Defense offsets and political leverage

Abstract

Why do states agree to offset provisions when they purchase weapons, and what are the consequences of different types of offsets? This article takes a network approach to understanding the causes and consequences of offsets in the arms trade. It argues that offset clauses create network ties that affect a state’s position and power in the global arms production network. This depends on the type of offset it pursues—only a small subset of states with advanced technological manufacturing capabilities can maintain a central and powerful position by leveraging direct offsets. Other states must pursue indirect offsets, which have the opposite effect and keep these states locked into peripheral positions of limited power. Through case studies of offset use in India and Malaysia, this article shows how difficult it is to achieve network interdependence (India), and the difficulties of using indirect offsets to achieve political goals (Malaysia).