An agreement to curb Iran’s nuclear program could create a bonanza for U.S. defense contractors who already are benefiting as the Obama administration tries to assuage Israeli and Gulf Arab concerns by cutting deals for more than $6 billion in military hardware.
The details of a potential deal being negotiated between Iran and six world powers — China, France, Germany, Russia, the U.K. and U.S. — would determine what steps the U.S. takes to help its allies. A nuclear agreement is likely to prompt Mideast partners to seek improved defense systems from American contractors such as Boeing Co., Lockheed Martin Corp. and Raytheon Co. as well as weapons-makers in France and elsewhere.
“In theory, an Iran deal could lead to a reduction in tensions in the region that would reduce the demand for advanced weaponry,” said William Hartung, director of the Arms and Security Project at the Center for International Policy in Washington. “In the short-term, a deal could actually boost the demand for arms.”
Gulf states and Israel have said they wouldn’t trust any pact forged in Vienna to curb Iran’s pursuit of nuclear weapons. They also worry that if economic sanctions are lifted and Russia’s push to lift an arms embargo on Iran succeeds, that would let the Islamic Republic upgrade its aged military hardware. Those concerns could lead them “to seek more imported weaponry regardless of whether there is an Iran deal,” Hartung said.
Michael Rubin, a Middle East military analyst with the American Enterprise Institute, said an estimated $100 billion in Iranian oil revenue now frozen by sanctions “will make possible an Iranian military shopping spree that it will be near-impossible for Israel to keep up with.”
The talks continued in Vienna on Thursday, with few visible signs of optimism about the prospects for a deal after 13 consecutive days of high-level negotiations.
The U.S. is trying to ease the concerns in Israel, where Prime Minister Benjamin Netanyahu said July 6 that the Iran deal was getting “worse and worse.”
The administration and Congress in May approved a $1.9 billion arms sale to Israel that analysts said probably was meant to offset Israeli objections to an Iran nuclear agreement. The sale included 3,000 Hellfire anti-armor missiles, 250 AIM-120C Advanced Medium Range Air-to-Air Missiles, and 50 BLU-113 “bunker-buster” bombs. Among contractors benefiting were Lockheed, General Dynamics Corp., Raytheon andElwood National Forge.
The next step would be signed contracts, a process that could take months or years.
For decades, the “United States has maintained an ironclad commitment to Israel’s security,” said Greg Kausner, deputy assistant secretary of state for political-military affairs, said in an e-mail. His bureau oversees the more than $3 billion in annual U.S. military assistance to Israel.
President Barack Obama promised Gulf leaders accelerated arms deliveries at a May summit he held to address their fears about an Iran deal. A final communique proposed development of a regional integrated missile-defense system.
“We really need to put the accelerator on that,” said Derek Chollet, a former assistant secretary of defense who’s now a senior adviser at the German Marshall Fund in Washington. “We will want to reassure our Gulf partners” that “their security needs will be met,” Chollet said.