Norway fund divests from companies tied to weapon production

Sur le même sujet

• 

  6 juillet 2020 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

  Opinion: Why Interest On Federal Debt Matters For Defense

  Byron Callan June 30, 2020 The COVID-19 pandemic has stoked consternation that U.S. defense spending is going to be significantly pressured in the 2020s. Congress will likely stick to the $740.5 billion defense discretionary top line agreed to in last year's budget deal for fiscal 2021. But the combination of trillions more in federal debt from higher spending and lower tax receipts this year and next and the probability that there will be future federal spending to better prepare for pandemics raise a higher probability of defense spending pressure. “Flat” was already the new “up,” but “flat” now may be a budget that does not keep pace with annual inflation. The fears may be that defense spending will decline in the 2020s after a couple of good years of largesse from Congress and the White House. Despite trillions in additional deficits and federal borrowing in 2020-21, there is one bright spot that indicates less dire defense spending pressures than now perceived—the interest on the federal debt. U.S. federal debt is comprised of debt held by the public and intragovernmental debt, which is owned by different federal trust funds, the largest of which is Social Security. As of May, total debt held by the public was $19.8 trillion, and intragovernmental debt was another $6 trillion. Often, these two sums are lumped together, but they should be treated separately. The interest paid on debt held by the public is dispersed by the Treasury in the form of outlays to the owners of that debt. The interest paid on intragovernmental debt is, in essence, interest the federal government pays itself. The Office of Management and Budget (OMB), in its annual projections of outlays, breaks out these two components of interest outlays to show net interest outlays. This is mandatory spending, and so it has been paid along with the other mandatory and discretionary funding the U.S. federal government provides. One of the silver linings of the pandemic has been the Federal Reserve's aggressive lowering of interest rates. This makes federal debt more affordable, much in the way that a lower interest rate on a home mortgage can make a place to live more affordable. The OMB projections released in February showed net interest outlays of $378 billion for fiscal 2021 rising to $665 billion by 2030. One could take issue with the deficit projections behind these outlay projects, as they may have rested on GDP growth expectations that were too optimistic and nondefense spending cuts that were not going to be realized. However, dividing interest outlays on debt held by the public by debt projections implied an interest rate of 3% or more over the forecast period. The pandemic has trashed those rate projections. Federal debt held by the public is offered in different maturities. Treasury bills, which mature in a year or less as of May, were 23% of the total debt held by the public. Treasury notes that mature in 1-10 years were 51%, and bonds that mature in 10-30 years were 12%. (There is another 10% of other Treasury instruments.) Rates now are much lower, although clearly that would only matter for new debt that is issued by the Treasury. The rate on a 90-day Treasury bill is currently 0.13%. On a five-year note, it is 0.33%, and on the 10-year note, 0.69%. The 30-year note rate is 1.4%. This implies that interest outlay projections should be declining, although new projections may have to wait until the White House releases its 2022 fiscal budget request and out-year projections, presumably in February-March 2021. Net interest outlays could be at least $100 billion less in 2022-23 than the February 2020 projections on higher debt but lower rates. In the scheme of total federal outlays, which the OMB projected to be $4.8 trillion for 2021, $100 billion is not a lot, but it indicates there is a bit more headroom for defense spending and other nondefense discretionary spending than a focus on federal debt alone might suggest. Federal infrastructure spending could be one area of more traction in the 2020s, and the issue of social justice may also spur more demand for federal resources. One outcome of the pandemic, however, will be to make defense expectations more sensitive to interest rate expectations. It is not too difficult to project scenarios with rising debt and interest rates that increase to more “normal” levels. The pandemic also underscores that the unthinkable should be given a bit more room on long-term projections. It is quite conceivable that a major military conflict, a massive natural disaster or another economic contraction could further add to federal debt in the 2020s. https://aviationweek.com/defense-space/budget-policy-operations/opinion-why-interest-federal-debt-matters-defense

• 

  9 juillet 2018 | International, Aérospatial, Naval, Terrestre, C4ISR

  French procurement office to undergo transformation

  By: Pierre Tran PARIS - France seeks to shake up, speed up and closely audit its arms acquisition with a “transformation” of its procurement office, the Direction Générale de l'Armement. In a July 5 speech, Armed Forces Minister Florence Parly pointed to the need for a deep restructuring of the DGA in response to changing threats, international relations, technology and innovation. AS part of that process, the DGA will spin up an innovation office for key programs, with a budget of €1 billion (US $1.2 billion). Closer ties with industry will be part of the new approach, with prime contractors sitting down with the DGA and chiefs of staff to draw up a requirement – but industry must also assume responsibility and better share risk, Parly said. “Transformation of the DGA” was the mission assigned to its director, Joël Barre, when he took up the post, Parly told the audience gathered at the defense ministry. Efficiency and responsiveness were key goals, requiring greater dialog between the DGA and the military services, rather than working in silos, she said. There are now three phases in arms programs, half the previous number, she said. Those key stages are preparation, production and use of the equipment. The ministry seeks to simplify procedure, increase flexibility and acquire innovation, while pursuing new legal structures and financing. While greater conversations with industry will be vital going forward, Parly pointed up that there would “balance” in the government's relations with industry. France was ready to talk to industry but the government was not ready to pay any price. There will detailed audits to ensure a right price was agreed to, Parly warned. “The DGA is not a quartermaster's store, nor little old grandma with an open check book,” she said. One of the major reforms for industry will be to pressure prime contractors deliver on time, with the government seeking to move to an approach used in civil aviation, where most of the payment is made on delivery. That encourages a delivery on time, rather than the present phased payment, where defense contractors have no incentive to speed up the work. The DGA will send teams to inspect the contractors to ensure the right price was paid. Additionally, Parly said there will be greater sharing and use of engineering information between the DGA and industry, with increased use of artificial intelligence and large databases. Innovation agency To help drive the new culture, DGA will set up an innovation agency, intended to be the one number to call for inquiries on innovation, and ready to take risk and speed up official backing. There is a search on for director of the agency, which will merge various existing offices including Astrid, Def'invest and Rapid. The agency will have a budget of €1 billion (US $1.2 billion) for investment. There will be a greater cooperation between the DGA, Joint chief of staff and Chief of staff of each of the services, with teams working together in the same office area from this autumn. There are two pilot projects being considered: the Future Combat Air Systems, which will also consider the potential for cooperation with Germany and other European countries, and a maritime surveillance system. There is a search for greater speed by merging the operational requirements set by the services with the technical needs drafted by the DGA. The forces and DGA will, with a prime contractor, draw up a single document setting out requirement. This combined approach will be tested on a new internal communications system for the ministry. The DGA will seek greater flexibility in its staff management as the office relies on technical staff, which are in strong demand in the job market. That includes sending its employees to work temporarily in companies to learn best practice and boost cooperation between the ministry and industry. The DGA manages an average annual budget of €11 billion for some 100 arms programs, employs 9,600 staff, of which 56 percent are engineers and executives. The office has a major role in managing export deals. Parly, in her opening remarks, quoted former U.S. President John F. Kennedy in his 1960 acceptance speech of the Democrats' nomination for the presidential campaign: “We stand today on the edge of a New Frontier--the frontier of the 1960′s--a frontier of unknown opportunities and perils-- a frontier of unfulfilled hopes and threats.” The DGA was formed just a few months before the presidential candidate delivered his speech at the Democratic National Convention at the Memorial Coliseum, Los Angeles. https://www.defensenews.com/global/europe/2018/07/06/french-procurement-office-to-undergo-transformation/

• 

  13 janvier 2021 | International, Aérospatial

  Lawsuit threatens $23B weapons sale to UAE

  By: Joe Gould WASHINGTON ― A small, 2-year-old nonprofit think tank has taken a step that most advocacy organizations never dare try: It has sued the U.S. State Department to derail a $23 billion arms sale to the United Arab Emirates. In a legal claim announced last month, the New York Center For Foreign Policy Affairs asserted that the Trump administration failed to provide a reasonable explanation for its decision to sell F-35 fighter jets and other weapons to the UAE, which places it in breach of the Administrative Procedure Act. It has asked the U.S. District Court for the District of Columbia to find the sale invalid. The case is unusual, as is the theory of the case, but so is the Trump administration's approach to the sale, said Brittany Benowitz, a legal expert on human rights and arms trade. Such legal challenges rarely succeed, but if this one does, it could halt the deal even if Washington and Abu Dhabi follow through with plans to sign contracts in the waning days of the Trump administration. “If you can say this deal was executed improperly and the contractor was on notice of that, which they are, then I think you can say it's possible to stop the sale before delivery,” Benowitz said. The State Department declined to comment on the pending litigation, in line with its policy. The new lawsuit against the State Department came after a failed attempt in Congress to block the sale of 50 Lockheed Martin-made F-35 aircraft, 18 General Atomics-made MQ–9B Reaper drones and Raytheon Technologies-made munitions. The Senate narrowly rejected a challenge to the sale amid arguments from the administration that the sales would make the UAE more interoperable with partners and defend itself from “heightened threats from Iran.” Opponents said the fast-tracked process was incomplete, leaving questions about the security of U.S. weapons technology, the potential of sparking a Middle Eastern arms race, and the potential for the weapons to be used in Yemen and Libya; these arguments were echoed in the lawsuit. The State Department came under scrutiny for irregularities in a previous sale. Its inspector general, who was later fired, found that a separate “emergency” sale of $8 billion in precision-guided bombs to Saudi Arabia and the UAE failed to “fully assess” or mitigate the risk of civilian casualties in Yemen. To boot, Saudi Arabia and the UAE reportedly breached arms sale agreements with the U.S. by transferring American materiel to al-Qaida-linked fighters and other militant factions in Yemen. Lawmakers have also called for an an investigation into reporting that the UAE may have transferred American-made Javelin anti-armor missiles to the Libyan National Army in violation of a United Nations arms embargo. “What we're saying is that the State Department rushed this through without congressional oversight, they didn't follow their own rules and they didn't apply the same metrics that would guide approval to others,” said Justin Russell, the director of the New York Center For Foreign Policy Affairs. The organization conducts advocacy and research on the conflicts in Libya and Yemen. “Congress tried to block [the sale] on the same merits and when that legislation failed, we said, ‘Wait a minute, we've got to stand up and do something.'” The Administrative Procedure Act allows a court to “hold unlawful and set aside any agency action ... found to be in arbitrary, capricious, an abseils of discretion or otherwise not in accordance with the law.” Here, the lawsuit argues the State Department didn't find, as required under the Arms Export Control Act, that the sale “will strengthen the security of the United States and promote world peace” ― or present “a reasoned explanation” for its actions as required by the Administrative Procedure Act. In 2019, the Campaign Against the Arms Trade won a U.K. Court of Appeal ruling to ban new arms sales to Saudi Arabia. The government has since renewed sales, and CAAT applied for judicial review into the legality of the U.K. government's decision to renew arms sales to Saudi Arabia. In the U.S., there has not been a successful court case of targeting government-to-government sales in recent years, according to Benowitz. What's also unusual about the New York Center For Foreign Policy Affairs' approach is that it doesn't rely on a human rights argument but rather points to aberrations in the process ― particularly past end-use violations that ought to have have disqualified the UAE, she said. “There have been court challenges to arms sales in the past on human rights grounds, but this challenge on national security grounds under the Administrative Procedure Act is unprecedented,” she said. “It's rare because we have never had a record of irregularities like the one we have now.” By Benowitz's reckoning, if a finalized deal is invalidated in the courts and it is found that the deal never should have been entered in the first place, its unlikely the U.S. could be penalized financially by the UAE. “To get a remedy, or damages, under contract law, you have to have ‘clean hands,' so it would be difficult for the Emiratis to recoup,” she said. https://www.defensenews.com/congress/2021/01/12/lawsuit-threatens-23b-weapons-sale-to-uae