As he surveyed the current global market for U.S. weapons and military-related equipment, a former assistant secretary of state for political-military affairs, noted a growing appetite among Asian nations for maritime security platforms, particularly those with intelligence, surveillance and reconnaissance (ISR) capabilities.
Andrew Shapiro, who left the Obama State Department in 2013 and is now a managing director at Beacon Global Strategies, told an audience of defense, aerospace and financial executives at a Cowen & Company conference in New York City on February 5 that the cutbacks in defense spending by Congress has inevitably led to more interest on the part of U.S. defense contractors in the potential of overseas markets.
Whether these transactions are handled through the government-to-government “Foreign Military Sales” channel or the company-to-government “Direct Commercial Sales” process, the opportunities for sales to foreign customers has been inspired, in part, by the fact that “the geo-political environment is as tumultuous as we’ve seen since the end of the Cold War,” said Shapiro.
He noted that the U.S. Government is encouraging the heightened focus on overseas sales for at least two reasons: (1) as the U.S. Government lowers its strategic profile around the world, it nonetheless wants to encourage its international partners to help it pursue its traditional counterterrorism, maritime security and anti-drug trafficking goals, and (2) in order for these partnerships to be effective, the international partners ought to be deploying “interoperable” U.S. military equipment.
Shapiro urged the defense contractors represented in the room to seek out foreign sales, but he soberly warned them that such sales are complex and difficult to consummate. He explained that Foreign Military Sales (FMS), which often are unusually complicated, require the active participation — and formal approval — by the U.S. Defense Department (which must OK the sale’s military wisdom), the State Department (which addresses the regional security interests, human rights questions and non-proliferation concerns) and the Congress (which reviews the “Big Ticket” arms sales packages.)
In his quick survey of sales opportunities around the world, Shapiro offered these observations:
- Several Asian countries have expressed an interest in beefing up their maritime ISR capabilities, as well as acquiring U.S. unmanned aerial vehicle (UAV) technology, with or without the ability for these UAV systems to carry weapons.
- Saudi Arabia, which traditionally has been the biggest customer in the Middle East of U.S. defense equipment, may become somewhat less reliable a buyer in the near future. Saudi officials have been sending veiled signals to the Obama administration in recent months that they are less than pleased with America’s current policies in Iran, Syria, Egypt and elsewhere. They have hinted that they may entertain offers for military equipment from countries other than the United States, in an effort to make their discontent manifestly clear to the White House, Shapiro explained.
- A host of countries have indicated their interest in new military-related purchases (Shapiro cited the UAE, Turkey, Poland, Japan, Korea, Australia, Malaysia and Indonesia), but he pointed out that none of these nations can make purchases that will come even close to the size of those routinely placed by Saudi Arabia in the past.
- The long-standing notion that foreign customers will only purchase U.S.-made defense equipment if, in fact, the U.S. military has already purchased the exact same equipment, may no longer apply, said Shapiro. Because foreign customers often are operating with much smaller military budgets, he explained, they might be interested in acquiring highly-capable, but much-less-expensive, systems from U.S. manufacturers, even if they U.S. military has not yet procured those precise systems.