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The Global Arms Trade: How Big is the Industry, Who are the Top Players, and Arms Regulations

Feb 22, 2022 7:19 AM 5 min read

Myanmar and Pakistan are reportedly in talks to ink an arms deal. 

Islamabad is slated to sell a slew of mortars, grenade launchers, heavy machine guns and possibly even air-to-surface missiles to the former, with whom its dynamics have changed dramatically since a coup last year dethroned a civilian government and replaced it with the military.

The strengthening bonds between Pakistan and Myanmar obviously don’t bode well for India and, as with virtually everything these days, there’s China in the background, puppeteering the developments. 

But South Asian geopolitics is a bottomless rabbit hole a pleasant Saturday can do without. For the sake of brevity, let’s limit our discussion today to a more rosy topic…like the global arms trade itself!

Call to Arms

“Arms trade” generally refers to the global trade in “conventional weapons” (like tanks, mines, guns, missiles, rockets, bombs etc.) as opposed to chemical or nuclear weapons aka weapons of mass destruction. 

This trade is primarily negotiated by governments to supply their military forces. A minor share of sales also goes to non-state actors, rebel militias and civilians, who purchase firearms for self-defence, hunting or sports.

Virtually every nation on earth is engaged in the arms trade. And because this business involves governments, military conflicts, human lives and big bills, it’s naturally a very touchy topic. In places where arms deals, politics and commerce are too close for comfort, the phrase “military-industrial complex” frequently comes up.

Ergo, the global arms industry is more intricately linked to geopolitics than its peers. Which means that significant international events - like the World Wars, the Cold War, the Gulf War, the War on Terror, the Syrian Civil War, the Yemeni Civil War, or the ongoing tensions along the Russia-Ukraine border - have a direct bearing on the arms industry.

Which isn’t to say the business has its ups and downs. Quite the contrary, actually. In fact, three things you need to know about the global arms trade: it’s (1) big, (2) booming and (3) unique.  

Big: Roughly 90% of the arms trade involves national governments. Which enables us to arrive at a rough estimate of the size of this industry - $118bn as of 2019, according to the Stockholm International Peace Research Institute (SIPRI). However, this number comes with several asterisks. Not all countries release data on arms exports (China being a notorious example) and many that do define “arms” in a conveniently restricted manner. Moreover, there is a blooming black market for arms, so the actual size of the arms trade is likely to be much, much higher.

Booming: The arms industry is one where economic contraction or unemployment may actually be welcome news. However, there’s never been a dearth of geopolitical nuances. On the contrary, the increasing multipolar polarisation, the growing clout of authoritarian regimes vis-a-vis China and Russia, and continued instability in the Middle East and Africa have kept the greenbacks rolling in for arms manufacturers. So much so that buyers are spoilt for choice. Canada is reluctant to sell tanks to Saudi Arabia? No worries - Riyadh can look to South Korea or Turkey. Militias in Yemen are finding it difficult to procure American or British guns? There’s always Russia and Saudi Arabia waiting to fill the void. It’s “a buyer’s market”, as one observer put it

Unique: This is a no-brainer - after all, the products of this industry are literally used to kill human beings. So it can’t be analysed like your typical FMCG or digital marketing foray! And because the arms trade is so vast and unique, its regulation is critical, cumbersome and eccentric…


Regulations in the War Zone

There are many arms control treaties in force. The most popular multinational ones are the Geneva Protocol and the Ottawa Treaty. However, looking at conventional weapons in particular, the most important agreement may be the Arms Trade Treaty (ATT), which entered into force in 2014.

Signed under the auspices of the UN, the ATT has all the characteristics of a typical UN agreement: negotiated under the hazy cloud of idealism, announced per the poetic zeal of optimists, and implemented by the iron hand of realpolitik. 

The crux of the treaty is that it bars members from selling weapons to states if they think the weapons could be used to violate international humanitarian law. Which is a seemingly simple premise but, as everyone knows, human rights violators still manage to get their hands on lethal weapons. The quintessential example is Yemen, where atrocities on civilians are a matter of fact. But arms continue to flow into the country, despite loud protests from the UN, ATT members and activists.

Why has the ATT been so ineffectual? One, because it’s an incomplete agreement. Major arms industry players like the US, Russia, Saudi Arabia, India and Pakistan have not ratified it. And, two, even among signatories, implementation is unimpressive. In 2017, for instance, a UK court ruled that the country's delivery of weapons to Yemen was not in violation of the ATT despite documented human rights violations in the country. Expectedly, the bulk of court hearings were conducted in secret.


Masters of War

The global arms industry is dominated by the US, but the emergence of other players has made Uncle Sam’s place atop the hierarchy less of a sure thing. France and the UK have been increasing their share of international arms sales, Japan has entered the industry, and former importers like China, Turkey, South Korea and the United Arab Emirates are now scouting for buyers for their made-at-home weaponry. 

As for India, we have been passionately trying to quit our costly addiction to arms imports from Russia, Israel, France and the US and instead boost domestic manufacturing of the same. Countless policies and initiatives have been unveiled to this end. However, India remains a net importer of arms, with defence Atmanirbharta remaining a distant dream.


Dreading Pax Sinica

Coming back to the blossoming Myanmar-Pakistan bonhomie, the elephant in the room is the red dragon.

How much China benefited from the Burmese coup last year is still up for debate. The CCP spent years cultivating ties with the erstwhile democratically elected government. At the same time, the last time there was military rule in Myanmar, China benefited greatly from a virtual monopoly on trade, given how Naypyidaw remained isolated from the rest of the world. As Western governments scale up sanctions against the Burmese military, China could reap similar benefits. But yet again, anti-China sentiment is widespread across Myanmar today, especially among the junta leaders, who are deeply sceptical of Beijing’s intentions.

So, it’s not exactly a black-and-white situation. The simplistic notion that China gets a diplomatic leg up when there’s authoritarianism and the US finds it easier to side with democratically-elected governments is a misguided one. Particularly in Asia. The Philippines' current government was popularly elected, but Rodrigo Duterte has taken his country closer to Beijing. Conversely, Thailand’s junta-led government is a staunch US ally. Vietnam, a one-party state, is deeply suspicious of China and overtly allied with Washington. And Cambodia is theoretically a multi-party democracy, but that hasn’t stopped it from falling into bed with Beijing.

The biggest takeaway from the evolving Myanmar-Pakistan nexus, probably, is the unfortunate situation India finds itself in, sandwiched on all sides by undemocratic or hostile forces: Pakistan, Myanmar, China and Afghanistan. All said and done, the escalating geopolitical uncertainties would be music to the ears of arms manufacturers. 


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