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  • Saudi Arms Deal

    So, I assume everyone heard about the $20 billion arms deal to Saudi Arabia announced by Condi, and the fact that further deals with other Arab states could be pending.

    Apparently this is to provide a counter weight to Iran. You know, like Iraq used to be!

    Anyway, it seems to me that an American military presence in the Persian Gulf (even a limited one) is already a counterweight to Iran. Also, these sorts of things on the part of western powers seem to accomplish nothing in the long run.

    I mean if support of the Shah, Iraq in the 80's etc. produced anything positive than I might think differently, but they never seem to achieve anything.

    So, the question is: Arms deals to Arab states, wise move/damage control or the latest in a long string of poor foreign policy decisions with regards to the Muslim world?

    Also, how does this promote stability?
    The Saudi military is already far better equipped than that of Iran.

    http://www.cnn.com/2007/POLITICS/07/...ref=newssearch

  • #2
    WHite Elefants

    here's a good commentary on the arms deal. I find it very funny and insightful:

    http://www.avnery-news.co.il/

    White Elephants

    by Uri Avnery
    The king of Siam knew how to deal with domestic opponents: he would present them with a white elephant. White elephants are rare in nature, and therefore sacred. Being sacred, they may not be put to work. But even a sacred elephant does eat, and eat a lot. Enough to turn a rich man into a pauper.

    My late friend, Gen. Matti Peled, onetime quartermaster general of the army, pointed out the similarity between this elephant and many of our gifts from the president of the United States.

    According to the stipulations of the grant, most of it must be spent in the United States. Let's assume that Israel needs Merkava tanks, made in Israel. Or anti-missile systems, also made in Israel. Instead of acquiring these in Israel, the Israeli army buys American airplanes, which it does not need.

    A state-of-the-art military airplane is an immensely expensive object. True, we get it for nothing. But like the white elephant, the airplane is very costly to maintain. It needs pilots, whose training costs a fortune. It needs airfields. All these expenses add up to much more than the price of the airplane itself.

    But which army can refuse such a wonderful present?


    --------------------------------------------------------------------------------

    The Middle East is now being invaded by a herd of white elephants.

    This week it became known that President Bush is about to supply Saudi Arabia with huge quantities of the most advanced weapons. The price tag is $20 billion (20,000,000,000).

    Ostensibly, the arms are needed to strengthen Saudi Arabia against the Great Satan: Iran. In Saudi eyes, this is now the great danger.

    How did this happen? For centuries, Iraq served as a wall between Shi'ite Persian Iran and the Sunni Arab Middle East. When President Bush toppled the Sunni regime in Iraq, the whole region was opened up to the Shi'ite power. In Iraq itself, a Shi'ite government was installed, and Shi'ite militias roam at will. The Shi'ite Hezbollah is growing in power in Lebanon, and Iran is extending its long arm to all the Shi'ites in the region.

    Allah, in his infinite wisdom, has seen to it that almost all the huge Middle East oil reserves are located in Shi'ite areas: in Iran, in the south of Iraq, and the Shi'ite areas of Saudi Arabia and the Persian Gulf principalities. If these reserves slip away from U.S. control, it will cause a drastic change in the balance of power, not only in the region but in the entire world.

    Therefore, the strengthening of Saudi Arabia – ruled by conservative Sunnis – makes a lot of sense from the American point of view. However, the arms deal is quite irrelevant to this.

    The Saudis do not need weapons. They have an instrument that is much more effective than any number of airplanes and tanks: an inexhaustible supply of dollars. They use it to finance friends, buy influence, and bribe leaders.

    On the other side, Saudi Arabia is unable to maintain the weapons that are flowing to it. It does not have enough pilots for the airplanes it is buying, nor crews for the tanks. The new weaponry will collect sand in the desert, like all the expensive weapons it has bought in the past.
    So what is the sense in buying more weapons to the tune of $20 billion?

    Well, the Saudis are selling oil to the Americans for dollars. A lot of oil, a lot of dollars. The United States, with a huge gap in its balance of trade, cannot afford to lose these billions. So, in order to make it possible for the U.S. to carry this burden, the Saudis must give back at least a part of the money. How? Quite simple: they buy American arms that they don't need.

    This is a merry-go-round that benefits all. Especially the Saudi princes. Saudi Arabia is blessed with a great abundance of these – some 9,000 princes, all belonging to the House of Saud. A prince has a lot of wives, a wife has a lot of offspring. Some of them are arms dealers, who automatically receive fat commissions from the arms billions. (It is easy to work it out: a mere 1 percent of 20 billion amounts to 200 million. And they would laugh at a commission of 1 percent.)

    The princes have, therefore, a vested interest in this convenient arrangement.


    --------------------------------------------------------------------------------

    This is where Israel enters the picture.

    Every arms deal made by the White House needs the assent of Congress. In Congress, the "friends of Israel" – the Jewish and the Evangelical lobbies – rule supreme. Any senator or congressman can forget about being reelected if he offends one of these lobbies.

    When Israel raises its voice against an arms deal with Saudi Arabia, the White House has a problem. The more so since there is a certain logic to the Israeli objection: the Saudi air base in Tabuk is but a few minutes flying time from the Israeli port of Eilat.

    What to do? Easy: give us a present of weapons, in order to maintain "the balance of power" and our "qualitative superiority over all the Arab armies combined."

    So, together with the $20 billion deal with the Saudis, President Bush decreed that the American yearly grant of military assistance to Israel should be raised from $2.4 billion to $3 billion. This means that in the coming 10 years, Israel will receive arms to the value of $30 billion.

    Apart from the small part of the grant that Israel is allowed to spend elsewhere, this huge sum must be spent in the United States. From the economic point of view, the gift to Israel is really an immense boost to the American arms industry. It will enrich the arms producers, who are so dear to Bush's heart. It will also show the American public how their wise president creates a lot of nice new jobs for them.


    --------------------------------------------------------------------------------

    That, of course, is not the end of the story.

    It would be unacceptable to "strengthen" the rulers of Saudi Arabia in such an impressive way, without giving something to the other kings, presidents, and emirs who cooperate with the Americans. Egypt, Jordan, and the Gulf emirs expect their share, too.

    The new arms deals will, therefore, amount to 40, 50, and God knows how many more billions of dollars.

    That's not bad for the arms producers, who helped Bush get elected and continue to support him. Not bad for the arms merchants, the princes and all the others who profit, the corrupt regimes that rule the Middle East (and, in this respect at least, Israel has succeeded in becoming an integral part of the region.)


    --------------------------------------------------------------------------------

    All this could be amusing, were it not for the dark side of these circular deals.

    When I was a child, I was taught that one of the most despicable human types is the arms merchant. He is quite different from all other kinds of trader, because his merchandise is death. His riches are drenched with blood.

    The title "arms merchant" was, at that time, a stinging insult, one of the worst. A person would not introduce himself as such any more than he would admit to being a hired killer.

    Times have changed. The arms dealer is now a respectable person. He can be a celebrity, an object of adulation for the gutter press, a friend of politicians, a generous host of members of the government.

    Weapons have their own life. They strive to realize their potential. Their mission is to kill. A general whose arsenals are full tends to fantasize about "war this summer" or "war this winter."

    The killing potential of weapons is getting "better" all the time, and their producers need testing grounds. Some days ago, one of our generals revealed on television that under an American-Israeli agreement, the Israeli army is obliged to report to the American military establishment on the effectiveness of all kinds of arms. For example: the accuracy of "smart" bombs and the performance of airplanes, missiles, drones, tanks, and all the other instruments of destruction in our wars.

    Every "targeted killing" in Gaza or use of fragmentation bombs in Lebanon serves also as a test. The leveling of a neighborhood in Beirut, the death of women and children as "collateral damage," the ongoing amputation of limbs by fragmentation bombs in south Lebanon – all these are statistical facts that are important for American arms manufacturers to know, so they can improve their merchandise.

    A deal is a deal, and goods are goods.


    --------------------------------------------------------------------------------

    In the same week that these huge arms deals were announced, Ehud Olmert spoke about a dialogue (unlimited in time) about the (nonbinding) principles for a final status agreement. Condoleezza was again buzzing around the region's capitals, smiling and talking, embracing and talking.

    Saudi Arabia is hinting that perhaps – perhaps – it may be ready to sit with Israel at the table of the "peace meeting" that may take place in the autumn. This is also intended to make it easier for Congress (meaning: the pro-Israel lobby) to confirm the arms deal.

    Bush's people have announced for the umpteenth time that a "window of opportunity" is now open. (Not a "gate of opportunity," not a "door of opportunity," but a window. As if windows were for walking through rather than looking through.)

    All this activity somehow reminds me of another story about the white elephant:

    An American billionaire had set his mind on acquiring a white elephant, in order to impress his peers. But it is strictly forbidden to export white elephants from Thailand, because they are so rare.

    A shrewd operator promised to get him a white elephant, and even told him how he would go about it: he would paint the elephant gray before smuggling him out.

    And indeed, at the promised time a crate arrived, and out walked a gray elephant. When the gray paint was scrubbed off, a white elephant was revealed. But with a bit more scrubbing, the white paint also came off, and underneath – the elephant was gray.
    "Freedom cannot exist without discipline, self-discipline, and rights cannot exist without duties. Those who do not observe their duties do not deserve their rights."--Oriana Fallaci

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    • #3
      Good post Piero....guess you wont be invited to the White House for afternoon tea.

      per ardua ad astra

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      • #4
        well, I guess not...

        but then again I AM part of the corruptive industry - I'm in marketing!
        "Freedom cannot exist without discipline, self-discipline, and rights cannot exist without duties. Those who do not observe their duties do not deserve their rights."--Oriana Fallaci

        Comment


        • #5
          On the other side, Saudi Arabia is unable to maintain the weapons that are flowing to it. It does not have enough pilots for the airplanes it is buying, nor crews for the tanks. The new weaponry will collect sand in the desert, like all the expensive weapons it has bought in the past.
          So what is the sense in buying more weapons to the tune of $20 billion?

          Well, the Saudis are selling oil to the Americans for dollars. A lot of oil, a lot of dollars. The United States, with a huge gap in its balance of trade, cannot afford to lose these billions. So, in order to make it possible for the U.S. to carry this burden, the Saudis must give back at least a part of the money. How? Quite simple: they buy American arms that they don't need.
          This sentence..."The United States, with a huge gap in its balance of trade, cannot afford to lose these billions."...is one of the most nonsensical things I've ever read.

          The Saudis are buying weapons that they cannot maintain or even populate with crews...

          US defense contractors are profiting from Saudi frivolity...

          Saudi Arabia wants to spend even more money on US weapons systems...

          The problem is...WHAT?
          Watts Up With That? | The world's most viewed site on global warming and climate change.

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          • #6
            buy shares of the defense industry!
            "Freedom cannot exist without discipline, self-discipline, and rights cannot exist without duties. Those who do not observe their duties do not deserve their rights."--Oriana Fallaci

            Comment


            • #7
              Originally posted by The Doctor View Post
              This sentence..."The United States, with a huge gap in its balance of trade, cannot afford to lose these billions."...is one of the most nonsensical things I've ever read.
              Why?

              Comment


              • #8
                Originally posted by Imperial View Post
                Why?
                The United States does not have to export some products in order to be able to import other products.

                The United States has a trade deficit because we can afford to buy a lot more stuff than we can produce. Our arms sales to Saudi Arabia have exactly nothing to do with our financial ability to buy their oil. We buy their oil because our demand for oil exceeds our domestic production by about a factor of two. Our demand for oil is driven by our economy.
                Watts Up With That? | The world's most viewed site on global warming and climate change.

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                • #9
                  "The United States has a trade deficit because we can afford to buy a lot more stuff than we can produce."
                  This is not necesarily a good thing due to the enormous debt that has been run up to pay for this, a debt which has been underwritten quite heavily by the Chinese and has helped create the currently very weak dollar, so I would imagine US arms deals are quite welcome in Washington right now.

                  Comment


                  • #10
                    Originally posted by copenhagen View Post
                    "The United States has a trade deficit because we can afford to buy a lot more stuff than we can produce."
                    This is not necesarily a good thing due to the enormous debt that has been run up to pay for this, a debt which has been underwritten quite heavily by the Chinese and has helped create the currently very weak dollar, so I would imagine US arms deals are quite welcome in Washington right now.
                    The US national debt has nothing to do with our trade imbalance.

                    China "owns" about 3.2% of the US national debt because they invested some of their cash in US Treasury instruments...China did not buy US gov't bonds as a favor to us. They did so because it is a more attractive investment than their other alternatives.

                    26% of US gov't debt is foreign owned...Japan 8.7%, PRC 3.2%, UK 2.3%.

                    32% of US gov't debt is owned by US citizens.

                    42% of US gov't debt is owed by one part of the US gov't to another. 23% is owed to Social Security.

                    In effect 55% of the US gov't debt is owed to US citizens, counting Social Security.

                    SOURCE

                    China cannot simply demand their money back; they could try to sell all their US Treasury bonds tomorrow and it wouldn't implode the US economy. The bonds could only be sold as fast as market volume could absorb them. The sudden increase in sales volume would depress bond prices, elevate yields and strengthen the dollar...IOW it would make the dollar and US gov't bonds more attractive investments to international investors as well as US investors. With interest rates rising, consumption would slow down. The US economy, and hence the world economy, would slow down a bit, oil prices would decline, a recession might even sink in. Demand for Chinese products decline and they would become more expensive due to the rising dollar…Then we start a whole new growth cycle.
                    Watts Up With That? | The world's most viewed site on global warming and climate change.

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                    • #11
                      Doc. National debt has a lot to do with trade imbalnace as they often feed off each other.Something that could take all our economies with it.




                      "TANNER: FOREIGN COUNTRIES
                      BUYING U.S. DEBT
                      Congressman says national security compromised,
                      U.S. jobs lost as result
                      U.S. Rep. John Tanner says foreign countries are buying shares of the United States’ rising federal debt, a "dangerous situation" that could compromise national security, harm the U.S. economy and take jobs from Tennessee workers.



                      Congressman Tanner participates in an Oct. 30 Ways and Means Hearing about China's role in the global economy and whether it threatens the security or economy of the United States.

                      The federal government will have accumulated a $374 billion deficit in the fiscal year that ended last month, not including additional spending in Iraq, according to estimates from the non-partisan Congressional Budget Office. The nation’s government owes almost $7 trillion, and roughly $1.38 trillion of that is held by other countries, according to the U.S. Treasury Department.

                      "We are increasingly turning to foreign investors to finance our federal budget and the war in Iraq," Tanner said. "To keep up with the unprecedented growth in federal expenditures, we have to borrow billions from other countries."

                      Mainland China and Hong Kong bought $177 billion of U.S. debt in the first seven months of 2003. Chinese holdings in the U.S. debt have more than doubled since 2001. Other countries holding major investments in the U.S. debt include Japan, the United Kingdom, Caribbean Banking Centers, Germany and Korea.

                      China’s stake in our nation’s finances is particularly significant because it is using its holdings to undervalue the American dollar and manipulate its own currency, the yuan. That helps the Chinese economy grow and takes jobs away from U.S. manufacturers, Tanner said.

                      "Economists tell us that China is undervaluing its currency by as much as 40 percent," he said. "Simply put, China can manufacture products that cost 40 percent less than when U.S. manufacturers make the same items. We have lost millions of manufacturing jobs in the United States -- many of them in Tennessee -- and this is certainly part of the reason."

                      Tanner co-sponsors a bill that requires the Treasury Department to study China’s currency manipulation and authorizes trade tariffs if necessary to ensure China is not harming the U.S. economy.

                      Officials in Beijing could also threaten to sell U.S. treasury securities, increasing U.S. interest rates and leading to recession at home, Tanner said.

                      "Some fear China could threaten to sell its holdings in the U.S. debt as a negotiation tool on issues where we disagree," Tanner said. "The Chinese have the power now to control the American dollar, and that could have global security implications too serious for us to even imagine.

                      "We must get our nation’s fiscal matters in order to protect the American dollar, American security and the American worker."

                      A longtime proponent of balancing the federal budget, Tanner addressed his concerns over foreign holdings of the debt in an Oct. 18 guest column in The (Memphis) Commercial Appeal.

                      "The Republican borrowing program, unless it is quickly reversed, will devastate our economy and diminish our role in the world," Tanner wrote in the column. "We cannot be the world’s leading economic and military power if our government’s financing depends on money from foreign countries, many of which oppose our policies."

                      That was 3 years ago, but now a finance professors from Yale Roger Ibbotson stated that;

                      "Through the 90s, as our trade deficit grew, our budget deficits made up only a small percentage of our GDP. We were easily able to service our debt. But war, tax cuts and Hurricane Katrina changed that. And the combination of a weighty budget deficit and a record trade deficit has made these creditor nations nervous about loading up on too much U.S. debt. It's reasonable to think that China, Japan and Southeast Asia may soon choose to diversify their investments and stop buying our debt. If foreign countries stop buying our debt, that will cause long-term bond prices to drop, interest rates to rise and the dollar to fall. Excess demand for energy and natural resources from China and India will likely spur a rise in U.S. inflation rates. Higher interest rates and inflation coupled with a weak dollar make long-term bonds a risky investment with very little upside. Investors looking to invest new money in fixed income will be better off investing in short-term bonds."

                      Doctor, why you think that this is not a problem for the US economy just makes no sense.

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                      • #12
                        Nothing has been sold yet. It is just the preliminary talking stage. What the Saudis want and what they get will be two different things. The USA might as well sell some armaments to the Saudis, if they don't get them from the West they will get them from Russia, China or North Korea.
                        "If you are right, then you are right even if everyone says you are wrong. If you are wrong then you are wrong even if everyone says you are right." William Penn.

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                        • #13
                          Originally posted by trailboss49 View Post
                          Nothing has been sold yet. It is just the preliminary talking stage. What the Saudis want and what they get will be two different things. The USA might as well sell some armaments to the Saudis, if they don't get them from the West they will get them from Russia, China or North Korea.
                          Or France.
                          Watts Up With That? | The world's most viewed site on global warming and climate change.

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                          • #14
                            Originally posted by trailboss49 View Post
                            Nothing has been sold yet. It is just the preliminary talking stage. What the Saudis want and what they get will be two different things. The USA might as well sell some armaments to the Saudis, if they don't get them from the West they will get them from Russia, China or North Korea.
                            or even the uk since they are buying the typhoons ..
                            owner of the yahoo group for WW1 ,WW2 and Modern TO&Es
                            (Tables of organisation & equipment or Unit of action )

                            http://games.groups.yahoo.com/group/TOandEs/

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                            • #15
                              doc has a point re. 20 bn $ not weighting much in the total US deficit or GDP anyways.

                              point is, imho, that after all it's your tax money. perhaps better used to build/repair crumbling third-world-like infrastructure, like bridges??

                              in all cases, I really doubt Saudis would do anything with their weapons - just like Iran's case in the 80's - once the flow of parts, advisors, trainers, woudl stop. after all - carefull, I'm going to say something almost racist here - they are just... well... you know... people from the sands of arabia (with lots of money - you should see these princes in Geneva right now, with lamboeghinis, Ferraris FLOWN IN from the gulf, cruising the 1mile-long lake shore downtown.... peasants with money! (and I really dont want to insult farmers, who are one of the best and most honourable profession in the world - I'd trade one farmer for 10'000 bankers or 2 million lawyers, in a hostage crisis, for example).

                              ... but I digress.
                              "Freedom cannot exist without discipline, self-discipline, and rights cannot exist without duties. Those who do not observe their duties do not deserve their rights."--Oriana Fallaci

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