I wonder if you’ve noticed, as I have, a prominent, somewhat new corporate sponsor of the PBS News Hour. It calls itself BAE Systems and it seems to be a rather high-minded tech company with the appealing brand motto “inspired work.” Oh yeah, they’re inspired alright, inspired to produce some of the most deadly machinery on the planet. BAE Systems, that is, used to be British Aerospace and changed to the more mild-sounding BAE Systems in 1999. That would’ve been after 1985 when British Aerospace was involved in the biggest (and perhaps most scandalous) arms deal of all time, the Al Yamamah trade supplying Saudi Arabia with over £43 billion worth of aircraft, specialized naval vessels, missiles, shells, support services and infrastructure. In return, the Saudis pledged to supply Britain with 400,000 barrels of oil a day. It was the deal that saved British Aerospace, and allowed it to thrive and establish subsidiary companies in the U.S. among other places, including no less than seven sites in the San Francisco Bay Area. This is the story that Andrew Feinstein tells in his 2011 book, The Shadow World: Inside the Global Arms Trade. It’s filled with gems like the story of the Al Yamamah deal, including luscious details about the scandal involving the Saudi Royal Family and a personal slush fund operated for them by BAE, and the massive commissions the dealers (including Maggie Thatcher’s son Mark, who received about £12 million as an agent, and Prince Bandar al Sultan of 9/11 fame) got for greasing the wheels of the deal. According to the story Feinstein cites from Britain’s Guardian newspaper, the principal beneficiary of the slush fund was Prince Turki Bin Nasser, head of the Saudi Royal Air Force, who in addition to about £17 million in personal benefits, (some of which took care of his mistress, Anouska Bolton-Lee), also got gifts for his family: “a $30,000 Mercedes for his daughter, a blue Rolls Royce for his wife (Rolls is one of BAE’s subcontractors), and a £175,000 Aston Martin Le Mans for himself.” These cars were regularly shipped between Saudi Arabia and Los Angeles on privately chartered airplanes; in 1995, for example, one cargo plane cost $300,000 to carry cars and assorted shopping booty home to Saudi Arabia. So were the members of the royal family, all paid for by BAE’s slush fund—the total, by 2002 amounting to more than 1 million pounds a month and 7 million pounds a year. Gives you an idea of the kind of money involved in the arms trade.
The shady characters involved are equally staggering. Feinstein begins by charting the origins of a company called Merex. It started with the Nazis, courtesy of U.S. intelligence’s decision to rescue a general named Reinhard Gehlen, who had been chief of Nazi intelligence on the Eastern Front and so knew a lot about the Russians and their industrial plants. So Gehlen and several colleagues were shipped to Washington in a private plane, and then, after supplying lots of intel, were within a year returned to Germany to head a huge German spy ring to monitor the Russians. That led to the ex-Nazi’s promotion to head the West German intelligence agency until his retirement in 1968, but that’s not all. In the 1950s, Gehlen asked one of his old SS associates, Gerhard Mertins, to “act as middleman for German arms sales to the Third World,” which is where the action was and still is. The idea was, Germany could remilitarize if it could sell its old surplus arms stock, and Mertins was to be the agent for the selling. In 1963, he established a new company that he called Merex based in Bonn and Switzerland. Some of Merex’s first deals, aided by one Sam Cummings of the CIA, were selling old Luftwaffe stock to Castro’s Cuba and to Venezuela. It was, and is, typical of such arms dealers to sell fighting equipment to both sides in a conflict, as they did to Pakistan and India. Like BAE, Merex established an American branch in Bethesda Maryland, a convenient location for working with the CIA, as when they managed to ship arms to the CIAs favorite “freedom fighters,” the Nicaraguan Contras. Of course, for the arms merchants in the shadow world, the pedigree of those who want to buy arms never enters the calculation. The motto seems to be, ‘If you got the money, honey, we got the guns, planes, bullets, rockets or whatever suits your fancy.’ Africa after colonialism thus became one of the great illegal arms markets. As Feinstein points out, lovely episodes like the Rwandan genocide could not have happened without the immense influx of arms from unscrupulous arms dealers. Between 1992 and 1994, Rwanda became one of Africa’s major arms importers, spending over $112 million on mainly hand grenades and AK-47s—much of it from former Soviet countries—which amounted to 20 times what it had spent in the entire 1980s. Grenades were so easy to come by “they could be bought from local vegetable markets for $3 apiece.” It was grenades and weapons, not machetes, that were necessary to kill masses of young men in Rwanda’s stadiums. Hence, the genocide.
What Feinstein makes clear, though, is that unsavory as these foreign arms dealers were and are, it’s in the United States and its pitbull, Israel, where the big money lies (in 2008, over 2/3 of all new arms sales agreements worldwide went to US companies) especially since the bonanza for arms manufacturers known as the War on Terror. In 2003, the US Government issued 3,500 contracts to companies for security, and from then to the end of 2006, the Department of Homeland security issued 115,000 contracts, most on the no-bid basis made possible by the contract initiated by Dick Cheney when he was head of the Pentagon. It’s called LOGCAP (Logistics Civil Augmentation Program) and it invites bids from American companies to supply logistical support for the US military, with NO DOLLAR VALUE in the contract. It's cost-plus: all costs covered plus a guaranteed profit; in short, corporate welfare for the types who regularly inveigh against welfare to the poor—chump change by comparison. Thanks to this kind of largesse, the US Government regularly spends about $550 per household on homeland security alone. And that doesn’t even begin to consider the amount spent on keeping our redoubtable military up to date, as with the Boeing $26 billion contract of 2001 to lease 100 KC-767 in-air-refueling tankers from Boeing over a ten-year period (the CBO determined that buying the damn things outright would have cost $5 billion less!). So corrupt was this deal that the Deputy Assistant Secretary of the Air Force for Acquisition, Darleen Druyun, who oversaw the deal, was charged with ethics violations (she got her son-in-law a job with Boeing and then got herself one), and eventually accepted a plea deal of 9 months in prison and a $5000 fine—though she still collects her government pension. Boeing’s CFO and CEO both resigned, with the CFO sentenced to 4 months in prison, while the company paid a big fine for its chicanery. But probably the best example of ‘price creep’ under LOGCAP involves Lockheed Martin’s F-22 Raptor, the most expensive fighter jet in history and one that is considered basically useless in any foreseeable war. The original intent (contract is meaningless here) was to buy 750 planes for a projected cost of $25 billion. By 1999, the cost had ballooned and plans had shrunk to 339 planes at a projected cost of more than $62 billion—i.e. half as many planes for twice the cost! The practice here is known as “buying in”, where the company bids at what it knows is a low price and then jacks up the price later, using “gold plating” or setting ever higher performance requirements after the plane is in development. Moreover, to protect their contracts, companies like Lockheed don’t do what one would normally expect a company to do to minimize risk—that is, build several prototypes to test before starting production. No, they start production based on lies and then simply jack up costs to keep the money flowing.
There’s more about Lockheed and other military contractors, especially those that made a killing in Iraq (the mother of all military-procurement boondoggles) like Dick Cheney’s company, Halliburton. Just to give a sense of the big bucks involved here, it should surprise no one that Cheney’s personal wealth rose from about $1 million before he became VP to $60 to $70 million when he left office. During his 7 years in office, “Halliburton was awarded with more than $20 billion in contracts,” most of them on the usual no-bid basis. So blatant was their cheating that in the end Halliburton was fined for overcharging the government and using misleading accounting practices. But Dick Cheney seems to have emerged scot-free, wealthy, and with the chutzpah to regularly criticize the current president for failing to live up to the standards set by the Bush administration. Feinstein’s comment provides the real picture: “In the Bush administration the war profiteers weren’t just clamouring to get access to government, they were the government” (209).
As to Israel, Feinstein devotes an entire chapter to their arms dealing entitled “America’s Shop Window.” By that he means that “Israel is the ‘primary testing ground’ for American weapons…It is, in effect, a shop window for the American weapons industry.” Feinstein goes on to note that in 2008, Israel’s military contracts were worth over $6.3 billion, “the 7th highest of 32 countries for which information is available,” spending no less than 8% of its GDP on the military (the US spends 4.5% while most comparable countries spend only 1% of GDP). It was also the 11th largest arms importer between 2005 and 2010, when its imports rose 102%. But the real story lies in its arms exports, ranking it as the 4th largest arms exporter to developing countries (always a great market), including “rogue states in Africa, Latin America, and even the Middle East.” One of the reasons Israel ranks so high here is that, given its long experience suppressing Palestinians, its arms industry specializes in “equipment designed to control civilians.” In this regard, the War on Terror was crucial in bolstering—even saving—Israel’s economy. Its sales pitch to arms purchasers highlights its experience in this regard: “We have been fighting a War on Terror since our birth, we’ll show you how it’s done.” When it comes to heavy equipment, of course, Israel 'buys' most of that from its chief sponsor and enabler, the United States: in 2007, the two countries signed a 10-year MOU (Memorandum of Understanding) calling for $30 billion in US military aid. In this, Israel is unique in that it is the only country permitted to use US military aid to build its own military industry, including the development of weapons systems based on US designs, and to fund joint military research and development with its donor, as with its “Iron Dome” anti-missile system. This has allowed Israel to amass an arsenal of 226 F-16 jet fighters, over 600 M-690 tanks, no less than 6,000 armoured personnel carriers, and countless transport planes, attack helicopters, cluster bombs and white phosphorus. Only Saudi Arabia buys more, but it pays for its equipment.
The story of Israeli arms dealers and deals is too long, and in some ways too well-known to go into here. Suffice it to say that its former officers train security forces all around the world, boasting a
one-stop shop that includes all requirements for riot control, ground forces, homeland security, counter- and anti-terror, K9 dogs, and identification of and protection against nuclear, biological and chemical weapons (385).
Israeli arms dealers dominate the shadow world, according to Feinstein, helped by the citizenship, travel privileges and protection their government provides them. Yossi Melman, an Israeli investigative reporter, is quoted by Feinstein as wryly describing the two wings of the entire Israeli business community thusly: ‘Those who are arms dealers and those who don’t admit they’re arms dealers.’ Perhaps most important, Israel comprises the chief testing ground for weapons the US thinks it might some day need. Feinstein spoke to one army source who testified to using ammunition in recent battles that was not even approved for use in the US:
It came from the American company ALS, where it was still in the testing phase, and thus, not legally usable in the US. But it was being used against people in the occupied territories by the IDF (Israeli Defense Forces) (393).
Of course, Israel is no laggard when it comes to developing its own high-tech equipment for dealing death to its enemies. It even sets up US subsidiaries so that it can utilize US aid money to buy the latest military equipment from its own companies. It is a leader in drone development, and its notorious separation barrier (some call it an apartheid wall) is similarly outfitted for long-distance monitoring:
The separation barrier is equipped with unmanned, armed observation points that, through personnel in a distant, secure location, identify and fire on anyone who comes too near to the barrier. (394)
Like drones, this amounts to “the creation of a robotic non-culpability for death…” Perhaps all the merchants of death, including the gun dealers and manufacturers in the US, would claim the same non-culpability for themselves: ‘We don’t kill anyone. We just sell them the equipment; what they do with it is not our affair.’