war on the rocks

The Case Against Arms Embargos, Even for Saudi Arabia

April 16, 2019

One area in which U.S. President Donald Trump does not need to worry about making America great again is international arms sales. The United States accounts for 34 percent of all global arms sales (second place Russia remains a distant 23 percent), and has more than 40 defense companies in the top 100 globally. However, with civilian deaths caused by the Saudi-led war in Yemen estimated at between 16,000 and 50,000 by the end of 2018, calls for the United States to suspend arms sales to its largest client — Saudi Arabia — have understandably gained traction in both Congress and the public. More generally, several authors have penned articles in these virtual pages calling for more selective U.S. arms export decisions or outright embargos, governed less by economic motivations and more by concern about blowback, human rights, dispersion, and reducing technology transfer. I respectfully disagree with all of these recommendations. Whether it is delayed approval, as in the recent Kuwaiti F-18 purchase, an outright embargo, like Egyptian F-16s in 2013, or denial of technology transfer, as in the 2016 Turkish Patriot missile request, using the withholding of arms sales as a blunt force instrument of coercion is unlikely to produce desired strategic benefits and often backfires.

Arms exports are best used for maintaining or strengthening relationships while limiting adversary access to client states; a tool of nuanced influence, not outright coercion. In fact, threatening to withhold arms sales to coerce a state into changing its behavior often has the opposite effect, leading clients to diversify their arms sourcing instead of shifting course. Similarly, calls to restrict technology transfer and worries about demands for direct offsets mistake what is known as “design technology transfer” for the much more difficult “capacity” level of transfer. Both are explained in more detail below, but for now it is worth noting that design transfer, the level at which most of these offsets occur, does not lead to the creation of an independent defense industry, but instead provides the United States with a source of political power. The United States should not fear technology transfer, but with the appropriate end-user controls, encourage it. Additionally, while a large domestic market provides the United States the luxury of sacrificing financial gains for political influence, sometimes economics do matter; especially when it comes to preserving complex production lines for future flexibility. Finally, the United States should not look to use an arms embargo to coerce Saudi policy change, not for economic reasons, but simply because it is unlikely to work.

Greasing the Skids, Not Twisting Arms

Arms sales are useful tools for maintaining communication, strengthening relationships, and keeping potential adversary states at bay. Conversely, as a blunt instrument of coercion (i.e. if you do not do X, we will suspend Y), they are likely losers. Senior U.S. government officials involved in the arms transfer process that I interviewed over the past year during the course of my research have echoed similar sentiments. This is also borne out by previous research providing evidence that using arms transfers as situationally coercive tools is rarely successful. Interestingly, coercion attempts using arms transfers are least likely to be successful when used as a punishment or threat against an autocratic regime, such as Saudi Arabia. Instead, punishments in the form of an embargo can often push a client to diversify sourcing rather than to change behavior.

Consider Indonesia and Egypt. In 2015, Egypt agreed to purchase nearly 50 Russian MiG-29M/M2s and more than two-dozen French Rafales. This represented a shocking turn of events after more than three decades of purchasing only American-made fighter jets. It was also driven largely by the U.S. embargo put in place in 2013, after the Egyptian army’s removal of then-President Mohamed Morsi, who had won the presidency in a 2012 election. The embargo caused significant tension between the two states driven by “an Egyptian sense that they were at a point of mortal peril” while the United States was moralizing about democratic reforms. Remarkably, the United States lifted the embargo in 2015 with virtually no change in Egyptian policies, no official U.S. “democracy certification”, and Egyptian military support for the Saudi-led war in Yemen. The U.S. arms embargo as a tool of coercive change was an abject failure.

A similar story played out in Indonesia more than a decade prior. A long-time arms client of the United States with no history of Russian imports, Indonesia announced a deal with Russia in 2003 to purchase Russian Su-27/30s. While Indonesia was always far more politically neutral than Egypt, this remarkable turnaround in arms sourcing diversification appears to be the result of a U.S. arms embargo implemented in 1999 in response to Indonesia’s apparent human rights violations carrying out heavy-handed military actions in East Timor. Furious at U.S. meddling in something the government considered a domestic issue, Indonesia looked instead to Russia with the specific intent to “overcome the effects of [U.S.] arms sales restrictions.” In other words, Indonesia looked to diversify, not capitulate. Indonesia continued sourcing Russian arms even after the United States lifted the embargo in 2005. Perhaps most remarkably, even after the United States agreed to give Indonesia 24 F-16s in 2012, the archipelago state still agreed to purchase 11 Russian Su-35s. The U.S. attempt at coercion not only failed but continues to perpetuate negative strategic effects today.

Who’s Afraid of Technology Transfer?

Another argument for a more restrictive arms export policy concerns direct industrial offsets (those economic agreements in which a supplier invests in the industry of a client state directly related to the arms being transferred) and technology transfer. However, these tools should not be feared. Technology transfer is unlikely to breed meaningful competition for the United States where it matters most, in the medium- to high-end markets, and instead gives the United States a source of political influence. The problem in many analyses is confusion over the type of technology transfer. There are three ideal-typical categories of transfer: material transfer, such as simple diffusion of weapons and machines; design transfer, like blueprints and schematics; and capacity transfer, which involves basic scientific knowledge and expertise within the industrial base. Most technology transfers ultimately fall into the first two categories, despite what a client state might hope for.

Consider the 2003 Polish decision to purchase F-16s from Lockheed Martin with direct offsets valued at more than $6 billion. This represented 170 percent of the program value and the then-largest in commercial history. Despite this massive investment, Poland does not design and produce their own fighter jets today, but rather subsections of American-designed systems under license. In fact, direct offsets provided inroads for U.S. industry in the Polish defense industry in a manner that strongly incentivizes the Poles to continue purchasing U.S. aircraft, and indeed Poland appears poised to purchase the F-35 in the near future. Offsets and technology transfer may have helped revive portions of the Polish defense industry and provided some domestic job creation, but it did not create an independent competitor to the U.S. defense industry. This is exactly as expected with material and design levels of transfer.

While some of the very largest industrial states, such as India or China, might eventually create a world-leading defense industry, it will remain out of the grasp of most states. Consider China, an unquestionable economic powerhouse of recent decades. Despite decades of arms purchases, technology transfer, blatant reverse engineering attempts, and hundreds of billions of dollars, China still turns to Russia for help with the most advanced weaponry such as fighter jets, helicopters, surface-to-air missiles, radars, and jet engines. If China, the second largest economy in the world struggles so mightily, what threat do smaller, less capable states pose? Capacity transfer, the acquisition of basic scientific knowledge and expertise crafted over decades, cannot simply be uploaded, emailed to another state, or hacked. Rather, it takes decades of intentional and costly investment. For high-end weaponry, where research and development costs remain a prohibitive barrier to entry, the United States and a handful of other advanced economies are likely to remain in the driver’s seat; even with generous technology transfer agreements.

Finally, consider some of the negative second- and third-order effects that excessive restriction caused in American unwillingness to commit to selling the U.S.-made Patriot missile system and its underlying technology to Turkey. This was recently posited as a U.S. export restriction success. However, this restraint looks less successful each passing day. Even with significant design transfer, it is unlikely Turkey could obtain the requisite capacity transfer to be self-sufficient in surface-to-air and anti-missile defense systems anytime soon. Conversely, by using U.S. technology, the United States could have legally restricted Turkey’s future export of it.

More importantly, Turkey has since agreed to purchase Russia’s advanced S-400 surface-to-air missile system, a blow to U.S. and NATO relations with Turkey. The S-400 purchase will put advanced Russian technology and military advisors inside a NATO ally and tier-two F-35 industrial partner that is a sole-source supplier on several F-35 components. As the Air Force Secretary said last year about Turkey’s S-400 agreement, “Sometimes it’s the United States that’s part of the problem.” Even worse, the United States has since approved the sale of the Patriot to Turkey, with the acting U.S. Defense Secretary recently commenting, “we need Turkey to buy the Patriot.” Was holding back on some surface-to-air missile technology worth the strategic cost? It appears unlikely.



Sometimes It’s Not Dollars, But Sense

As others have pointed out, the United States can afford to “make economic […] sacrifices” in order to privilege politico-security benefits in arms export decisions. As one author recently explained in War on the Rocks:

The United States is so economically advantaged in making and selling weapons that it can limit conventional-weapons proliferation [and] … technology diffusion, (and maintain a robust defense industrial base) while retaining its commanding market position.

This is undoubtedly true. However, on rare occasions economics do matter. Specifically, maintaining strategic flexibility by keeping a production line open which would otherwise shutter might sometimes need to be prioritized. Consider the two recent examples of the F-22 and F-15.

In December 2011, the final F-22 fighter jet rolled off the assembly line, 554 short of the original program requirement. At the same time, close U.S. allies such as Japan and Australia made inquiries about purchasing further increments of the fifth-generation fighter, which would have  kept production going for at least several more years. The United States rejected the inquiries, shuttering the production line instead. A 2011 RAND Corporation study estimates the cost of restarting production and fabricating 75 additional F-22s to be $17 billion — nearly $227 million per jet. Despite this cost and because of an evolving international security environment, the US Congress inserted language into the 2017 defense budget directing the U.S. Air Force to conduct a “production restart assessment,” though the likelihood of a production restart remains infinitesimally small.

Fortunately, the outcome is different for the F-15. In 2013, Qatar made a request for the purchase of 70 F-15QAs, worth $4 billion. At the time, without another export order the 40-year old F-15 production line was slated to close by 2019, eliminating any future purchases. After delaying approval for nearly three years, the U.S. administration finally approved the deal in late 2016, guaranteeing F-15 production into the mid-2020s. Unlike the F-22, the United States maintains strategic flexibility in F-15 (and F-18 and F-16) production, largely because of exports. This appears to be an especially prescient decision, as the FY2020 U.S. Air Force budget proposal requests money to purchase at least eight (and up to 100) F-15EX air superiority platforms; a platform one industry reporter highlighted “is only possible because other countries have spent roughly $5B over the last couple of decades to continuously evolve the F-15 into what it is today […] basically, the [Air Force] is getting [these upgrades] for free.”

What About Saudi Arabia?

In sum, more restrictive arms sales, delivery suspensions, or outright embargos are unlikely to succeed in policy coercion. While arms transfers provide an avenue of influence, embargos often lead to diversification, not desired policy changes. Additionally, fears of technology transfer and direct offsets creating a competitor out of every client are generally unfounded in the high-end market in which the United States generally deals. Finally, while the large domestic market provides the United States the luxury of sacrificing financial gains for political influence, sometimes economics do matter, particularly when it comes to saving a production line for future flexibility.

These conclusions should therefore inform U.S. policy on Saudi Arabia. The intent here is not to argue the moral or ethical responsibility of U.S. leaders in responding to Saudi Arabia’s execution of journalists or tactics in the war in Yemen. It is natural to see the horror wrought in Yemen and want to take any actions necessary to stop it. However, I ultimately argue against a Saudi embargo. This is not because, as the president has argued, it might cost a few billion dollars and some hundreds of defense industry jobs. As others have pointed out, the economic impact of Saudi arms purchases on the U.S. defense industry is relatively small. Rather, embargoing Saudi Arabia is unlikely to fundamentally alter Saudi policies, but likely to further damage U.S. ties with Riyadh.

In the near-term, Saudi Arabia can substitute other weapons, such as the Eurofighter and Tornado, and “dumb bombs” instead of U.S.-built “smart weapons.” The Saudis can also rely more heavily on their Emirati and Egyptian partners using non-U.S. produced arms. In the medium to long term, such an embargo is likely to push the Kingdom to greater arms diversification. If history is any guide, the United States will eventually lift any potential arms embargo with little change in Saudi behavior, but only after having provided an opportunity for adversary states such as Russia and China to gain a strategic foothold in Riyadh.

Some might counter that it would be extremely difficult and costly, in both time and money, for the Saudis to significantly diversify their arms acquisitions away from the United States. This is absolutely the case. However, costly does not mean impossible. Less wealthy states have already done it. Egypt is one example above; but others such as Venezuela and even tiny Kuwait — frustrated at years of U.S. approval delays — have significantly diversified their arms acquisitions. In other words, with the money and options available to Saudi Arabia, and few other producers showing a stomach for a full embargo, it is not unreasonable to believe that the Saudis might significantly diversify their arms acquisitions over time in response to a U.S. embargo. Thus, while a U.S. embargo might be morally compelling and emotionally satisfying, it is unlikely to create meaningful change for those most at risk or be strategically beneficial to the United States. In the absence of a compelling, evidence-based case that an arms embargo on Saudi Arabia might produce desired changes in behavior, policymakers should look elsewhere for solutions to their Saudi problems.



Lt. Col. Ray Rounds is a U.S. Air Force F-15E pilot and a Ph.D. candidate at Georgetown University in International Relations. He is a U.S. Air Force School of Advanced Air and Space Studies graduate and a former Mirage 2000 exchange pilot with the French Air Force. The views expressed are those of the author and do not reflect the official policy or position of the U.S. Air Force, the Department of Defense, or any other branch or agency of the U.S. government. You can follow him on Twitter: @banzaIRay


Image: U.S. Army Aviation and Missile Command