| Nordic offset policies:
Experiences and expectations Abstract |
|
Bjorn Hagelin |
| Although the post-cold
war trend of declining arms production has come to a halt, many defence
companies, supported by the respective governments, continue since the 1970s
to seek ways to survive the effects of cuts in military spending and reduced
domestic demand for indigenously developed military equipment. Foreign supplies
(imports) and participation in international cooperation for the development
and manufacture of military equipment have increased in importance for most
arms producers as complements to indigenous development and production of
major military equipment. As a result acquisition policies of many small
and medium sized arms producing countries in particular have become influenced
by and dependent upon export policies of arms exporters. However, as a result
of increasing competition among suppliers because of a reduced global arms
market, declining military R&D plus military industrial rationalisations,
buyers have been able to influence the conditions under which major weapons
are acquired. Most buyers demand compensations (offsets) in full for the
direct cost of acquiring major military equipment. Suppliers have come to
accept such demands in order to compete for new orders, while at the same
time criticizing such compensations as a market distortion mechanism that
is adding to their costs. Offsets as a business activity has been defined
as 'a variety of industrial, commercial and political arrangements under
which foreign suppliers implement specific actions aimed at partially or
fully compensating the buyer's procurement costs'. This paper attempts to
explain the origin and compare the contents of offset policies in the four
Nordic countries Denmark, Finland, Norway and Sweden. By policies are meant
formal government and/ or agency guidelines that explain the reasons and
conditions for demanding offsets in connection with military acquisitions.
All of the Nordic countries have experiences as an arms importer-in the
case of Finland from both the Soviet Union and western countries-but also
as arms exporters (although that experience varies greatly) and as partners
in international arms cooperation. This paper describes the policies, if
any, in these three roles.
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