February 12, 2011

Russia is right about Iran sanctions

TOP STORY | BHADRAKUMAR Melkulangara (India) | 11.02.2011 | 17:30


There is striking similarity in the predicament that India and Russia face with regard to the situation around Iran. For both, Iran has been and will always remain a key strategic partner.

The relationship with Iran never runs smooth for either India or Russia. Iran is a complex country of great sophistication in culture, politics and society and is not an easy partner to understand. Nonetheless, it is one of those pivotal countries with which unless you have a meaningful understanding and cooperation, your overall regional policies remain by far sub-optimal or even ineffectual. The United States never quite regained its rhythm in the Middle East after the fall of the Shah of Iran in 1979.

For Russia, shadows of the Iran problem fall on a much larger canvas admittedly than for India, which is only natural since Russia is an established nuclear power that carries the non-proliferation baggage as the ‘white-man’s burden’, belongs to the famous ‘Six-plus-One’ talking shop negotiating with Tehran now and then and which as a permanent member of the United Nations Security Council would, conceivably, have an obligation to monitor the ebb and flow of international security.

But for India, Iran canvas is big enough and is probably of even more immediate and vital consequence. Russia is an energy producer and exporter while India is a net oil importer and worries about its long-term energy security. But then, for Russia too, Iran’s profile as an energy exporter is of interest.

The most striking similarity, however, is that for both Russia and India, their respective relationship with Iran has become a template of their evolving ‘partnership’ with a third country – United States. The initiative for this unwarranted bonding came from the US, which also set its terms. Washington first tested out its efficacy with India during the second half of the second term of the George W. Bush presidency.

India was negotiating the civil nuclear cooperation agreement with the US at that time and the Indian leadership estimated that the deal was extremely important for the country to move on to a higher trajectory on the technological ladder, as the deal promised to whittle down the US’ existing restrictions on transfer of military technology to India. All that Washington needed to do was to link the nuclear deal with the conditionality that India should remain passive over the US’ pressure tactic with Iran on the nuclear issue. The western-oriented Indian elites saw it as a small price to pay – a bargain, almost. Washington might have been taken aback by the ease with which Delhi fell in line.

That pleasant experience would have encouraged the Barack Obama administration to subsequently introduce Iran as a vector of the US’s so-called ‘reset’ with Russia. Suffice to say, once again the ‘grand bargain’ worked with remarkable ease. In sum, START and the US-India nuclear deal, were the progenies of the US’s ‘smart power’ of selective engagement with Russia and India. For Russia, START is of no less importance than the nuclear deal is for India.

However, the grandmaster turned out to be the ultimate winner. The US used the ‘grand bargain’ with Russia to isolate China and coax Beijing into a more accommodating stance over the Iran issue and in turn it resulted in the current UN sanctions regime against Iran. More important, aside undercutting Russia and India’s traditional ties with Iran, the US also played havoc with the ‘polycentrism’ that all three – Russia, India and China – used to profess in their a priori history as the indispensable gospel of the new world order.

The heart of the matter is that the Iran nuclear problem always had a larger-than-life significance. The Iran problem is all about the ABC of the international system. The US’ doublespeak is at once apparent: it camouflages geopolitics as its non-proliferation agenda in the Middle East. Everyone knows that Iran situation is a litmus test of the end of the ‘unipolar’ era.

Paradoxically, while the medium and long-term interests of Russia and India ought to lie in a democratized, polycentric world order that is based on international law, they have bent from the angle of their limited self-interests to accommodate the US-led ‘unipolarity’ when it came to the Iran problem.

The shadow play has been useful for the US to not only ‘isolate’ Iran but also to retain the monopoly over conflict resolution in Afghanistan as well as for advancing the agenda of the expansion of the North Atlantic Treaty Organization [NATO] into Central Asia. Its ‘after-shocks’ are still playing out.

The ‘grand bargain’ with India has enabled the US to get embedded deeply in the South Asian region, which, incrementally, holds the potential to erode the Russian-Indian partnership itself. Arguably, the ‘erosion’ may already be under way. In the downstream of the nuclear deal, the US has begun dismantling its embargo on transfer of military technology to India and is positioning itself to take a quantum leap replacing Russia as India’s number one partner in military cooperation in a very near future.

Therefore, the latest Russian statements at the 47th Munich security conference regarding the situation around Iran have not come a day too soon. Foreign Minister Sergey Lavrov reportedly said, “The sanctions which were approved in June last year, the sanctions aimed at [Iran’s] nuclear programme have been completely exhausted” and any new sanctions would damage the Iranian economy. Deputy Prime Minister Sergei Ivanov reportedly said, “We believe that neither further sanctions, nor intimidation and application of force could be regarded an efficient too to solve these issues” and that the concerns that Tehran may obtain nuclear weapons in the next few years are groundless.

The statements by Ivanov and Lavrov are absolutely factual. Iran has withstood the sanctions regime and, in fact, sanctions are working to the advantage of the West and to the detriment of countries like India or Turkey. For instance, under US pressure, following Obama’s visit to India in November, India’s Central Bank decided that the long-standing clearing mechanism for oil trade with Iran can no longer be used, jeopardizing Iran’s 400000 barrels per day of oil exports to India which cover 12% of India’s oil needs.

Iran is second only to Saudi Arabia as an oil supplier to India but Iran’s high-sulphur content crude produces a higher percentage of diesel, which is used widely in India’s agriculture sector for machinery and water pumping. India caps diesel prices and the subsidy so far in the current financial year has been 4.63 billion dollars (whereas, the government’s budget allocation is 686 million dollars only). Quite obviously, a new payment mechanism for oil trade between India and Iran urgently needs to be found and meanwhile, with an eagle’s eye, Washington is watching.

The West’s hypocrisy is such that, as Bloomberg reported last week, “Europe has been buying crude oil from Iran at a record rate, even as it imposes sanctions against the Middle East country for its nuclear programme.” Europe’s imports of Iranian crude rose by 39 percent in the first 9 months of last year, according to the data from the International Energy Agency [IEA]. European countries of the Organization for Economic Cooperation and Development, excluding Hungary, imported an average of 763,333 barrels a day of Iranian Heavy and Iranian Light Crude in the third quarter of 2010, according to the IEA.

Bloomberg reports: “By contrast, China, criticized for not doing enough to help restrain Iran’s nuclear ambitions, cut imports by 11 percent in the same period”. Actually, the European refineries are having a ball by making cheap crude purchases from Iran while the US struts around like a vigilante imposing ‘sanctions’ on non-Europeans like the Indians or Turks.

Delhi is yet to figure out a way to be assertive about India’s sovereignty when it comes to the Iran problem. This is not going to be simple since new factors have come into play – US support for India’s bid for permanent membership of the UN security council, possibilities opening up for India to access military technology from the US, etc. Nonetheless, abandoning the UN sanctions route on the Iran issue will go a long way to ‘normalise’ the state of play.

Much depends, therefore, on Russia’s new thinking to oppose sanctions against Iran. If it sticks to the principled position and assesses the US-Iran standoff for what it is essentially, namely a geopolitical shadow play, the fallout could be beneficial for many countries. India’s Reliance Industries might, hopefully, muster courage to resume sales of refined petroleum products to Iran. So may Turkey’s Tupras or Kuwait’s Independent Petroleum Group. Why? Even Russia’s Lukoil may resume sales to Iran.

Israel's military caught unready for Sinai front. Tantawi is no friend

DEBKAfile Exclusive Analysis February 12, 2011, 10:33 AM (GMT+02:00) Tags: Egypt Gen. Suleiman Israel Sinai Tantawi


Friday night, Feb. 11, as Cairo's Tahrir Square rejoiced over Hosni Mubarak exit, Israel counted the cost of losing its most important strategic partner in the region.
Thirty-two years of peace with Egypt leave Israel militarily unprepared for the unknown and unexpected on their 270-kilometer long southern border: the current generation of Israeli combatants and commanders has no experience of desert combat, its armor is tailored for operation on its most hostile fronts: Iran, Lebanon's Hizballah and Syria; it is short of intelligence on the Egyptian army and its commanders and, above all, no clue to the new rulers' intentions regarding Cairo's future relations with Israel and security on their Sinai border.
The Israeli Defense Forces are trained and equipped to confront Iran and fight on the mountainous terrain of Lebanon and Syria. After signing peace with Egypt in 1979, Israel scrapped the combat brigades trained for desert warfare, whose last battle was fought in the 1973 war, and stopped treating the Egyptian army as a target of military intelligence. Israel's high command consequently knows little or nothing about any field commanders who might lead units if they were to be deployed in Sinai.

Israel's policy-makers and military strategists are meanwhile acting on two basic assumptions:

1. Egypt's new military rulers will not be keen to lose the US $1.3 billion military aid package or their access to state of the art technology, and the Obama administration will make continued assistance conditional on upholding the peace treaty with Israel.

DEBKAfile's military and Washington sources are not absolutely sure President Obama will lay down this condition or that, if he does, the Egyptian army will accept it. Even if the peace relations are left in place during the regime's first uncertain two or three months in Cairo, it is by no means certain they will survive thereafter.
The new rulers may be influenced by oil-rich Saudi Arabia's latest policy turn. As DEBKAfile reported exclusively Thursday, Feb. 10, King Abdullah was so incensed by Washington's abandonment of his friend and ally Hosni Mubarak that he ordered the kingdom's diplomatic and military ties with Iran upgraded and strengthened. It is anyone's guess today whether the generals in Cairo opt for Washington or decide to patch up Mubarak's quarrel with the ayatollahs instead.

Riyadh can easily afford to make up for the loss of American aid to Egypt. Abdullah made that same offer to Mubarak if he stood fast against American pressure for his resignation, promising him a Saudi dollar for American dollar.

2. Israel is counting on Gen. Omar Suleiman - overlord of Egypt's intelligence branches and for eight days, Mubarak's Vice President - to keep faith after many years of close cooperation in safeguarding the peace relationship. Suleiman is one of the top three members of the High Army Council now ruling Egypt, alongside Defense Minister Field Marshal Mohammed Tantawi and Chief of Staff Lt. Gen. Sami Al-Anan.

General Tntavy on October 31, 1935 was born in Egypt. He In 1956 the School graduated Egyptian War.

Tntavy Young, after graduating with the Egyptian army in the Six Day War with Israel participated. He also participated in addition to the Six Day War in 1967 (out of 5 10 June between Israel and Egypt, Syria, Jordan and Iraq) in October 1973 war and Israel was in Egypt.

His reign of Hosni Mubarak was invited to the Cabinet since 1991 towards the Egyptian Minister of Defense and military industries were responsible.

With his loyalty to Gen. Hasan Mubarak in 1995 could have as an important and strategic command of the Armed Forces allocated to Egypt, and to this day to maintain the same position.

DEBKAfile: Israel may be barking up the wrong tree. When Suleiman was elevated to VP, Jerusalem hoped he would come out of the Egyptian uprising as the coming man. Friday, Mubarak's resignation left him stripped of his new title.

His footing in the top army command council is far from certain. It is to be expected that once firmly in power, the top generals will start jockeying for the top spot. Suleiman and Tantawi have long been rivals and Mubarak often stepped in to resolve their arguments, usually in the former's favor which the latter won't forget. Since Tantawi is no fan of Israel, Suleiman may decide to promote his own chances by avoiding being seen as overly pro-Israeli or pro-American. Jerusalem may therefore find a closed door when seeking him out.

This is bound to happen soon because of the chaotic free-for-all launched in Sinai while all eyes were on Cairo.

Indeed while a military coup was in progress in the Egyptian capital, Iran, Hamas and Al Qaeda's Middle East networks were fully engaged in violently reducing the Egyptian presence outside the southern Sharm el-Sheik pocket and beginning a process of annexation to the Gaza Strip starting in North Sinai. This is part of Iran's new strategy, seized on during the upsets in Cairo, to expand the Hamas state and shift the crux of Palestinian governance from Ramallah to Gaza City.

While this was going on, Hamas and Al Qaeda terrorists along with drug and human traffickers were free to infiltrate Israel, using the flow of thousands of illegal job-seekers smuggled across the lawless Sinai border.

Even the limited control Suleiman asserted over this traffic has gone.

The Netanyahu government in Jerusalem must therefore think fast and make quick decisions about Sinai. Will the military regime in Cairo take action to bring Sinai under control? Or will Israel be reduced to sending drones or special forces across the border for covert action to cut down the threats building up to its security?

Suddenly, Israel finds itself in a situation akin to the US-led forces in Afghanistan, which have in the last year stepped up their drone attacks on Taliban and al Qaeda strongholds in Waziristan, to the detriment of US relations with Pakistan.

Our military sources note that Field Marshall Tantawi has never attached much strategic importance to the Sinai Peninsula, which is why Mubarak transferred responsibility for its security from the army to Suleiman. Its reversion to the army and the field marshal would be bad news for Israel and its future relations with Egypt.

INDIA: Exports on fast track

New Delhi, Feb. 12: Encouraged by the performance of merchandise exports, the government plans to more than double exports to $500 billion in the next three years.

“If it (India’s exports) is going to be $220 billion (by the end of 2010-11), then setting a target of $400 billion is ridiculous ... implicit rate of growth will be of the order of 27-28 per cent. India is targeting $500 billion worth of exports by the end of 2014,” commerce secretary Rahul Khullar said.

The ministry is preparing a strategy paper aimed at doubling India’s exports by the end of 2014.

The country’s exports went up 32.5 per cent to $20.6 billion in January, led by a 70 per cent surge in engineering and a 36 per cent jump in petroleum and oil products. The exports increased 36.4 per cent to $22.5 billion in December.

In the April-January period, total exports reached $184.6 billion — just $15.4 billion short of the target of $200 billion for the fiscal. Exports increased 29.4 per cent in the first 10 months of 2010-11 against a whole year target of 15 per cent.

“On the whole, export performance is pretty good. My guess is by next month we will cross $200 billion and we should end this financial year at $220-225 billion,” Khullar said.

Exporters’ body Fieo said the country’s exports were increasing in the new markets of Latin America and Africa, along with the US and especially within Asia. “Exports are increasing because of market diversification. Asia itself has emerged as a big export destination,” Fieo president Ramu Deora said.

The recovery in major advanced economies, which had weakened during the second quarter of 2010, regained strength in the next quarter.

Deora said emerging markets in Asia, Latin America, Africa and West Asian countries would play an important role to achieve this ambitious target of $500 billion.

“Out of $500 billion exports, a major chunk will be contributed by Asia with a share of $230 billion with Asean alone importing more than $100 billion from India. Exports to Africa and Latin America will zoom,” he said.

The central Asian nations such as Kazakhstan and Uzbekistan and Commonwealth of Independent States (CIS) countries such as Russia and Ukraine would also contribute in increasing Indian exports.

However, exports to traditional destinations — the US and Europe —would go down to 15 per cent and 10 per cent, respectively, as growth in advance economies will taper off. At present, the US and the EU account for about 35 per cent of India’s exports.

A CII report said to make India’s exports achieve the $500 billion mark, more incentives need to be given to textiles, gems and jewellery, leather and engineering firms and also concentrate on the rapidly developing markets in Latin America, the Caribbean and Africa.

Imports grew 17.6 per cent to $273.6 billion in April-January period, resulting in a trade deficit of $89 billion. In January, the country imported goods worth $28.6 billion.

Khullar said exports of engineering products increased sharply during the first 10 months of this fiscal, mainly because of the huge demand for Indian products in South American countries, especially Columbia.

Exports of engineering products surged 70 per cent to $45 billion in April-January period. Other sectors that have helped in better-than-expected performance in export data are — gems and jewellery (9.3 per cent increase at $24.5 billion), petroleum and oil products (36 per cent up at $30 billion), cotton yarn and made-ups (52 per cent up at $4.7 billion).

Obama and the Egyptian Dilemma

By Seyyed Mohammad Sadegh Kharrazi.


Middle East is at the boiling point these days. Deep-seated dissatisfaction of the masses is not only about bread, but also breath: the one-party, one lifetime president formula is not bearable for Arab citizens anymore; they want to take the matter in their own hand. The words of a young Egyptian citizen who expressed his anger over the rule of only one president during his lifetime were quite painful.

Amid the turmoil in Arab countries, the old question comes back: while these popular movements have taken place in countries whose leaders enjoyed close ties with Washington, why is the United States –a self-proclaimed advocate of democracy- kept silent about blatant violation of human rights? Why has it never uttered a word of objection against lifetime presidency of its allies? Middle East already knows the answer: in the eyes of every president in the White House, citizens’ right to determine their own destiny is worth defense if and only if it is in compliance with US’ critical interests; otherwise it’s an extraneous issue (unless the situation becomes so tragic that Washington senses the need to take a lukewarm critical stance.)

As Stephen Kinzer has correctly noted, “US foreign policy is stuck in a cold war mindset of imperial dominance”, a mindset in which containment of the Soviet Union and strategic alliance with Tel Aviv were two immutable tenets. With USSR’s dissolution and collapse of the Eastern Bloc, Iran replaced Moscow in the US’ zero-sum diplomatic game. Israel, nonetheless, remained the main beneficiary of Washington’s strategy.

It is common knowledge that Washington views Egypt, Jordan and some Persian Gulf Arab states –the Islamic Republic of Iran’s bitter foes- as its valuable assets in the Middle East and obstructs any radical changes in these countries as much as possible. Since the inception of popular uprising in Tunisia, the US administration has shown vague support for the Tunisian citizens’ democratic demands and called Ben Ali a dictator only after he fled the country. In Egypt’s political crisis, Joseph Biden started with rejecting claims that Mubarak was a dictator before Obama and Hillary Clinton felt the urge to support the demonstrators’ demands. And it was only after unprecedented violence of the Egyptian security forces that the US president called for transition towards democracy in Egypt. The following are the basic causes of the US administration’s refusal to chide Mubarak:

1. Washington’s Middle East policy revolves around full support and security for Israel. The pro-Israel lobby in the United States is strong enough to dissuade any US government from taking a non-preferential attitude towards this country. Every Democrat or Republican president in the White House must show commitment to maintaining Israel’s superior military position to its Arab neighbors. Tel Aviv receives the largest annual batch of military aid from the United States. Considering the warm relations of Mubarak and Omar Suleiman with Israeli officials, and the strategic importance of Mubarak’s regime for Tel Aviv, the US government cannot ignore Israel’s security concerns and acknowledge a new political regime whose ties to Israel would be a matter of doubt. Since the eruption of crisis in Egypt, Israeli officials have openly expressed their concern over the post-Mubarak state of Egypt. Senior US officials clung to halfhearted comments and refused to single out Mubarak.

2. As the 2012 US presidential elections are approaching, Obama’s every single major will have implications for his presidential campaign. The pro-Israel lobby and Republicans will avenge on Obama with any move that encourages or facilitates the fall of Mubarak’s regime and instigates political chaos in Cairo. Obama will try not to be caught in Egypt’s trap which could bring him accusations of overthrowing an Israel-friendly state (which is fairly a rare breed in the Middle East).

3. Leaving Mubarak high and dry and without any contingency plans will resent other US’ allies in the region. Thirty years after the Islamic Revolution of Iran, regional states have not yet forgotten how Jimmy Carter dealt with the last Shah of Iran, Mohammad-Reza Pahlavi. This is a point Obama will consider in interaction with his country’s Middle East allies.

4. In its latest masterstroke, Hezbollah ‘appointed’ a new, pro-Resistance figure, Najib Mikati, to premiership in Lebanon (indeed a blow to US’s and Israel’s interests in Lebanon). Ben Ali has fled Tunisia and Egypt is in turmoil. Washington is enduring one of its most difficult days in the Middle East. The prospect of Islamists gaining power in Egypt and other regional countries is not only distressful for Tel Aviv, but also renders Washington further prone to attacks.

Obama is now facing a dilemma, realpolitik versus his rosy election slogans of human rights and democracy for the world. American diplomats are thinking of how to negotiating the balance between strategic concerns and human rights these days. Washington may pressure Mubarak in the event of unrelenting popular demonstrations. The most likely scenario is Omar Soleiman serving as caretaker president until September, the date of next presidential election. In that case, Israel and the United States can save time and negotiate with the next likely president over relations with the Jewish state and the Middle East peace process. What the United States mustn’t forget is that the new realities in Middle East implicate a strategic turn in US policies. US should dispense with its obsolete Cold War mindset or forget about any sustainable solution to the Middle East crises.

6 Sunday February 2011 16:2

America's hottest export: Weapons - Full version

Boeing's Joint Direct Attack Munition (JDAM) bomb, which is used to target surface threats and is used by 26 countries.Boeing's Joint Direct Attack Munition (JDAM) bomb, which is used to target surface threats and is used by 26 countries.By Mina Kimes, writerFebruary 11, 2011: 11:07 AM ET

FORTUNE -- This time last year, Boeing's F-15 production line, which is housed in a beige, dreary building on the outskirts of Lambert-St. Louis International Airport, was on the verge of shutting down. The F-15 is an old jet, first designed in the 1970s to outmaneuver Soviet MiGs. It has long been surpassed by more advanced rivals, and the U.S. military hasn't bought a new one since 2001. When production slowed to a trickle a few years ago, a pair of orders from Korea and Singapore kept the line alive, barely, and it has been churning out about one F-15 a month since then. Local politicians fretted that Boeing would have to close the production line, eliminating hundreds of jobs and delivering a blow to the struggling regional economy.

Then, last summer, rumors surfaced about a deal -- a big one. The workers at the plant followed the news online, where defense publications reported on the details of the sale. The would-be buyer, they learned, was Saudi Arabia, and the proposed order was massive -- 84 planes, as well as upgrades to older jets. In October the Department of Defense, which administers sales to foreign countries, finally announced an arms package worth some $60 billion, including 70 Apache attack helicopters, also made by Boeing (BA, Fortune 500), and the fleet of F-15s.

It was the biggest overseas arms sale in recent memory, and it extended the life of the production line through 2018. The F-15 may live even longer -- a Boeing executive says there are two other overseas buyers waiting in the wings. Dale Lauer, a 52-year-old flight mechanic, smiled slightly when I asked him what he thought about the news. "People thought this program was dead a long time ago."

Far from it. Thanks to a surge in overseas demand, the F-15 and other aging U.S. weapons systems are hotter than they've been in years. The Department of Defense last year told Congress of plans to sell up to $103 billion in weapons to overseas buyers, a staggering rise from an average of $13 billion a year between 1995 and 2005, according to Deutsche Bank analyst Myles Walton. Signed agreements have tripled since 2000.

As defense giants like Boeing, Raytheon (RTN, Fortune 500), and Lockheed Martin (LMT, Fortune 500) increasingly seek to peddle their wares to well-financed (sometimes by the U.S.) international customers, they have a surprising ally: the President. "Obama is much more favorably disposed to arms exports than any of the previous Democratic administrations," says Loren Thompson, a veteran defense consultant. Or, as Jeff Abramson, deputy director of the Arms Control Association, puts it: "There's an Obama arms bazaar going on."

Administration officials say the boom in arms exports is simply the result of healthy demand. Indeed, American-made arms are widely considered the best and most coveted weapons in the world. But the Obama team has hustled to pave the way for big sales like the Saudi deal; the President himself recently sought to secure a pending $4 billion aircraft deal with India. Obama is also backing a massive push to rewrite the rules that govern arms exports, a process that some say will reduce oversight of U.S. weapons sales.

For the administration, robust international arms sales advance domestic goals, like bolstering exports and supporting a defense workforce of more than 200,000. Weapons transfers are also a subtle yet potent form of diplomacy: By arming its allies, the U.S. can spread the burden of policing hot spots (the Middle East, the Korean peninsula). And arms exports give Obama's State and Defense departments tremendous negotiating clout with buyers.

But critics contend that supplying some nations with advanced weaponry is a risky strategy, especially as the Middle East, which is teeming with American-made arms, crackles with the sparks of regime change. While the U.S. sells weapons only to its allies, power can shift quickly -- just look at Tunisia and Egypt. Even Saudi Arabia, with its 86-year-old monarch, could see a change in leadership. When friends become foes, arms exports become a liability. The government sold dozens of F-14 fighter jets to Iran in the 1970s before the Shah was deposed. Since then the U.S. has systematically destroyed F-14 parts to keep them out of Iran's hands.

Weapons proliferation watchdogs expected the volume of exports to decline when Obama became President; instead the reverse has happened. Thompson pins the surge in large part on the recession. Production lines for Boeing's F-15, Harpoon missile, and Apache helicopter are sustained by exports, which support thousands of high-paying, highly skilled manufacturing jobs.

But Thompson also believes that the President has other motives for supporting foreign arms sales. "It's about U.S. alliances, it's about maintaining jobs, and it's about America's broader role in the world -- and what you have to do to maintain that role."

'The spigot is starting to close'

Defense contractors like Boeing are notorious for spreading their manufacturing outlets across the country to curry political favor; the Chicago-based company has facilities in more than 20 states, supported by mom-and-pop subcontractors in dozens of districts. But its heart beats in Arlington, Va., which is where it gets its lifeblood -- government spending. There, executives in crisp suits walk alongside uniformed servicemen. Many of those officers will leave the military and walk straight into corporate gigs; Boeing's head of business development for military aircraft, Lt. Gen. Jeffrey Kohler, used to run the Pentagon agency that oversees arms exports.

Although most contractors have their headquarters elsewhere, they all have offices in D.C. for a reason: The industry does 80% to 90% of its business with the Pentagon. And business recently has been good: The U.S. government has more than doubled its defense budget since 2001, to about $700 billion, almost as much as every other country in the world spends combined. In December, Congress agreed to spend $725 billion on defense in 2011.

But while defense spending continues to rise, the mood in Arlington is somber. With two wars coming to an end and a massive federal deficit, it seems inevitable that, as Pentagon comptroller Robert Hale put it, "the spigot is starting to close." Though Secretary of Defense Robert Gates has requested a slight increase in spending over the next few years, defense analysts are skeptical that the budget can go anywhere but down. Walton, the Deutsche Bank analyst, says investors are pricing in a 30% decline in weapons spending over the next decade. "We're at a procurement peak this year," says Richard Aboulafia, an aerospace analyst at the Teal Group. "There's no disguising the fact that it's at best plateauing, and most likely going to soften."

In response, Boeing and its peers are following the same path as the rest of corporate America -- out of the country. Foreign arms sales, once viewed as icing on the cake, are now the focus of the industry's growth strategy. Honeywell (HON, Fortune 500) recently created a new international sales division. (EADS, a European defense conglomerate, plans to establish a headquarters in Asia.) Many companies have set targets for international growth. Lockheed, which currently gets 14% of its revenue from outside the U.S., wants to boost that figure to 20% by 2012, and Boeing's defense division aims to grow international sales to 25% from 17% today.

Compared with multinationals like Nike (NKE, Fortune 500) and Procter & Gamble (PG, Fortune 500), both of which derive about 60% of their sales overseas, that's a small percentage. But unlike those companies, defense contractors can't simply trek over to Delhi or Dubai and start knocking on doors. Before arms makers can sell weapons abroad, they must obtain the permission of the State Department. So-called "foreign military sales" are coordinated through the Department of Defense. (The parties usually overstate the value of the goods the companies hope to sell by about 30% to 50% so that they don't have to keep going back to the Hill with new requests; the $103 billion in congressional notifications in 2010 is likely to translate into close to $50 billion to $70 billion in actual sales.)

Until recently, executives say, the defense industry shrugged at globalization. "[During] my first few years here, you could hardly get a senior person to go international," says Tom Culligan, head of Raytheon's international business. "People would say, 'I don't want to give up my weekend to go to Riyadh.'" (The workweek in Saudi Arabia begins on Saturday.)

Raytheon now derives 23% of its sales from other countries, the most of any big contractor. Analysts say that's because it sells affordable gear -- missiles, upgrades, and radar -- as opposed to jets that cost $100 million apiece. Raytheon does sell one large program, the Patriot, a radar-guided firing system that shoots down ballistic missiles. Two years ago, Culligan says, a $3.3 billion order from the United Arab Emirates enabled the company to restart the Patriot production line and add new features like radar digital processors, which, in turn, lure more international customers. The strategy is working: Raytheon's domestic revenue was up just 1% last quarter, according to its CFO, but its international sales grew 11% to 12%.

Tapping the Middle East

The countries with the biggest appetite for U.S. weapons are, conveniently, the same ones that have the money to buy them: oil-rich nations in the Middle East. Nearly 50% of foreign military sales signed between 2006 and 2009 were with Middle Eastern countries, according to the Congressional Research Service. During that time, Saudi Arabia purchased about $13 billion worth of American weapons; the UAE spent $11 billion. Iraq, poised to get rich from its own oil reserves, is a growing customer.

All major defense contractors are profiting from the region, but none more so than Boeing, which was the major beneficiary of the Saudi deal. Mark Kronenberg, Boeing's head of international business development, attributes the buying spree to a natural replacement process, just as in any other business cycle -- mainframe servers and car engines, for example. "The last time we had a period like this in the Middle East was the early '90s," he says. "Here we are, 20 years later, and they're recapitalizing."

There are other, less innocuous reasons: a weakened Iraq, the terrorist threat in Yemen, and most important, the country that defense executives call the Gulf's "dangerous neighbor" -- Iran. "You hear it almost on a daily basis. Iran is flexing its muscles, most of it through offensive capabilities," maintains Abdulkhaleq Abdulla, a political science professor at UAE University. As a result, he says, small countries like the UAE feel pressure to try to keep up with their neighbors.

Though the Obama administration is reluctant to tie the recent Saudi deal directly to Iran -- in a press conference announcing the sale, Assistant Secretary of State Andrew Shapiro dodged questions on the matter -- the connection is obvious, says Gregory Suchan, who headed the State Department's arms transfers program from 2003 through 2007. Suchan, now a consultant, says the F-15 deal was in the works as early as 2006 -- the same year that Iran said it would reject any UN efforts to halt its nuclear program.

It took years of political legwork to execute the transaction. Lobbyists had to sell the idea to Congress, which has the power to stop major defense transfers -- something it has never succeeded in doing. Only a few sales have stirred major controversy, and all were to Saudi Arabia: AWACS sentry planes in 1981, Harpoon missiles in 1986, and Joint Direct Attack Munition (JDAM) bombs in 2007.

There was also the matter of persuading Israel to play ball. For decades the U.S. has promised to ensure Israel's military edge over its neighbors, and while the government doesn't like to admit it, arms deals to other countries tend to coincide with concessions to the Israelis. In 2007, the year in which the JDAM deal was announced, the U.S. boosted its military aid to Israel by about 25% annually, to $3 billion a year. Last October, right before the announcement of the F-15 sale, Israel ordered 20 F-35 planes, Lockheed's top-of-the-line fighter jet. Diplomatic cables released by WikiLeaks dating back to the summer of 2009 describe negotiations surrounding the sale of the F-15s to Saudi Arabia; they were ultimately stripped of long-range weapons systems. When the deal was announced in late October, the pro-Israel lobby barely batted an eye.

Neither did Washington. On Nov. 10, just nine days before the end of the 30-day period in which Congress can issue a resolution to halt an arms sale, a group of House members sent Secretary of State Hillary Clinton and Defense Secretary Gates a list of questions about the sale -- a "relatively soft gesture," laments Abramson. The transaction sailed through without incident.

Abramson and other arms watchers have concerns about the Saudi deal. They question the wisdom of selling weapons to a country that the State Department has criticized for funding terrorists and for human rights abuses. It's also unclear whether the equipment is even useful. The new attack aircraft could intimidate Yemeni terrorists, but they would do little to combat the primary Iranian threat: nuclear arms. "Somehow this is supposed to signal to Iran: We've got you cornered here," says William Hartung, director of the arms and security initiative at the New America Foundation. "The logic in terms of strict military calculation doesn't really seem to add up."

Others say arms sales are just one part of a complex dance the U.S. engages in with allies. Lawrence Korb, a senior fellow at the left-leaning Center for American Progress and former assistant secretary of defense, points out that when the U.S. sells conventional arms to Saudi Arabia, for example, it deters the country from pursuing nuclear options. "Are there some downsides?" he asks. "Sure. But the benefits right now probably outweigh them."

Before every arms sale, the State Department must gauge the effect on regional dynamics and record the transaction -- something it doesn't always do correctly, according to a September report from the Government Accountability Office. The report took the department to task for failing to document its justifications for several sales and blasted its record keeping. Some export licenses, it said, were actually counted twice. The authors concluded that they had no idea exactly how many weapons were being sold in the Middle East.

Kickstarting a relationship with India

A few days before I flew to St. Louis, I stopped in Marietta, Ga., the home of one of Lockheed Martin's aircraft plants. On Dec. 16, the company held a ceremony to celebrate the $900 million sale of six C-130J Super Hercules jets to India. There were several Indian pilots in the crowd; they had spent months training at the Air Force base in Little Rock to fly the jets back to India. After standing for both the American and Indian national anthems, we watched a video of the C-130J taking off and landing, several times, set to loud rock music. The ceremony's VIP, Deputy Assistant Secretary of State Beth McCormick, gave a short speech. As the head of the Department's arms transfers program, McCormick effectively oversees every single military item that leaves U.S. shores.

McCormick handed a giant key to Air Commodore Jasbir Walia, who coordinates air force dealings between the two countries. Suddenly classical music -- the kind played at high school graduations -- blared over the loudspeakers. The hangar door slowly rose to reveal the C-130J, painted with Indian insignias and awash in fog. With its bulky, rounded exterior and winking propellers, the plane, which has carried paratroopers in Iraq and Afghanistan, looked oddly cherubic.

It was, as a Lockheed executive had told me earlier, the perfect deal to kick-start a relationship with India: seamlessly executed and nonthreatening. For decades, India had mainly bought Russian-made arms. In 1998 the U.S. banned India from purchasing American weapons after the country held a series of nuclear tests; President Bush lifted the ban on arms sales in 2001. A few years later the weapons notifications started to trickle in. First there was the C-130J, a tactical air-lifter that can take off in rough conditions and fly across continents. Then, in 2009, the Indian air force purchased eight P8 surveillance planes from Boeing, worth an estimated $2.1 billion. When Obama visited India last November, he secured a preliminary agreement to sell 10 Boeing C-17 transport jets, a deal worth about $4.1 billion. Before the year was over, India had put in a request for 22 Boeing helicopters.

Analysts estimate that India could spend upwards of $100 billion over the next decade on new military equipment. Boeing and Lockheed are still in the running for the granddaddy of arms competitions -- a more than $10 billion deal to supply India with 126 fighter jets. "We are entering a period where we're trying to understand each other and trying to engage each other more," says Air Commodore Walia. "It's a test case for both sides."

McCormick, the State Department official, seems to agree. "Working with India is just such a natural thing," she says. "I see them as being the ones who are going to step up at times and do things in the world."

Stepping up -- or "burden sharing," as military types like to call it -- is the theory that arming allies with U.S. weapons will lighten the load for U.S. troops. "There is a belief in the region that the U.S. is gradually disengaging," says Mustafa Alani, a senior adviser at the Gulf Research Center in Dubai. "The U.S. is trying to transfer some of the defense responsibility to the regional states -- most of these deals are supposed to be delivered between 2015 and 2020." Another buzzword is "interoperability," which refers to the military's capacity to coordinate attacks with its allies. It is a useful selling point for contractors. China, Russia, and the U.S. are vying to sell Turkey missile launchers worth up to $4 billion, but only Raytheon's Patriot system can seamlessly communicate with other U.S. launchers in the area.

While government officials deny using weapons for quid pro quo arrangements, defense experts say they are effective carrots. Simply put, countries tend to do what the U.S. wants before -- and after -- major arms deals. Weeks after Obama left India, the country increased sanctions on Iran. Saudi Arabia and India, two of the biggest buyers of U.S. arms last year, are reportedly planning to hold joint military exercises.

There is a perception overseas that America strong-arms foreign leaders into buying its wares. U.S. officials dispute that accusation. When I asked McCormick if there was an overarching policy behind the recent spate of deals, she looked miffed. "You seem to imply we're out on some big crusade here," she said. "We're responding to demand."

Diplomat or salesman?

But many of the diplomatic cables released by WikiLeaks confirm what arms analysts have long suspected: In backdoor dealings with other nations, American officials acted as de facto pitchmen for U.S.-made weapons. The cables call this marketing process "advocacy." A November 2009 wire from Brasília describes how a U.S. diplomat urged Brazil to buy American jets, noting that "the charge reiterated and deepened advocacy points ... calling a decision to select the U.S. bid an accelerator for an already growing U.S.-Brazil military and commercial relationship." A cable describing a visit that Secretary Gates paid to Turkey last year has a section titled "Acquisition Advocacy" that recounts Gates' attempts to plug Raytheon's Patriot system. "SecDef stressed that 'nothing can compete with the PAC-3 when it comes to capabilities,'" wrote the diplomat. (A State Department spokesman declined to comment on the cables.)

Even congressmen are conscripted for the cause. In a February 2010 cable from New Delhi, the embassy sounds a plaintive note to Sen. John Kerry (D-Mass.): "Given an opportunity, we ask that you endorse Indian purchases of U.S. equipment as an important part of our defense relationship and support our ongoing sales efforts."

Perhaps the most striking account of arms advocacy, though, is a December 2008 cable from Oslo that recaps the embassy's push to persuade Norway to buy Lockheed Martin's Joint Strike Fighter (JSF) instead of the Gripen, a fighter jet made by Sweden's Saab. The cable reads like a Lockheed sales manual. "The country team has been living and breathing JSF for over a year, following a road to success that was full of heart-stopping ups and downs," wrote the American official. He lists helpful suggestions for other diplomats looking to promote weapons: work "with Lockheed Martin to determine which aspects of the purchase to highlight"; "jointly develop a press strategy with Lockheed Martin"; "create opportunities to talk about the aircraft." "Promoting economic security and prosperity at home and abroad is critical to America's national security, and thus central to the Department of State's mission," the department spokesman wrote in an e-mail.

Weapons advocacy isn't new; critics of arms proliferation have long alleged that U.S. diplomats work as salesmen for the defense industry. But some say the government has cranked up its campaigning efforts. "In the old days contractors used to complain all the time that U.S. embassies wouldn't help them," says defense consultant Thompson. "That's changing. Our embassies are working hand-in-glove with the U.S. defense industry in order to try to promote our military exports."

Arms watchdogs say that's just one facet of the administration's push to support weapons exports. "It is really surprising to me that this particular President would be, from a regulatory and policy framework, so willing to enhance U.S. arms sales and make it a cornerstone of his national security policy," says Rachel Stohl, the author of The International Arms Trade. Besides the massive jump in proposed foreign arms sales, she takes issue with a September treaty that enables the U.S. to sell weapons to Britain and Australia with little oversight, and Obama's waiver in October of the Child Soldiers Prevention Act, which forbade arms sales to countries like Sudan and Chad.

The critics' biggest indictment, though, is reserved for a wonky initiative that's received little attention outside D.C.: export control reform. Several Presidents have attempted to change the rules that govern foreign arms sales, but all failed to make much headway. In just two years Obama has announced a series of sweeping changes that could revolutionize the way we export weapons.

Under the current system, the State Department must clear all weapons exports strictly for military use, such as munitions, while so-called dual-use items -- products such as machine tools that can be used for both military and commercial purposes -- are regulated by Commerce. Dual-use products can be sold to China, while military items cannot. Defense companies say they must file thousands of military license applications each year for items as small as bolts and door latches -- a process that can cause costly delays and deter buyers who can procure some of those items elsewhere.

The administration -- spurred, insiders say, by Secretary Gates -- wants to revamp both lists to better protect the industry's "crown jewels." The goal, they say, is to build higher walls around items like stealth jets. In December they put out their first draft of a new military list for tanks and associated products. It eliminates 74% of the items on the old list, making them easier to export.

Watchdogs fret that pushing more items onto the Commerce list would allow arms to circulate more freely -- and fall into the hands of countries like China or Iran. "Technology could be stolen and then used to improve the weapons systems of competitors and then enemies," argues Matthew Schroeder, head of the arms-sales-monitoring project at the Federation of American Scientists. Conservative politicians are divided; some favor less regulation, while others say national security comes first. Business, meanwhile, unilaterally supports reform: Numerous contractors have lobbied the government on the issue, according to congressional records, including Boeing, Lockheed, and Raytheon.

Government officials walk a fine line in promoting the changes; though they tout the economic benefits of reform, they also play down financial motivations. "It's being done primarily for national security reasons," said a senior administration official. And yet American defense companies stand to benefit. Obama announced the latest arms export reforms at a meeting of the new President's Export Council, which aims to double U.S. exports by 2015. The chairman of the council? Jim McNerney, the CEO of Boeing.

No escape from outsourcing

The St. Louis story is, for now, a happy one. When I visited the plant late last year it was buzzing with activity; assembly workers were climbing up and down scaffolding and drilling wings together. But for all the talk of how good the Saudi deal would be for jobs, Dan Schell, the F-15's production head, says he isn't likely to expand his workforce much.

Indeed, the U.S. aerospace workforce has shrunk by 40% in the past 20 years. Like many other industries, the defense sector has been quietly outsourcing production (and jobs) to cheaper labor markets overseas. Part of that is mandated by the terms of export deals, which often require sellers to subcontract work to manufacturers in the buyer's home country. These clauses -- called "offsets" -- help companies win contracts, but they come at a cost: A little-noticed Commerce Department report noted that $2.2 billion worth of offset transactions in 2009 could have created or sustained more than 10,000 jobs in the U.S.

Defense executives maintain that even without offsets, they would still have to use foreign suppliers to keep costs down. Global competition, they say, is fiercer than ever. Russia, America's perpetual runner-up in arms exports, courts customers that the U.S. won't touch, like Venezuela. China, which recently flight-tested its first stealth fighter, has demonstrated an adeptness in producing knockoffs of Russian weapons. And Obama is not the only world leader lobbying for homegrown companies. The dust had barely settled from his India trip when Russian President Dmitri Medvedev and French President Nicolas Sarkozy swooped in, both pushing hard for arms sales.

Jeff Johnson, a Boeing executive, says the F-15 production line would have been shut down years ago if Boeing hadn't made parts overseas. "At the end of the day, it's about business," he says.

But defense is a business unlike any other. It benefits tremendously from taxpayer largesse: The government has given these private companies hundreds of billions of dollars for research and development, which enabled them to make best-in-class products that the rest of the world covets. They funneled that money back into the economy by creating thousands of gold-standard American jobs -- jobs that have been disappearing even as U.S. weapons spending soared.

Unlike most other businesses, arms makers play a central role in U.S. foreign policy, perhaps now more than ever. The U.S. has sent billions of dollars' worth of arms to countries in the Middle East, like Egypt and Yemen, which are among the biggest recipients of U.S. military aid. As power shifts take hold, Obama may be forced to reconsider arms sales to the region negotiated in less tumultuous times.

Chances are he'll stay the course. Even dovish Presidents have succumbed to the utility of arms exports. Take Jimmy Carter, who addressed the issue in a 1976 campaign speech: "Sometimes we try to justify this unsavory business on the cynical ground that by rationing out the means of violence we can somehow control the world's violence. The fact is that we cannot have it both ways. Can we be both the world's leading champion of peace and the world's leading supplier of the weapons of war?"

Two years later Carter sold 200 fighter jets to the Mideast. To top of page

The Pakistani Third Reich

Posted By Moorthy Muthuswamy On April 28, 2010 @ 12:03 am

Pakistan has the fastest-growing nuclear arms buildup in the world, even as its economy needs life support in the form of handouts from international donors.

Pakistanis claim that being outmatched by the conventionally stronger military of its arch-rival India, they need a large stock pile of nukes to defend against an Indian attack. However, closer scrutiny reveals a different story. Pakistan has always been the aggressor in the past military conflicts with India. Besides, terrorists are routinely sent from Pakistan to India to conduct mayhem and murder under the cover of religion. Moreover, it is now estimated that Pakistan has far more nukes than India, along with superior delivery systems.

Pakistan’s new generation nuclear weapons (nukes) are plutonium based—extracted from new nuclear reactors built for the very purpose. These weapons are compact and more powerful. Plutonium is also the basis for the hundred-times more powerful thermonuclear bomb. With this plutonium capability, Pakistan is well on its way to becoming a nuke factory.

The real question left unanswered is why Pakistan is making more nukes than it needs, and for what purpose. An insidious picture emerges from analyzing Pakistan’s theological focus and the likely funding source(s) behind its nuclear armament program.

In a recent Frontpage Magazine piece titled “Is Wilders Wrong About Islam?” I explained how jihad (holy war) waged on unbelievers forms the dominant thrust of the Koran and Muhammad’s biography. This theological basis continues to inspire modern constructs of jihad. Pakistan’s broad-based commitment to jihad is reflected in the contents of its school syllabus. The motto of the Pakistani army is “faith, piety and jihad in the path of Allah.” In the 1980s Brigadier S.K. Malik of the Pakistani army produced an authoritative military manual on jihad called The Quranic Concept of War. It is a required reading of Pakistan’s military officers.

Malik writes: “the Holy Prophet’s operations …are an integral and inseparable part of the divine message revealed to us in the Holy Quran… The war he planned and carried out was total to the infinite degree. It was waged on all fronts: internal and external, political and diplomatic, spiritual and psychological, economic and military… The Quranic military strategy thus enjoins us to prepare ourselves for war to the utmost in order to strike terror into the heart of the enemy, known or hidden… Terror struck into the hearts of the enemy is not only a means; it is the end in itself.”

The above theological thrust has not only ensured military domination of the civilian sphere, but also drove the military to commandeer all instruments and disproportionate share of the resources of the state in order to impose a violent jihad on unbelievers. In other words, Pakistan has become a modern Third Reich, armed to the teeth with nuclear weapons and sophisticated delivery systems.

Theological motivations enshrine Pakistan as an aggressive jihadist state, no matter the extent of financial and other incentives given to it to stop its jihad. Indeed, it appears that the Western aid and arms given to Pakistan since 2001 in good faith, have instead, mostly gone to further its jihadist agenda.

Leading Project Jihad is the notorious intelligence agency of Pakistan, the ISI (Inter-Services Intelligence), staffed by serving officers of Pakistan’s military on a rotational basis. Almost every major Sunni Islamic terrorist entity—Al Qaeda, the Taliban or Lashkar-e-Taiba—owe their existence and operational capabilities to the support received from the ISI. When the Taliban, a brainchild of the ISI, overran Kabul fifteen years ago the administrative support to run the country — arms, fuel and financing — flowed from Pakistan.

There was no way al-Qaeda leadership could have taken root in the Taliban-controlled Afghanistan without Pakistan’s tacit approval. This was despite the open knowledge that well before the 9/11 attacks the United States had implicated Bin Laden and al-Qaeda in terrorist attacks on its interests. Pakistan also allowed local charities to funnel funds to Bin Laden’s group in Afghanistan. Moreover, the al-Qaeda rank and file who used the Pakistani port city of Karachi as a transit point to enter landlocked Afghanistan could have been stopped had the Pakistanis wanted to. Yet, Pakistan’s intent toward the United States has been misconstrued. Even the usually perceptive Charles Krauthammer who sees an ominous sign in a plutonium-producing Pakistan doesn’t get it when he writes that “Pakistan is a relatively friendly power.”

The main nation widely thought to be behind the bankrolling of Pakistan’s nuclear buildup is Saudi Arabia, from where most hijackers who carried out the 9/11 attacks originated. Thanks to this symbiotic relationship, Saudi Arabia may already have nukes. As well, the fellow Sunni sheikdoms of the Middle East feel threatened of a nuclear Shiite Iran may get access to the cash-starved and ideologically inclined Pakistan’s plutonium-based nukes. All of this points to a higher risk of nuclear terrorism involving the nukes.

Starting in the 1990s, it took the jihadist enterprise in Pakistan about ten years to build the terrorist infrastructure in Afghanistan. This proxy was leveraged to attack the United States on September 11, 2001. Not only did Pakistan get away with it, but has since found itself benefiting from Western largesse. So encouraged, the Pakistani jihadist-elite may be convinced of once again escaping retribution from both reckless and wanton proliferation of its nukes and their use. And may even expect to reap in the benefits, as part of “assisting” in the aftermath.

The mindset of influential Pakistanis with nuclear knowhow is truly troubling. Sultan Bashiruddin Mahmood, an architect of Pakistan’s nuclear weapons program, was not only speaking for himself when he declared that Pakistan’s nuclear bombs are “the property of a whole ummah [worldwide Muslim community],” so that some Muslim nations or groups could use them on infidels to bring about “the end of days” and lead the way for Islam to be the supreme religious force in the world.

The plutonium-producing new reactors in the Sunni-majority Pakistan could be the beginning of a dangerous miles stone: the ushering in the new era of Sunni nuclear terrorism. Iran, whose leaders are notable for making apocalyptic threats directed at Israel too causes grave concern, especially when considering that it is expected to become nuclear weapon capable anytime now. Not unlike Pakistan, Iran too backs jihadist proxies, including Lebanon-based Hezbollah and Hamas in the Palestinian territories.

Trend lines on nuclear know-how of jihadist sponsors and that of global jihad suggest that the following worst case scenario can no longer be ignored: Nuclear strikes on the continental United States within the next decade.

As part of risk mitigation, policies must be designed to preempt this calamity. Any such effort must start with the acknowledgment that jihadist enterprises are ruling Pakistan and Iran. This calls for dismantling the nuclear infrastructure in these nations—undoubtedly a high risk and high cost strategic maneuver. But such a risk or even costs should likely dwarf the consequences of allowing the nuclear armament buildup in Pakistan and Iran to proceed unhindered.

Seen in the above context, the recent Nuclear Security Summit organized by the Obama administration is an exercise in futility because of its failure of imagination on Pakistan and Iran. To protect its cities from nuclear strikes, the United States faces the prospect of a mobilization not yet seen since the Second World War.

Moorthy Muthuswamy is a U.S.-based nuclear physicist and author of the recent book Defeating Political Islam: The New Cold War.

Article printed from FrontPage Magazine: http://frontpagemag.com

URL to article: http://frontpagemag.com/2010/04/28/the-pakistani-third-reich/

India’s Soaring Fighter Ambition

February 09, 2011http://the-diplomat.com/2011/02/09/india’s-soaring-fighter-ambition/

By Nitin Gokhale

....there’s the question of operational sovereignty. India has been prickly about US stipulations that India must sign binding agreements such as Communications Interoperability and Security Memorandum of Agreement (CISMOA). India sees such demands as impinging on its independence, although the United States says it is bound by domestic law to make these demands. Regardless, if the two sides fail to reach agreement on CISMOA, then the F-16 and F-18 aircraft would have to be shorn of the latest technologies. Europeans rivals Saab and Eurofighter, in contrast, have been quick to point out that they don’t have any such requirements.

Six fighter jet manufacturers are vying for India’s biggest-ever military aviation contract. Expect politics to play a role in the decision.

Image credit:Subharnab Majumdar

On February 5, the Indian Air Force’s newest squadron, the ‘Veiled Vipers,’ became active with the induction into service of the first of six Super Hercules aircraft.

The tactical airlift plane, given the motto ‘Kill with Stealth,’ is the first major US military platform purchased by the Indian Air Force in decades, and is expected to give India’s special forces a significant boost by allowing them to operate in all conditions, including airdrops and landings on unprepared surfaces in complete darkness.

According to an Indian Air Force spokesperson, the C-130J-30 Hercules can be used in wartime for special air operations, air maintenance,and casualty evacuation. Peacetime roles could include air maintenance around harsh mountainous terrain, UN or multinational missions, disaster relief and the evacuation of Indian nationals during a crisis.

And the subtext of the induction ceremony wasn’t lost on anyone.

The presence of the US Ambassador to India, Timothy Roemer, and top officials from Hercules manufacturer Lockheed Martin underscored the importance the Americans attach to India as a market for its military hardware.

By making a point of publicizing the induction of the C-130J, the Americans were perhaps trying to put some tacit pressure on decision makers in India’s Defence Ministry just days ahead of the bi-annual aerospace exhibition ‘Aero-India 2011’ that starts today in Bangalore.

The air show is expected to be the last chance for six major combat aircraft manufacturers from around the world to impress the Defence Ministry and the Indian Air Force before it takes a final decision on what’s being billed as India’s single biggest military contract—as much as $11 billion is expected to be spent on the purchase of 126 fighter jets for immediate induction into its air force.

Six aviation majors are in contention for the massive order—Boeing and Lockheed Martin from the United States, European firms Dassault, Eurofighter, and Saab, plus Russia’s RSK MiG.

A range of aircraft types are being offered. Boeing wants to sell its F/A-18E/F Super Hornet, while arch-rival Lockheed Martin wants India to buy its F-16IN Super Viper. Sweden's Saab has put the Gripen in play, and Dassault is seeking its first foreign order for the Rafale. Eurofighter, meanwhile, is pitching the Typhoon, and to round off the bidding, Russia has offered the RSK MiG-35.

The stakes are high. Whichever firm wins the contract and the potential follow-up orders will undoubtedly flourish over the coming decade. But the remaining five firms may well be forced to wind up some manufacturing plants as most big countries are now looking ahead to developing, manufacturing or buying fifth-generation aircraft post-2020.

Even India, despite its massive investment in this particular contract, already has an eye on the future. Indeed, in December 2010, India inked a Memorandum of Agreement with ally Russia for development of a fifth-generation aircraft. The project is expected to cost anywhere between $25 billion and S30 billion dollars over the next decade.

For now, however, all eyes are on Defence Minister A K Antony and his team of bureaucrats, who are expected to decide in April or May which combat aircraft to buy. Their decision will then need to be ratified by the Cabinet Committee on Security (CCS), India’s highest government body and the final arbiter on national security issues.

Antony and his advisers have a tough decision ahead. The Air Force is said to have done an excellent job of evaluating the technical merits of each of the six contenders in what has been a long and gruelling process. Indeed, manufacturers have said this is the most demanding set of criteria they’ve faced, with some 700 initial requirements in the 6000 page tender document.

Once their application was accepted, each manufacturer was then required to bring its aircraft to India for testing in the country’s varied and challenging climate—tests were conducted from the searing heat of India’s deserts in Rajasthan, to the high-altitude region of Ladakh. In addition, all six contenders had to base their aircraft at Leh, the world’s highest operational base at 11,000 feet, where temperatures plunge to minus 30 degrees during the winter.

But the technical evaluation may actually have been the easy part for India’s decision makers. The Air Force submitted its final evaluation to the Defence Ministry last July, but with such a high-profile contract at stake, the Ministry is determined to take its time in reaching a final decision. This is in part because there’s more to the decision than the straightforward performance of the fighter—there’s also the ‘offsets’ issue.

Under offset rules announced in 2007, the winning manufacturer has to create aerospace-related deals in India equal to at least half the contract value, to help boost local technical and financial capabilities.

In addition, there’s the question of operational sovereignty. India has been prickly about US stipulations that India must sign binding agreements such as Communications Interoperability and Security Memorandum of Agreement (CISMOA). India sees such demands as impinging on its independence, although the United States says it is bound by domestic law to make these demands. Regardless, if the two sides fail to reach agreement on CISMOA, then the F-16 and F-18 aircraft would have to be shorn of the latest technologies. Europeans rivals Saab and Eurofighter, in contrast, have been quick to point out that they don’t have any such requirements.

All this means that the ultimate decision by Prime Minister Manmohan Singh and his administration is bound to be a complex mix of political, strategic, and military factors. It’s little wonder then that there have been so many high-profile visitors to India in the last few months—British Prime Minister David Cameron, French President Nicholas Sarkozy, Russian President Dmitry Medvedev, and US President Barack Obama have all come calling, in part to press their case.

Such visits, and the considerable and highly-visible interaction with Indian political and business leaders, has made one thing clearer—the world looks at India as a sub-continental superpower, and the biggest potential market for selling military hardware.

Who will be taking home the biggest slice of pie in India’s military aviation history, though, remains to be seen.

Nitin Gokhale is Security and Strategic Affairs Editor with Indian broadcaster NDTV 24×7