Sales of military weapons by U.S. contractors to foreign governments doubled in the past year, as … the U.S. government loosened policies to allow more American weapons to be sold on the world market.
A total of $21 billion in arms sales agreements were signed from September 2005 to September 2006, compared with $10.6 billion in the previous year, according to data compiled by the Pentagon. Foreign military sales agreements have typically ranged from $10 billion to $13 billion a year since 2001.
A number of factors are behind the surge in sales. Since Sept. 11, 2001, the Bush administration has used arms sales as a way to reward allies and cement international relationships. Middle Eastern countries, flush with oil revenue, have become big buyers. Countries like India, Pakistan and Indonesia that were once barred from buying American weapons have had those bans lifted, and some have placed big orders.
One of the biggest orders was placed by Pakistan, which had been banned from buying most American weapons because of its nuclear program. A similar ban on India was also lifted, opening a potentially lucrative market to American contractors.
Foreign sales also have an importance to military contractors beyond the dollar value of the contract: Once a country buys a weapon system, it will need to continue to buy spare parts or upgrades.
"In the next couple of years," said Cai Von Rumohr, an industry analyst with S.G. Cowen in Boston, "foreign sales as a percentage of company revenues will be tracking up."
[The New York Times]
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