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. Last Updated: 07/27/2016

Bigger NATO Fattens Market For U.S. Arms

It is no coincidence, as Pravda used to say, that the Madrid summit to enlarge the North Atlantic Treaty Organization was preceded by the announcement that America's biggest defense corporation was to get even bigger.


The announcement that Lockheed-Martin was to buy Northrop-Grumman not only brings together the manufacturer of the F-16 fighter and F-117 Stealth warplane with the company that makes the F-18 and B-2 Stealth bomber. It also illustrates NATO's enlargement as an export bonanza for the U.S. arms industry, which sees a $35 billion market in re-equipping the new Eastern European members.


The International Monetary Fund has already expressed concern to the Clinton administration about the broader economic impact of defense spending on their fledgling economies. But the U.S. defense groups have been pouring money into U.S. political campaigns and lobbying senators to ensure that NATO enlargement goes ahead.


Just to ensure that it does, Bruce Jackson, director of strategic planning for the new Lockheed-Martin-Northrop aerospace giant, is the president of the U.S. Committee to Expand NATO.


The orders have been coming in fast. In April, Poland's Defense Ministry confirmed that it would issue "invitations to tender" for 250 new multi-role fighters by the end of this year. Also in April, Romania sent a letter of intent to the Pentagon to buy 12 F-16s or F-18s and nine Lockheed Hercules cargo planes. Slovenia announced last month the purchase of 12 Super-Cobra attack helicopters for $300 million, and Hungary has opened the bidding for a $1.2 billion order to replace its elderly fleet of MiG-21 and MiG-23 fighters.


The Pentagon and the U.S. arms industry have combined to produce some tempting deals. In February, the U.S. Navy offered a five-year "no-cost lease" of F-18 fighter bombers to the Czech Republic.


In return, the U.S. defense industry has become a major cheerleader for NATO enlargement. During an Eastern European tour in April, Lockheed's chief executive, Norman Augustine, declared his support for Romania to join NATO, just after Romania signed an $82 million radar contract. Bell Helicopter's chairman, Webb Joiner, also backed Romania's entry, as he signed a $1 billion deal to sell naval attack helicopters.


Romania last month became the first Eastern European country to take advantage of the Pentagon's new $15 billion defense export loan guarantee fund, which Congress established in 1995 after intense lobbying by the industry. Lockheed alone gave $2.3 million in campaign donations in the 1996 elections, part of a fivefold increase in defense industry donations to Democrats during President Bill Clinton's first term.


The accumulated mergers of the U.S. defense sector now top $100 billion since the famous "Last Supper" in 1993. The defense secretary at the time, William Perry, invited the tycoons to dinner: The Pentagon wanted a swift restructuring of an industry no longer cushioned by Cold War defense budgets, that would leave the U.S. best placed to dominate world export sales.


Immediately after that Last Supper, Clinton flew to Brussels for the January 1994 NATO summit, at which he declared that enlarging the alliance was "not a question of if, but of when." What an interesting coincidence.