ARMS AND TECHNOLOGY TRANSFERS In 1986, ACDA continued to participate in the formulation and implementation of US policy on the transfer of conventional arms and military technology in order to ensure that arms control considerations are fully factored into the arms transfer decision-making process. ACDA's arms transfer activities are carried out within the framework of Administration policy and long-standing statutory requirements. The President's conventional arms transfer policy, enunciated in July 1981, recognizes that arms transfers, judiciously used, can help deter aggression, demonstrate our enduring interest in the security of friends and partners, and foster regional and internal stability. By helping to enhance stability the United States can encourage evolutionary change and the peaceful resolution of disputes in various parts of the world. Conventional arms transfers and security assistance can also play an important role in supporting our efforts to dissuade nations from considering the acquisition of nuclear weapons. By helping friends and allies meet their legitimate defense needs, conventional arms can contribute to the self-confidence of such countries in their own security, thereby reducing possible pressures to acquire nuclear explosives. Under the President's policy, each request for arms is carefully reviewed on a case-by-case basis, primarily in terms of its net contribution to enhanced deterrence and defense. A wide range of factors, including arms control factors, are considered in evaluating prospective transfers. These include: whether the transfer is consistent with US interest in maintaining stability within each region; whether the proposed transfer can be absorbed without overburdening the recipient's military support system or financial resources; and whether possible detrimental effects of the transfer are more than counterbalanced by positive contributions to US and regional interests and objectives. Requests for coproduction or transfer of sensitive technology receive special scrutiny. Recognizing that first-line systems may not be appropriate to the needs of all countries, careful consideration is also given to alternatives, including adaptations of US military equipment. Under the Arms Export Control Act and the Foreign Assistance Act of 1961, as amended, decisions to transfer arms or provide military assistance are coordinated with the Director of ACDA, and the Director's opinion is taken into account on the extent to which proposed transfers or military assistance might: O Contribute to an arms race; O Increase the possibility of outbreak or escalation Prejudice the development of bilateral or multilateral In carrying out this responsibility in 1986, ACDA evaluated and rendered its opinion on about 1,500 Foreign Military Sales cases and commercial requests for licenses to export military equipment. Many of these cases involved the transfer of more than one item to more than one country. ACDA's Assistant Director for Nuclear and Weapons Control continued to represent the Agency on the senior-level interagency Arms Transfer Management Group, which assists the Under Secretary of State for Security Assistance, Science and Technology in advising the Secretary of State on arms transfer and security assistance matters. In addition, ACDA continued its participation in the Security Assistance Program Review Working Group, which focuses on the development of proposed security assistance programs and legislation. As a member of this working group, the Agency contributed to the development of the Administration's proposed FY 1988 security assistance programs in order to ensure that arms control considerations were fully taken into account in the development of these programs. The arms trade is marked by an increasing demand by arms recipients for offsets in the form of industrial and commercial compensation as a condition of military purchases. These offsets may include coproduction, licensed production, subcontractor production, overseas investment, technology transfer, and countertrade. In 1986, ACDA continued its participation in the interagency working group which prepared for the Congress the first and second reports on the impact of offsets in defense-related exports required by the Defense Production Act Amendments of 1984. These reports address the impact of offsets on the defense preparedness, industrial competitiveness, employment, and trade of the United States. Arms Transfers by Region On a worldwide basis, US Foreign Military Sales and Military Construction Sales agreements - component of US military transfers declined in FY 1986 for the fourth consecutive year. Sales totaled about $7.1 billion, a drop of sixty-five percent from the peak of $20.3 billion in FY 1982 and forty-two percent below the FY 1985 level of $12.3 billion. This decline has not been offset by the rise in commercial exports over the last few years from about $2 billion to $3-4 billion annually. With regard to particular regions, US arms transfers to Europe are directed primarily toward maintaining the strength of the NATO alliance. These transfers assist NATO allies in meeting common defense needs and in undertaking the force modernization required to compensate for the numerically superior conventional force capabilities of the Warsaw Pact. In the Middle East, US arms transfers have continued to be directed toward bolstering the security of friendly states, offsetting heavy Soviet arms deliveries to the region, and helping to deter and contain conflict. By enhancing the security of Israel and its neighbors, the United States seeks to encourage these countries to move toward a peaceful settlement of the Arab-Israeli conflict. The United States remains committed to maintaining Israel's qualitative technological edge. Israel and Egypt continue to receive preferential treatment for security assistance funding and advanced weapons technology. In 1986, ACDA participated in a number of decisions involving the transfer of advanced weapon systems and the development of indigenous defense production to these countries. In the Persian Gulf, the Iranian offensive at Faw early in 1986 brought the ground war closer to Kuwait and the other Gulf Cooperation Council (GCC) states. Attacks by both Iran and Iraq on tankers in the Gulf have also escalated dramatically. In this context, this past year's arms sales to Saudi Arabia, especially the air-to-air and anti-ship missiles, provided an important sign of continuing US support to the most important friendly Gulf country. The Presidential Certification and initial deliveries of the Airborne Early Warning Aircraft (AWAC) system to Saudi Arabia, and US efforts to assist the other GCC states illustrate the US commitment to enhancing collective defense capabilities against the threat posed by the Iran-Iraq conflict. In North Africa, the United States has continued to provide military equipment to Morocco and Tunisia, both strategically located long-time US friends. The breakup of the Libyan-Moroccan union removed a thorn from the side of USMoroccan relations, while Libyan threats against Tunisia prompted increased US support. Soviet arms influence remains strong in Libya (which received the SA-5 air defense missile system in 1986) and in Algeria, which reportedly signed a major new arms pact with Moscow. We remain interested in encouraging Algeria's diversification of arms suppliers, but this appears to be a very long-term proposition. In South Asia, the Unites States reaffirmed its commitment to Pakistan's security by agreeing to seek a six year follow-on security and economic assistance program amounting to $4.02 billion for the period FY 1988-1993. This assistance responds to the continuing Soviet occupation of Afghanistan and Soviet/Afghan incursions into Pakistan. The new program has a larger proportion of economic to military assistance and includes more concessional credit than the previous assistance program. Pakistan continues to acquire modern US weapons and is slowly expanding its access to US defense production technology in order to build up Pakistan's indigenous defense industry. These transfers have not altered the fundamental Indo-Pak military balance, which remains heavily in India's favor by any criteria. US military cooperation with India continues to expand slowly through a "mission areas" approach. Probably most significant to the Indians is US participation in the development of the Light Combat Aircraft (LCA), which the Indians see as a stepping-stone to ending reliance on foreign aircraft suppliers and as a conduit for transferring Western high technology into the Indian economy. The In 1986, US arms transfers to sub-Saharan Africa continued to be very limited, both in quantity and sophistication. Soviet Union has remained the largest supplier, providing roughly half of the arms shipped to the region. US assistance to Africa has continued to emphasize economic over military assistance in a ratio of about five to one. While US military aid programs are small, they are important in helping a number of African countries to defend themselves against aggression. US military sales have been coupled with diplomatic efforts to reduce tensions in the region and to find ways to defuse tense border situations that could flare up into major military confrontations. In 1986, the largest fraction of US military exports to sub-Saharan Africa was directed toward maintaining |