Security tensions and the need to modernize the equipment of armed forces are spurring a rise in defense spending worldwide, especially in Europe, the Middle East, and the Asia-Pacific region. New dynamics are emerging on the international arms market, with China and more recently South Korea joining the top ten exporting countries, and customer governments seeking strategic partnerships and industrial cooperation, including demands for transfers of technology and expertise. These growing ambitions and expectations are reflected in the importance placed on intergovernmental relations in sales of defense equipment. The framework established between governments may be more or less formalized and binding for the various stakeholders.
This study aims to gain a better understanding of these intergovernmental arrangements in the arms market, and in particular Government-to-Government (G2G) agreements for sales of defense goods and services. This method of selling differs from the contracts awarded directly by a foreign government to a company. In these cases, the exporting government acts for and on behalf of the customer government by awarding a public procurement contract to the industrial supplier. It also provides all the necessary guarantees regarding the contract’s performance. The U.S. Foreign Military Sales (FMS) program is a model in this area, but it is not the only one. Competing G2G offers are developing among exporting nations who are keen to meet the needs of buying governments.
To understand this trend in the international arms market, the study begins with an overview of the systems introduced by the main exporting countries (except for Russia and China), namely the United States, France, the United Kingdom, Italy, Sweden, Spain, Israel, and South Korea. A section focusing on Europe then illustrates the growing demand for government support in a deteriorating security context. The motivations of buyer governments in this area will be reviewed, as well as the implications of more complex sales methods for exporting governments and their suppliers.