June 21, 2012 / 5:40 PM / 5 years ago

U.S. expects record $60 billion in arms sales in 2012

WASHINGTON (Reuters) - U.S. arms exports are headed for a record $60 billion this year, but in coming years will probably return to the recent norm of about half that sum, a senior Pentagon official said Thursday.

Foreign military sales "likely will go to $60 billion" in fiscal 2012 ending September 30, said Richard Genaille, deputy director of the Pentagon's Defense Security Cooperation Agency, which brokers such government-to-government deals.

He told a conference hosted by Bloomberg Government that there were no indications that overseas sales would budge much in the next several years from roughly $30 billion, where they tended to settle since 2008.

This year's total was swelled by a record $29.4 billion sale to Saudi Arabia of up to 84 advanced Boeing Co F-15 fighter jets plus upgrades of 70 older F-15s as well as munitions, spare parts, training, maintenance and logistics.

Also contributing was a sale to Japan, valued at about $10 billion, of a planned 42 Lockheed Martin Corp radar-evading F-35 Joint Strike Fighter aircraft.

Genaille said the Defense Security Cooperation Agency is currently handling 13,000 foreign military sales cases valued at about $385 billion.

Demand remained strongest, he said, for U.S. fighter aircraft, transports and attack helicopters plus command-control, communications, computers, intelligence, surveillance and reconnaissance gear, including remotely piloted aircraft.

U.S. arms makers, which also include Northrop Grumman Corp, Raytheon Co and General Dynamics Corp, increasingly are looking to foreign markets to help offset what will be at least a flattening of Pentagon spending required by U.S. deficit-cutting measures.

But overseas markets will not be rich enough to make up for potential deep cuts in Pentagon spending, said Marion Blakey, president of the Aerospace Industries Association, the industry's chief trade group.

"We're not looking at the kind of overall pool that makes it possible to offset the kind of defense cuts we have now, much less sequestration," she told Reuters after speaking to the conference.

Sequestration refers to automatic across-the-board budget cuts, which could amount to roughly 10 percent of the Pentagon's budget, due to take effect on January 2, 2013, unless lawmakers agree on a last-ditch plan to trim the deficit by $1.2 trillion.

Reporting by Jim Wolf; editing by Matthew Lewis

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