Smart Bomb Procurement

Team Infidel

Forum Spin Doctor
Wall Street Journal (Europe)
June 17, 2008
Pg. 17
By Ethan B. Kapstein
Globalization has come to the Pentagon. The Joint Strike Fighter, the Presidential Helicopter and most recently the KC-45 refueling tanker -- the three most important defense-procurement decisions taken during George W. Bush's presidency -- are all being built collaboratively with U.S. friends and allies. The lead contractor on the tanker is none other than the French-dominated consortium EADS.
This trend must puzzle those who would label the Bush administration as unilateralist. Yet the Pentagon's reasons for going global are deceptively simple. By embracing a multinational approach to defense procurement, America achieves three distinct objectives: It strengthens national security, serves its economic interests and reinforces its "entangling alliances" in Europe and Asia
Historically, defense procurement has favored domestic solutions. The nation's security is at stake, and domestic economic interests are always lobbying Congress to "buy American" for "our troops." With defense contractors strategically spread across almost every congressional district, these pressures can be overwhelming. Not surprisingly, most U.S. presidents have rejected defense purchases from overseas even when the foreign alternative was far superior to its American counterpart.
It would have been easy for President Bush to continue this tradition. Recall that when he came to office in January 2001, the national security environment seemed relatively benign. Questions about the relevance of NATO and other defense groupings were raised daily by pundits and policy makers alike. The era of armed conflict had seemingly reached its inevitable dead end.
Accordingly, defense budgets were slashed in almost every country, including the U.S. So, too, was the number of military contractors. But some of these budding monopolists, who were unprepared for this harsher economic environment, naturally sought protection from any potential foreign competitors, so that they could keep shrinking national markets to themselves while forcing taxpayers to foot the bill.
Wasting the Pentagon's money in the current budgetary environment, however, is hardly a kindness to U.S. forces. Naturally, they would prefer that Congress award them pay raises and fewer overseas tours of duty. They also want and deserve the very best equipment that the world has to offer, for only in this way can they defeat America's enemies. One reasonable test of the national security priorities of any administration is whether it's willing to make procurement decisions that place the needs of the armed forces over those of domestic industry, no matter the political fallout. Beyond the security arguments, international collaboration makes good economic sense. Today, unilateralism in defense is tantamount to financial suicide given that a new weapons system can cost billions of dollars before it even gets off the drawing board.
The problem is straightforward: The upfront research and development costs of a new defense program need to be amortized over the number of weapons that are ultimately built. The unit-cost of each system falls as the quantity of units purchased rises. These costs could be borne solely by American taxpayers, who would literally get less of a bang for their buck, or they could be shared among friends and allies. When weapons are sold internationally, more units are produced and unit-costs decrease.
Take the case of the KC-45, which is being built as a collaboration between EADS and Northrop Grumman, on the basis of an existing, cutting-edge Airbus platform. Had the Pentagon not made this choice, Americans would have had to support Boeing as it upgraded an old airframe to meet the new mission requirements. Instead, Americans are reaping the benefits of technology that the Europeans have invested in and developed over many years. The marginal cost of building a KC-45 tanker based on an airframe already in production is almost certainly lower than starting from scratch on a new or obsolescent Boeing design. What's more, Americans will enjoy the jobs that will be created in the new plant that EADS must build in the U.S. in order to produce this system.
The KC-45 example also graphically demonstrates that the U.S. no longer dominates cutting-edge aerospace technology. By exploiting an Airbus airframe, the Air Force acquires a proven, "fly by wire" platform, and the tanker's refueling boom is exceptionally versatile. If the Pentagon wants the most effective weapons in the hands of American forces, then it must scour the globe for ideas and equipment. Usually, it can only acquire the relevant technologies via some collaborative arrangement.
There are also good industrial reasons to procure weapons on a multinational basis. As everyone knows -- even those serving in the U.S. Congress -- protectionism at home inevitably begets protectionism abroad. If American firms hope to sell their wares overseas, the U.S. must be open to international defense procurement.
Defense collaboration further strengthens and deepens the ties of interdependence between America and its allies. Collaboratively built weapons systems facilitate joint training and combat interoperability, making multinational operations more effective. These industrial and military linkages can only serve to strengthen relations between the United States and its partners, while reducing any temptation to act unilaterally.
In short, by deftly exploiting multilateralism in weapons manufacture, the Pentagon has built lasting industrial ties, particularly across the Atlantic, which could serve the next president well. These common industrial interests, for example, can and should be used as the cornerstones for broader discussions of deepening global economic integration and the management of trade frictions, in addition to their role in solidifying alliance relations. Of greatest importance, the globalization of the Pentagon reveal a hard truth: None of the allies can "go it alone" any longer when it comes to either national security or economic policy.
Mr. Kapstein is a professor of economics and political science at Insead and a retired U.S. naval reserve officer.
 
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