BY ETHAN B. KAPSTEIN, JONATHAN D. CAVERLEY
But jobs are a bad rationale for arms transfers on both economic and policy grounds. These weapons sales actually do not create many jobs, and even if they did, that shouldn’t be a consideration when it comes to whether these sales are approved. An extra job doesn’t make a sale more or less strategically or ethically compelling. After all, the bombs in these transfers are the same types causing undue civilian casualties in places like Yemen.
Trump advisor Peter Navarro went to bat for a sale of Raytheon munitions to Saudi Arabia, a transfer now held up by the Biden administration with a memo titled “Trump Mideast arms sales deal in extreme jeopardy, job losses imminent.”
These new deals will create few U.S. manufacturing jobs. The Biden administration and Congress can therefore focus on the strategic consequences of these weapons instead of pandering to domestic constituencies.
As flawed as the justification is on ethical and strategic grounds, the link between arms sales abroad to jobs at home is a bipartisan assumption. As former Obama-era defense official Andrew Exum wrote, “surely even the moral calculus of arms sales gets more complicated when you think about the millions of American mouths that are fed by mothers and fathers who work in the aerospace and defense sector.”
Both Navarro and Exum are wrong. To be sure, Middle Eastern states undoubtedly have bought political influence in Washington by saving production lines for weapons the Pentagon no longer intends to buy. Egyptian, Saudi, and Iraqi purchases famously kept the Abrams tank assembly line in Ohio open for many years. Kuwaiti and Qatari purchases of Boeing’s F-18 and F-15 jets helped keep Missouri assembly lines hot. And United Arab Emirates purchases helped save the Patriot plant in Massachusetts.
But the weapons currently sought by Gulf states are qualitatively different from past sales. The bad news about these new deals is they will create or sustain few U.S. manufacturing jobs. The good news is that the Biden administration and Congress can therefore focus on the strategic consequences of these weapons instead of pandering to domestic constituencies.
In his confirmation hearing, U.S. Secretary of State Anthony Blinken supported Israel’s recent normalization of relations with multiple Arab states and committed to ending U.S. support for the war in Yemen. Under Trump, normalization was, in part, sealed by an agreement to sell F-35 fighters to the UAE, while the Yemen war was prolonged and made more lethal by the sale of precision-guided munitions. These weapons, which support two different policies, have little in common besides the fact that neither has much of an impact on U.S. jobs.
Gulf arms purchases have changed over the past decade for two reasons. First, these countries now actually expect to use the weapons they buy. The UAE, for example, has not only fought in Yemen but occupied the strategic island of Socotra in the Gulf of Aden, conducted airstrikes against the Islamic State in Syria, and operated Chinese-made drones in support of Khalifa Haftar, the general rebelling against Libya’s internationally recognized government. Second, these countries also want to create jobs at home. Both Saudi Arabia and the UAE are attempting to build indigenous arms industries, largely through offset demands on weapons imports.
Both countries are aggressively seeking offsets, a mandatory reinvestment of part of a sale’s financial value in the purchasing country. These offset agreements will likely take the form of a licensed production and technology transfer, which directly cuts into U.S. defense jobs. Indeed, defense contractor Lockheed Martin estimated that the $28 billion arms sale to Saudi Arabia announced by Trump in 2018 would generate more jobs in the kingdom than at home; in fact, it only planned to hire around 1,000 additional U.S. workers but estimated that 10,000 jobs would be created in Saudi Arabia.
The Gulf states are thus buying either cutting-edge weapons whose order books already stretch for decades or lower-end munitions that are doing the killing in Yemen and are relatively easy to co-produce.
The Gulf states are thus buying either cutting-edge weapons whose order books already stretch for decades or lower-end munitions that are doing the killing in Yemen and are relatively easy to co-produce. Trump’s authorization for Paveway bombs, for example, allowed Saudi Arabia to assemble an unprecedented portion of these weapons’ electronic systems in the kingdom.
The $10 billion deal with the UAE for munitions, approved just before Biden’s inauguration, provides an example of how to think about weapons sales. Although it’s a single package, it covers radically different types of systems, each of which should be considered on its own policy merits. Some of these sales should be approved, but others must be rejected.
Roughly 95 percent of the request’s value goes to sophisticated missiles for missions like air-to-air combat and suppression of enemy air defenses. Although they may have some application in the UAE’s overseas adventures in Libya and elsewhere, these weapons are not generally used in Yemen or against civilians. They should probably be sold.
A relatively small portion of the agreement is for gravity bombs and their guidance kits, which are necessary for UAE operations (and contribute to civilian casualties) in beleaguered Yemen. Rejecting this part of the sale would have few domestic costs for the United States while sending a strong foreign-policy signal to the Emirati government. Anticipating the Biden administration’s rejection, Raytheon executives have already taken the similarly sized Paveway deal with Saudi Arabia off its books, saying these weapons are a diminishing part of its revenue anyway and Raytheon Missiles & Defense currently has an order backlog of nearly $30 billion; the effect on it is thus trivial.
The separate UAE F-35 purchase will also have little impact on jobs within the United States. This cutting-edge fighter may be a generous reward for the Abraham Accords, but it is of relatively little use in Yemen (and won’t be delivered for years). Fifty F-35 fighters (a multipurpose fighter with variants for the U.S. Air Force, Navy, and Marines) are a fraction of an estimated production run of several thousand planes bought by the United States and at least 14 other countries. At the maximum annual production rate of 180 planes, any jobs created are likely far in the future.
A large percentage of the program is already sourced outside the United States. For example, every F-35’s aft fuselage and vertical and horizontal tails are built by BAE Systems in either the United Kingdom or Australia. According to the U.S. Commerce Department’s Bureau of Industry and Security, offsets in aircraft manufacturing shifted 2,790 more jobs overseas than were created by exports in that sector from 2016 to 2018. In other words, this sale could be justified on strategic grounds, such as normalizing UAE-Israel ties, but not for its job creation.
The MQ-9 drones in a separate UAE deal are a platform the U.S. Air Force is now moving away from, so these sales could help prolong the production line in Poway, California. But more importantly, this platform can be used in ways that can either advance or damage U.S. foreign-policy goals, reflecting the type of sale that needs careful scrutiny.
On the one hand, the MQ-9 appears to be configured for maritime missions like anti-submarine warfare, which is closely aligned to U.S. security interests in the region. On the other hand, loitering drones can play an enabling role in Yemen or for repressing the UAE’s own public. This platform’s configuration should be scrutinized by defense officials and by Congress and the drones’ end-use tightly monitored as part of any approval.
Lower-end weapons nearing the end of their production runs make up a shrinking part of the export market in terms of dollars (and jobs), so they can be readily halted where they conflict with U.S. foreign-policy goals.
The notion that arms sales create jobs reflects a past when the United States exported obsolete weapons overseas, but those days are coming to an end. The shifting of Gulf demand to the most advanced weapons and the weapons needed for actual combat in Yemen represent a dramatic change, where the political effects of these sales can and should be considered largely independent of the economic effects.
Cutting-edge weapons demanded by U.S. clients with dubious intent are politically easy to stop due to large demand from U.S. forces as well as more credible allies abroad. Lower-end weapons nearing the end of their production runs make up a shrinking part of the export market in terms of dollars (and jobs), so they can be readily halted where they conflict with U.S. foreign-policy goals
For the Biden administration, the lesson from these deals should be clear: Only approve those weapons sales that are consistent with the strategic interests of the United States. Consider each system on its own merits, and avoid negotiating deals that include elements that could boomerang against Washington, such as weapons that are being acquired for deployment in the Yemen conflict. And do not account for the job consequences of your decision—no matter how much Congress may fret about keeping local production lines open. A sound and consistent foreign policy in support of a rules-based multilateral order has a much larger economic impact on the United States in the long run.
The views reflected here are the authors’ alone and do not represent the policy positions of the U.S. government.
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