Thesis (M.S. in Management) Naval Postgraduate School, December 2000. / Thesis advisors, Michael W. Boudreau, David V. Lamm. Includes bibliographical references (p. 71-73). Also available online.

Approved for public release; distribution is unlimited. / MBA Professional Report / The purpose of this MBA Project is to investigate and provide an analysis of the prominent factors that affecr the United States Foreign Military Sales (FMS) program. This project was conducted with the sponsorship and assistance of the Naval Postgraduate School's Acquisition Research Institute, Financial Management and International programs. The overall goal of this project is three-fold: 1) to identify the purpose of the United States FMS program and its processes 2) to identify, define and evaluate historical economic, political, social and industrial changes and trends that affect FMS worldwide allocation and support and 3) to apply these findings to a specific country (Taiwan) to make a prediction of future participation and support. The role of arms sales in world politics has grown tremendously since the end of World War II and more specifically since the passage of new arms laws in 1979. The importance of FMS is increasingly evident in the foreign policies of both supplier and recipient nations, in international politics, competition and relations. Arms sales have become in recent years a crucial dimension of international affairs. This paper examines several trends in military equipment, services and training exchanges and investigates their potential impact on the future conflicts. The nature of FMS is complex. This research plans to identify and analyze trends relating to socio-political, economic, and industrial and technological changes associated with FMS spending. This discussion then applies these findings to Taiwan as a case study and expands on the customer's experience with FMS. The intent of this paper is to increase the reader's knowledge of FMS, pinpoint trends in the program and use FMS to Taiwan as a point of comparison to increase comprehension of this extremely complex and not well-understood program.

The United States has different methods by which it leverages its influence on allies throughout the world. Military-to-military partnerships constitute one of the most effective methods, particularly when the U.S. seeks to influence developing nations or ones that are in the midst of difficult political transitions. However, recent events demonstrate that these mil-to-mil partnerships are not as effective as they should be. This paper seeks to examine one aspect of the mil-to-mil partnership, namely sales of U.S. military equipment through the Foreign Military Sales (FMS) program and the complementary Foreign Military Financing (FMF) program, through which the United States provides the funding to finance said purchases. This paper argues that the United States has continually "moved the goalposts" in justifying its FMF outlays and FMS authorizations, to the effect that the United States is dependent on the continuation of the very programs that are designed to be little more than tools that allow the foreign policy establishment to influence its partners. This "strategic drift" in the mil-to-mil relationship as evidenced through the FMS/FMF program is examined in detail in Egypt, with a focus on events that have transpired since longtime President Hosni Mubarak's ouster in February 2011. The paper seeks to demonstrate that when FMS/FMF is tied to external agreements upon which the United States is dependent - whether diplomatic or military - it creates an incentive for planners in both the Departments of Defense and State to resort to self-justifying analyses bearing little resemblance to the original purpose of the FMS/FMF agreements or to the United States' legitimate national interest in a given region. Large scale reforms of the architecture of security assistance, both political and administrative, are unlikely to occur for a variety of reasons that are touched upon in the paper. By looking at the historical, political, and military aspects of security assistance more broadly, the paper argues that if the United States wants to achieve clarity on whether its security assistance programs truly serve the United States' best interests, it will need to do so at lower levels in the relative implementing agencies. / text

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