Proliferation Press

A webpage devoted to tracking and analyzing current events related to the proliferation of WMD/CBRN.

Archive for March, 2007

Proliferation Press Rewind: Joe McGraw’s Response to “Debunking the Sovereignty Solution”

Posted by K.E. White on March 28, 2007

Below is Joe McGraw’s March 12 response to an earlier Proliferation Press post.

The post reviewed “The Sovereignty Solution,” a new US Strategy written by Anna Simons, Don Redd, Duane Lauchengo, and Joe McGraw presented in The American Interest.

The co-author’s response:

Mr. White is indeed correct in his posted response from 3 March. We do consider our concept quite distant from strategies of Pax-Americana. And this point is paramount: The Sovereignty Solution is fundamentally different from other proposed strategies. It is not isolationism, nor Empire, nor ‘new’ containment (and certainly not multilateralism). The foreign policy that we advocate is predicated on collaborative bilateral relationships, and these relationships we define and describe in the article.

The article in The American Interest provides a glimpse at this foreign policy that we term ‘SSR’, but even the careful reader might miss the other two pillars of our proposed Grand Strategy: ‘Indivisible America’ or IA (a complimentary domestic policy), and the creation of an operational capability that we term ‘Ethnographic Intelligence’ or ‘EI’. Together, SSR, IA, and EI provide a complete and yes, simple framework for national strategy that is both direct and clear. We do strongly reject the ad-hoc strategies of ambiguity that have been the hallmark of American leadership since the end of Cold War Containment.

Good blogging-edicate demands that I not redress all of Mr. White’s points in one sitting, but I do appreciate the opportunity today to take up his bifurcated critique of the Sovereignty Solution. Mr. White, with the powers of Janus, takes issue with “Sovereignty” both through analogies to the past, and predictions of the future.

THE PAST. Historical analogies are always a tad tricky to pull off; aside from casual comparisons between eras and societies, they just aren’t very useful for analysis. The comparison of our concept to the Austrian policies of 1914 is one such stretch. Our concept relies on functioning Constitutional government, liberal democracy, and unchallenged military dominance in air, sea, and space. Things not to be found in Austria at the turn of the 20th Century. One could easily make a more profound historical analogy between our concept and the strategy of the 1979 Pittsburg Steelers (who at least did have dominance in the air, and stout domestic support).

To be fair, the comparison was drawn over the mechanism of ‘demands’. Demands are a critical component of our strategy. They fit into the bilateral relationship framework. If US sovereignty is attacked (if our citizens are slaughtered), we deliver demands to the state which owns the problem. If the owning state refuses, the state is part of the problem, and the SSR response is to destroy the state’s levers of power–the government. But not to occupy, not to re-build, not to recast better governance. Simply to punish and destroy it. And those are things that American power can do rapidly. Had Austria the power of 2 aircraft carrier groups and an airborne division, AND the strategic clarity to punish and destroy, AND the balance of Constitutional power to seek and approve a representative sanction for defensive war, the analogy would fit a degree better.

The comparison to the WWI balance of power is not lost. Surely, the alliance structure of Europe is the quintessential vision of Westphalia philosophy come to terrible fruition. “Sovereignty” does rest heavily on the philosophy of Westphalia; we do believe the state structure is the best way to put the non-state ‘genies’ of disorder back into their respective state-lamps. But we adopt the philosophy of Westphalia to 21st Century realities. The Peace of Augsburg was defined through the line “cuis regio, eius religio” (whose region, his religion). We adapt it to the realities and requirements of today: cuis regio, eius reus (whose region, his responsibility). Because, dear readers, it is all about responsibility. If you want to be treated as sovereign of your state, fine. You got it. But you get it with all the trappings: the respect of your sovereignty from the United States comes with the accountability for it. And the United States will now hold you accountable. Such simplicity does not equate to unrestrained US power, the decision on if and when to use military force depends upon the bilateral relationship following an attack on US sovereignty. So, our citizens have just been attacked and killed. And the perpetrators crawled out from within your borders. What has your relationship been with the US? What do you want it to be now?

THE FUTURE: Mr. White cautions that future US strategy will grow out of the eventual end to operations in Afghanistan and Iraq. How terribly sad, and possibly prophetic, that assertion is. To say that it might be so is frightful commentary on American perception of strategy, to say that it will be so is to declare that such decisions are beyond the confines of national debate and reason. We, the light bulb installers, optimistically disagree.

The policy school that declared strategic planning was a thing of the past grew out of the late 1960s and exploded in the 1990s. The reasoning was that international events unfolded too fast to ever make a single, comprehensive strategy feasible. One might say this is simply laziness on the part of policy makers to establish an overarching doctrine of US security interests tied directly to sustainable ends, ways, and means. A cynic might add that this is nothing more than a way in which to conduct policy by the seat of one’s pants without holding firm to a position that political opponents might call to account. Either way, ad-hoc strategy has proven for the past 20 years to be a dangerous and costly proposition. One that the nation could certainly do without.

As we point out in the article, the reason that so many societies around the world can point to the United States and scream “hypocrite” is that, simply, we are. It stems from ad-hoc policy that is wielded largely for the best of intentions. And it doesn’t work. Democracy for Egypt…but not for Pakistan. Autocracy for Saudi Arabia…but not for Syria. Communism for China…but not for Venezuela. Reform for Gaza…no wait. This is realpolitik, global chess one might say, in action. This is what strategic ambiguity provides.

What we propose is containment of threats through cultural relativism and the power of state sovereignty. Furthermore, we underscore the primacy of bilateral relationships, and the rights, responsibilities, and accountability state sovereigns have over their respective populations. Read the article. Even if you disagree with one, some, or all of our concepts, we firmly promise that you will watch the news tonight through a different eyes: our concept has a 72 hour ‘flash to bang’ detonation process that will make you more a believer than you ever thought (or possibly wanted).

These opinions are my own. I, a single component of the ‘et al’, and but one of four light bulb installers. Mr. White, the floor is yours!

Posted in American Interest, Anna Simons, Debunking the Sovereignty Solution, Joe McGraw, Security Studies, United States | Leave a Comment »

ITT Pleads Guilty to Illegally Selling Weapons Technology to China

Posted by K.E. White on March 28, 2007

Night Vison GogglesYesterday ITT Corp pleaded guilty to violating weapons trade prohibitions when it sold night vision goggles to China, Singapore and Britain. 

The company will pay $100 million fine for two violations of the International Traffic in Arms Regulations (ITAR): 1) improper handling of sensitive documents and 2) making misleading statements.

More on the significance of the ruling, responses from ITT Corp. and the US Department of Justice, and more information on the ITAR is provided below.

In short: ITC admited to wrong doing (but contends it wasn’t that bad), the US Department of Justice looks tough, and ITT will now invest money in–and make profit on–night vison googles technology. Why? Because ITT promises that only the United States will be privy to any technological advancements.

Why is this news? From The Register:

“According to the DoJ, ITT will be the first major defense contractor convicted of a criminal violation of the Arms Export Control Act.”

The Register provides these additional details:

ITT illegally exported military night vision goggles to China. For good measure, it supplied some classified technical data about a laser counter measure known as a “light interference filter”. Now it is paying the price for its skulduggery: a whopping $100m fine.

The US defense contractor also sold the goggles to Singapore and the UK, both allies of America the last time we checked. But, here’s the rub: the company didn’t fill in the necessary paperwork and in some cases it omitted material facts from its Arms Exports Required Reports. According to the US Department of Justice, ITT knew that it was violating its export licenses but failed to take action until just before it was found out by the US Department of State.

ITT’s response

“We have been cooperating with the government in this investigation and we have voluntarily disclosed all discrepancies that our internal reviews revealed,” said Steven R. Loranger, chairman, president and chief executive officer of ITT Corporation. “While this settlement relates to the actions of a few individuals in one of our 15 business units, we regret very much that these serious violations occurred. I want to reinforce, however, that the heart of our night vision goggles – the tube – is secure. No technical information regarding the tube was ever compromised.”

Loranger added, “Our renewed commitment to a culture of integrity and compliance applies to the entire company. ITT has a long track record as a trusted employer, supplier and partner, and we are firmly committed to ensuring that this will not happen again. These violations have made it clear that we had gaps in our compliance programs. The steps we are taking now will address these issues in a comprehensive way.”

The company has already begun implementing stricter new measures such as:

  • Insuring that all personnel understand and follow applicable regulations governing the export of critical technology
  • Naming a new compliance officer
  • Instituting a required ethics and compliance training program for all employees worldwide
  • Developing a comprehensive computer tracking program to monitor all packages sent from ITT facilities
  • Working with independent experts to refine and enhance the effectiveness of these measures.

The Department of Justice chimes in:

Assistant Attorney General Wainstein said, “The sensitive night vision systems produced by ITT Corporation are critical to U.S. war-fighting capability and are sought by our enemies and allies alike. ITT’s exportation of this sensitive technology to China and other nations jeopardized our national security and the safety of our military men and women on the battlefield. We commend the prosecution team and ITT Corporation for developing a plea agreement that addresses the violations of the past, ensures compliance in the future, and serves as a strong warning to others who might be tempted by the profits of such illegal exports.”

More on the ITT Corporation: 

ITT Corporation ( supplies advanced technology products and services in several growth markets. ITT is a global leader in the transport, treatment and control of water, wastewater and other fluids. The company plays a vital role in international security through its defense communications and electronics products; space surveillance and intelligence systems; and advanced engineering and related services. It also serves the growing leisure marine and electronic connectors markets with a wide range of products. Headquartered in White Plains, N.Y., the company generated $7.8 billion in 2006 sales. In addition to the New York Stock Exchange, ITT Corporation stock is traded on the Paris, London and Frankfurt exchanges.


More information on the International Traffic in Arms Regulations:

Posted in China, illegal weapons trade, ITAR, ITT, night vison goggles | 1 Comment »

The Quandaries of a Secure Middle East? Egypt’s Proposed Constitutional Reforms Run Into Stiff Resistance

Posted by K.E. White on March 27, 2007

Numerous news-outlets are reporting on the bind Egypt’s moderate, democratic government has found itself in after trying to push religious parties out of the government. 

From Al Jazeera: 

Egypt‘s judges have vowed to boycott the supervision of future polls after rejecting the results of a referendum that approved a series of changes to the constitution.

“The judges wash their hands of the referendum results,” Ahmed Sabr, a spokesman for the body that represents the country’s judges, said on Tuesday. 

“We will no longer be a fig leaf to cover something shameful.”

The changes, which will help the government exclude religious parties from the political system, were backed by 75.9 per cent of people who voted but human rights groups estimated that turnout was less than 10 per cent.

The Egyptian justice ministry said 27.1 per cent of registered voters took part. 

The Economist caught the cynicism of the constitutional amendments:

Finally, in an Assembly where the Muslim Brotherhood, with less than a quarter of parliamentary seats, is still the only thing even remotely resembling an effective opposition grouping, further attempts to keep it out of political life are certain to be seen as anti-democratic. This is especially the case given the continuing stringent constraints on the formation of other opposition parties. If the Egyptian government were really serious about opening up the political arena to a secular alternative, it would abolish the stranglehold on the formation of new parties exercised by its highly restrictive Political Parties Committee.

The Middle East Times gives more details: 

The regime has defended the move as a boost to democracy and security, but the opposition and rights groups have described the changes, especially new anti-terrorism measures, as a major setback for basic freedoms.

“I affirm again that democracy will not be achieved only by constitution and legal texts but also by broadening participation,” Mubarak said in a televised address.

However, officially only 27.1 percent of the 35-million-strong electorate turned out, compared with 53 percent in a referendum two years earlier that paved the way for Egypt’s first contested presidential election.

The official American response? Take a look at these accommodating words from Secretary of State Condoleezza Rice:

“We have had a discussion. I have made my concerns known as well as my hopes for continued reform here in Egypt,” Rice told a news conference after meeting with Mubarak.

“The process of reform is one that is difficult. It’s going to have its ups and downs. We always discuss these matters in a way that is respectful, mutually respectful. But I have made my concerns known, and we have had a good discussion,” she said.

Protesters seem to have had enough of “being mutually respectful.”


Posted in Condoleezza Rice, Constitution, Egypt, protesters, reforms | Leave a Comment »

Is America Losing Pakistan to China?

Posted by K.E. White on March 27, 2007

Syed Mohammad Ali’s take on India and Pakistan’s place on the geo-strategic chess board:

Pakistan is thus keen on developing even closer ties with China. Ignored by the US, Pakistan is now undertaking nuclear energy cooperation with China. There are plans to build six more nuclear reactors, besides the one already built with Chinese help in Chasma. China has helped Pakistan build the Gawadar deep-sea port as well. For Pakistan, Gwadar’s distance from India is of strategic importance. Gwadar also provides China a foothold in the Arabian Sea, which heightens India’s feeling of encirclement by China. But China is currently more interested in getting a strategic foothold near the Persian Gulf region, vis-à-vis the US. China is in fact on a path of rapprochement with India, but unlike the US it remains more cautious about not sidelining Pakistan in this process.

There are internal compulsions requiring greater cooperation despite the lingering tensions between previously hostile neighbours. Cooperation in the energy sector to fuel economic growth is one such example, although this example is not free of contentions either. One of the proposed projects is a gas pipeline between Pakistan, Iran and India, and Turkmenistan, India and Afghanistan, respectively. Many experts have opined that there is no evidence of huge quantities of gas in Turkmenistan to justify the laying of a pipeline. Besides, the government in Kabul is in no position to guarantee the security of such a pipeline. Moreover, it would be difficult to raise finances for such a risky project in Western financial markets, even though the US is more in favour of this pipeline than one going through Iran.


Besides an escalation of violence in Afghanistan and creating more turmoil in Pakistan, another immediate consequence of a strike on Iran as part of a broadening of the US ‘war against terror’ would be a humanitarian crisis in terms of the movement of refugees into the Herat, Farah and Nimruz provinces of Afghanistan, and towards Balochistan in Pakistan. An influx of Irani refugees into Afghanistan would no doubt destablise an already fragile Afghan government. Already, Pakistan has announced that all 2.4 million Afghan refugees must return home by 2009, despite the Afghan government’s inability to ensure their adequate resettlement.

Posted in China, India, Pakistan, Syed Mohammad Ali, US | Leave a Comment »

Israel’s Successful Anti-Missile Test

Posted by K.E. White on March 27, 2007

Israel might just be showing the world how to live in a world of nuclear anarchy.

While no where near Reagan’s epic aim of a world-wide missile shield, Israel’s slimmed down Arrow system that just counter a nuclear-weaponized Iranian state:

Turgeman told The Jerusalem Post that the improvements to the missile not only reduced manufacturing costs – by some 20 percent – but also improved its ability to intercept incoming ballistic threats.

The Arrow missile has proven its capabilities time after time,” Arieh Herzog, head of the Homa missile defense agency, said. “The Arrow protects Israel from all ballistic missiles in the region,” he said.

Defense Minister Amir Peretz praised the successful launch, calling it “another stage” in the development of Israel’s missile defense system that provided protection against long-range threats to Israel.

This success builds on past successes for Israel, one that reflects the profound worry over Iran’s perceived nuclear ambitions.

And recent reports on Iran’s decision to limit cooperation with the IAEA have no doubt added to Israeli concerns.

Here more information on Israel’s ARROW anti-missile system.

Posted in anti-missile, ARROW, Iran, Israel, WMD | Leave a Comment »

M.I.A. NPT: Does the Nuclear Nonproliferation Treaty Fail to Deter Proliferation?

Posted by K.E. White on March 26, 2007

According to two academics, the NPT “has not deterred proliferation at the systems level.”

“Enthusiasm for the NPT among proliferation opponents thus appears to be misplaced,” write Dong-Joon Jo (University of Seoul, Korea) and Erik Gartzke (Columbia University).

The academics come to this conclusion by statistically investigating factors that lead countries to proliferate around the globe.

Now one may point out the following: the NPT is not a completely globally regime. The nations that have ‘illegally’ proliferated (meaning not recognized by the NPT) are Pakistan, India, Israel, and most recently North Korea. South Africa also had nuclear weapons, but latter renounced them.

None of those proliferators were members of the NPT—North Korea left the treaty.

This is not to say that Gartzke and Jo have a point: the NPT has not reversed nuclear proliferation.

They are also correct to show that membership within a treaty should not be seen, in and of itself, as a determinate in whether proliferation occurs around the globe.

But they fail to address the legitimatizing power of the NPT, and how it has been used to restrain nuclear proliferation for over three decades.

This is a long-winded way of asking: What’s the right benchmark to gauge success?

For Gartzke and Jo they just look at the numbers: finding that nations have proliferation weapons, and that being a member or not did not seem to have as much weight as “major power status”.

But that is because they treat NPT “membership” as a number, and emphasize the cases of proliferation–(and ignores probable cases of nuclear reversal).

No where do they discuss the NPT as a vehicle for nation-states to develop nuclear policy, instead they want to reduce it to a single anti-proliferation weight.

Ian Bellany writes in Curbing the Spread of Nuclear Weapons:

A final conclusion relates to the NPT itself. Like all good arms control treaties, it should be at constant risk of failure since, like a good nuclear-free zone, it is doing a job work. Its success as an international arrangement is not therefore to be judged by occasional failures as such (which simply demonstrate the fact that it is needed) but by how well its chief backers react and adapt to these emerging realities (3).

Bellany points out an important aspect of the NPT: it is a tool for nation-states to change viewpoints on the global security context. Simply pointing at an objective aspect of the treaty—membership—does nothing to address either 1) nuclear proliferation or 2) the role of NPT plays in the proliferation of nuclear weapons.

The treaty is a forum (as Gartzke and Jo themselves argue), and its success depends on the actions of its members—particularly its permanent five members. Looking at North Korea’s isolation—caused in no small part by its withdrawal form the NPT—seems to suggest that legitimacy does matter when it comes to proliferation.

And the NPT bestows that international legitimacy.

But most troubling, Jo and Gartzke seem to pay no attention to proliferation reversals (such as South Africa and the post-Soviet Republics). They thereby only look to cases of proliferation, and not counter-proliferation, to gauge the treaty’s value.

Conclusion: Dong-Joon Jo and Erik Gartzke fail to actually substantiate their dire NPT conclusions.

Are there problems within the treaty that Jo and Gartzke point out? Yes.

May the world be on the cusp on a nuclear tipping point? Yes.

Has the NPT radically changed nation-state conceptions of international security? No.

But the NPT has undoubtedly contributed to an atmosphere of trust and predictability–as only an international agreement can foster.

Will Iranian resistance break this fragile regime? Perhaps.

But the regime, even if it ended tomorrow, has played a role in limiting the spread of nuclear weapons.

No past proliferator can be used as proof for the failure of the NPT. In fact, the limited proliferation since the NPT’s inception is proof of success.

Again, President Kennedy predicted a world of 15 to 25 new nuclear-weapon states.

And where are we today? Four.

Seems like a roaring success.

Now some may disagree with this baseline for NPT success. But Dong-Joon Jo and Erik Gartzke fail to justify their own bench line—or even articulate one.

Instead they do some statistical magic, offer no historical analysis, and come to ‘hard’ conclusions on the usefulness of the NPT.

Totally (un)impressive.

Posted in Determinants of Nuclear Weapons Proliferation, Dong-Joon Jo, Erik Gartzke, NPT, Nuclear Nonproliferation Treaty | 1 Comment »

Musharraf On His Way Out? Not Stopping Pakistan’s Cruise-Missile Program

Posted by K.E. White on March 22, 2007

Pervez MusharrafToday’s Washington Post lead editorial heralds the “lame duck” Presidency of Musharraf, considering Musharraf “unable to rein in Talibanization in Pakistan or guide the country toward a more democratic future.”

Musharraf has faced stiff public resistance for removing Pakistan’s top national judge.

And this public turmoil in Pakistan—a nuclear weapons state—coincides with deadly mudslides in Kashmir and its recent cruise-missile test.

Is Musharraf’s fate sealed? And will this mean a severely troubled (or even failed) state in Pakistan—a country with an active nuclear weapons program?

Ahemed’s Rashid writes on Musharraf’s loss of support from his own political party, the nation’s intelligence agencies, and from the international community:

Moreover, Musharraf is losing control of three key elements that have sustained his rule but are now either distancing themselves or turning on him completely. The first is the ruling Pakistan Muslim League Party, which has acted as the civilian appendage to the military but faces an election and knows that going to bat for the unpopular Musharraf will turn off voters. Party leaders and cabinet ministers are already distancing themselves from him.

The second element is the country’s three intelligence agencies, which are at loggerheads over control of Musharraf, Pakistan’s foreign policy, its political process and the media. Military Intelligence and the Inter-Services Intelligence are military agencies, while the largest civilian agency, the Intelligence Bureau, is now run by a military officer. Ironically, Inter-Services Intelligence, the most powerful agency in the country, has been the moderate element urging Musharraf to open up the political system to the opposition parties. The other two agencies are the hard-liners and are urging Musharraf to adopt even tougher measures.

The third loss for Musharraf has been the unqualified international support he has received since the Sept. 11, 2001, attacks. Anger in the U.S. Congress and media, and particularly among members of the Republican Party, toward Musharraf’s dual-track policy in Afghanistan — helping to catch al-Qaeda members but backing the Taliban — is making it difficult for President Bush to continue offering Musharraf his blanket support.

The Times of India adds an important component, Musharraf’s loss of support within the Pakistani military:

Hard-line Islamists, favoured previously, are now out, and soldiers charged with mutiny have received the death penalty, says Hoodbhoy. Although this has further deepened pro and anti-US divisions within the army, among both commissioned and non-commissioned officers, Musharraf clearly expects to remain the president well beyond the October 2007 elections, as well as extend further his term of leadership of the army.

“To achieve this end, whatever needs to be done will be done; principles and rules are elastic,” Hoodbhoy says. He also writes that the US remains “clueless” on how to deal with Pakistan and its problems. “One might have expected the Americans to know better than to bet all on a man who might be gone tomorrow. But, beyond pumping in dollars and supporting Musharraf and his military, the US appears clueless in dealing with Pakistan and its problems of social development,” says Hoodbhoy.

These developments will undoubtedly cause diplomatic heartburn from the United States. Whatever Musharraf’s faults, he kept Pakistan (relatively) stable and was a key ally (though imperfect) of the United States.

Whatever is to come of Musharraf, unpredictability in Pakistan’s politics carries with it profound ramifications in global security.

Posted in Ahmed Rashid, cruise missle, judge removal, Kashmir, Musharraf, Pakistan, WMD | 7 Comments »

Is Siberia the Key to Resolving the Iranian Nuclear Crisis? Russia Opens an International Atomic Fuel Center

Posted by K.E. White on March 20, 2007

Russia has given the IAEA use of a Siberian enrichment facility. The site can now be used to grant nations fuel for their nuclear power plants.

Nations would then have enriched uranium needed to meet their energy needs, without developing their own enrichment facilities. 

Why the problem with countries having their own enrichment capabilities? Because once a nation gets its own enrichment facilities, there is nothing to stop a nation from developing their own nuclear armaments save 1) trust in the regime and 2) a pre-emptive strike.

This would solve a growing strain within the global non-proliferation regime. The Nuclear Nonproliferation Treaty prohibits its members (which include Iran) from producing nuclear weapons. But the treaty also confers onto its members a right to other nuclear technology. 

The NPT has become almost paradoxical: banning the spread of nuclear weapons, but allowing any of its members to get right to the edge of developing these weapons legally. A member can then announce their intention to live, and in 6 months a country would have “legally” proliferated.

The Iranian nuclear crisis results from this very diplomatic gray-zone. Iran officially desires an independent nuclear program. But once Iran develops its own enriched uranium, it is only a few steps away from a weapons program. 

From Bloomberg News

The center will be registered by summer and be 10 percent owned by Kazakhstan and 90 percent by Russia, said Vladimir Servetnik, deputy chief executive officer of Tenex, Russia’s state-owned nuclear trader. Other potential partners include India, China, Japan, South Korea and South Africa.

“The ownership is structured so that Russia can offer parts of its stake to other interested parties,” Servetnik said.

Russia plans to sign an agreement with Kazakhstan soon which will allow the center to be registered as a company. The international nuclear center will be overseen by the IAEA, which will have a seat on the plant’s supervisory commission.

“The successful functioning of the center is only possible under the aegis of the IAEA,” Servetnik said.

Novosti adds these details:

A delegation from the International Atomic Energy Agency (IAEA) is visiting the Angarsk chemical plant, the site of a uranium enrichment center, a senior IAEA official said Tuesday.

Last October, Russia and Kazakhstan, which holds 15% of the world’s uranium reserves, opened their first joint venture to enrich uranium in Angarsk, East Siberia.

The venture, which was part of Moscow’s non-proliferation initiative to create a network of enrichment centers under the UN nuclear watchdog’s supervision, will also be responsible for the disposal of nuclear waste.

To learn more on the evolution of the international fuel bank proposal, read this Christian Science Monitor article.

Posted in enriched uranium, IAEA, international fuel center, Iran, Russia, Siberia, United Nations, WMD | Leave a Comment »

Do Defense Contractors Recieve Unfairly Bloated Returns? Does Public Opinion Determine America’s Defense Spending? Robert Higgs Answers these Questions and More

Posted by K.E. White on March 19, 2007

Robert HiggsRobert Higgs recently published work, Depression, War, and Cold War: Studies in Political Economy, explores the finances of America’s evolution into a global hegemon during WWII and cemented during the Cold War.

Higgs casts a critical eye on America’s superpower evolution:

Not the least of this self-damage was the transformation of the executive branch of the federal government into a secretive, highly discretionary, often ill-advised, and badly informed organization that was far too dedicated to attempting the futile task of running the whole world. (xii-xiii)

Proliferation Press highlights two chapters of his recent book. The first explores the profits of defense contractors, and the second looks at the relationship between public opinion and American defense spending.

Profits of U.S. Defense Contractors

Do Defense Contractors defy market forces? Are defense industries being handed profits unfairly owing to a corrupt political system?

Higgs response: Not really.

But defense contractors do receive a significantly greater total market returns.

From Depression, War, and Cold War:

That claim that investment in defense companies was riskier than investment in the overall market is not compelling…We found that the systematic risk…borne by an investor in the top contractors as a group did not differ significantly from the risk borne by an investor in the overall Markey during the 1970s and 1980s.

These finds establish that the financial performance of the leading defense contracting companies was, on the average, much better than that of comparable large corporations during the period 1948-89. The findings do not justify a normative conclusion that the profits of defense contractors were “too high,” particularly in the case of the accounting rates of return (Fisher and McGowan, 1983)…

Either (a) the Capital Asset Pricing Model does not capture some relevant risk perceived by investors in defense firms or (b) investors persistently guessed wrong, leaving stocks undervalued over very long periods.

Does Public Opinion Determine U.S. Defense Spending?

Or is it all structural, with anyone outside the ‘military industrial complex’ hopelessly unable to change their nation’s defense priorities?

Higgs’ surprising claim:

Other ‘causes’ that are normally advanced by analysts (domestic economic conditions, perceived foreign threats, and so forth) do not directly determine changes in defense spending…”

Higgs goes back to exploring the impact of public opinion on defense spending. Higgs finds a curious correlation between the changes in public opinion on whether more money should be spent on spending and actual changes in defense spending.

While returning to the view that public opinion should not be seen as the determining factor in charting swings in defense spending, Higgs does the good service of bringing the public back—and especially how political elites contest over public opinion—to win their battles of spending for America’s national security.

Although surprising at first, the finding that public opinion alone is a powerful predictor of changes in defense spending seems, on reflection, exactly what one ought to have expected. Despite how defense (and other) analysts normally conceive of public opinion—as one element in a long list of commensurable influences…public opinion stands conceptually on a place by itself. It is a different kind of variable. Public opinion expresses people’s preferences regarding policy action. Other “causes” that are normally advanced by analysts (domestic economic conditions, perceived foreign threats, and so forth) do not directly determine changes in defense spending; rather, they determine what decision makers and the public prefer with regard to changes in defense spending. Once public opinion has revealed itself in the polls (or in other ways), government officials, especially those immediately concerned with reelection, face a constraint. They must either act in accordance with public opinion or bear the political risk inherent in deviating from it.

Higgs reminds scholars and non-scholars alike to not toss public opinion away too quickly when seeking to understand U.S. defense spending. Instead he re-opens the black box of public opinion and demands greater attention be paid to this highly prized, greatly contested over, and greatly unknown variable.

Posted in Defense contractors, Defense spending, Executive branch, Foreign Policy, political economy, Robert Higgs | 1 Comment »

The Troubled India-EU Free Trade Deal: WMD Issues to Blame?

Posted by K.E. White on March 16, 2007

Free-trade talks between the EU and India have run into trouble.

 From the South Asian Times

Similarly, India is opposed to having a clause relating to weapons of mass destruction (WMD). Although the clause would commit India to supporting international conventions against chemical and biological weapons, it would not deal with the nuclear Non-Proliferation Treaty, which India has declined to accept.

Annalisa Giannella, adviser on WMD to EU foreign-policy chief Javier Solana, confirmed this month that some EU states are willing to omit such a clause. She argued that if the EU fails to apply to India the WMD clause it systematically includes in agreements with other countries, this would “establish a terrible double standard”.

Posted in Annalisa Giannella, India, India EU free trade, Nuclear, WMD | Leave a Comment »