Arms Trading

The global buying and selling of military and defense equipment and services among countries, governments, private corporations, militant outfits, and other groups. Historically, nations have accepted international arms trading as legitimate and necessary for the maintenance of national security. Because of its intimate relationship with national security, arms trading has always received unique treatment compared to trade in other commodities.

The international arms-trading system has passed through four broad phases from the end of World War I to the breakup of the Soviet empire and the end of the Cold War. Each era was marked by changes in the availability of arms, major suppliers and purchasers, methods of financing the arms trade, and the level of effort devoted to limiting or regulating the trade.

The Post–World War I Era (1920–45)

The issue of arms trade as a global phenomenon first received widespread notice after the start of World War I. During this era, the acquisition of arms was thought to be directly linked to negative political consequences and the outbreak of conflict. This era, also known as the “merchants of death” era, lacked any controls on private arms manufacturers that exported their wares without considering the economic, political, and military effects of their actions.

During these years, the arms trade was driven by market economics; private arms firms and their subsidiaries dominated the system. This was a period of rapid technological change in which Western Europe and the United States were the world's dominant arms suppliers. Large arms firms typically granted licenses to smaller manufacturers, which in effect paid for the right to produce the arms locally. Attempts at disarmament during this era were visible but ineffective.

The Post–World War II Era (1946–66)

With the end of World War II and the beginning of the Cold War, arms trading became linked to the political and ideological struggle between capitalism and communism. National governments—primarily the United States and the Soviet Union—became the world's largest suppliers. The main purchasers of arms were newly independent nations and pre–World War II powers who were rebuilding their military capabilities. The United States and Soviet Union supplied these nations with large quantities of armaments in the form of direct military aid. In fact, grant aid became the predominant mode of payment for arms at this time. Military aid helped to cement political relationships between the superpowers and their allies. [Page 44]Significant control of arms exports existed at the unilateral or national level during this time, but there were still no effective multilateral or international systems in place to prohibit or limit arms transfer.

Expansion Phase (1966–80)

By the 1980s, a slight decrease in the intensity of the U.S.–Soviet rivalry opened the way for smaller countries to increase their share of the arms market. Decolonization in Africa and Asia and the rise of oil states in the Middle East provided more customers for arms traders. The acquisition of arms during this period was often a matter of political prestige. Many newly formed countries considered a potent military to be a sign of their legitimacy. This meant that the threat of armed conflict was no longer a prerequisite for receiving or exporting modern military equipment.

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