Peace and Environment News* July-August 2002
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Peace and Environment News * July-August 2002 |
by Steven Staples
The international arms industry is poised to flourish in the wake of 9/11. Multinational corporations such as Boeing and Lockheed Martin that arm the world's military forces with advanced weapons systems will reap the benefits of governments driving billions of public dollars into a new military build-up.
In fact, the global "War on Terrorism" will reverse a decade of reductions in military spending and arms production. The international arms trade is already estimated to be nearly $60 billion (Can), and many industrially advanced nations are ending years of reductions in military spending with substantial budget increases and new arms-buying programs.
Canada is no exception. Military spending is on the rise and the federal government plays an active role in promoting arms sales by Canadian weapons corporations around the world. But this economic strategy will be unsustainable ultimately, since the militarized economy will be dependent upon military spending, more government subsidies, and arms exports.
What's more, the Organization for Economic Cooperation and Development has warned countries that the increases in military spending after 9/11 could damage the economy in the long run. A recent OECD report said, "Although increased military and security spending can give a short-term boost to the economy, it creates a longer-term risk of crowding out activity in other sectors."
New military spending is being used to protect corporate investments that span a dangerous world, and support advanced domestic economies that are threatened by an unstable financial system.
The WTO and the arms industry
The World Trade Organization (WTO), the central organizing body for globalization, facilitates the negotiation and interpretation of international free trade agreements and enforces trade rulings that require governments to change their laws to conform to WTO trade agreements.
The WTO's trade rulings have struck down laws and government programs that have limited corporate profits through environmental regulations, health standards, state-owned enterprises, and government support for culture and other industries.
Ironically, the only areas of government involvement that are exempt from challenge under WTO rules are activities designated by the state as essential for national security, such as military research and export subsidies. This special protection for military industries, which is explicitly stated in the General Agreement on Tariffs and Trade (GATT), the WTO's main governing document, allows the wealthy industrial countries to use military spending to subsidize corporations, promote regional development through defence contracts, and conduct weapons research and development.
Noted writer Noam Chomsky recently remarked that even the contributors to Fortune and Businessweek Magazine understand the high-tech industry could not survive in a free market economy. U.S. President Ronald Reagan's "Star Wars" missile defence program was sold to the business world on these grounds. And maintaining the defence industrial base—that is, high tech industry—was one of the reasons given by President George Bush Sr. when he called for maintaining the Pentagon's budget immediately after the fall of the Berlin Wall had eliminated the Russian pretext.
The use of military spending to prop up corporations and high tech industries such as aerospace is rarely discussed by governments because of potential political fall-out. But the Canadian government made a rare admission that military spending is being used as an industrial subsidy in a recent report on the arms trade, which said, "Despite General Agreement on Tariffs and Trade (GATT) rules that eliminated tariff barriers between signatories on civil aircraft products and restricted the use of government procurement, many countries use national security exceptions to provide direct financial assistance to their domestic industry."
The aerospace and defence industry is a nearly $200 billion (U.S.) per year industry, dominated by huge corporations such as Boeing, Lockheed Martin, BAe Systems, and EADS (the owner of Airbus). These corporations receive preferential treatment and billions of dollars in subsidies from their governments through military and non-military spending.
In Canada, Bombardier corporation, the third largest manufacturer of civilian aircraft in the world, runs the NATO Flight Training Centre in Moose Jaw, Saskatchewan. Bombardier's defense division received a non-competitive $2.8 billion (Can) contract from the Canadian Government to purchase military aircraft and operate the pilot training center. The sweetheart deal was harshly criticized by the Auditor General, Canada's financial watchdog.
The fact that no foreign company was able to bid on the contract would ordinarily be open to challenge under international trade rules. Because the contract was for military training services, not civilian services, the Canadian government was able to invoke the security exception to shield the deal from the WTO's scrutiny. Meanwhile Bombardier is able to use guaranteed profits from the defence contract to offset an often unpredictable civilian aircraft market.
Canada's arms industry
Canada is home to two of the world's top 100 defence corporations, CAE Inc. and DY4 Systems, with year 2000 defence-related revenues of $539.8 million (Can) and $86.3 million (Can) respectively. However, there are many foreign-owned corporations in Canada producing arms, such as Computing Devices, Bell Helicopter Textron, and General Motors. All of these corporations are significant arms exporters to the US and countries around the world.
The Canadian government has learned that an arms industry is dependent upon exports to keep the factories running. When domestic military programs end, the government aids exports through low-cost loans, diplomatic support, and even using the armed forces to showcase military technology to potential foreign arms buyers.
Canadian government assistance has helped our arms industry become internationally significant. The Stockholm International Peace Research Institute has ranked Canada as the world's 13th largest arms exporter for the period 1996-2000. The United States is Canada's largest customer.
The "war on terrorism" provides the rationale for a global buildup of arms and increases in military spending, but it is the need to provide security for corporations—not the need to protect citizens from terrorism—that is driving the expansion of military power and the arms industry. Aided by the WTO, military economies are favoured over civilian economies. Over time national economies will become militarized and draw greater government military spending, leaving fewer public dollars available for vital social and environmental programs.
Steven Staples is the chair of the International Network on Disarmament and Globalization (www.indg.org) and lives in Ottawa.
Converted July 21, 2002 - Lg
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