Wednesday, June 10, 2009

Obama focus on coalitions may buoy U.S. arms exports

By Andrea Shalal-Esa
WASHINGTON (Reuters) - The Obama administration's focus on building coalitions may spur more global arms sales for the world's leading weapons exporter, a welcome prospect for U.S. defense contractors facing a shrinking defense budget at home.
The global recession may dampen or delay the foreign appetite for weapons orders somewhat, but many countries' arsenals are in urgent need of modernization.
Even in tough economic times, countries generally view defense accounts as a top priority, particularly given mounting concerns about enemy missile attacks and other threats, said Eric Edelman, who served as undersecretary of defense for policy during the Bush administration.
Edelman, a former U.S. ambassador to Turkey and Finland, said demand would likely remain high for cutting-edge U.S. products such as precision munitions, unmanned aerial vehicles and missile defense capabilities.
"A lot of countries are going to be looking for American goods and services," said Edelman, a fellow at the Center for Strategic and Budgetary Assessments. "There is a good market out there."
U.S. defense cuts announced by Defense Secretary Robert Gates in April are also spurring American companies to pursue foreign orders more aggressively, he said.
BIG-TICKET COMPETITIONS
U.S. companies are already vying for huge fighter and helicopter orders from India, helicopter work in Australia and shipbuilding work for Saudi Arabia and others.
Exports should also be buoyed as orders materialize from Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway -- the partner countries helping to develop Lockheed Martin Corp's F-35 fighter jet. Valued at over $200 billion, the radar-evading jet is the world's biggest weapons program.
Israel, Singapore, Japan and Spain were also interested in ordering the fighter, said Marine Corps Brigadier General David Heinz, head of the F-35 program. Work could start on pricing airplanes for Israel by the end of the year, he said.
Some lawmakers, keen to maintain production of the F-22 fighter, also built by Lockheed, have revived the idea of exporting that fighter to a select few allies, such as Japan.
At the same time, Lockheed's C-130 transport plane and Boeing Co's C-17 could pick up extra orders in Europe, given delays in the A400M plane developed by EADS.
Raytheon Co, which says big demand for Patriot missiles from the United Arab Emirates, Kuwait and Taiwan boosted global sales by 20 percent last year, forecasts even greater growth of 22 percent to 24 percent in 2009.
U.S. arms deals soared nearly 50 percent to $24.8 billion in 2007, accounting for 41.5 percent of all such agreements. The top five buyers were Australia, Turkey, Egypt, the United Arab Emirates and Iraq, according to the nonpartisan Congressional Research Service. [ID:nN04224011]
Analysts and industry executives say President Barack Obama is likely to continue the Bush administration's focus on training and equipping foreign militaries. Sales may even get a boost from Obama's drive to build coalitions and partnerships. Continued...
Source: Reuters

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