ebook img

DTIC ADA487954: Globalized Security: An Allied Industrial Base for the 21st Century PDF

17 Pages·0.1 MB·English
Save to my drive
Quick download
Download
Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.

Preview DTIC ADA487954: Globalized Security: An Allied Industrial Base for the 21st Century

Globalized Security: An AlliOedP IInNdIuOstNry Base for the 21st Century GLOBALIZED SECURITY: AN ALLIED INDUSTRIAL BASE FOR THE 21ST CENTURY Lt Col Shannon Sullivan, USAF During the Cold War, the United States maintained an extensive industrial base in the event of a global war with the Soviet Union. With the Russian threat diminished, and the downward spiral of allied defense budgets, a new industrial base model may be more effective in managing scarce defense resources. The new model would be spread across the allies, rather than centrally focused in the United States, with several prime-integrating contractors at the hub, and supporting or niche specialties along the spokes. O verall, most experts agreed that for an allied defense industrial base is ris- managing integrated industrial re- ing, which shares the burden of arms de- sources, relaxing trade controls, velopment and production. This paper asks and cooperating in program development the question: “Should the United States offers an effective method to maintain seek a broad allied industrial base?” powerful military capability and a vital al- lied industrial base. Over the past decade, powerful events METHODOLOGY and forces have changed the world. Com- munist rule in the Union of Soviet Socialist A variety of documents, articles, Republics (USSR) collapsed; information speeches, and books were reviewed to gain technologies brought the world closer, an appreciation for the arguments sur- while new types of threats and instabili- rounding U.S. defense trade policy. United ties pushed it apart. As budgets tighten and States government interviews were con- military suppliers proliferate, a new model ducted with individuals in the Departments DISCLAIMER The views expressed in this article are those of the author and do not reflect the official policy or position of the United States (U.S.) government or the Department of Defense. In accordance with Air Force Instruction 51-303, it is not copyrighted, but is the property of the U. S. government. 151 Report Documentation Page Form Approved OMB No. 0704-0188 Public reporting burden for the collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington VA 22202-4302. Respondents should be aware that notwithstanding any other provision of law, no person shall be subject to a penalty for failing to comply with a collection of information if it does not display a currently valid OMB control number. 1. REPORT DATE 3. DATES COVERED 2002 2. REPORT TYPE 00-00-2002 to 00-00-2002 4. TITLE AND SUBTITLE 5a. CONTRACT NUMBER Globalized Security: An Allied Industrial Base for the 21st Century 5b. GRANT NUMBER 5c. PROGRAM ELEMENT NUMBER 6. AUTHOR(S) 5d. PROJECT NUMBER 5e. TASK NUMBER 5f. WORK UNIT NUMBER 7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES) 8. PERFORMING ORGANIZATION Atlantic Council of the United States,1101 15th St REPORT NUMBER NW,Washington,DC,20005 9. SPONSORING/MONITORING AGENCY NAME(S) AND ADDRESS(ES) 10. SPONSOR/MONITOR’S ACRONYM(S) 11. SPONSOR/MONITOR’S REPORT NUMBER(S) 12. DISTRIBUTION/AVAILABILITY STATEMENT Approved for public release; distribution unlimited 13. SUPPLEMENTARY NOTES Acquisition Review Quarterly, Spring 2002 14. ABSTRACT 15. SUBJECT TERMS 16. SECURITY CLASSIFICATION OF: 17. LIMITATION OF 18. NUMBER 19a. NAME OF ABSTRACT OF PAGES RESPONSIBLE PERSON a. REPORT b. ABSTRACT c. THIS PAGE Same as 16 unclassified unclassified unclassified Report (SAR) Standard Form 298 (Rev. 8-98) Prescribed by ANSI Std Z39-18 Acquisition Review Quarterly — Spring 2002 of Defense, State, Justice, and Commerce. Third, states can now buy top technolo- Discussions were also held with represen- gies and integrate them to create superior tatives in the Office of the White House hybrid systems. Council of Economic Advisors, Congress, There is a plethora of suppliers of ad- industry, and the academic community. vanced technology around the globe. For Additionally, interviews were conducted in instance, India is selling advanced helicop- London with representatives from the ters to Turkey, and antiaircraft missiles, United Kingdom (UK) government, indus- warships, tanks, and fighters to whoever try, and research communities. United can afford them (Weir, 2000). France is Kingdom representatives were singled out reportedly marketing stealth cruise missiles because they are on the leading edge of worldwide and aiding Russia in night vi- new cooperative trade arrangements with sion technology (Flamm, 1999). Israel li- the United States and the European Union censed antiship missiles to Taiwan and (EU). South Africa, and they are working with China on a new F-10 Fighter. China and Pakistan are developing the FC-1 Fighter, THE POST-SOVIET INDUSTRIAL BASE the K-8 Trainer, and the Al-Khid Battle Tank (Bitzinger, 1999). Russia is not only GLOBALIZATION supplying arms to India; but through their The Defense Science Board (DSB, arms sales to China they are indirectly 1999) on Globalization and Security defines supplying Pakistan too, thereby fueling both globalism as, “the integration of the politi- sides of an arms race (Durso, 2001). cal, economic and cultural activities of geographically and/or nationally separated INDUSTRY CONSOLIDATION peoples — is not a discernible event or United States. During the Cold War, challenge, is not new, but is accelerating. unlike the industrial complex of pre-World More importantly, globalization is largely War II America, the military could not irresistible. Thus, globalization is not a afford a ramp-up time, and therefore the policy option, but a fact to which policy defense industrial base required sustained makers must adapt” (p. i). The DSB went support. The result was a defense indus- on to describe what effects a growing re- trial complex consisting of laboratories, liance on commercial technology, global manufacturing plants, test facilities, and availability of military systems, and a de- depots spread across the country (Center clining U.S. lead in dual-use technology for Strategic and International Studies has on the defense industrial base [CSIS], 1998). When the Cold War ended, (DSB,1999). the Department of Defense (DoD) pro- Three trends have developed in the curement budget plummeted 70 percent availability and capability of military equip- and research and development (R&D) ment. First, the weapons arsenals of coun- dropped 25 percent, causing a contraction tries are becoming more sophisticated. in the defense industry. Employment fell Second, nations who cannot afford new from 1,400,000 in 1990 to 878,000 in 1999, equipment are buying older systems and and defense firms consolidated from 36 in upgrading them with the latest technology. 1993 to 8 in 1999 (Markusen, 1999). 152 Globalized Security: An Allied Industry Base for the 21st Century As mergers progressed, stock prices Transatlantic. With much of the con- fell, bond ratings dropped precipitously for solidations complete on both continents, many, and debt ratios rose from 12.9 per- industry looked overseas to continue the cent in 1993 to 50.4 percent in 1999 process of integration and increased mar- (Bovin, 2000). To make matters worse, ket share. Former Rear Admiral, and now capacity remained constant. There were Lockheed Martin’s Vice President for In- “eight lines producing military aircraft, six ternational Programs, Rick Kirkland (per- private yards building large warships, four sonal communication, January 10, 2001), missile manufactures, and five helicopter described their position: 90 percent of the companies totally dependent on military business base is purchases” (Sapolsky & Gholz, 1999, p. in government 193). Additionally, mergers, which the programs, and “A chief complaint DoD had once encouraged, now became 23 percent of by Europeans in a concern over massive prime contrac- that work is in- acquiring U.S. defense firms is tors monopolizing certain sectors of the ternational, to- the restrictive defense market. taling $288 bil- security arrange- Europe. Europe was also experienc- lion. Lockheed ments imposed ing consolidation pains as support dried up. faces three re- by the U.S. For example, from their Cold War high in alities: first, government.” 1985, the UK were down 35.5 percent, sales must in- Germany fell 28.4 percent, and France crease to in- dropped by 16.1 percent in constant cur- crease profits, and the U.S. market is flat; rency (Adams, 2000). Even more critical, second, many contractors below the European overcapacity and redundancy prime-level have already merged with was worse than their American counter- Europe; and third, to be competitive a parts. In 1993, European industry produced company must be integrated worldwide. 123 separate weapons systems, compared A chief complaint by Europeans in ac- to 55 in the United States, to include: 16 quiring U.S. defense firms is the restric- armored vehicles (3 in the United States), tive security arrangements imposed by the 7 fighters (5 in the United States), and 7 U.S. government. If a U.S.-based com- assault rifles (1 in the United States; pany is conducting sensitive work for the Bitzinger, 1999). government, a proxy board composed of Two national champions eventually rose U.S. citizens whose role is to oversee the from the machinations: British Aerospace management of the company, is created. (BAe) Systems and European Aeronautic The European parent has no directors on Defense & Space Company (EADS). To- the board, no access to financial data, and gether they control about 70 percent of no control of company activities (Adams, the prime contractor business. With con- 2000, p.18). If the parent adheres to the solidation, however, competition in Europe rules and develops a good reputation with has also been drastically reduced, and often the U.S. government, the proxy board may there is only one prime contractor in key be downgraded to a Special Security defense sectors (Bialos, 2000). Arrangement (SSA), which then allows 153 Acquisition Review Quarterly — Spring 2002 citizens of the parent company to join in procedures date back to the 1970s, when managing the U.S. holding.1 Congress was attempting to regain over- Finally, governments on both sides of sight of foreign policy decisions from the the Atlantic are concerned that consolida- executive branch (Atlantic Council of the tions and restrictive trade practices are United States, 1998). Although the AECA creating Fortress Europe and Fortress of 1979 expired in 1994, its procedures America, in which each develops its own have been sustained through the Interna- arsenal and defense force. If the fortress tional Emergency Economic Powers Act walls grow, NATO’s existence, as well as (Adams, 2000). Most experts agree that U.S. influence in Europe, could be threat- the AECA is fairly broad and flexible, pro- ened. With a growing dependence on viding the State Department with some coalition operations, this is a devastating leeway in defining its implementation option for both sides. If, conversely, the (DSB, 1999). fortresses could be joined, both would The Security Assistance Act (2000) sets benefit from increased competition and into law the requirement that all countries combined resources (Hamre, 1999). desiring the benefits of the Defense Trade Security Initiative, which will be described PLAYERS AND LAWS later, must sign a binding agreement to re- A number of entities have a vested in- vise their export laws to conform to those terest in export controls. The major play- of the United States. They will also be ers are the Departments of State, Depart- subject to U.S. third-party transfer re- ment of Defense, Commerce, Congress, quirements, and they will permit the United the President, and industry. Their advocacy States to verify the location and end user is as diverse as their membership: some of any U.S. technology transferred to third want a return to parties. Cold War-like controls, others DANGERS OF INDUSTRIAL BASE REFORM “The major want more far- The Department of Defense has em- players are the reaching liber- barked on a quest to integrate allied and Departments of State, Department of alization; but the U.S. industrial bases through export con- Defense, Commerce, majority ap- trol initiatives and merger promotion. Their Congress, the Presi- pears to be reasoning is that closer cooperation will dent, and industry.” somewhere in enhance interoperability and capabilities, the middle. share development costs, and provide ac- Likewise, there cess to foreign technology. Skeptics, how- is a variety of legislation that impacts the ever, fear Americans will lose jobs, war- ability to export technology and promote time industrial response will be stifled, and cooperation, but the primary pieces are the technology will proliferate. Arms Export Control Act (AECA) and the Job Loss. As the United States sells Security Assistance Act of 2000. products and transfers technology, foreign The AECA is a product of the Cold War, industry benefits and becomes capable of having had only minor revisions since the producing a competitive product indig- collapse of the Soviet Union. Many of the enously. For instance, Lockheed assisted 154 Globalized Security: An Allied Industry Base for the 21st Century the South Koreans with their $5.2 billion panies, such as the French-controlled fighter aircraft program in 1991, by creat- EADS, will lead to industrial espionage and ing a local production capability. Now the proliferation to unfavorable nations Koreans can produce their own fighters, (Ashbourne, 2000). and they can also compete against U.S. Opponents’ further lack confidence in firms in other markets around the world the ability of proxy boards and SSAs to without the shackles of U.S. third-party stop the flow of information and technol- transfer requirements (Lumpe, 1999). ogy, because there is little regulators can Wartime Response. A chief argument do to check compliance (Maloof, personal against globalizing the defense industrial communication, January 12, 2001). BAe base among allies is it will jeopardize recently bought Lockheed’s Sanders Di- America’s ability to rapidly increase pro- vision, which does classified work for the duction output during a major war. Con- government. Skeptics ask how will en- servatives further worry that foreign manu- forcement agencies verify that when a facturing dependency, combined with coa- Sanders employee moves to another part lition agreements, will limit U.S. flexibility of the company, he does not share what to implement foreign policy. Defense Ana- he has learned with his new associates? lyst, Richard Bitzinger (personal commu- When faced with layoffs, promotions, nication, October 19, 2000), states that bonuses, or moves, will that employee stick unilateral capability provides the United to a strict code of silence? States with psychological and physical flexibility, global export clout, and the im- plied support of the United States in time INITIATIVES AND PROGRAMS of crisis. Technology Transfer. Finally, critics To address the concerns of critics, but argue that potential commercial or military still take advantage of allied strengths and competitors continue their assault on U.S. bolster weaknesses, a number of initiatives technology. Even with effective barriers, have arisen. Four promising programs are it is a challenge to stop the flow, but with- the Defense Capabilities Initiative (DCI), out those barriers, the loss would be dev- the Declaration of Principles, the Defense astating. A major stumbling block in deal- Trade and Security Initiative (DTSI), and ing with allies is third-party transfers of the Joint Strike Fighter (JSF). technology, because the U.S. perception is that the Europeans lack tight export con- DEFENSE CAPABILITIES INITIATIVE AND trols and enforcement capabilities. Jim THE DECLARATION OF PRINCIPLES Durso (personal communication, March The Balkans campaign demonstrated 21, 2001), from the National Security that U.S. capabilities, ranging from tactical News Service, adds that as Eastern Eu- communications to target identification, far ropean countries are integrated into the exceed those of its allies. DCI established EU and NATO, fears of weak govern- a framework of desired capabilities to en- mental control increases. United States of- hance European forces. ficials are also concerned that foreign gov- In February 2000, Secretary of De- ernment ownership in commercial com- fense William Cohen, and British Minister 155 Acquisition Review Quarterly — Spring 2002 of Defense, Geoff Hoon, took another step with whom we share the most forward by signing the “Declaration of sensitive information and technol- Principles for Defense Equipment and ogy. Under current ITAR [Inter- Industrial Cooperation.” The move was a national Traffic in Arms Regula- DoD-sponsored initiative to force the tions] rules, my staff is process- development of a license-free, “Canada- ing these requests with the same like” exemption with key allies. The five approach that they give to export pillars agreed upon are as follows: license requests destined for more problematic nations. Clearly, we 1. Congruent and reciprocal industrial could free up substantial resources security policies and procedures. to focus on more sensitive cases if we could agree upon an ap- 2. Congruent and reciprocal export con- proach that is appropriate for the trol processes. lesser risk associated with exports to the UK and Australia of unclas- 3. Cooperative relationships in law en- sified information and equipment forcement. of low sensitivity. (p. 1) 4. Close cooperation in intelligence shar- That same month Secretary Albright ing on matters of counterintelligence, announced DTSI to the world. DTSI is a economic espionage, and industrial se- compilation of 17 separate initiatives, fall- curity and export control violations. ing into the categories of export controls, industrial security, intelligence, law en- 5. Willingness to enter into binding agree- forcement, and trade reciprocity. The most ments establishing reciprocal access contentious aspect are four new licensing to each other’s markets (Adams, vehicles, which allow industry to self-regu- 2000). late compliance, once an overarching li- cense has been approved by DoS.2 Steve DEFENSE TRADE AND SECURITY INITIATIVE Brosnan, a political military officer in the From the DCI and Declaration of Prin- State Department’s Office of Plans, Policy ciples, the DTSI arose. In May 2000, Sec- and Analysis, made the analogy that DoS retary Cohen sent Secretary of State is working with industry to draw a box (DoS) Albright a letter saying: around a particular venture. Everything inside the box is industry’s responsibility. I have found that DoD is spend- If things change, and they have to step ing too much effort controlling outside the box, then they can come back low-risk items destined for low- for an amendment to the license. “It pushes risk destinations at the expense of more responsibility and planning onto to devoting more time to high-risk industry’s shoulders” (S. Brosnan & A. cases and issues. For example, Coletta, personal communication, Decem- nearly a third of the export license ber 19, 2000). requests are destined for the UK Critics complain that DTSI will provide and Australia, two historical allies a conduit for U.S. defense technology to 156 Globalized Security: An Allied Industry Base for the 21st Century enter the less restrictive trading environ- the Netherlands, the UK, Italy, and West ment of the EU, and once there, it will pro- Germany agreed to build a fighter. Even- liferate to rogue nations. SECDEF Cohen tually, Belgium, the Netherlands, and (personal communication, May 2000) Canada withdrew, because they saw no countered, “The proposal would require reason to spend money on an aircraft that legally binding agreements with the UK was more expensive than the U.S. alter- and Australia on tightening third-party native and had lost much of its capability retransfer controls and closure of other due to requirements compromises. When gaps. This strengthened retransfer control the time came to produce the Tornado, would extend to UK and Australian end- the UK was the users for all U.S. Munitions List items, not logical choice only items entering the UK and Australia to design and “Joint programs have under the proposed exemption. Our pro- manufacture the long been the recipients posal would dramatically improve our con- airframe and of harsh criticism, trol of third-party retransfer, further en- wings, because and perhaps hancing national security.” they had more rightly so.” Europeans lamented that the initiative expertise. Ger- fails to address the underlying problem of many, however, an antiquated export control system, it contributed more money, so they did the seeks to impose U.S. law on the EU, and majority of the work (Zahkeim & the United States is conducting bilateral Weinberger, 2000). negotiations with the United Kingdom, The JSF is attempting to shatter this rather than multi-lateral cooperation with image.3 Instead of unwilling participants the EU. While some of these accusations who are pushed together by politicians and may be valid, European compliance with bureaucrats, JSF is an economically moti- third-party transfers of technology has vated program led by industry.4 A require- been intermittent. Edward Levine (per- ment for participation is that all countries sonal communication, January 19, 2001), must agree to an export control plan, and a senior staff on the Senate Foreign Rela- the contractors involved have tight restric- tions Committee adds, “[We] like NATO, tions on the transfer of technology. The but the allies are still working with poten- multinational industry teams are in the com- tial enemies and human rights violators. If petition phase, which are led by the Boeing Europeans said they will work together on and Lockheed prime contractors. BAe, foreign policy, then we will respect differing along with other European firms, are views and policies.” partnered on one or both sides (A. Ashbourne, personal communication, JOINT STRIKE FIGHTER February 22, 1001). Joint programs have long been the David Oliver, former Rear Admiral and recipients of harsh criticism, and perhaps Principal Deputy Under Secretary of De- rightly so. For example, the Tornado fense for Acquisition, Technology and Lo- fighter aircraft was built on compromis- gistics, believes JSF is the type of ing everything from requirements to pro- arrangement that the DoD would like to duction and expertise. Canada, Belgium, encourage in the future. The Europeans 157 Acquisition Review Quarterly — Spring 2002 are contributing to the R&D costs, offsets tion. Industry must be allowed to survive are not a concern, the U.S. becomes the on its own merits, not on some subsidized sole integrator of the world’s fighter, and standard that fosters neither competition interdependence is encouraged in a capi- nor innovation. “The Department of De- talistic way, instead of being forced to- fense must try to behave like any other gether by governments. He adds that the commercial buyer: impose few unique con- European industrial base is in trouble, be- tracting regulations, follow best-value cri- cause there is not enough local money. The teria, and most of the time accept com- result will be that NATO will become less mercially developed specifications and effective. “You can’t fight that countries standards” (CSIS, 1998, p.30). want [defense] money spent at home, so Sheltering industry behind an export by encouraging partnerships and mergers, control regime and protectionist politics everyone gains” (Oliver, personal commu- only serves to make industry less efficient nication, December 6, 2000). and less effective. Contractors may keep up with their heavily subsidized European counterparts, but who is interested in just RECOMMENDATIONS keeping up? As the world becomes more integrated, and countries adopt best buy- The existence of defense-unique indus- ing practices, protectionism and subsidies tries during the last half-century has con- become costly for both governments and ditioned American leaders to think such a companies. An efficient U.S. industry will “defense industrial base” and the associ- be ready to gain customers and market ated special set share, because other than the few coun- of acquisition tries with large defense industries to “Sheltering rules, regula- protect, most are looking for the best value. industry behind tions, stan- A disdainful reality is that Americans an export control dards, and re- may lose jobs in transition to a more pro- regime and protec- quirement is ductive model if anti-competitive barriers tionist politics only natural. In fact, are dropped, but others will be gained and serves to make the continued overcapacity will be reduced. Additionally, industry less segregation of the flow of labor is important to the growth efficient and defense and of the economy, because it allows work- less effective.” commercial ers to migrate into industries where their activities pro- talents will be most effectively used. If duced by the existing acquisition process France wants to keep their farmers em- will no longer stand up to the altered ployed through protectionism and deny defense environment and the changing those individuals to more productive parts nature of our national industrial base (CSIS, of the economy, it is their right, but it does 1998, p. 29). not make much economic sense. An open economy also provides addi- JOB LOSS tional capital from abroad, lowering Give capitalism its due. American domestic interest rates, expanding the success is built on free and open competi- nation’s stock of capital, and raising the 158 Globalized Security: An Allied Industry Base for the 21st Century productivity of American workers. Japa- of suppliers in critical times, but they con- nese investment in U.S. auto plants, for cluded that they “found none of them new, example, has raised the productivity of nor compelling when cast against poten- American autoworkers by providing new tial benefits” (p. v). plants and equipment and introducing new Support DCI and expand DTSI. The production techniques…the world’s most U.S. Commission on National Security in successful economies also turn out to be the 21st Century (2000) stated, “Since it those with the lowest trade barriers (CSIS, cannot bear every burden, the United 1998, pp. 4, 5). States must find new ways to join with However, the United States is still the other capable and like-minded nations. big gorilla in buying and selling internation- Where America would not act itself, it ally. If Europeans want access to U.S. retains a responsibility as the leading markets and products, they must be will- power to help build effective systems of ing to make concessions in areas such as international collaboration. America must barriers to trade and limiting subsidization therefore overcome its ambivalence about of industry. They must also seek best international institutions and about the value rather than what is in the best politi- strength of its partners, questioning them cal and economic interests of the EU. less and en- couraging them WARTIME RESPONSE more” (p. 6). “…the United The DSB (2000) Task Force on Pre- Likewise Con- States is still serving a Healthy and Competitive U.S. gress, through the big gorilla in Defense Industry concludes, “Thus the de- modifications of buying and selling fense industrial base is in essence enter- the AECA and internationally.” ing a new paradigm, an era of rapid tech- Security Assis- nological change (often commercially tance Act of driven) smaller production runs and fewer 2000, must provide the flexibility to new starts and an increasingly international negotiate with countries to improve trade business base. In this era, new ways of while protecting vital technologies. doing business are imperative” (p.7). Sealing U.S. borders will only provide The era of relying solely on the U.S. other arms-producing countries with lucra- defense industrial base is long past. Rick tive markets to sell their products and Kirkland (personal communication, De- finance new R&D investments. Addition- cember 7, 2000) points out, “you can’t do ally, diffusing technology is not always as a major program in the United States with simple as it may first appear. Often tech- U.S.-only parts.” Components for U.S. nologies and processes are difficult to warfighting systems come from manufac- reverse engineer because potential perpe- turers across the globe. For example, Tur- trators lack the R&D background that first key is the only manufacturer of a particu- produced the technology. Even if the ideas lar component for the F-16 (D. Quinn, are obtained, the host country still possesses personal communication, December 19, the original creators, the environment, and 2000). The DSB (1999) concluded that it the synergy that was essential in develop- found associated risks if there was a loss ing the capability. Military technology is 159

See more

The list of books you might like

Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.