Book Review: The Shadow World by Andrew Feinstein

How the multibillion-dollar global arms market is built on graft

SA-7 missiles at a Libyan military base in March; 20,000 of these antiaircraft weapons, looted during the conflict, are unaccounted for Franco Pagetti/VII

By Robert Baer

The Shadow World:
Inside the Global Arms Trade
By Andrew Feinstein
Farrar, Straus & Giroux; 672 pp; $30.00
 

Writing about the arms business isn’t easy. Weapons merchants, large and small, legal or illegal, hide their business behind numbered accounts, shell companies based in tax-haven islands, and middlemen who’ve learned to keep quiet. The arms dealers operate in distant places like Kiev or Sofia, beyond the rule of law and scrutiny. They live in Monte Carlo or Liechtenstein, where journalists aren’t welcome. They give interviews only after they’ve been caught red-handed, and even then will just maintain their innocence.

With The Shadow World: Inside the Global Arms Trade, Andrew Feinstein peers into this murky realm and sheds light on one of the world’s biggest and least regulated markets. Much of his insight stems from his experience in South Africa’s parliament. In 1999 he witnessed firsthand, as the ranking member of the African National Congress on the parliament’s Committee on Public Accounts, how the British arms company BAE Systems and the Swedish conglomerate Saab beat out their less expensive Italian competition in the sale of jet fighters to South Africa. The venal South African leadership ignored its own technical committee and bought the BAE-Saab aircraft—which South Africa ultimately found too expensive to maintain. Feinstein left parliament and started writing, with no shortage of acid in his pen.

Feinstein does not let up on the merchants of death, regularly reminding us that arms-related corruption is a global cancer, affecting everyone from America’s defense giants to Africa’s poorest countries. If Transparency International’s estimate that the arms trade accounts for 40 percent of world corruption is correct, Feinstein could hardly have found a more worthy target. He is also right that the West has turned a blind eye to the situation. There is simply too much political money tied to defense contracts to force politicians to demand accountability. Feinstein repeatedly asserts that we know enough about how these deals work to stop them. It’s only because of an absence of will—or a consent of silence—that we don’t.

Feinstein says the unregulated arms market is fundamentally immoral. Arms dealers such as the recently convicted Russian smuggler Viktor Bout, he says, have earned a special place in hell by fueling Africa’s conflicts and facilitating the slaughter of innocents. Such castigation is deserved—and uncontroversial. Where I most see eye to eye with Feinstein is the issue of Saudi Arabia’s egregiously corrupt arms deals. I’ve written on corruption in Saudi Arabia myself and have yet to hear of any credible effort to clean up arms purchases there.

Saudi royals are wealthy people. But the sizable government allowances they receive don’t begin to cover their lavish lifestyles, which include yachts, Kensington mansions, and private jets. So the royals have been forced to seek supplemental income. And the serious money comes from arms deals, where they collect substantial, unreported commissions.

Feinstein pays special attention to Al Yamamah, the infamous arms-for-oil deal signed by Britain and Saudi Arabia in 1985. BAE, the prime contractor, would net more than $50 billion in revenue from the deal over the next 20 years. On the face of it, the exchange made perfect sense: Saudi Arabia was too small a country to produce its own weapons, and Britain needed more oil than it was pumping out of the North Sea. The abuses, as Feinstein reveals, arose from the vast slush funds packaged into Al Yamamah. The funds were paid out at the discretion of BAE and certain Saudi princes. According to British and American investigators, the money ended up in the pockets of the princes and middlemen. Prince Bandar bin Sultan bin Abdul-Aziz al Saud, the former Saudi ambassador to Washington, reportedly got a $17 million dollar house and an Airbus A340 out of the deal.