Significant amounts of money continue to be made available to countries buying weapons from the US. So, in addition to the record levels of defence spending and foreign military cooperation funding (that is often used to buy US weapons and totalled around $5bn in 2003), the State Department and Pentagon spend an average of over $15bn per year in security assistance funding, a large share of which goes to finance purchases of US weapons and training. In addition, low-rate, US government-backed loans are made available to potential arms-purchasing nations. Such a loans programme existed in the 1970s and 1980s but was closed down after loans worth $10bn were either forgiven or never repaid, i.e. the programme became a further giveaway for US contractors and their foreign clients. Despite this history, in 1995 another $15bn loan guarantee fund was signed into law by President Clinton. This followed six years of lobbying by the arms industry, led by Lockheed Martin’s CEO, Norm Augustine.
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Direct pressure from the Pentagon and the White House is often used to close a sale. For instance, in 2002 the US government demanded that South Korea award a $4.5bn contract to Boeing rather than a French company. Leaks from the South Korean defence ministry indicate that the French plane outperformed its American rival in every area and was $350m cheaper. But the Deputy Defense Secretary, Paul Wolfowitz, told the Koreans that they risked not only losing US political support but the American military would refuse to provide them with cryptographic systems that allow aircraft to identify one another or to supply the American-made air-to-air missiles that the plane uses. Boeing was awarded the contract.
When Colombia considered buying light attack aircraft from Brazil rather than a US manufacturer, the senior American commander in the region wrote to Bogotá that the purchase would have a negative impact on Congressional support for future military aid to Colombia. The deal with Brazil fell through.
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The winners of the Deepwater competition were Lockheed Martin and Northrop Grumman. The companies were to work in partnership not only to build their own aspects of the contract but to supervise the work of every other company involved in the programme. This ‘innovative’ approach was touted as a way to reduce bureaucracy and increase efficiency compared with a system in which the Coast Guard itself would retain primary control. What it ended up proving was that contractors can be far less efficient than the government at running major programmes. Anthony D’Armiento, an engineer who worked for both the Coast Guard and Northrop Grumman on the project, called it ‘the fleecing of America. It’s the worst contract I’ve seen in my 20-plus years in naval engineering.’
Initially eight ships were produced for $100m. They were unusable: the hulls cracked and the engines didn’t work properly. The second-largest boat couldn’t even pass a simple water tank test and was put on hold. The largest ship, produced at a cost of over half a billion dollars, was also plagued by cracks in the hull, leading to fears of the hull’s complete collapse.
In May 2005, Congress cut the project’s budget in half, leading to the usual battery of letter writing, lobbying and campaign contributions that resulted in not only the avoidance of cuts to the disastrous programme but an increase to the budget of about $1bn a year, bringing the total project budget to $24bn. Finally, in April 2007, the Coast Guard took back the management of the project from the defence contractors. The first boats are expected to be ready for launch sometime in 2011, ten years after the 9/11 attacks that prompted the modernization effort in the first place.
More (#6) from The Shadow World:
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