Global Arms Market Evaluation Technique

The CAWAT 2009 annual publication is positioned as a reference material necessary for practical work pertaining to developing an efficient marketing policy, aimed at promoting defence-related products in one or other regional market. The publication can be considered to be the primary instrument required for comprehensive analysis and assessment of the arms and materiel market in one or other region with regards to one or other type of arms and materiel.

All statistical calculations, included in the annual publication, have been done by CAWAT on its own. Costs of contracts are given in US dollars at current rates, i.e. at exchange rates as of the dates of signing of such contracts. This fact eliminates the ambiguity about the appraisal of the international arms exports/imports, caused by significant currency fluctuations during the period under review.

A period of eight years has been chosen as a reference time interval, as is customary in most leading international think-tanks. This period is the most suitable, given the rate of revamping weapon systems and implementing big-ticket arms modernisation programmes. Data pertaining to the last year under review, in this case it is 2008, is given in a separate chapter.

The analysis takes into account countries, engaged in the global defence cooperation. All nations are divided into ten regions. Both geographical and economic factors are taken into consideration, when a country is placed into one or other category. States, which are not engaged in the global defence cooperation, have been excluded from the analysis.

As far as the regional aspect is concerned, all countries have been divided into the following groups.

1. Asia-Pacific Region (27 countries)

Australia, Afghanistan, Bangladesh, Brunei, Bhutan, Vietnam, India, Indonesia, Cambodia, China, North Korea, Laos, Malaysia, Mongolia, Myanmar, Nepal, New Zealand, Pakistan, Papua New Guinea, Singapore, Thailand, Taiwan, Fiji, the Philippines, Sri Lanka, South Korea, and Japan.

Since the Asia-Pacific Region is the largest, both as far as the number of nations and the geographical extent are concerned, CAWAT subdivides it into the following four sub-regions:

Pacific sub-region (3 states): Australia, New Zealand, and Fiji.

South Asia sub-region (7 states): Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka.

East Asia sub-region (5 states): North Korea, Mongolia, Taiwan, South Korea, and Japan.

South-East Asia sub-region (12 states): Brunei, Vietnam, Indonesia, Cambodia, China, Laos, Malaysia, Myanmar, Papua New Guinea, Singapore, Thailand, and the Philippines.

2. North and North-East Africa (11 countries)

Algeria, Djibouti, Libya, Mauritania, Mali, Morocco, Sudan, Tunisia, Chad, Eritrea, and Ethiopia.

3. African countries south of the Sahara Desert (39 countries)

Angola, Benin, Botswana, Burkina Faso, Burundi, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, the DRC, Zambia, Zimbabwe, Cape Verde, Cameroon, Kenya, the Comoros, Congo, Cote d'Ivoire, Lesotho, Liberia, Mauritius, Madagascar, Malawi, Mozambique, Namibia, Niger, Nigeria, Rwanda, Swaziland, the Seychelles, Senegal, Sierra Leone, Tanzania, Togo, Uganda, the Central African Republic, Equatorial Guinea, and the Republic of South Africa.

4. The Middle East (16 countries)

Bahrain, Egypt, Israel, Jordan, Iraq, Iran, Yemen, Qatar, Kuwait, Lebanon, the UAE, Oman, the Palestinian Authority, Saudi Arabia, Syria, and Turkey.

5. Post-Soviet territory (15 countries)

Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, and Estonia.

Insofar as the geographical aspect is concerned, post-Soviet states are further subdivided into the following four sub-regions.

Transcaucasia sub-region (3 states): Azerbaijan, Armenia, and Georgia.

Central Asia sub-region (5 states): Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.

Baltic sub-region (3 states): Latvia, Lithuania, and Estonia.

Post-Soviet Central Europe sub-region (4 states): Belarus, Moldova, Russia, and Ukraine. 

6. Eastern Europe (13 countries)

Albania, Bulgaria, Bosnia and Herzegovina, Hungary, Macedonia, Poland, Romania, Serbia, Slovakia, Slovenia, Croatia, Montenegro, and the Czech Republic.

7. Western Europe (20 countries)

Austria, Belgium, the UK, Germany, Greece, Denmark, Ireland, Island, Spain, Italy, Cyprus, Luxemburg, Malta, the Netherlands, Norway, Portugal, Finland, France, Switzerland, and Sweden.

8. South America and Mexico (13 countries)

Argentina, Bolivia, Brazil, Venezuela, Guyana, Colombia, Mexico, Paraguay, Peru, Surinam, Uruguay, Chile, and Ecuador.

9. Central America and the Caribbean (15 countries)

Antigua and Barbuda, the Bahamas, Barbados, Belize, Haiti, Guatemala, Honduras, the Dominican Republic, Costa Rica, Cuba, Nicaragua, Panama, Trinidad and Tobago, Salvador, and Jamaica.

10. North America (2 countries)

Canada, the USA.

The analysis of the global arms market focuses on eight major types of arms and materiel. Each type is divided into several functional categories. The analysis reviews a total of 30 categories of arms and materiel.

Aircraft category: multi-role fighters, attack aircraft, tanker planes, base patrol aircraft, military transport planes, AWACS aircraft, reconnaissance aircraft, combat training jets, and turboprop trainers.

UAV category: medium-altitude and strategic UAVs, tactical and small-size UAVs.

Rotary-wing aircraft category: attack helicopters, ASW and naval patrol helicopters, heavy transport helicopters, medium and light utility helicopters.

Naval materiel category: surface warships (aircraft carriers, destroyers, frigates, corvettes, minesweepers, tank landing craft), submarines, boats (missile boats, gun boats, patrol boats, landing craft, littoral and maritime boats).

Armour category: main battle tanks, armoured combat vehicles (infantry fighting vehicles, armoured personnel carriers), and armoured motorcars.

Missile and artillery armament category: anti-tank rocket launchers (anti-tank guided missiles, ATGM), MRLS, artillery systems (field guns and self-propelled guns), mortars.

Air defence systems category: long-range SAM launchers, short- and medium-range SAM launchers, MANPADS, anti-aircraft artillery.

Other weapon systems category: combat modules for armoured vehicles, ammunition, radio sets, engines of all types, explosive reactive armour (ERA), targets, helmet-mounted systems, night vision devices, communications systems, target designation systems, thermal imagers, simulators, etc.

Rating table calculations of yearly arms and materiel deliveries until 2008 inclusively are based on data on actual deliveries, specified in summary tables. Calculations for following years (2009 and on) are based on obligations of the signatories to corresponding contracts. In other words, such calculations are based on the assumption that the delivery deadlines under contractual obligations will be met at the initial fixed contract prices. If delivery deadlines are unknown, contractual obligations under similar deals are projected on the contract in question. The same principle holds true for contract costs.

Big-ticket military programmes, involving several countries at the same time, introduce the greatest ambiguity into the market evaluation. Estimates are done with respect to the general contractor only for deliveries under one or other programme to be taken into account just once. It is all the more necessary as the number of subcontractors, participating in a programme, or their respective shares in such a programme are often unknown. In this case figures, pertaining to the general contractor state, are somewhat overrated, while those of subcontractor states are underrated.  However, given a wide cooperation among countries fulfilling big-ticket contracts, such overrating or underrating is ultimately offset. The advantage of this approach is obvious since the cost of a programme is taken into consideration only once. An underrating or an overrating of exports of a country does not exceed several per cent, given its participation in many programmes.

At the same time there are a number of countries that doe not fall into this pattern. These are primarily states that export components in the capacity of subcontractors. There are not many countries like that. Ukraine is the largest country in this category. It is a subcontractor to many Russian exports programmes and programmes of the Russian Ministry of Defence, envisioning deliveries of components for the Russian Armed Forces. If calculations follow the afore-mentioned technique, Ukraine’s defence exports are underrated to a considerably greater extent. Nevertheless, in order to avoid ambiguity in appraising global arms exports the abovementioned assumption is a must.

Just like in any other world economy industry, arms production features international division of labour. Many big-ticket programmes are implemented jointly by a number of countries. When analysing global exports/imports, CAWAT considers deliveries of defence-related products to nations, which do not participate in such cooperation, exports. Deliveries among the countries, jointly fulfilling a programme, i.e. which are a combined party to defence cooperation, are considered to be internal orders. If one or other type of armament is delivered to states, which do not take part in a corresponding joint programme, the credit for export contracts will be given to the country, bearing the greatest workload under the joint programme. It maintains the principle of unambiguity of appraising the global arms trade. In other words, calculations are done in compliance with the afore-mentioned principle with respect to the general contractor, while other states, participating in a joint programme, are considered to be subcontractors.

A similar principle is applied to evaluation of all other large-scale international defence programmes.

Another element of ambiguity is introduced into the appraisal of the global arms market by the fact that many companies have now evolved into transnational enterprises through integration and operate their subsidiaries or subdivisions in various countries. In such cases CAWAT takes into consideration the subsidiary of a company and its location. In addition to that, the designer country of one or other system is also taken into account.

All rating tables are based on data, specified in summary tables on arms exports and imports. Data, specified in summary tables, is open source information and does not constitute state secret.

Public sources, used to compile the annual publication, can be divided into the following three groups.

The first group embraces specialised international think-tanks, including SIPRI, CRS, IISS, and ACDA. In addition to that, this group includes the UN Register of Conventional Arms, Jane’s Sentinel Security Assessment (JSSA), Military Balance, US DoD DSCA, the Russian Federal Service for Military-Technical Cooperation, Rosoboronexport, Defence Express, as well as official state information on arms exports (governmental statements and statements by ministers of defence and finance). This group of open source information also incorporates data of the International Monetary Fund and national statistical agencies of various countries.

The second group covers data of specialised foreign and Russian publications.

The third group of information sources includes Russian and foreign published and electronic mass media, reports of flagship Russian and international news agencies, as well as press releases of defence contractors.

The CAWAT Annual Publication 2009 presents three summary tables. Their contents are the same, but the tables proper are based on three categories for better display of data, visualisation, and user-friendliness. The first summary table is based on exporting countries, the second one on importing countries, and the third one on separate types of armament.

Rating tables, included in the CAWAT Annual Publication 2009, are based on data, specified in the three summary tables. Each rating table carries a brief comment, containing general information. If necessary, the reader can make a more thorough analysis of a subject he or she is interested in on his/her own.