US greenlights more than $54 billion in military equipment to foreign governments

  • The U.S. sold more than $54 billion in military equipment to foreign governments in the fiscal year that ended Sept. 30, according to the Pentagon's top financial officer.
  • The increase in foreign military sales comes amid trade tensions between the U.S. and China, the world's two largest economies, and increased sanctions on Russia.
A U.S. helicopter from the Helicopter Maritime Strike Squadron Seven One lands on a Navy vessel.
Department of Defense photo
A U.S. helicopter from the Helicopter Maritime Strike Squadron Seven One lands on a Navy vessel.

WASHINGTON — The U.S. sold more than $54 billion in military equipment to foreign governments in the fiscal year that ended Sept. 30, the Pentagon's top financial officer told a small group of reporters.

"We've had a 62 percent increase in foreign military sales, over $54 billion," David Norquist, the Defense Department's comptroller, said alongside Deputy Secretary of Defense Patrick Shanahan on Oct. 3.

"I don't know if it's a record, but if it is, and it's close to that, that matters. It matters, not only because it helps our industrial base, ... it helps our economy," Norquist explained, adding that the foreign military sales forge closer relationships with key allies.

"Those are folks buying equipment that's interoperable, and those are allies that we're now working with on a close and more regular basis," Norquist said.

The increase in foreign military sales comes amid intensifying trade tensions between the U.S. and China, the world's two largest economies, and increased sanctions on Russia.

When asked if trade disputes were spilling into the industrial base, both Norquist and Shanahan downplayed concerns.

"We haven't seen that so far," Shanahan, the Pentagon's No. 2 official, told CNBC. "As you know, the way I tend to think about that is that these relationships are very complex. They're not monolithic," he said, adding that Defense works closely with the State, Commerce and Treasury departments to navigate the economics of foreign military sales.

India was one example Shanahan offered up.

"The dilemma with India is forever [that] the Indians bought equipment from Russia," Shanahan said. "So you have to buy spare parts, you have to maintain it, and it's not like you cut that off," he added, noting that Congress is able to provide a waiver for certain military purchases with Russia.

Last week, Indian Prime Minister Narendra Modi signed a $5 billion deal with Russian President Vladimir Putin for the S-400 missile system, a deal that may peeve Washington but fall short of financial consequences.

The Russian-made S-400 system is believed to have a longer range than the U.S.-made THAAD missile system and is estimated to cost significantly less.

What's more, Turkey, a NATO ally, is also interested in buying the S-400, which raises concerns among other NATO partners as well as Washington, who are wary of Moscow's increasing military presence in the region.