Arms & the Salesman

Devising major modern weapons has become such an expensive business that few nations can afford to get into it alone. Result: many of them in the free world are coming shopping in the U.S. The trend not only saves them a lot of money but creates business for U.S. corporations and helps the U.S. balance of payments problem by partially offsetting the high cost of the American military presence around the world. Last week even Britain put the pressure of escalating defense costs ahead of national pride; the Labor government decided to abandon the development of two military planes and instead buy U.S. models already in production.

In place of its projected HS-681 transport, Britain will buy some 50 C-130 Hercules turboprop transports from

Lockheed; instead of British P-l 154 supersonic fighters, it will order about 150 F-4 Phantoms from McDonnell Aircraft. While the decision will add to Britain's worrisome balance of payments deficit, Prime Minister Harold Wilson estimated that it will save $840 million over the next ten years. Wilson postponed an even bigger decision: whether to scrap development of the British TSR-2 strike bomber in favor of General Dynamics' F-111 (originally TFX) fighter. But he grumbled loudly at the "prodigious" cost of the British plane --as much as a prewar battleship.

Widening Sales. Last year, quite aside from U.S. military aid, foreign nations paid $1.1 billion in cash for U.S. military hardware, about 40% of what the U.S. spent overseas in defense of the Western world. Now the Pentagon is widening its sales push to some 60 nations whose economies are strong enough so that they can help finance their own security. This year the program is expected to bring a 25% increase in orders for everything from missiles to navigation gear.

Spain recently agreed to buy 70 F-5 jet fighters from Northrop Corp. for $47 million; the planes were originally developed for distribution to U.S. allies under military-assistance pacts. Canada, on the verge of ordering 200 F-5s, is debating whether to switch to the costlier McDonnell F4, whose interceptor model is the hottest in the U.S. inventory, or to the Douglas A-4E Skyhawk, which can land on a carrier. Australia has decided to buy ten Lockheed P-3 Orion antisubmarine planes. West Germany, whose purchases account for nearly half of U.S. foreign arms sales so far, has agreed to buy three guided-missile destroyers for $150 million each.

The man behind the Pentagon's sales effort is Henry J. Kuss Jr., 42, a New York City-born economist whose formidable title is Deputy Assistant Secretary of Defense for International Logistics Negotiations. His 27-man staff does not try to palm off expensive weapons systems on a country, instead studies foreign strategies and figures out what new U.S. arms or equipment could help most. The staff has much to choose from, chiefly because U.S. military research spending totals more than $3 billion a year v. only $400 million in Britain, $180 million in Germany, $175 million in France.

Long-Range Aim. Much of the equipment is manufactured abroad under licensing agreements that produce royalties for U.S. firms. Lockheed is building 1,896 F-104 Starfighters for foreign nations, most of them in Italy, Germany, The Netherlands, Belgium and Canada. Britain plans to put Rolls-Royce engines in its McDonnell F-4s. Such arrangements not only bolster the economies of buying countries but also fit the long-range U.S. aim of standardizing military hardware among its allies. Kuss figures that by 1967 foreign purchases of military goods will offset half the nation's defense spending abroad.

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