Is There a Future Market in Afghanistan and Iraq for U.S. Defense Contractors? - Page 2
The next step will be to determine what future opportunities are there. The Iraqi military will be buying much more heavy equipment then a nation like Afghanistan. It already has purchased tanks, armored vehicles, aircraft and helicopters. Many of these while not American made are bought through the U.S. military or with financial aid. Further contracts like this may be expected. For example last week the U.S. Army negotiated a contract with Russian company, Mil, to provide 21 Mi-17 helicopters to Afghanistan at a cost of up to $300 million. U.S. companies while they won’t be supplying hardware will be able to provide training, maintenance and program support to both the U.S. and the Iraq and Afghan users of these kinds of items.
One issue that hangs over all of this is the need for U.S. contractors to gain more overseas businesses. The U.S. defense budget will decline in the near future. In order to maintain the current level of sales and earnings more business will be needed from foreign sources. The Iraq and Afghanistan markets should favor the U.S. but due to the needs of those countries, their familiarity with Russian types of weapons, and the low level of technology they are buying it might be difficult. Certainly in a few years Iraq might be looking at American fighters such as the F-16 or F/A-18 but not in the immediate future. Technology transfer rules also affect the ability of these types of sales.
U.S. contactors have already made a great deal of money supporting the fighting in Iraq and Afghanistan. Much of this has been through logistics and training support rather then providing hardware directly to these two new governments. There may be opportunities in the future for larger, more complex contracts but it may take several years as the two militaries are built up. In the short term though it will be contracts for supply, maintenance and training where the market will be. Much of the money for those efforts will still be provided by the U.S. taxpayer either directly or through foreign aid. The time when Afghanistan and Iraq place large orders with their own tax money is still a ways off.
Photo from Christian Brigg's Flickr photostream.