THE WAR on Terror and windfalls from rising oil prices have helped to push American military sales to foreign governments to their highest level since the first Gulf War.

An investigation by The Times has found that the US Congress was notified of sales worth $12.9 billion (£6.8 billion) in July — the largest monthly total since the beginning of the Bush Administration.

So far this year, foreign governments have agreed contracts with the Pentagon worth $21.7 billion, more than the total of any other year since 2001.

Defence analysts believe that the US could be heading for the biggest full-year total since 1993, when the end of the first Gulf War triggered a $42 billion bonanza for defence contractors.

The largest spenders in the past five years include Saudi Arabia, which has placed orders worth $14 billion, South Korea, with orders of $8.8 billion, and Pakistan, with orders of $7.6 billion. Among the biggest winners of contracts this year are Boeing, Northrop Grumman, Lockheed Martin and Britain’s BAE Systems.

US government officials and leading defence analysts have told The Times that among the many factors influencing foreign military sales (FMS) has been the Pentagon’s desire to cement relations with foreign governments in order to bolster support for the War on Terror.

Other factors behind the leap in arms sales include the rising price of oil, which has given oil-producing nations more money to spend. An unusually high number of contract negotiations have also reached completion this year.

A lucrative result of the leap in arms sales is the $600 million that the Pentagon has earned in commission. It places a 2.8 per cent charge on all arms sales that it arranges for foreign governments and in the past five years this has been worth about $2.5 billion.

Tom Lantos, a Democrat on the International Relations Committee, said: “Countries that wish to receive sophisticated US weapon systems, military training and other security assistance must be full partners with the United States in the global struggle against terrorists. Arms sales are a vital tool in the effort to forge closer political and military relationships with our partners in this struggle, and they help bolster these countries’ own self-protective capabilities.”

BIG DEALS 2006

58 Abrams tanks and upgrades, Saudi Arabia, $2.9bn. General Dynamics Land Systems

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