Procurement: Why Israel Runs With The Big Dogs

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July 4, 2013: Israeli arms exports last year were once again over $7 billion. Four years ago Israel became one of the top four arms exporters on the planet, shipping $7.2 billion worth of military equipment. The year before Israel had exported $6.9 billion. The U.S. is the largest exporter, followed by Russia and Germany. Israel is holding on to the number four despite being much smaller than the top three (the U.S. has a population of 310 million, Russia 142 million, and Germany 82 million people compared to 7.8 million in Israel). Israel defense exports account for about three percent of their GDP, compared to .7 percent in Russia and even less in the United States and Germany.

But even for the larger exporters, those foreign arms sales are important. Russian arms exports for 2012 were a record $15.2 billion. This is a major increase over 2010 (a then record $10 billion). That was an 18 percent jump from 2009 sales of $8.5 billion. That was less than two percent more than 2008's $8.35 billion. It was feared that the 2010 sales might be as high as it would get for a while. This was because the subsequent political upheavals in the Arab world might lead to large cancellations of orders, in part because of Russian willingness to use bribes to obtain sales and past help in security matters to keep the ousted dictators in power. Russia did lose some orders and there might be other cancellations (especially from Syria). But India remained the largest buyer of Russian arms, despite complaints of poor quality and bribes.

Increasing arms sales is very important for all the major exporters. The defense industry employs over three million people and accounts for about 20 percent of industrial jobs in Russia. At the end of the Cold War in 1991, defense work was more than three times as large as it is now. It was the enormous size of the defense industry that played a major role in bankrupting the Soviet Union. The Russians were never quite sure (cost accounting not being a communist favorite) what proportion of their GDP was devoted to military spending, but it was later estimated to be over 20 percent. That was more than four times the figure for Western nations (and their generally larger per-capita economies).

Half the weapons exported worldwide last year came from the United States (mostly) and Russia. European nations have long occupied the next three slots (Germany, France, and Britain). But lately German and Israeli exports have been growing. The other big exporters are Spain, China, the Netherlands, and Italy. These top ten exporters accounted for over 90 percent of the exports. The major importers are Middle Eastern Arab nations, India, South Korea, China, and (until recently) Greece.

Israel and Germany have been gaining more sales because of reliability and quality. Israel has a major advantage in that many of its weapons and military equipment have proved their worth in combat. Often subject to arms embargoes, Israel learned to design and build a lot of its own weapons and equipment. With a highly educated and motivated workforce, Israeli gear was often world class, while also cheaper and more reliable (and often combat proven) than similar stuff coming from the United States and Europe.

 

 


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