By: Aaron Mehta and Pierre Tran
WASHINGTON AND PARIS — Foreign military sales (FMS) are a critical foreign policy tool, one used to bind partners to America while bolstering interoperability on US systems — and providing a boost to domestic industry.
The administration of US President Barack Obama has made good use of FMS, setting records for foreign weapons sales in 2015 and coming close in 2016. But as President-elect Donald Trump’s administration spins up, the future of US sales abroad is unclear.
As with everything related to the Trump administration at this point, there is little hard evidence to go by. But analysts are watching closely for signs of what might come. In particular, there is concern that two areas of strong sales — the Gulf region and Europe — could be impacted by either the policies of the next administration or the statements of the next president.
Analyst Byron Callan, of Capital Alpha Partners, wrote to investors the day after the election, noting some of Trump’s campaign positions could impact foreign weapon sales.
“We would expect if countries increase spending, it would be to the benefit of their own industries and not necessarily favor US defense firms,” Callan wrote to investors, adding: “If a Trump administration takes a harder line on Muslims, that may also bear on US defense exports to some Middle Eastern and Asian countries.”
Doug Berenson, managing director with Avascent, agrees there are potential roadblocks from Trump policies but stresses that a lot is still in the air.
“I think there is a chance that many European countries could get nervous about what this means, about the reliability of the US as a supplier,” Berenson said. “But I think it’s too early to assume that would be the outcome.”
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