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Turns Out Saudi Arms Deals Won’t Add a ‘Million’ Jobs to U.S. Economy

They even send jobs overseas, but who's paying attention to details?

Last week I wrote about how Peter Navarro has not only been President Trump’s point man for his new tough China policy but has been serving longer as an interlocutor for the defense industry in the White House. According to new reports he was able to thwart attempts to stop a lucrative Saudi arms sales in 2017, convincing the president that “thousands of jobs” at defense giant Raytheon would be lost as a result.

More recently, TAC and other outlets have reported that Secretary of State Mike Pompeo might have been the target of an IG investigation into his 2019 role in declaring an “emergency” in order to thwart, again, Congressional attempts to stop $8 billion worth of arms sales to the Saudi Kingdom and the UAE for the purposes of fueling their war against the Houthis in Yemen.

There have been two rationales for these arm sales all along: one, they maintain and/or increase jobs for Americans. Two, they are being used to challenge Iranian influence in the region, as the Houthis are ostensibly backed by Tehran. The Saudis and Emiratis, supported by billions in U.S. weaponry, refueling, and targeting assistance, are really the victims in need of defending here, so the story does.

But two reports this week show how fragile these rationale are and why we should we should remain vigilant in our skepticism, even as 40 million Americans now are out of work.

First, William Hartung at the Center for International Policy has a report out that throws a bit of cold water on President Trump’s claims that the Saudi arms sales that he cooked up with Saudi crown prince  Mohammad bin Salman will create “over a million jobs.” But his letters of intent signed in May 2017 for $110 billion aren’t the same as what is actually authorized by Congress. Hartung estimates that arms sales that have actually gone through since 2017 have likely only created 20,000 to 40,000 new jobs a year among the major defense companies, “or less than one-tenth of President Trump’s highest claims of employment tied to U.S. arms sales to the regime in Riyadh,” writes Hartung.

Furthermore, and this is key, he found that despite the $85.1 billion total arms sales in 2019, 10 percent involved licenses for production overseas, which means that many of the jobs that were created, were overseas, not here. His extensive report is worth a closer look. 

It is difficult to nail down just how many defense jobs were added under Trump since 2016. The Aerospace Industries Association seems to have the most comprehensive numbers, but the last total they posted publicly was that there were 370,084 defense-related design and manufacturing jobs in the U.S. as of 2016. The group has issued workforce studies each year since, but they are only available on request. The New York Times says that “arms industry association” organizations say the number of defense jobs has risen 3.5 percent in the last three years to about 880,000, but “the numbers, the most recent available, do not specify how many were in manufacturing.”

That is not to say that as the arms sales have increased under Trump (according to The Times, $51 billion to $36 billion a year under Obama) there hasn’t been more jobs added. According to this January 2020 Reuters report, for example, top federal contractor Lockheed Martin surged 15 percent to 102,800 jobs since 2016, mostly because of the F-35, according to this report. 

In addition, according to  Defense One, defense companies are actually adding thousands of jobs during Coronavirus, thanks in part to the Pentagon’s shift to Asia. Reporter Marcus Weisgerber suggests it likely has to do with the $76 billion in classified projects he wrote about in October, which would include secret aircraft, space, and missile projects. Whether escalating a new war, on top of the ones we’re still enmeshed in in the Middle East, is worth it, is certainly up for debate (as Ryan Girdusky has pointed out here at TAC, there are plenty of non-war sectors Trump could be focusing taxpayer resources right now to help boost the economy, but hasn’t yet). One wonders too, how much of the companies’ rosy employment forecasts are for shareholder benefit, and how much is steeped in real hiring.

Secondly, CNN  is reporting today that the U.S. government is clearing the way for new arms sales to the UAE after its own investigation into reports that our weapons were falling into the hands of Al Qaeda-linked extremists. This would mean that in our continued insistence to support the Gulf State monarchies in their regional war against the Houthis in Yemen, we have essentially armed militants linked to Al Qaeda, the very extremists behind the 9/11 attacks on America.  CNN’s own report last year was exhaustive, and so compelling the State Department put further sales on hold. 

Nonetheless, the war machine is not to be stopped (and no doubt Navarro is already assembling the jobs rationale). According to CNN Friday: 

While the probe concluded earlier this year, its findings have not been made public. But multiple government officials on both sides of the aisle and within the administration told CNN that the UAE has now been cleared.

The State Department has told some leaders in Congress that it is “satisfied no actual transfers were made,” and has “made sure the UAE fully appreciates the letter of their agreements” with the US, another source with knowledge of the investigation told CNN.

With that assurance, the lawmakers gave their blessing to a new proposed sale of US military hardware to the UAE, the source said.

It is time to stop taking the jobs and geo-political rationales at face value. Yemen is a cholera-infested crater thanks to our bombs, but despite that, the UAE has backed out and the Saudis are begging for a cease fire because they’ve gotten their butts handed to them by the much under-armed Houthis. Meanwhile we see thousands of defense manufacturing jobs going overseas and the actual defense jobs attached to these controversial arms sales much lower than advertised. Keep your eyes open and support members of Congress who are actually asking the right questions.