Bulletin     March 1999, Number 53


Opening the Floodgates for High-Tech Arms
In Haiti and many other countries throughout the region, U.S. efforts to promote democracy often fall short and are sidelined when other U.S. objectives—such as combating drug trafficking or promoting U.S. economic interests—prevail. Another policy shift taken in response to domestic political pressures could have far-reaching and disastrous consequences for democratization and demilitarization efforts in Latin America: the Clinton administration’s decision to lift a two-decade ban on sales of advanced weapons to Latin America. The lifting of the ban opens the floodgates for high-tech weapons and could ignite an arms race in the region. Like U.S. drug policy, the administration’s action flies in the face of its own stated policy objectives to promote regional demilitarization and democratization trends.

The 20-year ban did not prevent sales of other weapons. According to the Congressional Research Service, between 1988 and 1995 the United States sold or gave approximately $2.2 billion worth of arms and military equipment to its southern neighbors. Even before the ban was lifted, the United States was supplying three times as many weapons to the region as any other arms exporter.

With the ending of the cold war, domestic demand for high-tech military equipment dropped dramatically, as did purchases by traditional allies. As a result, U.S. arms manufacturers (who also happen to be major campaign contributors through industry PAC funds) sought new customers abroad, often looking to previously neglected markets such as Latin America. In calling for the policy shift, they argued that foreign companies were gaining the upper hand in Latin America, which was obtaining the weapons anyway. Why not let U.S. companies reap the benefits, instead of foreign competitors? Some Clinton administration officials also argued that the ban was obsolete, given the democratic transition throughout the region.

The administration’s decision to lift the ban paved the way for the sale of F-16 fighter aircraft to Chile. Given the ongoing border disputes throughout the hemisphere and other rivalries, critics fear that Chile’s acquisition of sophisticated planes could lead other countries to follow suit. At the time, former U.S. President Jimmy Carter, who along with former Costa Rican President Oscar Arias led the fight against the lifting of the ban, noted that selling F-16s to Chile would “open up a Pandora’s box,” provoking further sales. Argentina, another regional heavyweight, was among the most disgruntled when the decision was announced. Three weeks later, the U.S. government announced that it would consider Argentina a non-NATO ally in recognition of its close collaboration with the United States and its participation in peacekeeping operations. This move added fuel to the fire, further aggravating anxieties about U.S. intentions and re-igniting longstanding suspicions between Southern Cone countries. The calls by former President Carter and others for the Clinton administration to at least implement a two-year moratorium on sales to allow for the implementation of confidence-building and transparency mechanisms, such as the publication of defense budgets, have gone unheeded.

U.S. Direct Investment Abroad on a Historical-Cost Basis
at Yearend, By Region and Country

(in millions $U.S.)

Region/Country All Industries 1995 Regional % of Total U.S. FDI Abroad 1995 All Industries 1997 Regional % of Total U.S. FDI Abroad 1996
Total: Latin America and other Western Hemisphere 128,252 17.9% 172,481 20.0%
South America
   Brazil
46,914
23,706
6.5%
3.3%
67,112
35,727
7.8%
4.2%
Central America
   Mexico
22,688
15,980
3.2%
2.2%
48,881
25,395
5.7%
3.0%
Other Western Hemisphere 47,650 6.6% 56,489 6.6%
Source: Survey of Current Business, July 1997.

 

U.S. Government Foreign Grants and Credits, 1990 - 1996*
(in millions $U.S.)

* 1990 1991 1992 1993 1994 1995 1996
Western Hemisphere 2,002 2,020 2,462 678 796 441 328
World Total 14,253 -32,040 17,718 17,110 15,835 12,090 15,937
* Negative figures (-) occur when the total of grant returns, principal repayments, and/or foreign currencies disbursed by the U.S. Government exceeds new grants and new credits utilized and/or acquisitions of foreign currencies through new sales of farm products.
Source: Statistical Abstract of the United States: 1997, U.S. Department of Commerce (pp. 796-798).

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