The Military’s Silent Role in Globalisation

By Niccolo’ Sarno, IPS, 14 May 1999

THE HAGUE, May 14 (IPS)—Wealthy countries negotiating international trade and investment agreements are pushing for exemption clauses where national security interests are concerned—but this is not for reasons of security alone, independent analysts say.

It allows the maintenance of corporate subsidies through virtually unlimited military spending, said Steven Staples, executive member of the Canadian organisation, End the Arms Race.

Globalisation has created a new relationship between governments on the one hand, and the corporations with their allies in the military on the other, said Staples at a meeting on ’Demilitarising the Global Economy’ at the Hague Appeal for Peace.

More than 4,000 delegates from around the world gathered this week at the Hague marking the 100th anniversary of the 1899 Hague Conference, an attempt by world leaders to push for world peace.

The aerospace and defence industry, which includes some of the largest transnational corporations in the world—such as Boeing, British Aerospace and Aerospatiale—is heavily subsidised by western governments. These subsidies are vital for the corporations to remain competitive on the global market place, according to Staples.

Government research and military spending through grants, subsidies and purchases of military aircraft provide a boost for the corporations and enhance their competitive edge internationally, he explained.

At the same time, the military, which relies on the aerospace and defence industry for the advanced technology needed to gain technological superiority in warfare, is feeling the effects of the worldwide decline in defence spending.

Ann Markusen, a specialist on military and defence expenditure at the Rutgers University in the United States said that world military spending has declined in the last decade.

However, although the overall global military spending has been declining, spending continues to increase in some countries, particularly in the Middle-East and South East Asia.

Staples says there is a contradiction at play here: while Western aerospace and defence corporation’s rely on developing countries’ adherence to the free market in order to sell their ware, these corporations continue to depend on protectionist policies and government subsidies at home.

How do wealthy countries where aerospace and defence products are produced maintain their ability to subsidise their corporations and at the same time prevent developing governments from practising the same protectionist policies? asked Staples.

His answer: by negotiating insisting on exempting military spending from the liberalising demands of free trade and investment agreements with other countries.

In fact, only rich nations can afford to devote billions of dollars on military spending, and they will always be able to give their corporations hidden subsidies through defence contracts, Staples said.

Fredrik Heffermehl of the International Peace Bureau remarked that at the March celebration of the Nato’s 50th anniversary, the only 40 non-governmental outsiders invited at the meeting were arms manufacturers. This tells a lot about what this is all about, said Heffermehl.

According to an April report by the World Policy Institute in New York, a number of US arms makers put up up to 250,000 dollars each to serve on the host committee for the NATO anniversary.

The organisation also says the US government has stockpiled over 1.5 billion dollars inn grants and subsidised loans that US firms can use to finance arms sales to new and prospective NATO states.

In another World Policy Institute report, Institute president William D. Hartung warns that President Clinton’s plan to increase Pentagon spending by 112 billion dollar over the next six years is inconsistent with geopolitics.

There is no threat to US interests that can possibly justify the largest increase in the Pentagon budget since the Reagan era, says Hartung.

Current US arms spending of 276 billion dollars per year is already more than twice as much as the combined military budgets of every conceivable US adversary, including Russia, China, Iraq, North Korea, Libya, Syria, and Cuba, notes Hartung, adding that the US and its closest allies - Nato members, South Korea, and Japan—now account for nearly two-thirds of world military expenditure.