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May 31st, 2006 - Oil Boom
Threatens to Trigger Arms Spree News
article by Inter Press Service |
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Oil Boom Threatens to
Trigger Arms Spree By Thalif Deen Inter Press Service May 31, 2006 United Nations - The unprecedented
rise in oil prices - from an average of 22 to 28 dollars per barrel in early
2005 to over 70 dollars last week - is expected to trigger an increase in
arms purchases by some of the world's leading oil-producing nations,
including Saudi Arabia, Algeria, Venezuela, Iran, Nigeria and the United Arab
Emirates (UAE). If history has a way of
repeating itself, a significant portion of the growing petrodollars will
spill over into the coffers of the world's five leading arms merchants: the
United States, France, Britain, China and Russia. All five countries,
ironically, are veto-wielding permanent members of the U.N. Security Council,
exercising decision-making powers over war and peace. After the first Gulf War in
1990-1991, U.S. weapons exports doubled to more than 30 billion dollars,
around the same time that oil prices peaked at 40 dollars a barrel, says
Frida Berrigan, senior research associate at the New York-based World Policy
Institute's Arms Trade Resource Centre. "In the midst of the
'oil crisis' of the early 1970s, Iran and Saudi Arabia alone accumulated 40
billion dollars in cash revenues, much of which they spent on weapons,"
Berrigan told IPS. She said that during 1973-1974, those two countries plus
Kuwait spent more than four billion dollars just on U.S. weaponry alone. Still, Berrigan thinks, it
is too soon to tell if rising oil prices will equal increased weapons sales.
Major weapons contracts so far in 2006, she said, have gone to Australia,
Japan, Thailand, Turkey and South Korea, none of them major oil exporters. "But a look at recent
history indicates that demand for U.S. weapons and military hardware could be
on the rise," said Berrigan, who closely tracks arms sales worldwide. The International Monetary
Fund (INF) has estimated that hard currency surplus in oil-fuelled Middle
Eastern nations could rise to about 218 billion dollars - up from 57 billion
dollars in 2003. According to the
London-based military magazine Jane's Defence Weekly, Russia has finalised a
7.5-billion-dollar arms deal with Algeria, with a possibility of a
three-billion-dollar additional military contract, taking the total to over
10 billion dollars.. Under the agreement, Russia
will provide 36 MiG-29 and 28 Sukhoi Su-28 fighter planes, along with 16
Yak-130 advanced jet trainers. The Russians have sweetened the offer by
agreeing to cancel Algeria's 4.7-billion-dollar Soviet-era debt. During a visit to Algeria
last February, U.S. Defence Secretary Donald Rumsfeld said he discussed
possible arms sales to that oil-producing North African country. "They
have things they desire, and we have things we can be helpful with," he
said, in a cryptic message to reporters. Algeria is specifically
interested in helicopters and night vision goggles which may be helpful in
monitoring anti-government rebels. Tom Baranauskas, a senior
Middle East analyst at Forecast International, a leading provider of defence
market intelligence services in the United States, does not see that much
activity toward big arms buys. "Algeria is a bit of an
exception to the other Middle East arms buyers in that it has not spent all
that much on major defence equipment purchases in recent years, except to
address counterinsurgency needs," Baranauskas told IPS. The Russian deal probably
represents an initial phase to address more pressing needs, and further
phases may follow should oil prices remain high, he added. Saudi Arabia, one of the
biggest single buyers of U.S. arms, has agreed to buy 72 Typhoon multi-role
fighter planes from a European consortium led by British Aerospace Systems.
The contract could go as high as 16 billion dollars. In January, the United
States imposed sanctions on nine European, Indian and Chinese companies for
supplying military equipment and technology to Iran, another leading oil
producer. Currently, the administration of U.S. President George W. Bush is
on a confrontation course with Iran over its disputed nuclear programme. Since China and Russia are
the major arms suppliers to Iran, both countries have shown reluctance to
support a U.S. move to impose U.N. economic and military sanctions on Tehran. The London Financial Times
reported last February that the United Arab Emirates plans to spend about 15
billion dollars on building its own aerospace manufacturing and aviation
services in Dubai, its commercial hub. Last year, China signed a
250-million-dollar military contract to provide 12 fighter aircraft to
Nigeria, the biggest oil producer in Africa. Nigeria's future requirements
include high speed patrol boats against rebel attacks in the delta. Berrigan said when there was
an earlier surge in U.S. arms sales to countries floating on rising oil
revenues, one Pentagon official expressed the reasons for the U.S. Defence
Department's unofficial policy of trading weapons for petrodollars by saying:
"The biggest long range problem facing the United States is finding a
way to get the Arabs to spend their dollars without letting them get control
of their economy." Weapons do that quite
efficiently, she pointed out. "It is interesting to note that the United
States has departed somewhat from that policy in its recent decision to cut
off weapons sales to oil-rich Venezuela," Berrigan added. Baranauskas said the Arab
Gulf states in particular have had long-term military force overhaul
programmes in the works or planned, and enough equipment has been procured to
date that some of the militaries have even had to slow down procurement in
order to absorb these new and often complex systems. "Granted that the
Saudis are planning some big aircraft buys, but these have been under
discussion for years, particularly a potential Rafale buy (an advanced French
fighter plane), and the additional oil revenues probably will just speed
things up a bit," he added. "What I find
interesting in the Saudi market is the government's plans to basically
militarise the entire land border. Discussions with the French have been
ongoing for a couple of years regarding a programme worth as much as 8.8
billion dollars to build a national border surveillance system that would
include patrol aircraft, unmanned aerial vehicles (UAVs) and early warning
systems, as well as a fence-type barrier along the nation's 4,531 kilometers
of land borders," he said. This programme, he said, has
a high priority because the Saudis are increasingly concerned over closing
off the infiltration into Saudi Arabia of Islamic militants and weapons to
stage terrorist attacks. The Iraqi and Yemeni borders are regarded as
particularly dangerous in this regard. Initial Saudi efforts to
build a fence along the border with Yemen met with fierce criticism from the
Yemeni government and work was suspended. Now, the Saudi defence and
aviation ministry has invited bids from local contractors to build an
814-kilometre-long double-line fence along the entire border with Iraq. The Iraq border barrier will
cost several hundred million dollars and will consist of 135
electronically-controlled sliding gates, fence-mounted ultraviolet intruder
detection sensors, and buried radio detection sensors. Baranauskas also said there
are indications of some significant Iranian arms buys in the works, but these
are driven more by the threats being issued by the United States and Israel. "Yes, higher oil prices
will make it easier to fund such purchases, but the Iranians would be upping
their arms buying anyway because of the growing threat level," he added. Inter Press Service (IPS)
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