So far this year contracts worth $21.7 billion (£11.5 billion) have been passed to the US Congress for ratification, 76 per cent more than agreed during all of 2005, when America is believed to have lost market share in the global weapons trade to Europe.

America’s foreign military sales (FMS) for the whole of this year are expected to reach a level not seen since 1993 and the end of the first Gulf War.

An investigation by The Times has uncovered a number of reasons for the surge in arms trade, including the Bush Administration’s determination to gather support for its War on Terror. However, it is important to note that defence deals agreed with the US Government often change and the values cited can drop, or be officially accounted for, in subsequent years.

Also, defence contracts with foreign governments can take many years to conclude and one of the reasons for the surge in FMS during 2006 is that a number of big deals have come to completion.

Yet the orders being sent to Congress for ratification have increased this year and there are a number of domestic and international factors driving this, including the War on Terror.

In June the Bush Administration used the war against terrorism as justification for its sale to Pakistan of 36 F16 fighter jets, and an upgrade to 60 more aircraft, in a $4.5 billion deal.

The Pentagon said: “Given its geo-strategic location and partnership in the global war on terrorism, Pakistan is a vital ally of the United States . . . This proposed sale will contribute to the foreign policy and national security of the United States by helping an ally meet its legitimate defence requirements.”

This sale was controversial because the White House rammed it through Congress, bypassing normal procedures. John Hamre, president of the Centre for Strategic and International Studies, said: “You don’t sell F16s to fight terrorists. You sell them to deepen your structural ties to a partner country and develop a relationship.”

Mr Hamre, a former Deputy Defence Secretary under President Clinton, added that this policy of national-interest-led arms sales also existed during the Cold War and that FMS has always been used by American governments to deepen strategic relationships with foreign countries.

Another reason for the increase in FMS is the rising price of oil, which has brought windfall profits to the governments of oil-producing nations.This is particularly true of Saudi Arabia, which agreed a $2.9 billion contract last month to upgrade its Abrams tanks and a $5.8 billion deal to upgrade National Guard equipment.

US troops started to pull out of Saudi Arabia in 2003 and the Kingdom has been the victim of its own terror attacks in recent years. As a result, defence analysts say that Saudi Arabia is using money from higher oil prices to bolster its National Guard forces.

Sales of American military equipment have also benefited from the invasion of Iraq and the bombardment of Afghanistan. There is frequently a rise in military sales after a war as other countries have had an opportunity to see new weaponry in action. This was particularly true in 1993 when countries rushed to buy America’s Patriot missile defence system after witnessing its use in the first Gulf War.

A US government source said: “Conflicts act like a customer demonstration show and we tend to see an upsurge in sales because other countries want to buy American having been impressed by what is available.”

The Pentagon’s decision to use FMS as a means of encouraging greater support for the War on Terror has increased competition in the defence sector. Russia, France and Britain are the next-largest weapons exporters and all have benefited from rising foreign defence budgets — as was demonstrated last week by the sale to Saudi Arabia of 72 Eurofighter jets made by BAE Systems.

However, traditional customers can no longer be taken for granted as the United States seeks out new partners. For example, India is looking at buying new fighter jets and Russia, its traditional supplier, France, the US and the UK are bidding. President Bush is thought to have promoted American-built jets during a recent trip to India, during which he also backed India’s nuclear ambitions.

Doug Kennett, a spokesman for Boeing, said: “Clearly, we will target those opportunities that the US Government says that we can go after such as India with fighters.”

Times Recommends

• US stocks fall below 9,000 mark
• House price fall smallest in seven months
• Wary investors opt to keep cash in safes