06 May 16. Foreign Military Sales Strong Through First Half of FY16.
Through the first six months of fiscal 2016, foreign military sales are on track to meet or surpass last year’s total, according to an analysis by the Guggenheim Securities group.
“Through the end of April, the Defense Security Cooperation Agency had announced about $29 billion in FMS cases, and there are a number of pending U.S. fighter aircraft orders that could bump that number up significantly if they are approved by the White House,” Roman Schweizer, the author of the report, wrote.
Regionally, the Middle East is the largest recipient of sales, with $17.6bn announced so far. Lockheed Martin, with $16.2bin in announced sales, is the leading contractor.
The assumption of matching or passing last year’s total of $43bn is based, in part, on the belief that two major deals will go through before the end of the Obama administration.
The first is the finalization of a 10-year military funding plan for Israel, expected to be in the $40bn to $50bn range. If the final figure ends up on the higher edge, Israel could seek to add two squadrons of F-15Is. As Schweizer noted, “the finalization of the FMF package could mean a surge in new spending on U.S. systems, including additional buys of Lockheed Martin F-35s, possibly a squadron of Boeing F-15Is, and a long-pending buy of Textron-Boeing MV-22s.”
The second factor is a pair of long-held fighter sales to the Gulf: 73 F-15s to Qatar and 40 F/A-18s to Kuwait. There is a belief that once Israel’s deal is completed, those sales will be allowed to move forward.
However, Schweizer highlighted the bad blood between the Obama and Netanyahu administrations as a potential roadblock, noting that “it’s very possible neither side wants to agree with the other, and Israel may believe it can get a better deal from the next U.S. presidential administration.” In that case, these sales would obviously be pushed into FY17 or later.
The Guggenheim analysis also highlighted three trends that could cause a push in FMS deals in the near-term.
The first is the need for precision guided munitions on a global scale, but particularly in the Gulf region, where the ongoing operations in Yemen, Syria and Iraq are depleting stores of weapons from partner nations. This issue has caught the attention of leadership inside the Pentagon, which has raised the need for faster PGM deliveries as an example of how the FMS system needs reform.
The second is the Russian threat in Europe, which Schweizer identifies as a factor that is already having an impact on FMS deals.
“Lithuania is an early case of this, with a $600m order of up-gunned Stryker armored vehicles and $55M order of Javelin anti-tank missiles. Countries such as France (4 Lockheed Martin C-130Js, Hellfire missiles), United Kingdom (Hellfire missiles), Italy (adding weapons to MQ-9 Reapers), and even Finland (buying Lockheed Martin GMLRS munitions) also have pending cases and could be the start of a more significant procurement wave,” he wrote. “We also note that Lockheed Martin’s MEADS air defense system is apparently back in consideration in both Turkey and Poland.”
Finally, there is the aggressive posture by China toward its neighbors in the Pacific, including placing weapons on islands in disputed territory. While Schweizer highlighted that this could mean good things for high-end US systems from richer nations such as Japan and South Korea, it has also had an early effect on smaller nations in the region, such a Vietnam which has expressed growing interest in US kit. (Source: Defense News)
05 May 16. The Debate has Shifted to Force Expansion. The Center for Strategic & International Studies (CSIS) new report, U.S. Military Forces in 2017, indicates that the days of speculating about how low forces might be cut are over and that the debate has shifted to force expansion. The report, authored by CSIS International Security Program Senior Adviser Mark Cancian, describes propo