Defense Contractors: Always Ready for More
The weekly quiz is provided by the Globalist, a daily online feature service that covers issues and trends in globalization. The nonpartisan organization provides commercial services and nonprofit educational features.
QUESTION
Even though President Donald Trump has proposed severe cutbacks for the U.S. government, he plans to further expand the size of and spending on the U.S. military. He has also called on NATO allies to do the same. That could translate into big sales for U.S. defense manufacturers. We wonder: What percentage of global arms sales generated by the top 100 defense companies is accounted for by U.S. firms?
A. 22 percent is not correct.
The United States pays for 22% of the cost of NATO as an institution. This includes the directly shared NATO programs, staff, headquarters, facilities and budgets. In 2017, NATO’s civil budget is $252.3 million and its shared military budget amounts to $1.4 billion. The U.S. share, as for all member countries, is a proportional share based on the size of the country’s gross national income. Among NATO members, Germany pays the next-largest share under this formula, at 15%, followed by France (11%), the U.K. (10%) and Italy (8%). The vast majority of military spending by NATO member countries occurs via their own national defense budgets, rather than shared NATO budgets. President Donald Trump has created the impression, or erroneously seems to believe, that all nations pay their entire respective defense budgets into NATO. Therefore, he has talked about the United States being “ripped off” and that “Germany owes vast sums of money to NATO.”
B. 36 percent is not correct.
The United States accounted for about 36% of all arms exports worldwide in 2015, from among the 48 countries that sold arms abroad that year. In absolute numbers, U.S. firms exported $10.2 billion in major arms and defensive systems in 2015, according to the Stockholm International Peace Research Institute (SIPRI). As it happens, 36% is also the U.S. share of all global defense spending of any kind by every country as of 2015. The U.S. is the largest spender by far. In the global arms sales market, the other leading nations are Russia (accounting for a 20% share), France (7%), Germany (6%) and China (6%). Also relevant are Spain (4%), and the United Kingdom. In regards to global arms imports, the U.S. accounts for less than 2%, since it generally produces its own major arms. The five largest arms-importing countries in 2015 were Saudi Arabia (12%), India (10%), Australia (5%), Egypt (5%) and Iraq (5%).
C. 57 percent is correct.
Among the top 100 arms-producing and military services firms, there are 39 U.S. companies, according to SIPRI. However, if one accounts for the actual sales volumes, U.S. firms provide 57% of the military sales of the world’s top 100 firms. The largest U.S. firms are Lockheed Martin, Boeing, Raytheon, Northrop Grumman, General Dynamics, United Technologies and L-3 Communications. SIPRI does not include any Chinese defense manufacturers in its reports due to lack of reliable public data on them. The institute estimates some of them likely rival the size of the companies ranked in the top 10.
D. 72 percent is not correct.
If all defense spending by all NATO countries, inside or outside of official NATO costs or operations, is tallied up, the United States spends 72% of that combined amount. This total measure of the share of defense spending by member countries also includes expenditures that go beyond NATO projects. It notably includes the many nonNATO operations that are undertaken independent of the organization. A few examples include French and U.S. operations in West Africa or Turkey’s military activities in Syria and Cyprus. This cumulative 72% U.S. share of all defense spending by NATO countries is probably what President Donald Trump had in mind, when he incorrectly talked about the United States providing “the lion’s share” of the alliance’s budget. More than half of all nonU.S. defense expenditures by countries within the alliance come from just three other countries: France, Germany and the United Kingdom.