United States Plans Financing Option for Defence Equipment Sales

The United States government is planning a new financing option to enable its allies and partners buy American weapons as part of the Trump administration’s goal of enabling defense contractors grow their sales.

The US administration had liberalized the sale of unmanned aerial systems in April this year and plans further initiatives to counter competition from China, Israel and Russia among others, participants at a Center for Strategic and International Studies (CSIS) event in Washington on Wednesday said.

Laura Cressey, deputy director for regional security and arms transfers at the State Department said that new financing options for foreign partners would be available as an incentive to buy American in comments quoted by USNI News.

Dak Hardwick, assistant vice president for international affairs at the US Aerospace Industries Association and others specially cited the growing Chinese interest in overseas military sales and Russia’s success of selling air missile defense systems to Turkey and possibly India.

“Neither has the strict rules governing the sales or how these systems would be used after purchase such as the US does,” as USNI News report on the event said.

Tina Kaidanow, acting assistant secretary of state for political-military affairs, added the April presidential memo revising the arms transfer policy and covering unmanned serial systems sales, “is only the first step to support and grow our defense industrial base,” she was quoted as saying.

Keith Webster, president of the defense and aerospace export council at the United States Chamber of Commerce, said that the United States is not only competing with the Russians and the Chinese, but also with its allies such as the French, Koreans and Israelis. Thirty years ago, “we had a very strong corner on the market,” and only serious competition from the Kremlin.

Defenseworld.net comment: China and Russia have been actively pursuing arms sales by extending credit to their customers. China in particular is known to offer liberal credit terms to customers from Asia and Africa while Russia has settled for a part-barter, part-financing deal with Indonesia for the sale of Su-35 fighter jets.

France marked the first international sale of its Rafale fighter jets by offering Egypt a line of credit.

However, besides the financing part, the US government’s strong end-user conditions in addition to relatively expensive equipment may prove to be a stumbling block in furthering arms sales. A case in point is Pakistan whose purchase of F-16 fighter jets had been stalled and eventually canceled on terrorism concerns. Islamabad has since veered towards China for fighter jets and is being courted  by Russia as well.