Military and Economic "Aid"

Military and economic "aid" have gone hand in hand, with much of the former disguised as the latter. The vast bulk of American "economic" aid to the Third World has gone to a few countries of special strategic political and military importance: South Korea, Taiwan, Indochina, and Israel. Outright U.S. military aid exceeded economic aid by five to four in fiscal year 1974 and, according to Western estimates, Soviet military aid was double its economic aid in the same year. Furthermore, military aid has progressively given way to military sales on a simple commercial basis. In the United States military grants predominated in the 1950s; grants and sales were roughly equal in the 1960s; and in the 1970s grants have been increasingly replaced by commercial arms sales. In response to the cut in the space program, the end of the Vietnam War, the 1973-1975 recession, and the American balance-of-payments crisis, U.S. sales of armaments abroad increased from about $1 billion in 1970 to $10 billion in 1975. Other Western manufacturers also launched arms sales drives, if only to extend their production series and pay for the enormous fixed overhead costs of increasingly expensive weapons that their own armed forces cannot use in sufficient quantities to lower unit costs. Armaments have become the number-one export industry of France. Without it, the already weak French economy would suffer a grave crisis. "The equilibrium of our foreign trade is, it is true, a function of our arms sales," French Socialist Party leader François Mitterand, has admitted. Lock estimates that military exports as a proportion of all machinery and transport equipment exports (Standard International Trade Classification -- SITC 7) are about 19 percent for the United States and Italy, 12 percent for France and 7 percent for Britain -- and 60 percent for the Soviet Union. Lock identifies arms imports as 12 percent of Third World imports of SITC 7 imports of equipment and technology but thinks that including the arms imported as "transport equipment" etc. it is safe to assume that arms transfers to the Third World countries exceed 20 percent of their imports of production technology. The purchasers of these economically generated metropolitan arms manufactures are largely in the Third World. Third World countries imported 66 percent of these arms in 1970 and 85 percent or $7.4 billion worth in 1973. A summary of suppliers and recipients of arms transfers until 1974 appears in Table 8.1. Since then, encouraged by the war and the petroleum price increase in the Middle East in 1973, Third World countries have increased their arms purchases enormously, by 40 percent in 1974 and by another 40 percent in 1975. Between 1960 and 1977-1978 (when they levelled off, but perhaps only temporarily) Third World military expenditures increased four fold in constant prices and reached approximately US 86 billion in 1978. By comparison, total world military expenditures increased by about 70 percent and reached $425 billion. Previously these countries had usually bought obsolescent or second-hand arms, though with a component of modern arms.