country since it become a sovereign state while Iran has not started a war since before America was created.

      • Colin Clark

        “Solid proof” you will not find unless Iran behaves differently. The proof lies in Iran’s behavior and the findings of the UN’s International Atomic Energy Agency. The Iranians bar IAEA inspectors from various sites that the IAEA believes are the site of work that appears related to nuclear weapons. If you don’t believe the IAEA then there’s not much point in discussing this. Ask Syria what it was doing at the site Israel recently destroyed.

      • Carlos54

        Jack -you need better meds if you don’t think Iran is seeking nuclear weapons

        • Jack

          Coward sheep you need to stop supporting the Mexican drug lords.

    • PolicyWonk

      The sad fact, is that it probably didn’t have to be this way.

      After 9/11, Iran was the first Islamic nation to offer condolences, aid (they are very experienced in digging through ruins, because they have a lot of earthquakes), and condemn the terrorist attacks.

      Iran also gave the US huge quantities of actionable intelligence on Afghanistan (as a number of their diplomats (and their families) were murdered by the Taliban), offered logistical support, use of airfields and hospitals for the Afghan campaign, and also expressed a serious (hat-in-hand) desire to put all issues of the past on the table with the goal of re-normalizing diplomatic relations. Additionally, they also gave the US considerable information on Iraq.

      The foolish, short-sighted, neoconservative administration of George W Bush responded began their now-infamous “Reign of Error” by adding Iran to the so-called “axis of evil” speech, in effect telling Iran they were next on the target list (warning a potential adversary you are gunning for them is the height of stupidity).

      Hence – what could’ve been the diplomatic coup of the century was turned into a disaster by foolish neoconservatives that thought all their aims were best reached by the barrel of a gun.

      And the rest, shall we say, is history.

  • Alexey

    I read your site with great interest. Yet it hurts me to see the choice of words like ‘thuggish Russia’ here. I am Russian and trust me, many decisions of US administration can also look thuggish. Unfortunately both nations are imperial in their thinking. One is trying to disguise it with democratic pretext, the other is just directly retaining its interest in ‘real politik’ style. Syria is as bad as Iraq and Afghanistan, and we did not start the war there. Unfortunately for Westerns (and actually a lot Russians like myself are Western-minded), the world has many of shades of gray and both great nations constantly upset the state of things, with US doing so on every continent. Both are driven by the national interest or rather, corporate greed. Democracy is present in Nordic Europe and these nations mind just their own business. And US actions as of last 40 years have very little to do with real democracy. Putin is very oppressive, and he is thuggish himself, true, but it is wrong to paint the entire country with your term. Following your choice of words, – look at Obama, not able to pull out the US troops. Or look at how everybody is perpetrating regular mass shootings in US towns, justifying it by 2nd amendment? And you say my nation is thuggish? Come on, guys, have some respect.

  • Alexey

    I read your site with great interest. Yet it hurts me to see the choice
    of words like ‘thuggish Russia’ here. I am Russian and trust me, many
    decisions of US administration can also look thuggish. Unfortunately
    both nations are imperial in their thinking. One is trying to disguise
    it with democratic pretext, the other is just directly retaining its
    interest in ‘real politik’ style. Syria is as bad as Iraq and
    Afghanistan, and we did not start the war there. Unfortunately for
    Westerns (and actually many Russians like myself are Western-minded),
    the world has many shades of gray and both great nations constantly
    upset the state of things, with US doing so on every continent. Both are
    driven by the national interest or rather, corporate greed. Democracy
    is present in Nordic Europe and these nations mind just their own
    business. And US actions as of last 40 years have very little to do with
    real democracy. Putin is very oppressive, and he is thuggish himself,
    true, but it is wrong to paint the entire country with your term.
    Following your choice of words, – look at Obama, not able to pull out
    the US troops. Or look at how everybody is perpetrating regular mass
    shootings in US towns, justifying it by 2nd amendment? And you say my
    nation is thuggish? Come on, guys, have some respect.

    • Jack

      Very well said, great comment!

    • Colin Clark

      I agree with many of your statements. American foreign policy has often ignored democratic precepts while declaring our commitment to them. However, that behavior proves the most basic truth of international relations: they are determined by the perceived interests of the state; voters influence foreign policy directly at times — think of US policies toward Poland, the Baltic states and Israel.

      The difference between the US and Russia in its current form is that Putin does a brilliant job of manipulating elections, terrorizing elements of the population who oppose the state and ignoring the rule of his own country’s laws. That is thuggery and he is guilty. You may not like or approve of the Second Amendment to the Constitution, but it is one of our most fundamental laws and we adhere to it at some cost in life and property. America certainly is not perfect, but the people possess rights and freedoms in practice and in law that are not regularly and brazenly abridged by executive fiat and violence. If they are abridged (some would argue the PRISM program is such an example) the mechanisms exist to correct those wrongs. In Russia under Putin people who try to correct those wrongs tend to move to other countries, end up in jail, lose their jobs or die. It is a sadness, given how much your people have suffered ever since the Mensheviks lost to Lenin.

    • Michael

      Alexey, stop pretending you are independent, your brief is obvious to anybody with experience in the way Russia’s PR machine operates (clumsily btw.) But that aside, 2nd amendment or not, for murder rate, Russia still leads US, by a big margin. And yes, US is a democracy, warts and all, while Russia is, has always been, and likely will stay an authoritarian-cum-dictatorial “thuggish” regime. The Poles, and *every* other Russia’s neighbor understands it very well. What kind of nation is it that is universally feared and hated by all of its neighbors?

      • Alexey

        Hi Michael,

        i don’t need to pretend. It hurts me personally to see when the nation is painted thuggish. I very rarely post anything online and yes, i do have an experience with PR and marketing, working in IT and being multilingual. In fact I have no problem giving you my name privately, if that helps you to believe me. And I worked for US companies. I am well traveled (over 40 countries) and lived in a few. I even immigrated 3 years ago, loosing a great job, because I disagree with Putin’s policies, but I still have to spend considerable time in Moscow. Under Putin Russia again became authoritarian. As I said one can call the regime thuggish and that I agree with, but not the nation. I have been on many occasions to Poland, and there is definitely an anti-Russian sentiment, I fully agree with you there. They were part of Russian empire, just like Finns. Baltic nations went through a lot because of the shameful 1939 Russian-German agreement. We are hated by these countries, just like Germans are. Russian government PR bots would go into blaming Poles for atrocities they were committing in W.Russia in 1918-1921. I don’t. I agree that killing several thousands of their officer core is a shame on my country. But rather think of this though. By the end of 19th century Russia started to develop too quickly, going from the slavery, abolished just in 1860s into industrial stage. Then the steam broke loose – the WW1, 2 revolutions (and mass exodus of elite and intelligentsia), Stalin’s repressions of 30s, when elite was exterminated, WW2, when the bravest died and again repressions of 40s-50s. We talk, ~50-60M people killed and millions immigrating. Genetically my nation was destroyed. For most of 20s century we were not let to choose and that obviously tells, with inability to choose the government as a result and send Putin into retirement. Yet it was a great nation – very clean, educated, poor and noble, and this was the case till 90s. I am 39, I remember things as they were in Soviet Union. We had a lot of ideology crap, but so did you. Then, in 90s we became democratic for short 10 – 12 years. Corruption, bandits, criminal privatization, economic crisis were all there. But we had an absolutely free press. I loved that period, even if I earned a little. Putin came with his strong Russia message, bolstered GDP with oil and gas exports, created Latin American style economy growth and closed down every free TV channel, intimidating journalists and quickly creating a strange mix of Soviet Union with money and corruption. But because people were poor hety accepted the paradigm. Larger cities became wealthy, at expense of personal freedoms. And obviously as people get wealthier they start demanding personal freedoms. That’s why Putin is now issuing ridiculous, oppressive laws, is using nationalist rhetoric and merging the secular state with corrupt Orthodox church. This is just a bit of insight for the readership to understand better the dynamics here.

        It is clear to me that the people who call an entire nation thuggish judge from afar and probably know little about Russia. A lot of people who come here on business or as tourists realize that the picture created by the Western media is severely unbalanced. Just like Russian state TV tries to isolate us from the West, painting US as imperialist country and making you look ridiculous.

        Russians, just like everybody else is a very interesting and diverse nation, and ourculture is great (some people are not very civilized though).

        I am glad it hurts you when I compare the two nations, because that initial choice of words hurt me. What – my poor mom, a librarian is a thug, my friends are, my poor deceased father, an electric and mechanical engineer was a thug? We lived on pennies and we were a great family. I know only one person who was to jail, who lives in my condo building. Just one.

        You guys are nuts going by such definitions. You have no right to judge.The trouble is – a professional journalist should avoid creating such hatred. What I recently became disillusioned with is how things work in both countries. I watch US TV, read your press. I see very disturbing similarities. They happen due to a low level of political, cultural and global experience of average population in both countries. You might not agree, but if you just take the ideology out – it is strikingly similar. Both nations think in imperial way. I have a lot of respect for every nation. And yet I would say this – if you think Americans are hated less – you need to come to Western Europe and talk to the people there. You’ll be surprised what a change occurred since 2001. You’ll be very surprised with what people think about your global role, your culture, your dominance in terms high tech and your tendency to control things.

        I recall a conversation with my US female colleague, when I worked for semiconductor US corporation back in 2003, – we talked about Iraq at sales conference in Munich. A second generation American, her parents came from Vietnam, she said – “there is no democracy in Iraq, we need to help them out, didn’t you see how they treat women? Women there have to wear head scarfs”. She said nothing about US interests in that oil reach region. Unfortunately this is very typical. And instead of claiming democratic values (which I fully support, btw) your politicians should state the true reasons for invasions. Who created Taliban in Afghanistan? Who was supporting Ben Laden in Afghanistan? By the way, who was supporting Pakistan you have an issue with now? Who is friends with Saudis, fueling the radical islamists? Your flirting with fundamentalists and corrupt government all over is no democracy, its stupidly and greed, playing global chess. Your industrial support of Chinese will trigger major global wars in future, first with Russian Far East falling into Chinese hands.

        Please be balanced and respectful, this was all I asked for.

    • Lop_Eared_Galoot

      Demonization sir.
      Poland has good reason to remember the last time the Russians came ‘visiting’ and it took the Nazis to get them to leave. Then they came back and refused to leave for 45 years, setting EE back four decades worth of technical and cultural achievement. Not good foreign relations that.
      By acknowledging this paranoia and making it possible for them to feel righteous in their defensive mindset, the American defense industrial complex makes it possible for even -bigger- Polish expenditures in the near future. I still do not see an adequate defense in place against Iranian Al Shahab and I don’t doubt that Poland would install all the goodies including the GMR/GBI and backup THAAD batteries, just to give Russia the social finger, if only someone would, ahem, ‘help them out’ with the setup and ops costs. Given the latter will be massive, far beyond any other U.S. NATO investment or indeed -any group- of tactical weapons sales, this is one way of keeping friendly relations in place that could allow for future improvements to the NATO baseline defense posture.
      Myself, it’s all pointless because, as the dollar heads for the cellar the price of American hardware will not become easier to afford simply because exchange rates are dependent on currency volumes in place and the moneys from the last QE are only now hitting the major currency markets. If the defcons see a major bloat in U.S. currency availability, internationally, they will raise the price of everything from weapons to spares to support ontop of jacking up the prices of the platforms themselves. If they don’t, they simply won’t show because they know that the USD is going into the grave of dead currencies of history and will not do the kinds of offset deals which will let other countries be the ones with the bigger lever on deal making with their own cash and carry options.
      The kinds of customers who would ‘buy American’ in a heart beat, if they could, are driven away by sticker shock and the superiority of many European products (Aster vs. Patriot, AASM vs. JDAM, Meteor vs. AMRAAM).
      Even if you are willing to accept ‘last generation’ performance with types like the F-16C.50+, you are looking at acquisition costs well up into the 50 millions and with an initial spares/weapons package, probably more.
      The F-35 is flatly beyond consideration as no one is willing to be the profit donkey for LM that takes the once promised 3,000 airframe sales base up over 2,000.
      Add to this a 35,000 dollar per flying our operational cost and the U.S. is seen as having shot itself in the foot, trying to export technology that has no business being outside the key-allies as shared defense cooperation circle.
      If the USA wanted to reapproach the market with a good, cheap, multirole platform along the lines of the MAKO or T-50 with affordable CPFH and a leavening (EODAS and APG-81 with Sniper as an option) of future-tech, things might change.
      But as is, they are trying to move lead by pretending it’s gold and everyone already has so much of the same hardware that the market is saturated for what the currency base will support good sales on.
      The defcons have only two real choices: further networking as shared R&D to generation the next generation of fully automated weapons systems on a cost driven basis of 1:4 replacement (one robot does the job of four MBT or fighter jets etc.). Or a mass migration into the civilian fields with an emphasis on the kinds of plowshare products that will become essential to survival as the world continues to breed itself to the point of annihilative overburden. Modular desalinization, high efficiency/cheap solar power, robotic agro. These are the kinds of things which an effort to get Africa to a self-sufficient status before she crosses 2 billion like she just whizzed past 1 would require. It may also be a good way to bypass failing U.S. infrastructure without having to regenerate the same kinds of systems. Local discretes being more flexible than widescale monolithic systems.
      Unfortunately, the defcons need guidance more than anything, some kind of indication that _there is a plan_ as contracts waiting for them if they take path X/Y/Z.
      And they are not getting this because the political administration of my country are themselves simply waiting for the other shoe to fall on a major inflationary depression of our economy.
      I frankly don’t know what the answer is.

  • Jack

    “Vlad Putin and the thuggish Russia he presides over” What a piece of corporate crap this article is. It’s the West that is the biggest arms dealers that will sell weapons to terrorists and keeps the world at constant never ending war scenario to make their blood money. America has proven once again that it will sell weapons to anyone coming down the pike with a buck like it’s doing now trying to arm terrorist infiltrators in Syria. Benghazi was caused by CIA gun running under Obama. Libya was a CIA coup to sell more weapons to terrorist and out the sovereign government as well as Iraq, Afghanistan, Pakistan and now India. America has become the Third Reich of the modern world and is encouraged by terrorist Israel.