The Unintended Consequences of Military Aid

| Rana Shabb
Rana Shabb
PhD Candidate at the Sam Nunn School of International Affairs, Georgia Institute of Technology

This Academic Incubator column is part of an academic partnership with the Nunn School of International Affairs at the Georgia Institute of Technology, presenting regular expert commentary on global security-related issues by faculty, fellows, and students.

Military Aid and its Unintended Consequences

The author is Rana Shabb, PhD Candidate, Sam Nunn School of International Affairs, Georgia Institute of Technology

Military aid is a foreign policy tool dispatched to secure US interests at home and abroad. As long as terrorism, extremism, and narcotics remain a national security threat, the US will continue to bolster strategic allies’ military capabilities in the Middle East and elsewhere for countering these threats. Security assistance has reached the magnitude of billions yearly– in 2016 alone, the US spent $15 billion on military assistance. While military aid can be a controversial topic in terms of its unintended consequences, it is possible to leverage it in ways that trigger positive ripple effects in local economies – such as economic innovation. These positive ripples can indirectly strengthen fragile societies by spurring sustainable economic development.

Security assistance, as with most public expenditure, is scrutinized for its effectiveness in delivering its immediate promises. While most analysists and observers focus on evaluating its direct impact of shoring up local military capacity to counter violent extremism, secure borders, and combat drug trade, military aid has unwillingly trigged unintended consequences in recipient countries. In many circles, military aid is associated with negative second-hand effects such as undermining democratic rule and human rights, increasing the likelihood of military coups, and fueling regional arms races. In the developing world, efforts to strengthen the military can be contentious and are often portrayed as a zero-sum game whereby spending on guns is money not spent on education and health. Nevertheless, this is not necessarily true.

In stark contrast, military expenditure in the developed world is generally associated with good things. In the context of Western society, military spending helps foster technical and economic innovation, which in the long run, helps sustain economic growth and continued prosperity. Outside the security realm, investment in military Research and Development (R&D), defense technology spinoff, and military procurement all have positive effects in the domestic economy – supporting increased productivity and economic innovation. What is understudied is whether military aid to developing countries can emulate the positive effects we see in the West.

A close examination of U.S. military aid to Jordan – a top ten recipient for decades – shows that under the right circumstances, military aid, which is in effect a subsidy to military expenditure, can help trigger virtuous feedback loops in the recipient economy.

It is important to note that the disbursement of security assistance is supply driven. That is, the US provides military aid to bolster capabilities it prioritizes in the recipient country. For example, Jordan receives military aid in various formats reflecting US regional priorities: securing peace with Israel and countering extremist threats emanating from Syria and Iraq. Firstly, Jordan consistently receives hundreds of millions of dollars in Foreign Military Financing (FMF), especially after it signed a peace treaty with Israel in 1994. Though FMF cannot be spent in the domestic Jordanian economy to trigger procurement or R&D channels for innovation directly, it indirectly supports the Jordanian defense budget and allows it to remain considerably high compared to its neighbors. For example, in the past decade, Jordan’s military expenditure as a percent of GDP hovered around 5% in comparison to 2% for Turkey. Aided by this massive inflow of FMF, the fungibility of these funds has helped establish and support an indigenous defense industry post 1994.

As part of its military spending, Jordan purposefully established the King Abdullah II Design and Development Bureau (KADDB) in 1999 to kick off a homegrown arms sector. This bureau is nested within the Jordan Armed Forces (JAF), but its board of director reports directly to the King of Jordan, through the Chairman of the Joint Chiefs of Staff. Despite being funded from the defense budget, the main goal, however, is economic development. The KADDB’s objective is to trigger the development of a scientific industrial base to develop domestic industries and technology. The goal of this industrial park is to create backward and forward linkages into the economy by transferring “know-how” to Jordan via its joint ventures with international companies, establishing a competitive industry base, and retaining high level human capital in Jordan. Explicitly, the KADDB’s mission statement is to “provide innovative solutions and exploit advanced technologies to serve National Security” and “to enhance independence and increase competitiveness through the improvement of local production capabilities and human competency.”

Indeed, Jordan has successfully established a new and innovative domestic arms industry that serves both the JAF and international markets for special localized needs. For example, Jordan has developed a myriad of land system products. The Desert Iris – for example – is a Special Forces vehicle that is light weight and an all-terrain vehicle to serve as an agile, multi-mission, and light patrol vehicle. It was designed, developed, and manufactured by KADDB in partnership (through a joint venture) with two UK companies Jankel Group and SHP Motorsports. Technologies that were based on the JAF’s requirements for counter-terrorism border and internal security gained international recognition. This light-weight jeep has found markets in other countries such as Saudi Arabia and the UAE.

However, not all aid is fungible and adaptable to local industrial policy priorities. Jordan has received aid in the form of technical know-how and training. One such program is the Cooperative Biological Engagement (CBE) program, which focused on pushing best practices in promoting security and safety in biological laboratories with pathogens and establishing bio-surveillance to help detect and prevent WMD terrorism. This dovetails with the larger post 9/11 approach to counter the threat of non-state actors obtaining biological materials that could lead to a biological weapon. While the US did share technical knowledge, the intervention created an isolated pocket of excellence within the government and public sector; the private sector and local businesses were excluded from the trainings and the meetings. Potential synergies with local industries, specifically the pharmaceutical industry, were overlooked because this was not an industrial priority and outside the original scope.

Nevertheless, building potential links with the local vibrant and regionally competitive pharmaceutical industry could help build capacity in a more sustainable way by increasing the number of stakeholders and vested partners. In the CBE case, technical knowledge was shared, but potential synergies to enhance sustainability of the intervention or to strengthen private public partnership were missed. Thus, US military aid helped spur innovation and the emergence of new economic sectors and high-tech products in the Jordanian economy. Because of the fungibility of FMF funds, Jordan leveraged this military expenditure subsidy towards targeted innovation goals under the KADBB umbrella and mission. Yet, not all aid leads to such innovative ripple effects. If the supply of aid remains narrowly focused, there is a risk for missed opportunities to amplify potential local synergies for shared knowledge and strengthening the local economy.

As military aid will continue to be dispatched in large sums to achieve stability and security in fragile environments, policymakers can seek to magnify the secondhand innovation effects of military aid by being cognizant of the domestic science & technology and industrial policies of recipient nations. Factoring these local conditions into the decision making and design processes of military aid disbursement could leverage fixed costs for cheap and low hanging opportunities to spur economic and industrial development, which in the long run contribute to the very goals of military aid – security and stability.

The Cipher Brief is proud to work with The Sam Nunn School of International Affairs, Georgia Institute of Technology, to bring you this ongoing series on #EmergingTechnologies and #FutureWarfare.  

Margaret E. Kosal is The Academic Incubator’s liaison and an associate professor at Sam Nunn School of International Affairs, Georgia Institute of Technology. She is editor and contributor to Disruptive and Game-Changing Technologies in Modern Warfare: Development, Use, and Proliferation

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The Author is Rana Shabb

Rana Shabb is a PhD Candidate at the Sam Nunn School of International Affairs, Georgia Institute of Technology.

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