Germany: Surprise No. 3 in Arms Exports

A German think tank finds that the country leads the EU in exports of military goods. Globally, it's behind only Russia and the U.S.

Once one of the world's most aggressive powers, Germany today likes to project a pacifist image. From the German army's reluctance to fight abroad to a foreign policy that promotes peaceful intentions and global harmony, Germany regards itself as a model the world should follow.

But a report released yesterday by the Bonn International Center for Conversion (BICC), a German think tank, reveals a different side of Germany's relationship to war.

Between 2005 and 2006, the Germany arms industry saw a 20 percent jump in the value of individual and collective export licenses for military goods from €6.2 billion ($9.7 billion) to €7.7 billion. However, the number of exports of war weapons decreased to €1.3 billion from €1.6 billion in 2005.

Germany, it turns out, exports nearly a billion euros worth of military goods each year ($1.55 billion) to developing countries. In fact, the BICC estimates, Germany's total defense sales in 2006 made it the world's third largest arms exporter. "That makes Germany the European Union's biggest military goods exporter, and worldwide it's behind only the US and Russia," said BICC analyst Marc von Boemcken.

The 2006 numbers are the highest in almost a decade—according to the BICC report, the last time Germany sold a greater number of military goods was back in 1998. And German the value of individual and collective export licenses has been increasing steadily.

The BICC's annual report, guest-authored by former UN Chief Weapons Inspector Hans Blix, focused on the rise of military spending all over the world, a development that the end of the Cold War was supposed to reverse. Instead, global spending on weapons and armies rose by 15 percent between 2001 and 2006. Today it tops €650 billion ($1.1 trillion). A third of that is spent by the US. "The United States is determined to maintain absolute military supremacy and other powers are afraid to lose influence if they fall too far behind," Blix writes. "We see a revival of Cold War politics without the Cold War—a Cold Peace, if you will."

Since 2001, the report's authors argue, America has accelerated the world's rush to acquire weapons. Almost half of the world's military spending takes place in Washington, which shells out €349 billion a year to fund the US armed forces. The BICC report says American spending has risen 52 percent since 2001, dragging the world with it. "Apart from America there are a number of fast-growing countries—like China, India, Indonesia and Pakistan, not to mention Russia—where the global trend towards militarization is showing itself most clearly," BICC Director Peter Croll said.

In terms of its own defense, Germany comes off as relatively cheap: In 2006 it spent 1.3 percent of its GDP, or about €28 billion, on its military, less than both the UK and France. That amount is expected to pass the €30 billion mark by 2010.

BICC's got an axe to grind: the think tank promotes efforts to convert military production and spending to peaceful ends. It has a long way to go: The thirty countries in the Organization for Economic Cooperation and Development, whose members include the European Union, the US, Canada, Australia and Japan, spend €580 billion on defense—and just $68 billion on foreign development assistance.

Before it's here, it's on the Bloomberg Terminal.