Asia beats Middle East as world's largest arms market

UNITED STATES: Asia has shot past the Middle East as the world's largest arms market, with India concluding $5.4 billion in deals in 2005, the most of any developing nation, a new report for the U.S. Congress has found.

Weapons orders worldwide rose sharply in 2005, according to an annual study by the Congressional Research Service - one of the most authoritative, unclassified, reports of its kind.

The total, $44.2 billion in arms deals, was the largest for any year in the period reviewed, which began in 1998. The next highest was $29.3 billion in 2003.

Asia has long been the developing world's No. 2 market after the Middle East, where arms buying was fueled by Saudi Arabian and United Arab Emirates' concerns over Iraq and Iran.

The report, dated Oct. 23 and made available this week, defines the developing world as all nations except the United States, Russia, European states, Canada, Japan, Australia and New Zealand.

In 2002 to 2005, Asia ranked higher than the Middle East, accounting for 48.4 percent of the value of all arms transfer agreements with developing nations, said the survey, titled Conventional Arms Transfers to Developing Nations, 1998-2005.

By contrast, from 1998 to 2001 Asia accounted for 39 percent of all such deals, it said. During the 2002-2005 period, Russia topped the United States in arms transfer agreements with Asia with 36.7 percent, or $16 billion, chiefly due to big combat aircraft and naval system sales to India and China.

The United States ranked second with 26.5 percent, or $11.6 billion. The major West European suppliers as a group - France, Britain, Germany and Italy - had 18.4 percent, the study found. Russia's arms transfer agreements with developing nations in 2005 totaled $7 billion, up from $5.4 billion in 2004, the report said.

Russia's willingness to license production of its designs has been "a central element" in several cases involving its top arms clients, China and India, according to Richard Grimmett, the report's author.

"They have also agreed to engage in counter-trade, offsets, debt-swapping, and in key cases, to make significant licensed production agreements," he wrote.

India, pressing a major military modernization, made $12.9 billion in arms transfer agreements from 2002 to 2005, or 14.4 percent of all such deals involving developing countries, the report said.

China ranked second with $10.2 billion, or 11.4 percent of the value of all such developing world pacts, it said. In 2005, Russia agreed to sell India 24 SA-19 air defense systems for $400 million and a number of Smerch multiple-launch rocket systems for about $500 million. Russia agreed to overhaul an Indian diesel submarine for about $100 million and to provide India with a number of BrahMos anti-ship missiles.

Russia also agreed to sell 30 IL-76TD military transport aircraft and eight IL-78M aerial refueling tanker aircraft for more than $1 billion to China in 2005. It signed new deals with China for AL-31F military aircraft engines for $1 billion, and agreed to sell engines for China's FC-1 fighter aircraft valued at more than $250 million, the report said.

Saudi Arabia was second, behind India, in the value of arms it agreed to buy in 2005, with $3.4 billion. China was third with $2.8 billion.

Washington, Thursday, Reuters.