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Policy Jolts in U.S. Arms Transfers: the Post Cold War Security Environment Jane Misheloff Dissertation Submitted to the Facult

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Policy Jolts in U.S. Arms Transfers: the Post Cold War Security Environment Jane Misheloff Dissertation Submitted to the Facult Policy Jolts in U.S. Arms Transfers: The Post Cold War Security Environment Jane Misheloff Dissertation Submitted to the Faculty of Virginia Polytechnic Institute and State University in Partial Fulfillment of the requirements for a Degree of Doctor of Philosophy in Public Administration and Policy Philip S. Kronenberg, Chair Sumner Benson Edward M. Kaitz Orion F. White James F. Wolf May 1999 Falls Church, Virginia Keywords: Conventional Arms Exports, Transfers Copyright 1999, Jane Misheloff Policy Jolts in U.S. Arms Transfers: The Post Cold War Security Environment Jane Misheloff (ABSTRACT) This research addresses the subject of conventional arms transfers in the Post Cold War Era. ("Conventional arms" herein are defined as high cost, state-of-the-art weapons systems in aerospace, land vehicles, missiles and naval vessels. ") The rapid and startling changes in the international political environment that took place in the late 1980's forced the U.S. and her Western Allies to reexamine their national defense budgets. The Bush Administration responded to the situation with new policy initiatives or "jolts" that aligned the annual U.S. Department of Defense's budget with Post Cold War realities. (A "jolt" is defined here as a sudden "shock" to a system that has the potential to alter radically one or more of its established structural components or behavioral patterns.) The word "jolt" is specifically used because while the policies reducing force strength and decreasing defense spending had been introduced on earlier occasions since the end of World War II, these particular jolts were driven by different circumstances than previous drawdowns. The Cold War that had dominated and shaped international affairs was over; the Post Cold War era promised to be a radical departure from the 50-year long status quo. Some phases of the policy jolts were directly related to U.S. Department of Defense operations, such as base closings and reductions in force, while others affected the U.S. defense industrial base through the weapons acquisition process. Domestic acquisition programs have important linkages to transferable weapons systems. Such linkages were so deeply embedded that despite severe reductions in weapons acquisition programs, most prime defense contractors did not conceptually redefine or reconstitute themselves although they went through a long period of mergers and acquisitions. This research explores how U.S. governmental stakeholders interpreted the utility of conventional arms transfers in managing the "aftershocks" of the policy jolts experienced by defense contractors. Their behaviors indicate that U.S. policy-making institutions, for the most part, tried to direct favorable outcomes for U.S. sales in the world market. Ultimately, the policy initiatives undertaken to assure favorable outcomes for defense corporations and their unforeseen consequences could lead to new policies or issue transformation. iii Dedicated to Philip S. Kronenberg, Steve Klonsky and to the memory of Charles Terry Angelo iv ACKNOWLEDGEMENTS My deepest thanks go to my doctoral Committee Chair Philip S. Kronenberg for his patience and support as this project advanced through its many iterations. Professor Kronenberg never expressed any doubt that this dissertation could not be completed. He has been generous with his time and in sharing his ideas to help move this effort forward. I have valued our academic association inside and outside the classroom and participation in his projects as a graduate assistant at the Center for Public Administration and Policy. Sumner Benson has been an enthusiastic supporter of this research effort. I am very grateful he was willing to serve as a committee member. His comments have been invaluable and insightful. It has been a privilege to work with him and share his intellectual curiosity. I look forward to a future collaborative relationship. I owe the impetus toward writing on the subject of arms transfers to Edward Kaitz. As always, his grasp of military and corporate issues is comprehensive and timely. It was my pleasure to work with him again on an academic project. I was honored to be his student during my MBA program and was honored once again that he was willing to be on my dissertation committee. I am most appreciative of Orion White who graciously consented to be on my committee. Over the past few years, he has continuously been supportive and interested in my work and offered his support and counsel. It was my good fortune to be his graduate assistant for a year and to participate in some of his interesting organizational development work. Ultimately, I am indebted to James Wolf who's decision to award financing for my doctoral program made it possible for me to begin and complete the program of studies at Virginia Tech. I have been grateful for his continued support, assistance and friendship over the years. I am delighted that he was able to serve on my committee and thank him for his comments and insight. Finally, I would like to thank Steve Klonsky for his support and for his encouragement in my academic pursuits. I could not have completed this project, and many others, without his unconditional faith in my abilities. v TABLE OF CONTENTS LIST OF TABLES ........................................................................................................... x LIST OF FIGURES ........................................................................................................... xii CHAPTER I: THE STAKEHOLDERS AND THE POLICY JOLTS ......................... 1 Introduction ........................................................................................................... 1 The Current Status of Arms Trading......................................................................... 2 The Figures.................................................................................................... 2 The "Stakeholders".................................................................................................... 5 U.S. Governmental Stakeholders .................................................................. 8 The Economic Stakeholders.......................................................................... 15 The Policy Jolts and U.S. Conventional Arms Trading ............................................ 16 Environmental Events Fueled the Policy Jolts.............................................. 16 The Policy Jolts ............................................................................................. 17 Intent of This Research Paper ................................................................................... 23 CHAPTER II: ARMS EXPORT RESTRAINTS............................................................ 25 Introduction ........................................................................................................... 25 Restraints in Place ..................................................................................................... 26 The Export Administration Act of 1979 ....................................................... 26 The Arms Export Control Act of 1976.......................................................... 27 Legislation Linked to Humanitarian Concerns ............................................. 29 Congressional Budget Review Process......................................................... 29 International Control Regimes .................................................................................. 30 CoCom and the Wassenaar Arrangement ..................................................... 31 Reporting Initiatives...................................................................................... 33 Issues in Technology Transfer ...................................................................... 35 CHAPTER III: ARMS TRADING IN THEORY AND PRACTICE ........................... 38 Introduction ........................................................................................................... 38 The Krause Categories .............................................................................................. 38 An Update on the Krause Categories ........................................................................ 39 The Philosophic Divide............................................................................................. 42 The Realists ........................................................................................................... 43 The Non-Realist Literature........................................................................................ 47 The Supply-Side in International Trade........................................................ 48 The Supplier and Domestic Production ........................................................ 50 Discontinuous Change............................................................................................... 52 First- and Second-Order Change and Environmental Jolts........................... 52 Punctuated Equilibrium................................................................................. 55 Chaos Theory ........................................................................................................... 56 vi CHAPTER IV: ARMS TRADE DATA ........................................................................... 59 Introduction ........................................................................................................... 59 Who Complies Trade Statistics................................................................................
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