U.S. says its arms exports boomed this year

WASHINGTON Wed Sep 3, 2008 9:07pm EDT

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WASHINGTON (Reuters) - U.S. government-brokered overseas arms sales are expected to total about $34 billion in the current fiscal year, up more than 45 percent from the year before, the Pentagon agency in charge said on Wednesday.

"Our program is growing by leaps and bounds," Jeanne Farmer of the Defense Security Cooperation Agency told an international defense industry conference.

Among the biggest government-to-government buyers in fiscal 2008, which wraps up at the end of this month, were Afghanistan, Saudi Arabia, Morocco, Egypt and Iraq, Farmer said.

Overseas arms sales are a key instrument of U.S. foreign policy as well as a boon to defense contractors such as Lockheed Martin Corp, Boeing Co, Northrop Grumman Corp, General Dynamics Corp and Raytheon Co.

In fiscal 2007, such sales totaled $23.3 billion, up from $21 billion in fiscal 2006, according to the security agency's figures.

Farmer, at the conference known as ComDef 2008, said her agency was playing a growing role in the U.S.-declared global war on terrorism and national security.

The security agency was currently working with 207 countries and had 12,262 "open cases" totaling $274.3 billion as of last month, she said. Open cases include those in which orders have been filled but which could still involve exercise of options among other things.

"In the current environment, everybody needs everything right now," Farmer said. "We do expect to continue to have large, large sales."

The United States carries out government-to-government conventional arms transfers through the Defense Department's Foreign Military Sales program, which operates on a no-profit, no-loss basis.

In 2007, the Pentagon notified Congress of more than $39 billion in such potential sales to 23 countries and Chinese-claimed Taiwan, including some funded by grant aid.

This year's notifications are expected to be a record high, led by Iraq. Not all notifications result in final sales such as those now being reported for this year. Buyers pay a fee, currently 3.8 percent of the cost of the purchase, to cover the cost of administering the program.

The U.S. government says arms sales strengthen U.S. national security by tightening bilateral defense ties, supporting coalitions and enhancing U.S. ability to operate with foreign militaries.

Critics say booming sales reflect a failure of U.S. diplomacy and show a need for the United States to rethink how it handles foreign policy.

"Instead of spending millions or billions of dollars on weaponry, many U.S. arms customers should be funding education, health, and infrastructure programs that would go much further in improving the long-term stability of their countries," said Wade Boese, research director of the Arms Control Association, a nonpartisan group aimed at curbing the spread of weapons.

(Reporting by Jim Wolf; editing by Carol Bishopric)

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