Speculating the Future Evolution of Defence Offset
تاريخ النشر: 23/07/2024
الناشر: مركز تريندز للبحوث والاستشارات
نبذة الناشر:Offset is a controversial and poorly understood field of defence endeavour. For decades, it has been viewed as an important mechanism for accelerating economic, industrial and technological development, activated simply by procuring expensive military systems. Billions of dollars are spent buying arms that lead to a reverse flow of billions ...of dollars of ‘offsetting’ investment into the buying country’s economy.
Driving this process is the idea that the offset benefits provided by the foreign defence contractor act to ‘compensate’ the customer country for buying costly military kit. This begs the question, however, as to why a defence contractor would succumb to what appear to be ransom payments. It smacks of blackmail but is actually completely legal, and reflects an (albeit pressured) agreement to provide reciprocal benefits linked to the signing of the primary defence contract. If the contractor expresses reluctance to comply with the offset requirement, the customer, operating in a ‘buyer’s market, can then discontinue negotiations and switch interest to another competitor that will comply. Similarly, the contractor can walk away, but if the deal is highly profitable, this will unlikely happen. So, the solution is inevitably one that benefits neither party in the long run: the contractor wins the contract and agrees to be fully compliant with the offset demands but fails to deliver on them. Unsurprisingly, offset programmes often struggle to deliver, due to the lack of goal convergence between the customer country, seeking development, and the overseas defence contractor prioritising profit. إقرأ المزيد