Research Communication: The Military Related External Debt of Third World Countries
| Published date | 01 September 1983 |
| DOI | 10.1177/002234338302000308 |
| Date | 01 September 1983 |
| Author | Michael Brzoska |
| Subject Matter | Articles |
Research
Communication:
The
Military
Related
External
Debt
of
Third
World
Countries
MICHAEL
BRZOSKA
Institute
for
Peace
Research,
Hamburg
The
structure
of
arms
imports
financing
has
changed
considerably
in
the
past.
While
in
the
fifties
and
sixties
grants
prevailed,
in
the
seventies
credits
and
cash-payments
became
most
important.
It
is
not
possible
to
indicate
how
much
of
arms
credits
were
included
in
available
debt
statistics.
Anyhow,
some
theorizing
has
led
to
the
conclusion
that
direct
military
credits
might
not
be such
an
interesting
indicator
if
we
are
interested
in
the
total
burden
imposed
on
Third
World
countries
through
the
credit
financing
of
arms
imports.
I
have
therefore
introduced
an
’opportunity
cost’
assessment.
Both
from
direct
payment
statistics
and
my
indirect
estimates,
I
conclude
that
in
the
second
half
of
the
nineteen
seventies
credit
payments
became
the
most
important
financing
source
of
arms
imports.
Measured
indirectly,
in
the
second
half
of
the
seventies,
more
than
half
of
all
arms
imports
in
the
Third
World
were
credit
financed.
The
opportunity
cost
burden
of
military
credits
in
the
second
half
of
the
seventies
rose
to
about
20
to
30%
of
all
real
inflow
of debt
to
Third
World
countries.
Had
the
Third
World
countries
importing
debt
capital
in
1979
not
imported
arms
in
1979,
the
net
transfers
of
debt
could
have
been
up
to
20
to
30%
lower.
The
opportunity
cost
burden
of
accumulated
debt
over
time
is
estimated
at
around
20%
of
the
total
Third
World
debt
burden
for
1979.
For
the
same
year,
I
estimate
that
interest
in
amortization
of
old
debt
added
up
to
more
than
twice
the
cost
of
new
weapon
imports
for
credit
importing
countries.
The
fast
rising
credit
burden
of
arms
imports
adds
a
very
important
dimension
for
the
burden
measurement
of
Third
World
arms
imports.
1.
Introduction
There
is
much
speculation
but
little
hard
in-
formation
on
the
financing
of
arms
imports
of
Third
World
countries
or
debts
incurred
because
of
imports
of
military
related
goods
in
the
Third
World.
The
available
regular
debt
statistics
are
of
no
help.
Most
observers
seem
to
think
that
military
related
debt
is
not
included
in
the
regular
debt
statistics to
a
large
degree’
and
as
hard
data
do
not
seem
to
be
available,
speculation
runs
high.
Although
it
is
difficult
to
grasp
this
prob-
lem,
some
information
is
available.
Ad-
ditionally,
a
theoretical
approach
with
rea-
sonable
premises
can
guide
empirical
inve-
stigation
to
yield
some
preliminary
estimates
on
the
extent
of
military
related
indebtedness
and
the
structure
of
finance
for
the
inter-
national
arms
trade.
I
will
start
this
research
note
with
some
thoughts
on
the
theoretical
side,
then
pre-
sent
data
for
the
financial
structure
of
the
arms
trade
and
conclude
with
an
estimate
of
total
military
related
debt.
The
data
pre-
sented
here
mainly
serve
heuristic
purposes.
As
will
be
seen,
military
related
debts
are
quite
substantial
and
add
to
the
economic
burden
of
arms
imports.
The
debt
aspect
is
ignored
in
most
empirical
studies
of
the
effects
of
arms
transfers.
2.
Financing
Third
World
arms
imports
The
easiest
way
to
’finance’
arms
imports
is
to
try
to
get
them
for
free.
In
the
past,
this
was
the
usual
way
to
get
arms,
especially
from
the
USA
and
the
USSR.
Today,
the
importance
of
outright
gifts
is
reduced,
although
the
US
and
the
USSR
still
give
substantial
amounts
of
weapons
to
poor
countries
or
special
allies
for
free
(such
as
Israel,
Egypt,
Ethiopia
or
Vietnam).
There
is
also
some
’triangular’
traffic
with
arms
supplied
to
third
countries
through
financing
by
oil-rich
Arabian
countries,
such
as
Saudi
Arabia.
A
second
way
of
financing
arms
imports
is
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