As an introduction to the concept of offsets, I quote from last year's post entitled Counterjihad, Inc. Part I:
From Offsets: The Industrial, Employment and Security Costs of Arms Exports, "Last updated: November 2001":One of the most politically powerful claims supporting U.S. arms trading today is that weapons exports sustain American jobs. But the employment benefits of arms exports are diluted, and may be negated, by seldom-discussed side deals known as "offsets." These agreements require a supplier to direct some benefits. -usually work or technology. -back to the purchaser as a condition of the sale.
(Note: the Federation of American Scientists article quoted has been updated since I quoted it for last year's post.)
There is a word for that: kickbacks.Offsets come in two forms. Through "direct" offsets, the purchaser receives work or technology directly related to the weapons sale, typically by producing the weapon system or its components under license. "Indirect" offsets involve barter and countertrade deals, investment in the buying country, or the transfer of technology unrelated to the weapons being sold. Both types of offsets send work overseas, but direct offsets also raise serious security concerns, as they assist the development of foreign arms industries.
So, the kickback can be that the purchasing country's industry gets built up by production of components for the weapon system being purchased.
That's interesting, because one big marketing tool for sale of high-tech weaponry to countries that really shouldn't have it is the jobs (especially high-tech ones) that the sale will bring to the selling country. But, if that industrial capacity and those jobs go to the purchaser's country, then that defeats the purpose of the sale as far as the selling country is concerned: it is just transferring technology, economic benefits and industrial capacity to the purchaser, which often is just a step or two away from being an enemy.
Under those circumstances, the only ones in the selling country who are benefiting are the companies that are actually making the deal -- and they are making money essentially by selling out their country to the highest bidder.
Alternatively, the kickback can be in the form of marketing the buyer country's goods and services (shoes, rugs, furniture, rice, clothing, jihad, heroin...) in the seller country (or elsewhere).
(You need to be familiar with the Sibel Edmonds case to appreciate the comment about the heroin.)
The 2001 report produced by the Presidential Commission on Offsets in International Trade (created by the Defense Offsets Disclosure Act of 1999) concluded that the average offset requirement for 1998 was 57.9% of the value of the contract; this rate represented a slight increase over the figures from the previous five years. The quantifiable effect of direct offset transactions for 1993-1998 "supplanted $2.3 billion in U.S. work or 25,300 work-years." The report concluded that while quantitative levels of offsets have remained relatively steady, there has been a qualitative increase in the negotiated transactions. These qualitative increases refer to the transfer of often sensitive technologies to foreign defense industries, which improve the competitiveness of foreign firms and rarely (only in 4% of the cases) result in the transfer of technology back to the U.S. Furthermore, Ann Markusen, a member of the Presidential Commission on Offsets, concluded that although "the United States has one of the strongest licensing regimes in the world, ...enforcement is inadequate." Thus these qualitatively high demands for offsets and the resulting technology transfer increase potential threats to U.S. national security, and pose real threats to U.S. jobs.
So, first of all, the value of the kickback is a very significant fraction of the original sale: more than half, on average.
Second, increasingly it entails the transfer of sensitive technology and the best of the jobs to the buying country.The report claims that theoretically if offsets were not offered, there would be a net loss of profits which would have a detrimental impact on U.S. jobs. However actual figures speak volumes. William Hartung in his report "Welfare for Arms Dealers" reported that "Today, thanks to these offsets, there are twice as many workers employed building the F-16 in Ankara, Turkey (2,000), as there are at Lockheed Martin's principle F-16 plant in Fort Worth, Texas (1,155)." Sending jobs abroad reduce labor costs for manufacturers, but it translates into the loss of American jobs.
In other words, if America goes to war with Turkey, Turkey is better able to produce F-16's (an American jet fighter) to fight that war than America?
Of course, the information was quoted one year ago, and it was current as of several years ago. Specifically, the information about F-16 production was current as of 1996.
From REPORTS - Welfare for Weapons Dealers: The Hidden Costs of the Arms Trade 1996:
Lockheed Martin's F-16 fighter program provides a case study of how modern arms deals can be structured in a way that actually exports jobs and production facilities from the United States to the purchasing nations. As a result of offset and coproduction deals tied to F-16 exports going back to the mid-1970s, parts of the aircraft are now being produced in Belgium, Denmark, Holland, Norway, Turkey, Japan, Singapore, South Korea, Taiwan, and Israel. Despite ex-President Bush's 1992 election year deal to sell 150 F-16s to Taiwan as a way to preserve defense jobs at Lockheed Martin's Fort Worth, Texas, production facility, the number of employees working on the F-16 at Fort Worth has actually dropped to less than one-third of the number of people employed building the aircraft in September 1992, from more than 3,600 then to only 1,155 now.
Basically, they tell you they are selling weapons to boost the US economy, especially in the high-tech manufacturing sector.
The truth is that the deals they cut to make the sale actually result in US production capacity being diminished, as production is contracted out to the foreign country so the foreign country will buy the weapons being produced.
Saudi Arabia pays cash from petrodollars; they don't produce, and don't need offsets. For other countries, like Turkey, Turkey's side of the deal is funded with US foreign military aid money.
In other words, taxpayers fund a deal that moves our defense industry -- production capacity, jobs, technology, everything -- to a foreign country. The only Americans that benefit are the executives and stockholders of the corporation making the sale, the lobbyists that arrange it, and the government officials (Congress, and certain elements of the Executive Branch) that approve and authorize it.
This gives you a glimpse of one aspect of what the Sibel Edmonds case is about.
For more on the Turkish Lobby, read this earlier post.
Addendum for Stop Islamic Conquest:
The Sibel Edmonds case is about lobby groups that front for Turkish organized crime, the so-called Turkish Deep State.
The Turkish Deep State is a modern mafia that includes Turkish government figures (political leaders and military officers), business moguls and cartels that smuggle heroin, sex slaves, weapons and nuclear secrets. Where the interests of these groups converge, might makes right and the purpose of the law is to further business.
Working as a translator in the FBI's Washington Field Office, Sibel Edmonds was assigned to translate a backlog of documents and tapes. Among the information that Edmonds came across was powerful evidence that strategically-placed US officials in Congress and the Executive Branch were on the take, receiving bribes from lobby groups that front for Turkish heroin traffickers.
While these lobby groups do have "legitimate" functions that they perform, and not everyone associated with them knows what they are about, their main purpose is to ensure that US foreign and economic policy gets steered in a way that favors the business interests of the Turkish Deep State. US Congressmen and Senators and officials in the State and Defense Departments perform services, while on the US government payroll, for their foreign masters; protection is provided against prosecution by strategically-placed employees of the FBI, who bury evidence and derail investigations. In return for their services, these people receive bribes, campaign contributions, and a variety of compensation, and are guaranteed a cushy retirement later.
Sibel Edmonds told her story at the FBI and was fired. She then went to the Department of Justice, Office of the Inspector General; to the US Senate; and, finally, to the US media. All investigated at least some of her claims, and substantiated what they investigated -- 60 Minutes even did a segment on Edmonds. But, nothing happened, and, ultimately, Sibel Edmonds was gagged by the Bush Administration's Justice Department.
Congressman Henry Waxman, D-CA, was briefed on all of this, and promised in 2006 that should the Democrats win Congress, he would hold public hearings into the Sibel Edmonds case. The Democrats won, but one month after the Democrat-controlled Congress was convened in January of 2007, the Turkish Coalition of America came into existence, a key official of which had been a major player in the American Turkish Council -- the organization most associated in the obstructed FBI investigations with espionage and bribery of US government officials.
Its Congressional Caucus membership list includes Congressman Henry Waxman.
Needless to say, Congressman Waxman has yet to hold those hearings.
Congressman Henry Waxman (D-CA) was bought out by the Turkish Coalition of America; he is on the payroll of Turkish organized crime.