Inside Trump's 'Buy American' drive to expand weapons exports

WASHINGTON - 18 April 2018: In a telephone call with the emir of Kuwait in January, U.S. President Donald Trump pressed the Gulf monarch to move forward on a $10 billion fighter jet deal that had been stalled for more than a year.

Trump was acting on behalf of Boeing Co (BA.N), America’s second-largest defense contractor, which had become frustrated that a long-delayed sale critical to its military aircraft division was going nowhere, several people familiar with the matter said.

With this Oval Office intervention, the details of which have not been previously reported, Trump did something unusual for a U.S. president – he personally helped to close a major arms deal. In private phone calls and public appearances with world leaders, Trump has gone further than any of his predecessors to act as a salesman for the U.S. defense industry, analysts said.

Trump’s personal role underscores his determination to make the United States, already dominant in the global weapons trade, an even bigger arms merchant to the world, U.S. officials say, despite concerns from human rights and arms control advocates.

Those efforts will be bolstered by the full weight of the U.S. government when Trump’s administration rolls out a new “Buy American” initiative this week aimed at allowing more countries to buy more and even bigger weapons. It will loosen U.S. export rules on equipment ranging from fighter jets and drones to warships and artillery, the officials said.

Reuters has learned that the initiative - which industry sources said will be announced on Thursday - will provide guidelines that could allow more countries to be granted faster deal approvals, possibly trimming back to months what has often taken years to finalize.

The strategy will call for members of Trump’s cabinet to sometimes act as “closers” to help seal major arms deals, according to people familiar with the matter. More top government officials will also be sent to promote U.S. weapons at international air shows and arms bazaars.

Shares of major U.S. defense contractors added to gains after the news and Raytheon hit an all-time high.

Human rights and arms control advocates warn that the proliferation of a broader range of advanced weaponry to more foreign governments could increase the risk of arms being diverted into the wrong hands and fueling violence in regions such as the Middle East and South Asia.

The Trump administration stresses that the main aims are to help American defense firms compete better against increasingly aggressive Russian and Chinese manufacturers and give greater weight than before to economic benefits of arms sales to create more jobs at home.

One Trump aide, speaking on condition of anonymity, said the new initiative is also intended to ease human rights restrictions that have sometimes led to an effective “veto” over certain arms deals.

“This policy seeks to mobilize the full resources of the United States government behind arms transfers that are in the U.S. national and economic security interest,” a White House official said, responding to a request for comment on the story.

“We recognize that arms transfers may have important human rights consequences,” the official said. “Nothing in this policy changes existing legal or regulatory requirements in this regard.”

One of the main architects of the new policy has been economist Peter Navarro, a China trade skeptic ascendant in Trump’s inner circle. His effort to boost arms exports has drawn little resistance within the White House, officials said.

‘WHOLE OF GOVERNMENT’

The initiative has been in the works for months and some of its expected components have already been reported. But with the rollout nearing, more than a dozen industry sources and current and former U.S. officials have provided Reuters with the most complete picture yet of Trump’s policy, though they caution that last-minute changes are still possible.

The policy will call for a “whole of government” approach – from the president and his cabinet on down to military attaches and diplomats – to help drum up billions of dollars more in arms business overseas, U.S. officials said.

It will also call for cutting red tape to secure faster deal approval on a broader range of weaponry for NATO members, Saudi Arabia and other Gulf partners as well as treaty allies such as Japan and South Korea, among others, they said. Many details will remain classified.

Companies that stand to benefit most include Boeing and the other top U.S. defense contractors, Lockheed Martin Corp (LMT.N) , Raytheon Co (RTN.N), General Dynamics Corp (GD.N) and Northrop Grumman Corp (NOC.N). All of their shares have surged by double-digit percentages, led by the doubling of Boeing’s stock price, since Trump took office in January 2017.

Trump’s aides also want more senior officials to attend major international arms shows, including cabinet members such as Defense Secretary Jim Mattis and Commerce Secretary Wilbur Ross, to promote U.S.-made weapons the way countries such as France and Israel pitch their companies” wares.

“If you go to the Paris air show, you see the French foreign minister standing in front of the Airbus pavilion,” one U.S. official said. “We’re getting outplayed so we have to change our culture.”

In addition to the broad arms export initiative, Trump is expected to sign a separate document easing exports of military drones, an item high on foreign governments’ shopping lists, officials said.

U.S. foreign military sales totaled $42 billion last year, according to the U.S. Defense Security Cooperation Agency. Experts say exports from Russia, the largest U.S. competitor, are typically half those of the United States.

The Aerospace Industries Association trade group said it had first lobbied Trump during the 2016 presidential campaign on the need for “bolstering U.S. manufacturing” and encouraging allies to take more responsibility for their own security.

SALESMAN-IN-CHIEF

While many presidents have helped promote the U.S. defense industry, none is known to have done so as unabashedly as Trump, a former real estate developer who seems sometimes at his most comfortable when he is promoting U.S. goods.

Trump regularly discusses specific arms sales with foreign leaders in meetings and on the phone, according to White House statements. And on a trip to Japan last November, he publicly urged Prime Minister Shinzo Abe to buy more American weapons.

More recently, at an Oval Office meeting with Saudi Crown Prince Mohammed bin Salman last month, Trump held up posters with pictures of U.S. jets, ships and helicopters and other armaments sold to Saudi Arabia. “We make the best military product in the world,” he boasted to reporters as the prince sat smiling beside him.

Other presidents, including Richard Nixon, Bill Clinton and George W. Bush stressed the need to strengthen the defense industrial base, but they did it more subtly, said William Hartung, director of the arms and security project at the Center for International Policy, a non-partisan think tank.

“Nobody’s been as blatant about it as Trump,” he added. “Nobody has yelled it from the rooftops.”

Former President Barack Obama would sometimes talk to allied leaders about weapons systems that he felt suited their security needs, but aides said he preferred to keep weapons salesmanship at arm’s length.

The Trump administration’s plan to overhaul the Conventional Arms Transfer policy, the framework for evaluating foreign sales, goes well beyond Obama’s relaxation of rules in 2014 that enabled U.S. arms contractors to sell more overseas than ever before. Obama drew a clear line, however, requiring each sale to meet strict human rights standards – though he was criticized at times for allowing some controversial sales.

Trump has already gone ahead with several deals that Obama blocked, including the sale of $7 billion in precision-guided munitions to Saudi Arabia despite human rights groups’ concerns they have contributed to civilian deaths in the Saudi-led campaign in Yemen’s civil war.

ANATOMY OF A TRUMP-ERA DEAL

How Boeing’s Kuwait deal got on Trump’s agenda for the Jan. 17 call with Kuwait’s Emir Sheikh Sabah Al-Ahmad Al-Jaber al-Sabah illustrates how seriously the administration is taking the arms export push.

The State Department granted approval in November 2016, in the final months of the Obama administration, for Kuwait to buy 40 F/A-18 Super Hornet strike fighters.

But Kuwait, a U.S. Gulf ally, appeared to drag out negotiations, U.S. officials and industry sources said, and the purchase was still not finalized by the time the emir visited Trump at the White House last September.

Trump told reporters at the time that, at the Kuwaiti leader’s request, he had intervened and won State Department authorization for the deal – a false claim since that approval had already been granted nearly a year earlier.

Months later, Boeing’s request for a presidential nudge to Kuwait was channeled to National Security Council aides, who included it among Trump’s “talking points” for the January phone call, two people close to the matter said.

This time, Trump did make a difference. Just days later, Kuwaiti state media reported the deal was done.

The Kuwaiti government did not respond to requests for comment. A Boeing spokesman declined comment.