TWENTY-FIVE years ago - back during the energetic days of the Kennedy administration - Washington leaders confronted international trade and currency problems. Their solution was to launch the United States arms-industrial dominance which has caused many, perhaps most, of our security problems of today. Export flows of US dollars into the European Common Market had grown faster than export flows of US products needed to repatriate those dollars. Europeans converted their dollars into gold withdrawals from US reserves at Fort Knox. Thus, US ``balance of payments'' and ``gold flow'' problems threatened the gold value of the US dollar as the free world's denominator for building common global markets.
To counteract this threat, the Kennedy administration canceled the Eisenhower policy for US-NATO arms-industrial cooperation and launched the Pentagon's foreign military sales program. Thus, Eurodollars were repatriated by US exports of conventional weapons. Instead of encouraging NATO allies to cooperate in sharing financial-military-industrial burdens of deterring threats of invasion by Soviet-led Warsaw Pact conventional forces, the US government adopted a policy of competing with allied governments of NATO.
US competitiveness in global arms markets has become a national industrial policy - and the impetus for an important bureaucracy of the US government. More than 95 percent of $16 billion in annual US arms export sales have been promoted, legally contracted, managed, and supported by about 5,000 military officers or civilian bureaucrats.
The huge US weapons outflow has not necessarily contributed to the stability of nations receiving those arms. During the period 1965-85, US arms exports to 42 nations and occurrences of military coups or acts of armed repression or insurgencies in those nations were both 50 percent greater than they were during the period 1945-65.
Before the Shah of Iran was ousted by fundamentalist Shiite Muslims, for example, US arms exports to Iran grew from $1.5 billion in 1969 to $19.2 billion in 1978. The US Export-Import Bank extended more than $1 billion in loans to finance those exports, and it charged the Iranian government interest rates lower than the interest rate paid by the US Treasury to finance the US debt.
Export of French-produced Exocet missiles to Iraqi forces resulted in the death of 37 US sailors on the USS Stark in the Persian Gulf last May, to safeguard oil supplies for Western industries. Exports of US-produced Hawk and Stinger missiles have been made available for Iranian forces to use against Iraqi and Western military forces concerned with the security of oil supplies for Western Europe and Japan.
During the past two years our national-security officials executed export sales of US weapons to Iranian forces - condemned by the White House and State Department as terrorists - to generate funds illegally to procure and supply weapons for insurgent Nicaraguan ``freedom fighters'' known to have committed acts of armed terrorism against North and Central American civilians.
Without such Central American military violence, would problems of illegal immigration have grown out of control in the US - with all the social and political costs the contra policy has produced? Washington has increased federal expenditures for guarding US borders and enacted legislation making US businessmen liable to criminal charges and $10,000 fines for employing illegal immigrants or refugees from Central America. Costs and political problems enforcing this new law have been far greater than expected.
The Permanent Court of International Justice found the US government guilty of illegal mining of Nicaraguan harbors. This has seriously damaged US political standing and influence throughout the world.
Washington has been exporting arms to South African and insurgent Savimbi forces in Angola, while the Angolan government deploys Cuban military forces equipped with Soviet-produced weapons to safeguard production and refining operations of the Gulf Oil division of Socal, USA.
We Americans blame our European and Japanese allies for failure to boost their share of the burdens of the West's conventional military security. Yet, we fail to realize that the massive US military-industrial linkup blocks our allies from adopting more self-reliant or cooperative arms policies. Western democracies enjoy about equal levels of per capita wealth. So they can afford about equal per capita shares in the burdens of conventional military forces necessary to deter Soviet-Marxist expansionism.
Our European NATO allies, Japan, and Australia have demonstrated willingness to boost their shares whenever the US agrees to military-industrial cooperation. Equalized shares would mean that the US could cut its share of Western defense expenditures by about $100 billion annually. Military-industrial cooperation would mean that allied industries developed and produced common, standard conventional weapons for operation and maintenance by Western allied forces. Gen. Andrew Goodpaster, former commander of NATO forces, has estimated that standard weapons would increase the effectiveness of NATO forces by at least 50 percent (and by 300 percent for tactical air units now unable to rearm or refuel at different air bases operated by NATO allies).
There's another plus to be gained by a more genuine US-Western cooperation in the arms area: Instead of increasing political pressures for protectionist measures against Japanese or European manufacturers - or threats of unilateral withdrawal of US forces from Europe or Western Pacific - Americans could reinvest their savings from military-industrial cooperation, not just in reducing federal deficits, but also in social programs.
Such programs could be designed to improve housing, bolster health care and education, develop markets, increase living standards and export sales, and close gaps of political-economic interdependence with nonaligned countries. Growth of United States civil-industrial capabilities and decline of the US military-industrial hegemony are preferable means for ensuring democratic security and containing Soviet Marxist-Leninism.
Robert E. McGarrah, professor of management at the University of Massachusetts, Amherst, is a former Defense Department official.