chapter  11
22 Pages

From Offsets to Industrial Cooperation: Spain's Changing Strategies as an Arms Importer

In July 1984, Spain and McDonnell Douglas Corporation signed the most important offset deal ever agreed by Spain and a foreign corporation or government. Spanish firms had secured licensed and co-production agreements before,2 as in the purchase of US F-5 fighter aircraft in the mid-1960s, but had never entered an offset programme of this magnitude.3 Lacking experience in handling big offset programmes, the Spanish administration found itself having to manage an offset worth $1540 million (in 1981 US dollars). To address this situation a new office was created: the Gerencia de Compensaciones (Offsets Management Office) would be responsible for managing the F-18 programme as well as any other offset agreements that followed. Later, the office changed its name to "Gerencia de Cooperaci6n Industrial" (Industrial Cooperation Management Office). I will argue that this change in name reflects a transformation in the acquisition and compensation policy followed by the Spanish government. From enthusiasm about offsets in the early and mid-1980s, the emphasis shifted in the early 1990s towards other ways of obtaining industrial and technological benefits when importing military equipment. Although offset deals remain an important aspect of Spain's arms importing policy, other "compensation" formulae, like foreign investment for joint ventures set on Spanish soil, are gaining preeminence. Besides, international co-operation is increasingly favoured as the means of acquiring highly complex and expensive arms systems. It may seem contradictory that while US sources expressed concern about the allegedly too prodigal offset deals that US defence companies had granted foreign clients, a main beneficiary of such an apparently lavish approach was shifting its purchasing policy away from offset agreements. The present chapter will attempt to clarify the causes behind this apparent paradox.