US weapons sales hit record US$66b in 2011 on back of massive Saudi deal

Congressional report says sales tripled because of massive Saudi deal but that sales are not rising overall because of weak global economy

PUBLISHED : Wednesday, 29 August, 2012, 12:00am
UPDATED : Wednesday, 29 August, 2012, 3:42am


US weapons sales tripled last year to a record US$66.3 billion, pumped up by $33.4 billion in sales to Saudi Arabia.

The US sales accounted for 78 per cent of all global arms sales, which rose to US$85.3 billion, the highest level seen since 2004.

But a massive one-off US sale of fighter jets to Saudi Arabia last year skewed the statistics and the international arms market is not likely to continue growing, according to a comprehensive congressional report.

"The extraordinary total value of US weapons orders in 2011 distorts the current picture of the global arms trade market," said the report by the nonpartisan Congressional Research Service, calling US$66.3 billion "a clear outlier figure".

While Washington remained the world's leading arms supplier, nearly all other major suppliers, except France, saw declines in 2011, according to the annual report which is prepared for Congress.

France signed arms sales valued at US$4.4 billion, up from US$1.8 billion a year earlier, but Russia, the world's number two arms dealer, saw its sales nearly halved to US$4.8 billion. The four major European suppliers - France, Britain, Germany, and Italy - saw their collective market share drop to 7.2 per cent in 2011 from 12.2 per cent.

Saudi Arabia was the biggest arms buyer among developing countries, concluding US$33.7 billion in weapons deals, followed by India with purchases of US$6.9 billion and the United Arab Emirates with US$4.5 billion.

Total annual global arms sales ranged between US$42 billion and US$67 billion from 2004 to 2011, reaching a cumulative total of US$467.9 billion in that period.

A weaker global economy, the European financial crisis and the slow international recovery from the recession of 2008 have dampened demand for new weapons, with many countries putting off or scaling back their purchases, the report found.

The report said some countries were focused more heavily on upgrading existing systems and support services, which remained "a rather lucrative" sector for weapons suppliers.

Washington, for instance, generates a steady stream of orders for upgrades, spare parts, ammunition and support services from year to year, even when it does not conclude big deals for new weapons systems.

Concerns about Iran continued to fuel arms sales to the Middle East, especially Saudi Arabia and the United Arab Emirates, but India, Taiwan and other Asian countries also were important buyers, said the report, written by Richard Grimmett and Paul Kerr.

The report predicted increasingly intense competition between European nations and the US for a small number of global orders in coming years.

It also noted that developing countries were demanding greater cost offsets in their arms contracts, access to more advanced technology and provisions allowing them to produce some weapons at home.

Key US weapons sales in 2011 included:

  • US$33.4 billion to Saudi Arabia for 84 Boeing Co F-15 fighters and dozens of helicopters built by Boeing and Sikorsky Aircraft;
  • US$3.49 billion for Lockheed Martin's Terminal High Altitude Area Defence, an advanced missile shield, to the United Arab Emirates, and US$940 million for 16 Chinook helicopters built by Boeing;
  • a US$4.1 billion agreement with India for 10 C-17 transport planes built by Boeing; and
  • a US$2 billion order by Taiwan for Patriot antimissile batteries.