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Wednesday, November 24, 2010     INTELLIGENCE BRIEFING

GAO calls for more openness on arms exports from Pentagon, State Dept.

WASHINGTON — Middle East states are leading users of a U.S. military aid program that Congress believes lacks transparency.

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The General Accountability Office has asserted that the federal government has not been sufficiently open in reporting on weapons sales to foreign countries. GAO, the fiscal watchdog of Congress, cited the Foreign Military Sales program, which accounts for 40 percent of U.S. arms exports.

"U.S. exports of defense articles were concentrated in a few countries: about half went to Japan, the United Kingdom, Israel, South Korea, Australia, Egypt, and the United Arab Emirates," the report, titled "Reporting on Exported Articles and Services Needs to Be Improved," said.

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The report was released in September 2010 before Congress was notified by President Barack Obama of a $60 billion arms deal with Saudi Arabia. Officials said the UAE was also expected to submit a major weapons request under FMS, administered by the Defense Department and State Department.

"Congress does not have a complete picture of defense exports under current reporting — including which method of export is used more often by individual countries or for certain types of items," the report said. "State — which has overall responsibility for regulating defense exports — and DoD, report to Congress in response to various requirements."

About 60 percent of U.S. arms exports have been conducted through direct commercial sales. The report said Congress has even less information on direct commercial sales, used heavily by the UAE.

"Although no data are available on the export of defense services — such as technical assistance and training — provided through DCS, exports of defense services through FMS were stable, accounting for about one-third of the value of FMS exports," the report said.

GAO complained of information gaps and inconsistencies in Pentagon and State Department reports on arms exports. The report, which examined export data from 2005 through 2009, said the State Department has not obtained data from U.S. companies on defense service exports under direct commercial sales.

"These differences and limitations may inhibit congressional oversight and transparency into the entirety of U.S. defense exports," the report said.

The report said Britain, Egypt, Israel, Japan and the UAE account for nearly half of all U.S. defense exports. Egypt and Saudi Arabia were also regarded as leading clients of U.S. defense services, which have included logistical support, repairs, training and technical assistance.

"By fiscal year 2008, the most recent data available, the value of approved licenses for defense services almost tripled to over $71 billion," the report said. "However, State does not report on the value of defense services exported under license authorizations because it does not have such information."

The report did not include data on what was termed classified exports under either FMS or direct commercial sales. The Pentagon banned the use of classified data on FMS exports even when combined with other figures.

"We obtained and reviewed classified data for FMS and determined that excluding the FMS classified data from our analysis would not materially affect the high-level trend analysis and other information we discuss in this report," GAO said.



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