In one of the biggest US arms exports since the end of the cold war, a small sheikdom in the Persian Gulf is expected to receive 80 fighter jets with more-advanced technology than in those flown by American pilots.
The deal between Lockheed Martin Corp. and the United Arab Emirates (UAE), which is expected to be final soon, comes as the US government has been loosening export controls to boost a defense industry hurt by a drop in military orders, analysts say.
The result of the new US attitude is that, in some cases, purchasing countries have greater leverage over American sellers - and they can now get advanced weapons that once were reserved for the closest US allies.
The concern is that friends can become foes, and secrets can be stolen.
In this latest deal, the UAE, an oil-rich ally from the Gulf War with a population of 2.3 million, would get F-16s that have a range, radar ability, targeting accuracy, and avionics capability that are superior to the US F-16s.
"We're losing control of technology, and we're giving foreign countries better stuff than our own kids have," says Lawrence Korb, a former assistant secretary of Defense who advocates reduced military spending.
The significance of this deal - and its importance to the US - was underscored by Vice President Al Gore's presence at a May ceremony announcing the preliminary sales agreement, which is thought to be worth $7 billion to $8 billion. More talks have been scheduled this month, according to a Pentagon source.
If completed, it would be the first transaction in which a foreign country would pay an American company to develop and receive significant new technology.
Military officials say they have never scrutinized an arms sale as closely as this one and that the upgraded F-16s, even if they fell into the wrong hands, would never be a threat to US fighter pilots. They argue that the financial compensation will be a major boost for Lockheed Martin and the US taxpayer at a time when defense spending is well off its cold war high.
"These international sales are largely sustaining our defense industry during a time when we're not buying [too many aircraft]," says a senior military official who asked for anonymity.
The UAE deal also has regional security implications. The military says doing business there will strengthen the US foothold in the Persian Gulf region, which includes Iran and Iraq.
"It will give us more access to airfields in the region," says the military official.
But according to Natalie Goldring, who heads a University of Maryland disarmament program, more arms mean more danger. "Stability is not ensured by arms races," she says. "History is pretty sure on this."
The loosening of export controls can be traced to a 1995 Clinton administration arms-transfer policy that sets as a sales criteria "the impact [on] US industry and the defense-industrial base."
The Middle East has been America's leading arms customer dating back to the establishment of Israel in 1948 and the days when Iran was considered an ally. As oil prices dropped and Middle Eastern economies tanked, however, more business moved to Asia. But Asia also got hit by an economic crisis, and today weapons producers are having more trouble finding customers.
Competition has also increased. With fighter aircraft, for instance, there is more or less technological parity between the US, Europe, and Russia - one reason the Pentagon is currently developing a new trio of planes.
Finally, the end of the cold war slowed purchases by the US government and made exporting more crucial for the survival of arms producers. To gain a lion's share of the international market, the US companies have had to look much harder for new customers.
"Once the cold war ended, there were no longer ideological reasons for selling weapons," says Luke Warren, a military analyst for the Council for a Livable World Education Fund. "Now the defense industry has to export to maintain profit margins."
Whereas previously the US would sell arms that were one generation behind top of the line, it is now more willing to sell from current generations.
Moreover, the US is becoming less discerning in choosing to whom it sells, critics charge. Although the UAE is considered a reliable friend in a volatile region, it is not a core ally like Britain.
In the case of the UAE deal, officials there played Lockheed Martin against other international aircraft producers, and may have come away with more-advanced technology than the US would have otherwise given.
And when the UAE wasn't satisfied with how much the US was accommodating it with technology, it threatened to reopen talks with a French aircraft producer.
Analysts worry that the UAE sale could set a dangerous precedent in which the US needs to reveal more and more technology to complete a deal.
The Israelis are reportedly asking for an unprecedented software transfer in an $800 million Apache Longbow attack helicopter package. Australia is requesting source codes for an Airborne Early Warning and Control System, and Singapore wants source codes for the F-16.
Nevertheless, US military officials are confident that selling high-tech equipment and weapons benefits the arms industry more than it harms national security.
They also look forward to new equipment lines, such as the F-22 fighter jet, which will be vastly superior to today's weapons for sale.
"I am not going to sell anything to anyone that can beat us," says the military official. "We understand the importance of air power very, very well."
(c) Copyright 1999. The Christian Science Publishing Society