Canada emerges as top buyer of U.S. military products in Americas

[Kiwi]

Canada emerges as top buyer of U.S. military products in Americas
David Pugliese, The Ottawa Citizen
Published: Thursday, January 10, 2008

Canada was the top purchaser of U.S. military products and services in the Americas during the past eight years, according to a newly released congressional report.

From 1999 to 2006, Canada entered into agreements to purchase a little more than $2.1 billion U.S. of defence products direct from the United States government through a special process called Foreign Military Sales or FMS.

The figure doesn't include U.S.-built equipment that the Canadian government purchased direct from U.S. companies, an amount that is in the billions of dollars. That total is estimated to be worth around $1 billion per year, while Canadian firms ship a similar amount of products back to the Pentagon and U.S. companies, defence industry officials say.

The congressional report, written in late December, did not break down the individual FMS sales.

Chile was the top importer of U.S. defence products from 1999 to 2002, its $555 million in purchases slightly higher than Canada's $447 million in that period. From 2003 to 2006, though, Canada was the leading purchaser in the Americas on foreign military sales. In addition, Canada was the top purchaser overall in the Americas for the entire period covered.

The foreign military sales process can include weapons sent directly from U.S. stockpiles, equipment that was originally destined for U.S. forces, but was diverted to the militaries of other nations, or sensitive or high-tech gear.

Alistair Edgar, a political science professor who monitors the defence industry, said the FMS process had been used several times for equipment purchases for the Afghanistan mission. The Canadian military has bought new howitzers and precision-guided artillery shells through the process.

The Communications Security Establishment, which eavesdrops on foreign governments and terrorists, purchased sensitive communications gear from the U.S. under FMS, as did other federal departments.

Mr. Edgar, of Wilfrid Laurier University in Waterloo, noted that the purchase of the C-17 strategic transport aircraft fleet was also done as an FMS case, although it didn't appear that the multibillion-dollar deal was included in the congressional report.

He said the FMS process does an end run around providing any work to Canadian-based companies since the equipment tends to come from inventory stocks of U.S. units or from production lines set up for a U.S. military contract.

"It's a catch-22 because in cases like Afghanistan, you have to provide the proper equipment to the troops quickly, but then your own industry is often left out of the process," Mr. Edgar said.

Timothy Page, president of the Ottawa-based Canadian Association of Defence and Security Industries, said his organization did not have analytical information on the extent that the FMS process was used or its effect on domestic defence firms.

"As an organization, we are encouraging the government to think strategically on how it is trying to re-equip the Canadian military in a way that provides the kit required in an expedited fashion and with a maximum economic benefit for the country," Mr. Page said.

Canada's foreign military sales purchases, however, pale in comparison to those made by South Korea, Australia, Japan, Greece and many of the Middle East nations.

Saudi Arabia was the leading purchaser of U.S. defence products between 1999 and 2002, spending $8.9 billion U.S., the report said. Israel was the leading purchaser between 2003 and 2006, acquiring $5.2 billion U.S. worth of military products and services. Australia was the top destination for U.S. foreign military sales in 2006 with $1.7 billion U.S. worth of equipment.

Transfers of big-ticket military equipment items also figured heavily in some of the purchases. In the period between 1999 and 2002, the United Arab Emirates spent $7.3 billion U.S. on U.S. equipment, mostly for 80 F-16 fighter aircraft.