History of the world economy|
Date: Fri, 16 Jan 1998 19:57:41 +0800
Sender: Southeast Asia Discussion List <SEASIA-L@msu.edu>
From: steve graw <smg7@CORNELL.EDU>
Organization: Development Sociology, Cornell University
Subject: Asian economic crises: less for US weapons makers
Every cloud has a silver lining?!
From Los Angeles Times Internet edition
Thursday, January 15, 1998
Crisis Thwarts Pentagon Efforts to Beef Up Asia Military:
Ailing countries rethink investment in U.S.
weapons, some made in Southland, for their own defense
By Paul Richter, in Los Angeles Times
15 January 1998
WASHINGTON--The Asian financial crisis,
suddenly touching U.S. security
has set back the Pentagon's efforts to
Asian allies to pay more for their own defense
is threatening sales of American arms
manufacturers, including Southern Californian
As the crisis has rippled across Asia, it
caused South Korean and Japanese officials to
rethink investment in high-tech weapons--AWACS
surveillance planes and missile-defense
systems--that the Pentagon has urged in a bid
move the countries toward a larger role in
Similarly, the financial turmoil has
various Asian nations to delay or cancel arms
that have helped keep U.S. weapons makers busy
time when procurements by the Pentagon have
Thailand, for example, has just asked the
Pentagon for help in renegotiating a
deal for eight F/A-18 fighter jets, 40% built
Northrop Grumman's facilities in El Segundo.
Asian arms purchases have been strong in
recent years and have recently set off a
scramble among weapon-making countries for
worth billions of dollars. East Asian military
spending reached $165 billion last year--twice
Purchases by Asian nations from American
companies, which accounted for about 10% of
arms exports a decade ago, last year made up
25% of the $16 billion in weapons that U.S.
manufacturers sold abroad. Growth has been
particularly strong in the fast-growing nations
Southeast Asia, such as Malaysia, Thailand and
By providing avenues for U.S. defense
manufacturers, these sales have helped lower
per-unit prices of aircraft and other weapons
the Pentagon and helped assure that the
defense manufacturing base would survive its
post-Cold War retrenchment.
But now South Korea and Thailand have
to defense cuts as part of austerity programs
proposed by the International Monetary Fund in
exchange for bailout financing.
Pentagon officials, while stressing that
do not want the Asian allies to buy anything
cannot afford, have acknowledged their concern
about the potential effects of such defense
cutbacks and offered to help renegotiate the
with U.S. manufacturers.
"We will certainly urge defense
grant stretchouts in purchases," a senior
official said last week. "We're not unaware of
Defense Secretary William S. Cohen, in
Lumpur, Malaysia, on a seven-country swing
Asia, told a news conference earlier this week
the administration would help allies in their
efforts to extend, defer or find "some other
of making payments" to contractors.
Analysts note that cancellation of any
deal will directly affect Southern California,
which has about 130,000 defense and commercial
aerospace workers in the five-county region,
according to the UCLA Business Forecasting
"You'd be hard-pressed to find any major
defense contract that doesn't have a large
California component," said Joel L. Johnson, a
president of the trade group Aerospace
Northrop Grumman employs about 2,500
El Segundo to build the middle and rear
the F/A-18 aircraft, which cost about $35
to $40 million apiece. Jim Taft, a spokesman
the company, played down the threat from the
turmoil, saying, "We have production scheduled
through June 1999."
As they threaten U.S. contractors, the
defense cutbacks also throw at least a
roadblock in front of the Pentagon's effort to
strengthen and update its alliances with its
partners. U.S. officials have been pushing the
South Koreans to spend more for their own
and urging the Japanese, who have limited their
military activities since World War II, to
their role in the region's defense network.
Defense officials insist that the U.S.
commitment to the region is steadfast. But amid
signs that U.S. forces may need to reduce their
numbers in some areas, such as Okinawa, because
local resistance, defense officials want
that their allies can pick up the slack. In the
face of budget pressures at home, they also
the U.S. commitment to be as lean as possible.
To accomplish these goals, U.S. defense
officials have been urging Asian
gently, sometimes not--to buy high-tech weapons
that would be useful in defending themselves in
first hours or days of an attack.
They have urged the South Koreans to buy,
example, four AWACS surveillance planes, which
track of aircraft and missiles, and
radar, which enable defensive forces to quickly
track and retaliate against incoming artillery
And the United States has been pushing the
Japanese to take part in a complicated,
effort to develop a "theater missile defense"
program that would provide a shield against
and medium-range missiles.
But the South Koreans, who have dragged
feet on some of these purchases, are now
the purchase of AWACS, as well as a list of
defense systems: submarines, military training
aircraft and, according to Korean newspaper
accounts, U.S.-built C-17 transport aircraft.
Japanese officials have made no official
comment on whether they will commit to the next
stage in development of the theater missile defense