The Growing Business of Selling Arms Abroad

April 18, 1993|By PETER STONE

WASHINGTON. — Washington -- From his penthouse suite atop a 17-story offic building in Arlington, Virginia, Dov Zakheim, a former Pentagon planner who now heads the consulting firm of SPC International, doesn't directly shape military policy anymore.

But as a highly paid consultant to such U.S. arms manufactures as McDonnell Douglas Corp., he is probably doing as much to bolster the defense industry's fortunes as when he was in the Pentagon.

Mr. Zakheim is just one of a regiment of consultants and lobbyists -- many of whom are veterans of the nation's vast national-security apparatus -- who have used their personal firepower to promote overseas arms sales during the Bush years. Now they are preparing to try to expand their overseas beachheads during the Clinton era. While the Bush administration achieved a historic U.S.-Russian pact to cut nuclear arms, it slighted curbs on conventional weapons, at least in part because of pressure from the weapons industry.

Arms contractors have beefed up their Washington lobbying arsenals by hiring many former high-level government officials. Some contractors have even used the offices of the president and the defense secretary to nail down offshore deals.

To increase overseas sales during the Clinton years, the industry's lobbyists and consultants are pushing hard for government loan guarantees to boost their exports; further rollbacks in Pentagon ''recoupment fees'' that have long been charged on arms exports to recover initial research and development costs, and more help from U.S. ambassadors and embassy staffs in making contacts in overseas markets.

The stakes are increasingly high for defense contractors beset with financial troubles on the home front. Foreign orders are soon expected to account for about 25 percent of U.S. arms production, a big jump from the current level of 15 percent.

Industry lobbyists have skillfully pushed arms exports by linking them to U.S. jobs and the overall health of the U.S. economy. For added ammunition, they argue that all U.S. contractors want is a level playing field. They note that some governments -- among them the British, French and German -- often do much more than the United States to help their defense contractors hawk their hardware.

Critics have noted that even though foreign competitors sometimes receive more government export assistance, America's rivals are lagging far behind the U.S. arms industry. For example, the United States now accounts for more than half of all arms sales to the Third World, as compared to a share of only 8 percent in 1986.

''What's wrong is that the U.S. doesn't have a coherent policy on arms control,'' said Judith Kipper, a guest scholar and Middle East specialist at the Brookings Institution. ''I think lobbyists are taking advantage of the opportunity. They use whatever marketing techniques work. If jobs are in, you sell jobs. A few years ago it was the [threat of the] Communists.''

The Bush administration was sympathetic to the industry and provided various forms of export largess:

* In 1990, Lawrence Eagleburger, then the deputy secretary of state, fired off a classified memo to all U.S. ambassadors urging them to ignore a Carter-administration policy that told U.S. embassies to steer clear of defense contractors. Arms-industry officials, who had pushed for such a memo, have since boasted that it has helped their sales in several countries.

* The industry lobbied successfully to reorganize the State Department's Office of Munitions Control. That office had long been a sore point with defense contractors because, they said, it was too slow to grant export licenses required for certain weapons transactions. The munitions office, now reconfigured as the Center for Defense Trade, has speeded up the paperwork and helps the industry promote its exports.

* Vice President Quayle's Council on Competitiveness successfully pushed for the elimination of recoupment fees on all arms exports, except for such major weapons as Patriot missiles. Industry officials have estimated that the new policy will save exporters about $75 million a year.

U.S. arms manufactures have been doing especially well of late in such Middle East sheikdoms as Saudi Arabia, Kuwait and Bahrain. In 1991, Saudi Arabia, for example, led all Third World countries by contracting for nearly $8 billion in new weapons; $5.6 billion of that total was from the United States.

The recent campaign to sell the Saudis 72 F-15 fighter-bombers underscored the growing sophistication of arms-industry lobbying. The message of the campaign was quite simple: jobs, jobs and jobs. And McDonnell Douglas hired well-connected Washington consultants to make its case.

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