Multinational Monitor

NOV 2001
VOL 22 No. 11


Pentagon Spending Spree: The Wartime Opportunists on High Alert
by William Hartung

Too Cheap to Deter: The Nuclear Power Industy Pushes Ahead Post 9-11
by Charlie Cray

Fear of Flying: The Political Economy of Airport Security
by Todd Paglia


The Great Game: Oil and Afghanistan
an interview with
Ahmed Rashid

A Resource War
an interview with
Michael Klare

A Corporate Tax Break Feeding Frenzy
an interview with
Nancy Watzman

The Corporate Attack on Electronic Privacy
an interview with
Chris Hoofnagle

Insuring a Fair Deal
an interview with
Robert Hunter


Behind the Lines

The Corporate State and the Public Interest

The Front
The Cipro Rip-Off

The Lawrence Summers Memorial Award

Names In the News


Pentagon Spending Spree: The Wartime Opportunists on High Alert

By William D. Hartung

Despite repeated assertions by President Bush and his top advisers that their global campaign against terrorism will be a “new kind of war,” the biggest recipients of the new weapons spending sparked by the September 11 attacks will be the usual suspects: big defense contractors like Boeing, Raytheon, Lockheed Martin and Northrop Grumman. Once emergency anti-terror funding and supplemental appropriations to finance the war in Afghanistan are taken into account, this year’s Pentagon budget could hit $375 billion, a $66 billion increase over last year.

Most of this new funding will be used to bankroll longstanding pet projects of the military-industrial lobby, not to finance equipment or techniques designed for the fight against terrorism. As one Pentagon official told Defense News, much of the initial anti-terror funding “will have nothing to do with retaliation in response to the Sept. 11 attacks. The funding will go to the [military departments’] wish lists for things we’ll have several years from now.”

The Great Leap Forward

The arms industry’s biggest agenda item of recent years — a massive, across-the-board increase in military spending — has taken a giant leap forward in the wake of September 11. In October 2000, in the stretch run of the presidential campaign, the National Defense Industrial Association joined with other arms industry trade groups and the corporate-backed Center for Security Policy to finance a full page ad in USA Today touting a “4 percent solution” to the nation’s defense needs. Their “solution” involved jacking up the Pentagon budget from 3 percent of gross domestic product to 4 percent, which would involve an unprecedented peacetime increase of $100 billion. The industry’s rallying cry has since been taken up by the Project for a New American Century, a right-wing think tank founded by conservative luminary William Kristol of the Weekly Standard.

Candidate George W. Bush’s hard-line rhetoric on defense issues raised high hopes among defense contractors. The industry rallied behind the Republican ticket, giving more than four times as much to the Bush campaign as they donated to Al Gore’s presidential bid, and favoring Republican candidates for Congress by almost a two-to-one margin. But Bush dashed the arms makers’ hopes for a quick payoff in February 2001 when he announced that he would not seek additional increases in Pentagon spending beyond those already recommended by the outgoing Clinton administration until Secretary of Defense Donald Rumsfeld had completed a comprehensive review of U.S. military strategy.

Rumsfeld’s review, with its early emphasis on the development of lighter, more maneuverable conventional forces and a rapid expansion of missile defense and military space programs, caused additional anxiety for weapons firms. It appeared that the new strategy might involve scaling back existing big-ticket programs like Lockheed Martin’s F-22 fighter plane and United Defense’s Crusader artillery system to make way for next generation systems. For the major contractors, this would mean giving up lucrative production contracts now for the promise of new projects down the road, a tradeoff the industry did not want to make.

Rumsfeld’s reform agenda ran into a brick wall on Capitol Hill and in the military services, each of which had their own weapons procurement priorities. By summer 2001, it appeared Rumsfeld had backed off from the notion of making major cuts in existing programs, and was banking instead on the prospect of instituting substantial, long-term increases in Pentagon funding that could accommodate missile defense and space weapons in addition to the military’s existing commitments to costly weapons projects that had been designed during the Cold War era. But especially after the $1.3 trillion Bush tax cut, Congress was reluctant to support a massive peacetime military buildup. Even the first installment on the Bush/Rumsfeld buildup, an $18.2 billion “amended increase” to the FY 2002 Pentagon budget, ran into serious resistance on Capitol Hill.

September 11 changed all that. Within days of the attacks, Congress signed off on a $40 billion package for reconstruction and anti-terrorism efforts, and many members echoed the sentiment of Representative Norman Dicks, D-Washington, who argued that prior notions of fiscal conservatism must be shunted to the side, given the imperative of funding the fight against terrorism. Secretary of Defense Rumsfeld has compared the war on terrorism to the Cold War, and stock analyst Paul Nisbet has predicted that a $400 billion military budget is now within reach. Boeing vice chairman Harry Stonecipher told the Wall Street Journal that “the purse is now open,” so the Pentagon will no longer have to make the “hard choices” among competing weapons projects that were present prior to September 11. Lest anyone try to question this flood of new military funding, Stonecipher warned that any member of Congress who argues that “we don’t have the resources to defend America — won’t be there after next November.”

The main question now for the military-industrial lobby is how to carve up this unexpected windfall.


The biggest beneficiaries of increased Pentagon spending will be existing systems, many of which were designed during the Cold War and have little or nothing to do with the fight against terrorism.

Representative Curt Weldon, R-Pennsylvania, will look to the new surge in Pentagon spending as an opportunity to secure the future of the troubled V-22 Osprey, built by Boeing in his Philadelphia area district. The V-22, which is designed to take off and land like a helicopter and fly like a plane, has been plagued by a series of crashes that have killed 30 U.S. military personnel and by a scandal involving falsification of maintenance records. Last spring, a Pentagon “blue ribbon panel” recommended slowing down the program until its serious technical problems could be fixed, but the program’s boosters have seized on the war in Afghanistan as a rationale to speed up the program. Weldon, who took over as the chair of the powerful subcommittee on military procurement after the death of Representative Floyd Spence, R-South Carolina, in August, will be well positioned to pump funding into his pet project, which he has been promoting nonstop ever since then-Secretary of Defense Dick Cheney tried to cancel it in the first Bush administration.

Another major program that was widely considered to be on the chopping block as recently as this spring was the United Defense Crusader artillery system. When candidate George W. Bush spoke on the campaign trail of building a new military defined “not by mass or size, but by mobility and swiftness,” the Crusader was one of the weapons systems he had in mind for cancellation. Critics believe that the 70-ton system is simply too heavy to transport to distant battlefields, and would be difficult to maneuver even if it could be delivered to a combat zone. But United Defense has pledged to build an assembly plant for the Crusader in Lawton, Oklahoma, which has garnered the project strong support from House Majority Whip J.C. Watts, R-Oklahoma, and Senate Armed Services Committee member James Inhofe, R-Oklahoma. If these Congressional advocates aren’t enough to get the job done, United Defense, which is owned by the Carlyle Group, run by former Reagan Defense Secretary Frank Carlucci, also has friends at the highest levels of the Bush administration. Carlucci has already had a private audience with his long-time friend Donald Rumsfeld since Rumsfeld took over as secretary of defense, but he denies using the opportunity to plug the Crusader. Other Carlyle associates include former Secretary of State James Baker, who represented George W. Bush in the Florida election fight, and former President George Herbert Walker Bush, who makes overseas trips on behalf of the company where he reportedly gives presentations for a fee of $100,000 each. With all this political firepower in its corner, United Defense is poised to get more than its fair share of the coming Pentagon windfall.

Lockheed Martin’s F-22, an overweight, over-budget combat aircraft that is now the most expensive fighter plane ever built (at over $200 million per copy), should also fare well in the new budgetary climate on Capitol Hill. Just two years ago, in the fall of 1999, the company had to pull out all the stops in a concerted lobbying campaign to restore production funding for the program, which had been cut by influential committee members John Murtha, R-Pennsylvania, and Jerry Lewis, R-California, due to concerns over the F-22’s burgeoning costs and continuing performance problems. The F-22, which has been described by veteran defense correspondent Greg Schneider as “a jet fighter with no one left to fight,” was originally designed to do battle with a new generation of Soviet fighter planes which were never built. Prior to September 11, Lockheed Martin was sufficiently concerned about possible cuts in the 339-plane, $63 billion project that the company had a special team of officials designated to drive around the country with an F-22 flight simulator on the back of an truck in order to generate local political support. Now the plane appears safe from budget cuts.

Despite the fact that current generation U.S. combat aircraft like the F-15 and the F-16 are far superior to the planes fielded by any likely U.S. adversary, the costly F-22 is just one of three major fighter programs now under way. Boeing’s F/A-18 E/F program is already in production for the Navy and Lockheed Martin recently won a $19 billion long-term development contract for the Joint Strike Fighter, a $200 billion program that will provide next generation combat aircraft for the U.S. Air Force, Navy and Marines as well as the armed forces of the United Kingdom. Although the Pentagon claims that the decision to award the contract to Lockheed Martin over Boeing was made on the merits, it is interesting to note that the Bush administration’s Secretary of the Air Force, James Roche, spent most of the last two decades working for Northrop Grumman and its predecessor, Northrop. Northrop Grumman is a major participant in the Lockheed Martin Joint Strike Fighter team.

More money for the Pentagon may also provide an opening to revive programs that have recently run their course, like Northrop Grumman’s B-2 bomber. Representative Dicks, whose hometown firm Boeing is a major subcontractor on the project, raised the issue of buying more B-2s in the very first meeting that President Bush held with members of the congressional defense committees. Some military “reformers” have championed the B-2 as well, arguing that its long range could reduce U.S. dependence on overseas bases in future conflicts. So far, the main problem in restarting the B-2 program has been cost. The first 21 planes cost $2 billion each. Funds permitting, Secretary of Defense Rumsfeld is reportedly considering purchasing another 40 B-2s for “only” $735 million each. With B-2s running bombing missions in Afghanistan and tens of billions of dollars pouring into the Pentagon, the B-2 lobby’s odds of reviving the project are looking better every day.

Propping Up Missile Defense

Despite the fact that the September 11 attacks underscored the fact that a ballistic missile armed with a weapon of mass destruction is by far the least likely way a foreign power or terrorist group would choose to attack the United States, Congressional backers of the Bush administration’s missile defense plan are intent on moving full speed ahead nonetheless. The United States has extracted an agreement in principle from Russia to accept new, more flexible “interpretations” of the Anti-Ballistic Missile Treaty of 1972 to permit ongoing missile defense testing beyond what would have been allowed under the letter of the agreement. This is good news for the big four missile defense contractors — Boeing, Lockheed Martin, Raytheon and TRW — which have split roughly two-thirds of all missile defense research funding over the past few years and are looking forward to getting the lion’s share of the $120 billion to $240 billion that it will cost to deploy the multi-tiered missile defense shield favored by the Bush administration.

Meanwhile, the Democratic opposition to missile defense, such as it was, has been temporarily silenced in the wake of September 11. Under pressure to show “unity” in a time of national crisis, Senate Armed Services Committee Chair Carl Levin, D-Michigan, withdrew an amendment that would have limited the administration’s ability to conduct missile defense tests that violate the ABM Treaty without consulting Congress. Levin also allowed a $1.3 billion cut in the administration’s $8.3 billion missile defense research spending in the 2002 budget to be restored.

While missile defense critics in Congress have been holding their fire, the missile defense lobby continues its efforts unabated. The corporate-backed SAFE Foundation (Safeguarding America For Everyone) has accelerated its National Missile Defense education campaign in the wake of September 11, even going so far as to put a picture of the charred ruins of the World Trade Center front and center on its web site as an attention-getter for its pro-missile defense propaganda. Board members of the foundation include Representative Weldon and Dean J. Garritson, a vice president of the National Association of Manufacturers.

The National Defense University Foundation and the National Defense Industrial Association are continuing their ongoing series of missile defense “breakfast briefings” on Capitol Hill. Not only is the series supported by the arms industry’s largest trade association, NDIA, but each breakfast receives support from a specific corporation like Bechtel or Lockheed Martin. Meanwhile, Raytheon has hired former House Appropriations Committee Chair Bob Livingston, R-Louisiana, to make the case for missile defense on Capitol Hill, while Boeing has hired top-flight lobbying firms Bonner and Associates and Powell Tate for its missile defense push.

Missile defense lobbyists will get a sympathetic hearing within the Bush administration, which has placed veterans of the missile defense lobby in key positions. Secretary of Defense Donald Rumsfeld is a long-time associate of and contributor to the Center for Security Policy, a pro-Star Wars advocacy group that has received over $2 million in corporate contributions from the likes of Boeing and Lockheed Martin, among others. Douglas Feith, Rumsfeld’s under secretary of defense for policy, is a former chair of the organization’s board. Albert E. Smith, who used to run Lockheed Martin’s space operations, has been appointed as undersecretary of the Air Force in charge of all military/space acquisitions. And the new head of the Joint Chiefs of Staff, General Richard Myers, the former head of the U.S. Space Command, is a longstanding advocate of militarizing outer space. Rumsfeld has also turned to self-interested corporations to shape his vision of future military uses of outer space: a commission he chaired on the subject that released its findings in early 2001 included no fewer than eight representatives of companies working on space technology and missile defense for the Pentagon.

Last and Least: Money for Anti-Terror Weapons

A small portion of the Pentagon’s new windfall will actually be spent on weapons with applications to the war on terrorism.

At a September 24 speech to the Heritage Foundation, Pentagon Comptroller Dov Zakheim indicated that the department would step up funding forpilotless aircraft like the Northrop Grumman Global Hawk, surveillance/intelligence aircraft like the RC-135 “Rivet Joint,” and precision missiles and munitions like the Raytheon Tomahawk cruise missile and the Boeing Joint Direct Attack Munition (JDAM).

But these expenditures will be dwarfed by the billions destined for Cold War relics like the F-22 fighter and schemes like the president’s missile defense plan.

Even these outlays miss the larger point: there is no effective military response to terrorism. Diplomacy, intelligence gathering, cutting off financial assets of terror groups and other cooperative initiatives are far more likely to have an impact than raining bombs down on Afghanistan or the next nation that may be targeted for “harboring terrorists.”

But the lobby for utilizing non-military tools to fight terrorism is not as well funded or as mobilized as the arms lobby.

William D. Hartung is the director of the Arms Trade Resource Center at the World Policy Instititute at the New School for Social Research in New York.

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