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World arms sales steady despite markets crises

By Paul Taylor, Diplomatic Editor

LONDON, October 21, 1999 (Reuters) - World arms sales held steady last year, reflecting heightened tension in Asia and the Middle East, despite financial crises in Asia and Russia and low oil prices, an authoritative think-tank said on Thursday.

In its annual study, ``The Military Balance 1999-2000,'' the International Institute for Strategic Studies (IISS) said the global arms trade was worth some $55.8 billion in real terms in 1998, only slightly less than the previous year's $56 billion.

``Despite the 1997-98 economic downturn in Asia and a period of weak oil prices, the arms trade did not decline by as much as had been expected,'' it said.

Arms deliveries to East Asia and Australasia actually increased slightly, and weapons sales to sub-Saharan Africa almost doubled.

Colonel Terence Taylor, assistant director of the London-based institute, said the figures reflected tension on the Korean peninsula, between China and Taiwan -- the world's second biggest arms importer with deliveries valued at $6.3 billion in 1998 -- in the Gulf and in central Africa.

``This just shows that political conflicts drive arms sales rather than available resources,'' Taylor said, noting that only Indonesia among Asian nations had significantly reduced arms imports because of economic problems.

Saudi Arabia remained the world's number one importer of military goods, taking delivery of equipment worth $10.4 billion last year after $11 billion in 1997.

This was despite a slump in oil prices which fell to a low of barely $10 a barrel late last year before recovering to about $22 a barrel this month.

U.S. accounts for half of world's arms exports

The United States extended its lead as the world's biggest arms exporter, with deliveries of arms and military services in 1998 worth $26.5 billion, a 49 percent market share.

France leapfrogged Britain into second place with sales of $9.8 billion, a jump from $7.4 billion in 1997, while British exports fell to $9 billion in 1998 from their peak of $10.9 billion the previous year, reflecting the winding down of the massive Al Yamamah oil-for-arms contract.

The IISS said Russia managed modest growth to export $2.8 billion in military equipment last year, compared to $2.5 billion in 1997. Israel came next, although its deliveries declined to $1.3 billion from $1.5, and China's exports halved in value to $500 million last year.

The IISS figures contrast with estimates by the Stockholm International Peace Research Institute, which assigns its own notional values to arms deliveries and makes Russia the world's second exporter by volume.

In Asia, deliveries to Japan, worth $2.1 billion, and South Korea, worth $1.4 billion, remained high, while Singapore's military imports rose to $900 million.

In the Middle East, Israel and Egypt both took delivery of arms worth $1 billion in 1998 and the United Arab Emirates' imports were worth more than $900 million in 1998.