03.06.11

Economic Treason: NYTimes focuses on taxpayer funded arms sales to Egypt

Posted in Permanent Fail, Predator State at 8:38 am by George Smith

The top story at the NY Times today is a long piece on US arms sales and contracts with the Egyptian military.

They’re abused, no surprise, worked for the benefit of the old Hosni Mubarak-military-oligarchy.

That story is here.

However, it also unequivocally demonstrates my assertion, published most recently in the Economic Treason post at Globalsecurity, that arms manufacturing is a protected industry in the US. (It was published first on Monday of last week.)

It is a rigged form of socialism for a part of the American private sector, an entitlement, corporate welfare-spending exempt from the downsizing, pick-pocketing, austerity and economic punishments meted out to everyone in the middle class not directly connected to it.

Various quotes taken from the Times piece show a clear picture.

American corporations are the recipient of much of the taxpayer money that is sent to Egypt as military aid. And this is because the US government is concerned about diversion and misuse of funds.

For practical purposes, however, that happens anyway because a sale is a sale to US business. It is always a heads-they-win/tails-they-win situation for those involved.

The examples:

In part because of concerns about diversion of funds, only a sliver of the money from the American aid program actually goes to the Egyptian military. Instead, the Pentagon directly pays American companies that it has chosen to manufacture and ship the tanks, planes, guns and ammunition to Egypt.

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Edward W. Ross, a former official at the Defense Security Cooperation Agency, which oversees the sales, said he was irked by allegations that Egyptians could have pocketed money. “That money goes to the Federal Reserve,” he said, “and then it is only released to a U.S. contractor.”

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The yearly $1.3 billion, one retired colonel explained, is viewed as “an entitlement.”

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Over the years, the Gulfstream fleet — which now totals nine jets — has cost American taxpayers $333 million, government officials said. The most recent purchase was in 2002, but the Pentagon continues to pay $10 million a year to service the planes.

(Gulfstream Aerospace is an American firm. It is a part of one of the biggest arms manufacturers in the world, General Dynamics. — DD)

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Last year, the American military awarded two Foreign Military Sales contracts to Chrysler in Detroit. One, for $26 million, was for 750 unassembled Jeeps. The other, announced in November, was for $7 million to ship tools and spare parts for Jeep Wranglers to the Egyptian Ministry of Defense.

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Mr. Springborg, the expert on the Egyptian military, said he was skeptical that, in cases like this, the Egyptians could maintain a firewall between production of civilian and military items.

Another area to look at, Mr. Springborg said, is the production of the well-known M1A1 Abrams tank, which the Egyptian military builds under license with American-made parts. The Pentagon pays General Dynamics to ship tank kits to Egypt, where military workers assemble them.

Former American officers consider the tank manufacturing plant a giant jobs program. “It’s as much about providing jobs as it is buying military hardware,” General Collings said.

In 2007, the Defense Department announced the sale of 125 more unassembled tanks to Egypt, at an estimated cost of $890 million. So far, Egypt has more than 800 of the tanks.

“There are two assembly lines where they make that tank,” a former senior American military official said. “They are all in the same huge building.”

Next to the tank production line that receives the American aid, he said, workers are assembling an Egyptian construction vehicle for commercial sale.

(General Dynamics Land Systems’ M1 tank business is in Sterling Heights, Michigan, Lima, OH, and Eynon, PA. All the counties these communities are located in have suffered high unemployment during the economic collapse. All are now faced with public sector worker lay-offs. However, arms manufacturing has been exempt from hardship in the same communities, in this case gallingly making and sustaining jobs in Egypt. General Dynamics Land Systems incorporates its various ventures in Delaware, recognized by everyone as a national and community aimed tax-cheating and avoidance strategy. — DD)

While the New York Times article is primarily interested in reporting the news of diversion of military aid to the Egyptian Army aristocracy for civilian projects, it also stands as a striking example of US arms manufacturing welfare. And how the American private sector arms making business is guaranteed and underwritten by the taxpayer, given opportunity and riches not afforded anyone else. Except maybe the oil industry and Wall Street.

The companies involved plead ignorance. They’re totally unconvincing, intelligence-insultingly so.

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