ISN Security Watch April 10, 2006
South Asia, Pacific ratcheting up arms
By Carmen Gentile
South Asian and Pacific nations are bolstering their arms and should surpass the Middle East to become the world's number three defense market - behind the US and Europe - by 2012, defense specialists told ISN Security Watch.
A British government report published in February asserts the same, saying that over the next 15 years the defense market stretching from Pakistan to the Koreas, and on down to Australia - encompassing all of Southeast Asia - will grow to 15-25 per cent of the world's total defense expenditure. Those nations, the report claims, could spend a total of US$400 billion in the coming years.
Some defense analysts, however, balked at a figure that high, though admitted that countries like China, India, Pakistan, and even Indonesia and Nepal, appeared poised to revamp and vastly improve their military capabilities in the coming years.
Those nations and others are reportedly looking to improve all aspects of their respective militaries: from multi-million dollar F-16 fighter planes and naval warships, to cruise missiles and armored vehicles. Countries in that region are also procuring equipment and arms for their ground troops, including items like rifles and night-vision goggles for forces traditionally operating on a shoestring budget and showing little interest in boosting armaments.
Indonesia is reportedly interested in improving the performance of its military and is hoping to forge a viable navy replete with the latest in submarine technology.
"Historically, Indonesia has had what's been termed a 'light military', nothing more than a bunch of speedboats, jeeps, and cargo planes," John E. Pike, director of Globalsecurity.org, told ISN Security Watch. "Basically it's nothing more than an internal force."
But Southeast Asia's most populous nation is reportedly making moves to change that. The quest to bolster land forces follows a recent spike in Islamic militant activity on Indonesian soil. At sea, piracy makes the waters off Indonesia among the most dangerous in the world for both commercial and leisure vessels.
Meanwhile, the region’s giants - India and China - are both expected to increase defense spending every year for the next decade or so, said defense industry specialists.
“When you look at this market and the opportunities, it’s mind boggling,” said Bob Trice, Lockheed Martin’s executive vice president for marketing. With demand, however, comes competition among defense contactors looking to satiate the region’s growing taste for weapons. “We’ve got the products, technology, and people,” said Trice. “But it’s going to be a very, very competitive market and we’ve got to be on our game if we’re going to win.”
In February, Asian Aerospace 2006 - a week-long arms show held in Singapore - hosted both defense contractors from around the world and military officials including representatives from the US Department of Defense.
More than 930 exhibitors from 43 countries attended the show this year, making it the largest in Asian Aerospace’s 13-year history.
“This has become the market,” Alan Garwood, the chief of the Defense Export Services Organization, which spearheads Britain’s arms sales worldwide, was quoted as saying during the show. “That’s why this year’s show is so big; everyone in this industry is positioning themselves.”
South Asian and Pacific Rim nations are expected to spend 2 per cent to 7 per cent of their growing gross domestic products (GDPs) on defense and the market is expected to grow by nearly 5 per cent annually in the next ten years, said John Jackson, president of Northrop Grumman’s Electronic Systems International during the show, which also hosted a conference: “Asia-Pacific Security: Enduring Concerns”.
During that next decade, European spending is expected to increase less than 1 per cent of GDP per year, while the Middle East - despite rising oil prices and concerns about Iran’s increasing regional influence and nuclear aspirations - will likely spend between 2 per cent and 3 per cent of GDP on defense.
In the meantime, the US will spend more than half a trillion dollars on defense in 2007, though it could see its defense budget shrink in the following years, as the administration of George W. Bush is beginning to receive criticism from both sides of the aisle for lavish defense spending since the "war on terror" began in 2001.
The US defense budget could shrink about 2 per cent per year for the next decades, speculated some defense contractors, prompting them to turn their attention to other customers, particularly Asia-Pacific nations.
Though demand for arms is increasing in Asia-Pacific, the type of weaponry being built for the region will differ than those produced by arms manufacturers for the US, Europe, and the Middle East.
Defense ministries are reportedly demanding what contractors refer to as a greater industrial role in what they buy. Several defense companies are opening offices and operations in cities like Kuala Lumpur and New Delhi as part of agreements with Malaysia and India to begin producing more of the weaponry on home soil rather than shipping the finished product.
The new strategy is beneficial both to contractors, who can employ regional workers at a fraction of the cost of those building arms in European plants, and Asian-Pacific states, which learn the new technology firsthand and create jobs.
The demand for an industrial role, said Torkel Patterson, Raytheon’s international business chief, will force vendors to ensure they can produce quality products without compromising performance and price.
“This has been a great market for us for a long time,” reporters quoted Patterson as saying. “[Countries] in Asia, as in most parts of the world, want some value-added involvement, not industrial offsets, and that raises the importance of teaming with the right partners.”
While defense contractors are giddy at the prospect of new money-making opportunities in the region, some analysts warn that the rapid increase of arms in Asia-Pacific could serve to heighten tensions in the region, and rather quickly at that.
China is “arming to the teeth to deal with the Taiwan issue”, noted Pike in reference to China’s ongoing claim that Taiwan is a rogue province, while the island maintains it is not a part of the mainland communist state.
US concerns about an armed Asia-Pacific include worries that the arms being sold to countries like Indonesia, home to groups with ties to with or sympathies for al-Qaida, could ultimately wind up in the hands of terrorists.
“There is a risk to having a short-term weapons sale policy,” Rachel Stohl, a senior analyst at the Center for Defense Information, told ISN Security Watch. “There can be checks in place but little to do after the sale.”
Concerns about just how the region plans to use its newfound arsenal will likely keep the interest of the US Defense Department piqued for years to come.
© Copyright 2006, ISN, Center for Security Studies (CSS), ETH Surich, Switzerland
