1945 – the year when the whole world witnessed the catastrophe of nuclear weapon use, their indiscriminate effect and their immense destructive power, has altogether altered the course of warfare. Old warfare strategies became almost obsolete and new trends soon emerged at the limelight of global security structure. Traditionally, where the victory lied in winning a war suddenly transformed into avoiding it. As it became unthinkable to instigate an all out war in the presence of a devastating nuclear arsenal, states resorted to small scale wars and limited conflicts. Consequently prompted states to pursue there goals through means other than a total war. This changing nature of warfare led to a paradigm shift in international security domain where traditional Westphalian model of nation-state system has been seriously compromised. The shift from a state centered approach, brought to the centrestage the role of non-state actors. State’s sovereignty and it’s writ has been challenged as result of the emergence of new forms of conflicts following the cold war and the post cold war era. State vs non-state conflicts seemed to have dominated the battlefield.
Such a deviation from conventional approach has not only undermined the Westphalian notion of state system but has also incorporated new agents and structures, that paved a way for new forms of conflicts and warfare. Drifting from traditional notion of war and warfare, the battlefield in the post 1945 is dominated by cold wars, proxy wars, trade wars, psychological wars, cyber wars, informations wars and hybrid warfare. It implies that mostly such forms of warfare are characterised by an ever growing role and influence of non-state actors.
The paper is a critical analysis of deterrence theory and its marginalisation in terms of relevance in new wars. It provides a thorough understanding of evolving non-nuclear threats largely dominated by state vs. non-state conflicts, non-nuclear and hybrid warfare; and the diminishing utility of traditional deterrence approaches. Furthermore, it offers a new framework for advocating Modern Deterrence and Tailored Deterrence so as to establish a corelation between the emerging hybrid threats and deterrence.
The pioneer of nuclear deterrence strategy Bernard Brodie suggests ‘traditionally the sole purpose of military establishment was winning a war, from mow on its chief purpose must be to avert them.’This deterrent approach is likely to work in nuclear conflicts as the famous axiom states ‘Nuclear deters nuclear’. The said notion is quiet acceptable in nuclear context as no two-sided nuclear war has taken place and are successfully being averted. But in the context of non-nuclear threats, the said approach seemed to be irrelevant. Deterrence has failed to avert non-nuclear wars that have posed devastating challenges to the international security and stability.
The stability instability paradox substantiate this idea of limited, small scale, non-nuclear conflicts in the presence of nuclear weapons. While analysing nuclear deterrent capabilities it infers:
‘nuclear weapons confer large scale stability between nuclear weapon states, as in over 60 years none have engaged in large direct warfare due primarily to nuclear weapons deterrence capabilities, but instead are forced into pursuing political aims by military means in the form of comparatively smaller scale acts of instability, such as proxy wars and minor conflicts.’
Drawing upon this theoretical understanding, the omnipresence of non-nuclear conflicts seem to be inevitable. The mere presence of nuclear weapons and their immense destructive capability have prompted state as well as non-state actors to explore new avenues for the pursuit of their desired ends. But such deterrence failure at lower levels can exacerbate tensions at strategic level as even minor conflicts can spiral up into a major nuclear flashpoint given the ambiguity of intentions and rationality when non-state actors get involved.
Threshold theory also contributes to address the issues of deterrence failure in case of new wars. The major cause of such failure lies with not properly defining the red lines of non-nuclear threshold. Whilst the non-nuclear wars are waged without explicitly crossing the nuclear threshold, thereby easily bypassing the the notion of nuclear response. Even though if the states intend to lower their threshold to accommodate various non-nuclear strategic attacks, as some have already done; it becomes highly controversial. Besides, it become a subject to rational judgment that whether or not a non-nuclear (cyber) attack should be met with a nuclear retaliation.
Existing literature on deterrence has failed to comprehend the changing nature of warfare and as a result failed to adapt with the changing trends. Thus offering a fragile base on which to construct a complex hunch of the relevance of deterrence theory in the realm of new wars.
Emergence of New Wars and Deterrence Calculus
The nuclear revolution of 1945 has not only transformed the nature of war but has also revolutionised the international security construct. It has divided the world into the pre and post nuclear world thereby challenging the conventional security architecture largely dominated by states in international system. The post nuclear era has witnessed the grey zones of peace and war largely due to the encroachment of myriad non-state entities in global politics and security environment. The said developments heralded new wars and warfare domains:
State vs Non-State Conflicts
The ever growing role of non-state actors in warfare following the cold war and the post-cold war era, has fanned the flames of unpredictability and uncertainty in war. While the states are regarded as legitimate actors to wage a war, the non-state actors does not enjoy such perks of legitimacy under international law. Having said that it implies that states have an obligation to abide by the rules of international system while non-state actors are set free to do anything they desire.
The surfacing of state vs. non-state conflicts also reflect the drawbacks of deterrence theory. One of the core assumptions of nuclear deterrence theory i.e. “Deterrence works among rational actors”, also seems futile in this context. Since non-state actors are regarded as irrational, hence the probable patterns of deterrence become hard to calculate. Modern wars being overwhelmed by asymmetry, ethnic conflicts, irregularity, insurgencies and terrorism; are some of the domains where traditional notion of deterrence appears trivial.
Psychological Operations, Information and Cyber Warfare
Use of propaganda to psychologically manipulate the perceptions of adversary dates back to the ancient era. It has been successfully employed by Cyrus-The Great, Genghez Khan and German and Allied forces in WW2, to name but a few. In modern warfare psy-ops is usually executed using a more subtle and sophisticated medium i.e. information domain, either to ‘win hearts and minds’ of the population or to ‘demoralise the enemy’. Psy-ops when accompanied with information warfare not only has the potential to manipulate the information in oder to gain information superiority but rather makes a complex web of misinformation aimed at generating desired response from the targeted audience and mobilizing support for the perpetrator’s agenda.
Likewise, cyber warfare is also evolving and poses a great challenge to the national and global security. Cyber attacks are becoming more and more threatening to the critical infrastructure and the information and operational technology with high levels of sophistication. In todays information age, a fierce cyber attack can be easily mounted on an adversary with the aim of manipulating data so as to incur massive disruption and destruction to the recipient’s critical infrastructure. The most severe form of cyber attack can have a decapitating effect on the adversary; whereby its ability to respond to a threat is hampered and paralysed. The spillover effect of digital attacks can also cause physical damage as well.
In nuclear domain where threshold of nuclear use has been defined adequately, no serious effort has been made in defining the same in case of these emerging threats. There are no clear red lines and norms in cyber and information domain on which to devise a deterrence strategy in order to prevent a cyber attack. Furthermore, deterring such an adversary whom one cannot see, neither can one identify, nor can one communicate the credibility of the threat; makes a case where the very essence of deterrence strategy is expected to be challenged.
Hybrid warfare refers to the integration of different forms of warfare commonly referred as ‘multi-domain warfighting approach’ intended to inflict massive damage upon the opponent.
‘Hybrid warfare capabilities include the movement of conventional forces equipped with smarter technologies; nuclear force intimidation, trade wars, economic manipulation, energy coercion; propaganda and disinformation, use of proxies and insurgencies, diplomatic pressure and cyber disruption that are being employed through direct or covert means.’
The pervasiveness of hybrid threats and associated risks cannot be ignored. The notion of ‘existential deterrence’ that states ‘the mere presence of nuclear weapons capability can deter an adversary from taking aggressive actions that could possibly lead towards escalation’, also appears irrelevant since the mere presence of nuclear weapons did not prevent terrorists from attacking world trade centre on september 11, 2001. Likewise, strategic deterrence has lost its credibility in deterring hybrid attacks because the dynamics of these threats vary considerably from that of the cold war era.
Strategic Deterrence Failures
Legacies of the cold war ‘strategic nuclear deterrence’ still remain. But when viewed in line with the changing nature of new wars, it seems less flexible and hardly relevant. As a courtesy of strategic deterrence, a nuclear war has been successfully averted but that does not seem to have a case as far as new wars are concerned. The success of deterrence in the cold war era does not imply that the same would also work in the post cold war era. That is to say ‘there is no one size fits all’ in deterrence. Unlike the deterrence patterns of cold war whereby primary focus was on deterring nuclear aggression from states, the current deterrence strategies are assessed with regard to the changing trends of new wars.
Thus the foundation of deterrence theory based on cold war security construct is deemed to fail when applied to the new forms of warfare that are non-nuclear in nature. The deterrence 3C’s approach i.e. Capability, Credibility and communication shall be utilized to assess its relevance in current era.
New wars have witnessed the enhanced role of non-state actors inflicting major damage to the state’s security and infrastructure by the employment of various non-conventional methodologies. These actors have so little to loose as compared to the benefits they reap from such adventures. The relative power of these actors is less than that of a state but their behavior is not constrained by the international system, whereby they can threaten even the superpowers. Thus the capability to deter such an aggression remains questionable as the states have not yet been able to deny such acts of aggression by these actors. The primary reason might be the states’s reluctance to carry out punitive actions against an adversary who is irrational and also due to the threat of escalation. Thus the capability of even a nuclear state is essentially been compromised in the face of new threats. Deterrence cannot work unless the opponent is psychologically motivated that his actions would be met with dire consequences and in case where the adversary is not a rational actor and is ready to risk everything, the notion of deterring such an adversary seems futile. Likewise, the unbeatable nuclear and conventional deterrent capabilities that state’s now a days possess had done no good in averting these challenges.
State’s credibility of deterrence has also been challenged. The inability of state to respond effectively to the emerging threats merely due to the difficulty in locating a non-state adversary, or due to the threat of escalation or as a rational choice, undermines the deterrence in the eyes of the perpetrator. It further conforms to the opponents belief that the state is unwilling to take retaliatory actions thereby prompting them to take risks and undermine the state’s credibility. Furthermore, the state’s failure in following up on the threats also attract these actors to continuously inflict damage and challenge deterrence credibility. Perception of the adversary regarding the credibility of threat of retaliation is a dominant factor in determining the deterrence success or failure.
The communication of the threat to the adversary forms the basis of deterrence. The capability and the credibility of any state become effective only when they are being conveyed to the opponent. In the context of new wars the inability of states to effectively communicate their deterrence capabilities and credibility to the opponents, constitutes the major part of the problem. The traditional notion of threat communication became almost obsolete as the world today has numerous entities other than states that can act as potential aggressor. Thus, explicitly communicating deterrent threat among those entities presents a grave challenge for the states.
Rethinking the Traditional Deterrence Approaches
As the famous proverb goes ‘modern problems requires modern solutions’, the emergence of hybrid threats and new wars also requires modern deterrence approaches. The referent object of traditional deterrent approaches must be replaced i.e. a shift from state-centric nuclear deterrence to non-state centric non-nuclear deterrence.
Punishment vs denial deterrence
The two fundamental approaches of deterrence theory can provide a framework for understanding the contours of non-nuclear conflicts. Although their utility so far in deterring such conflicts has been questionable, they still can serve as the basis for the modern deterrence theory.
‘Deterrence by denial strategies seek to deter an action by making it infeasible or unlikely to succeed, thus denying a potential aggressor confidence in attaining its objectives. Deterrence by punishment, on the other hand, threatens severe penalties, such as nuclear escalation or severe economic sanctions, if an attack occurs. The focus of deterrence by punishment is not the direct defense of the contested commitment but rather threats of wider punishment that would raise the cost of an attack.’
The aforementioned approaches need to be customized according to the requirement of the emerging threats. The primary focus of these deterrence approaches was to avert a nuclear conflict, but in the current era of non-nuclear conflicts these approaches can be moulded so as to ensure the same in non-nuclear domain as well.
Modern deterrence theory just like that of nuclear deterrence aims at ‘dissuading the adversary from taking aggressive actions by persuading that actor that the costs would outweigh potential gains.’ As nuclear deterrence failed to deter non-nuclear or hybrid wars, in order to prevent the aggressor from initiating a non-nuclear attack, several deterrence strategies have been proposed by Centre for Strategic and International Studies which specify:
- Establishing norms of behavior
- Tailoring deterrence threats to individual actors
- Adopting an all of government and society response
- Building credibility with adversaries, such as by always following through on threats
The modern deterrence project has been initiated by RUSI focusing on ‘blending of traditional deterrence and societal resilience against emerging forms of warfare.’ The project is aimed at integrating military, government, the civil society and the business community so as to build a resilient deterrence against the hybrid threats. The initiatives like these can contribute a lot in framing effective modern deterrence theories.
The concept been proposed by Dr. Barry Schnieder suggests that new threats requires tailored deterrence and that the traditional concepts of cold war deterrence might not work for modern challenges. According to his theory,
‘Deterrence must be tailored to
- specific adversary leaders,
- in specific scenarios,
- utilizing a range of verbal and non-verbal communications, and
- cognizant of the balance of military, economic and political power between the parties.’
Fundamentally, it proposes the investigation into opponents decision making process, leadership profiles, willingness to take risks and the susceptibility towards the deterrent threats. Although this theoretical approach is state-centric, it is flexible enough to accommodate non-state threats of twenty-first century.
The post-nuclear era has witnessed the dawn of non-nuclear conflicts largely dominated by hybrid and non-state threats which has added uncertainty and unpredictability to an already complex nature of warfare. The asymmetric nature of new wars and the hybrid tactics they employ has raised serious concerns about the relevance of the existing discourse of deterrence. The credibility of deterrent capabilities has been vaining since the rise of new actors in the arena of global politics. Unlike nuclear deterrence which was aimed at few nuclear weapons states with known capabilities and intentions, the contemporary enemy is the one that is not visible with hidden capabilities and intentions. Thus making it even more difficult to exercise deterrence.
The traditional model of strategic deterrence needs reevaluation and adaptation to cope up with the emerging non-traditional challenges of the twenty-first century. The expansion of the narrow conception of deterrence is required so as to broaden the realm in order to integrate non-nuclear factors.
SCO: Potential and Challenges to Regional Integration
The modern system of the world is facing the state of imbalance as it passes through the phase of change and evolutionary development. Globalization has emerged as a main trend in international relations and deepens the interdependency between countries of the world. The rapid increasing interdependency contributes for countries to get close one another and to protect their interests. The desire of extending economic and trade activities, access to capital market and the contracts for investment are encouraging countries to work together and to cooperate. The cooperation for economic activities, trade, transportation, information, communication and transmission are making the countries and regions unite.
Regionalization has emerged as a new form and process of interaction among the countries of the world. Many countries are striving to establish a system of cooperation with their neighbors to enhance their potential and also to facilitate each other for solution regional issues. Thereby, the regionalization has taken diverse form of regional integration including the establishment of multinational regulatory system and flexible model of cooperation and partnership in different areas and at different levels. The Shanghai Cooperation Organization (SCO)is an outstanding example of regionalization and hybrid and new mixed model of interstate multifaceted cooperation.
SCO established in 2001 to meet the objectives of regional security and stability. Since the establishment the organization continued evolutionary path of multifaceted and multilateral cooperation. It does not desire to achieve a specific target level of collaboration, but it move systematically along the path of finding the common attribute in resolving the regional issues. The SCO also has potential of unique perimeters, new opportunities and directions of further development in the areas of security, economics and other mutual interests. The organization comprises of 43 percent of world population and 25 percent of global GDP. Similarly, it covers 80 percent area of Eurasia. Although the Shanghai Cooperation Organization is a young organization than the other international associations but it has the ability to achieve mutually beneficial solution of political, economic and security issues and it also leads to accumulation of unresolved issues of the region. However, the size never conflates with influence and effectiveness. In fact, the SCO is also facing hamstring by major regional economies and powers with their own interests in the region and mistrust between member states.
The Shanghai Cooperation Organization is often stated as a club of autocrat powers. The members follow the principle of noninterference in the internal affairs of other states. However, China and Russia adhere this principle rhetorical basis but not in reality. Both the countries have history of interference and violence of neighboring countries. The member states rely on the principle to push back at Western and local civil society effort to promote responsible governance, human rights and democratic norms in the region. Since the formation, the organization holds a broad goal of fighting against terrorism, extremism and separation. Furthermore, the convention of the Shanghai Cooperation Organization invokes the principle of United Nation charter to help clock the organization’s founding document with international legitimacy identifying all three equal threats to state security, public order and the safety of citizen. The member states also have commitment to share information about terrorist activities and threats and to make request to act against individuals or organization. Subsequent declaration of the Shanghai Cooperation Organization and agreements of the member states have simply added to the list of principles and their responsibilities. Since the surveillance of new technology the member states moved beyond the simple method of information exchange to best practice of monitoring and tackling.
On the other hand, the Shanghai Cooperation Organization has had very little achievements to strength domestic security despite the convergence of member states. The RATS (Regional Anti-Terrorism Structure) based in Tashkent Uzbekistan has been coordinating to combat these three evils Terrorism, Extremism, Separation). The RATS provides a platform and services to member states particularly Central Asian States of Kyrgyzstan and Tajikistan for sharing intelligence but it made very little progress. Furthermore the RATS shares intelligence with member states but the terrorist threats are increasing.
Since the SCO framed, the high hopes of diplomatic relations, effective economic and security cooperation were made by the founding members. It was also expected that the organization may bring regional cohesion to Central Asia and it would create great opportunities for the regional states of mutual trade and economic activities, and it will lead towards security promotion of the region. The founding partners of the SCO had ambitious plan for the transforming the organization in to a cohesive bloc with political and economic integration. There was also a hope that the organization may counter influence of EAEU and CSTO and will maintain its own influence in the region. But Russia wanted to dilute Chinese influence within the organization by advocating its expansion in to south Asia and other neighboring states.The SCO has organized many joint military exercises and efforts but could get any significant level of achievements because they were symbolic and political moves. To encounter any kind of security crisis and military operation in the region, there is a need of political logistical and operational system. For example during the unrest in Kyrgyzstan in 2010, the organization delivered an anodyne statement for peace; security and stability, additionally, China and Russia were hesitating to get involved. While, the other states and powers tried to play their role to tackle the crisis.
China and Russia are the primary drivers of the Shanghai Cooperation Organization but have different visions for this organization. Although they share common interest of regional stability within the organization but at the same time their geopolitical interests pull them in different directions. These differences are a big question mark, how the organization would achieve their objective and would evolve? Russia thinks of SCO as a security to prevent encroachment by outside powers NATO, UE and United States, and also a tool to maintain its geopolitical domination on the region and less than a partnership in Central Asia.
Since the post-cold war, the economic imbalance has increased between China and Russia. China is increasing its economic influence in Central Asia while Russia is worrying about its security issues. Moscow hopes that the Pakistan and Indian including in Shanghai Cooperation Organization may bind Beijing to more work for the security and stability of the region than to enhance its own economic influence in the region. As the issues of uncertainty in Afghanistan, Pakistan-India confrontation and instability on China-India border are a clear threat to the interests of all member states. China is also suspected about the Russian ability to act as the security manager in an area where china has invested and is investing billions of dollars. On the other hand, Beijing may not be able rely on extra regional powers to secure and prevent Central Asia from the security deteriorated environment. However, SCO has not made any mechanism or approach to play a decisive security role in Afghanistan post withdrawal United States and NATO force.
China thinks that economic activities and investment can mitigate instability. Shanghai Cooperation Organization also a tool to promote Chinese soft power and economic influence in Central Asia. Therefore, Beijing has been continued its investment in the region and through OBOR and SCO. Although the Central Asian States are receptive to these Chinese overture but they are also keen to prevent SCO to become an anti-western bloc because the states feel the need of Western powers to counterbalance their powerful neighbors. Moscow already has upended its relationship with West over the Ukraine issue, thus, in these circumstances; Russia has no other choice to acquiesce Chinese increasing economic influence in the region. Moscow may pull itself from the Chinese efforts to multiply its security role in the region. The current clash on border between China-India put Russia in to awkward position. Russia does not like tension between China and India but it suggests dialogues and appears to have little interest mediating. Russia never wanted that China convert SCO in to an economic and trade bloc while China never wanted that Russia transform the organization into a military alliance. It is hard to imagine that Shanghai Cooperation Organization may be able to deliver its original goals eradicate extremism, terrorism and separation through mutual cooperation because it appears with the major focus on economic integration across the Eurasian region.
Now the Shanghai Cooperation Organization is coexisting with other regional initiatives like OBOR, AIIB, CSTO and EAEU. Both China and Russia have expressed their intentions to work within these institutions. Since the formation, the SCO is facing many structural and organizational challenges. All members have their own interests and values of independence and sovereignty, which are difficult to reconcile with collective security particular Pakistan and India, China and India have mutual mistrust and all Central States also have territorial issues with one another.
Possibility of an alliance in Sino-Russian Relations
The defense ministers’ meeting of NATO member states was held in video format a few days ago (17/2/2021). During the period, the discussion focused on the topic of “China-Russia threat” and believed that a “global approach” should be adopted to curb China-Russia expansion.” At the same time, this meeting also attracted widespread attention from outsiders.
Senior Russian researcher, Vasily Kashin published an article in which he emphasized that when there is a risk of military conflict with the United States, China and Russia should immediately form a military alliance. And share the missile early warning data collected by themselves.
According to the article, Sino-Russian military technology cooperation has always been quite secretive, and because Russian companies have participated in the development of China’s ballistic missile early warning system, China and Russia are fully able to establish data sharing on this basis and establish their own global Missile defense network. Russian media subsequently reported on it and said that Russia has repeatedly proposed the formation of a Sino-Russian military alliance, and even President Putin himself has conveyed the idea of an alliance with China.
It should be noted that the containment and suppression of China and Russia by Western countries do not stop there. To provoke the territorial sovereignty of China and Russia, US aircraft and warships have already on the doorstep of China and Russia, carrying out under the banner of freedom of navigation (FON).
Intensive reconnaissance activities, this behavior has seriously threatened the national security of China and Russia but also undermined global peace and stability. To build a global encirclement of China, the United States is also actively wooing other countries to join its anti-China front in an attempt to reorganize the eight-nation coalition forces to contain China.
It can be said that Western countries are pressing on with China and Russia step by step. As the US continues to escalate its suppression, the security situation around China and Russia will deteriorate again in the future, and the two sides may even break out head-on conflict.
Faced with the complex situation in the Indo-Pacific, China and Russia also need to strengthen cooperation in the field of national defense. After all, the two countries are originally a comprehensive strategic partnership of cooperation in the new era. In recent years, the strategic mutual trust between the two sides has been deepening and several rounds of military exercises have been jointly conducted.
Therefore, the opinions of Russian experts are in line with the future development trend of Sino-Russian relations. As a friendly country, Sino-Russian relations will only continue to develop for the better, and the possibility of China and Russia forming a military alliance in the future is not ruled out. The Chinese people also have extremely high expectations for the future direction of Sino-Russian relations. Chinese Foreign Minister Wang Yi once stated that Sino-Russian cooperation “has no end, no restricted zone, and no upper limit” (2/1/2020).
Foreign media believe that this means China’s non-aligned position or non-alignment Applying the Sino-Russian relationship again means that Wang Yi recognized the possibility of China and Russia forming a military alliance. Both China and Russia are peace-loving world powers and have always been committed to maintaining the peace and stability of the regional situation.
Therefore, even if a military alliance is concluded in the future, they will never follow a hegemonic line. In the final analysis, how China and Russia cooperate depends on changes in the international situation. Instead of worrying about the “threat” brought by the rise of China and Russia, Western countries should stop deteriorating the regional situation and work with China and Russia to maintain world peace and stability. Otherwise, this “heart disease” will never be eliminated.
It is worth noting that the Western countries, led by the United States, have a very playful attitude towards Sino-Russian cooperation. They have been using various means to sow discord between China and Russia in an attempt to prevent the establishment of a Sino-Russian military alliance.
However, the continuous deepening of cooperation between China and Russia is a historical development. The inevitable result of this is that no matter how obstructed by Western countries, Sino-Russian relations will continue to develop for the better, without any interference from external forces.
The world arms sales market
New data from SIPRI’s Arms Industry Database, released last December, show that arms sales by the world’s twenty-five largest defence equipment and military services companies totalled 361 billion dollars in 2019. This is an 8.5% increase in real terms in arms sales compared to 2018. All this emerged from the studies by the Stockholm-based International Peace Research Institute founded in 1966.
In 2019 the top five arms companies were all based in the United States: Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics. These five companies together recorded 166 billion dollars in annual sales. In total, twelve U.S. companies rank among the top 25 for 2019, accounting for 61% of total sales.
For the first time, a Middle East company appears in the top twenty-five. Edge, based in the United Arab Emirates, was established in 2019 from the merger of over twenty-five smaller companies. It ranks twenty-second and accounts for 1.3% of the total arms sales of the top twenty-five companies. This demonstrates that oil revenues in the Near and Middle East are also invested in businesses that produce jobs and money, and are not just accumulated for the personal expenses of the ruling elite. Edge is an example of how high domestic demand for military products and services, combined with the desire to become less dependent on foreign suppliers, is driving the growth of arms companies in the Near and Middle East.
Another newcomer to the top twenty-five list in 2019 was L3Harris Technologies (ranking tenth). It was created by the merger of two U.S. companies that were both in the top twenty-five in 2018, namely Harris Corporation and L3 Technologies.
The top twenty-five list also includes four Chinese companies. Three of them are in the top ten: Aviation Industry Corporation of China (AVIC, ranking sixth), China Electronics Technology Group Corporation (CETC, ranking eighth) and China North Industries Group Corporation (Norinco, ranking ninth).
The combined revenue of the four Chinese companies in the top 25 list, which also includes China South Industries Group Corporation (CSGC, ranking twenty-fourth), grew by 4.8% between 2018 and 2019. Chinese arms companies are benefiting from the People’s Liberation Army’s military modernisation programmes.
Conversely, the revenues of the two Russian companies in the top twenty-five, namely Almaz-Antey and United Shipbuilding, declined between 2018 and 2019, for a combined total amount of 634 million dollars. A third Russian company, United Aircraft, lost 1.3 billion dollars in sales and dropped off the top 25 list in 2019. Domestic competition and reduced government spending on modernising the Russian Navy were two of the main challenges for United Shipbuilding in 2019.
After the United States, the People’s Republic of China recorded the second largest share of 2019 arms sales by the top twenty-five companies, accounting for 16%.
The six Western European companies together account for 18%. The two Russian companies in the ranking account for 3.9%. Nineteen of the top twenty-five arms companies increased arms sales in 2019 compared to 2018. The largest absolute increase in arms sales revenue was recorded by Lockheed Martin: 5.1 billion dollars (11% in real terms). The largest percentage increase in annual arms sales (105%) was reported by French manufacturer Dassault Aviation Group. A strong increase in export deliveries of Rafale fighter aircraft pushed Dassault Aviation into the top 25 arms companies for the first time.
The Sipri report also examines the international presence of the 15 largest arms companies in 2019. These companies are present in a total of 49 countries, through majority-owned subsidiaries, joint ventures and research facilities. With a global presence in 24 countries each, Thales and Airbus are the two most internationalised companies, followed closely by Boeing (21 countries), Leonardo (21 countries) and Lockheed Martin (19 countries).
The United Kingdom, Australia, the United States, Canada and Germany host the largest number of these companies.
Outside the North American and Western European arms industries, the largest number of foreign corporate entities is hosted by Australia (38), Saudi Arabia (24), India (13), Singapore (11), United Arab Emirates (11) and Brazil (10).
There are many reasons why arms companies might want to establish themselves abroad, including better access to growing markets, collaborative arms programmes or policies in host countries that link arms purchases to technology transfers.
Of the 49 countries hosting foreign industries in the top 15 arms companies, seventeen countries are low- and middle-income ones. Southern countries seeking to restart their arms production programmes have welcomed foreign arms companies as a means for benefiting from technology transfers.
Chinese and Russian arms companies in the top 15 list have only a limited international presence. Sanctions against Russian companies and government limits on takeovers by Chinese companies seem to have played a role in limiting their global presence.
All these data were collected by the Sipri Arms Industry Database founded in 1989. At that time, it excluded data for companies in Eastern European socialist countries, including the Soviet Union. The updated version contains 2015 data, including data for companies in the People’s Republic of China and the Russian Federation. An archive of the first one hundred data sets for the period 2002-2018 is available on the Sipri website (www.sipri.org), while for the first twenty-five ones it has been updated with the latest available information.
Arms sales are defined as sales of military goods and services to military customers at national and international levels. Unless otherwise stated, all changes are expressed in real terms. Comparisons (e.g. between 2018 and 2019 or between 2015 and 2019) are based on the groups of companies listed in the respective year (i.e. the comparison is between different groups of companies).
For 2020-2021, Sipri is releasing its dataset on arms sales of the world’s largest companies along with the results of a mapping on the internationalisation of this industry. For this reason, a new dataset was created, including 400 subsidiaries, joint ventures and research facilities linked to the top fifteen arms companies in 2019. Data sources included corporate investment documents, information on company websites, public records and newspaper and magazine articles.
To be included in the mapping, an arms industry must have been active for the majority of its fiscal year, as well as be located in a country other than that in which its parent company is headquartered and also (i) produce military goods or provide military services to military customers; (ii) produce or provide services for dual-use goods to military customers.
This is the first of the key data handovers in view of the publication of the next Sipri Yearbook in mid-2021. Before that, Sipri will release its data on international arms transfers (details of all major international arms transfers in 2020), as well as its data on global military expenditure (comprehensive information on global, regional and national trends in military expenditure). We will inform readers of all this in due course.
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