This report provides Congress with official, unclassified, background data from U.S.government sources on transfers of conventional arms to developing nations by major suppliers forthe period 2000 through 2007. It also includes some data on worldwide supplier transactions. Itupdates and revises CRS Report RL34187(pdf) , Conventional Arms Transfers to Developing Nations,1999-2006 . The data in this report provide a means for Congress to identify existing supplier-purchaserrelationships in conventional weapons acquisitions. Use of these data can assist Congress in itsoversight role of assessing whether the current nature of the international weapons trade affects U.S.national interests. For most of recent American history, maintaining regional stability, and ensuringthe security of U.S. allies and friendly nations throughout the world, have been important elementsof U.S. foreign policy. Knowing the degree to which individual arms suppliers are making armstransfers to individual nations or regions provides Congress with a context for evaluating policyquestions it may confront. Such policy questions may include, for example, whether or not tosupport specific U.S. arms sales to given countries or regions or to support or oppose such armstransfers by other nations. The data in this report may also assist Congress in evaluating whethermultilateral arms control arrangements or other U.S. foreign policy initiatives are being supportedor undermined by the actions of arms suppliers. The principal focus of this report is the level of arms transfers by major weapons suppliersto nations in the developing world -- where most of the potential for the outbreak of regional militaryconflicts currently exists. For decades, during the height of the Cold War, providing conventionalweapons to friendly states was an instrument of foreign policy utilized by the United States and itsallies. This was equally true for the Soviet Union and its allies. The underlying rationale for U.S.arms transfer policy then was to help ensure that friendly states were not placed at risk through amilitary disadvantage created by arms transfers by the Soviet Union or its allies. Following the ColdWar's end, U.S. arms transfer policy has been based on assisting friendly and allied nations indeveloping and maintaining their ability to deal with regional security threats and concerns. The data in this report illustrate how global patterns of conventional arms transfers havechanged in the post-Cold War and post-Persian Gulf War years. Relationships between armssuppliers and recipients continue to evolve in response to changing political, military, and economiccircumstances. Where before the principal motivation for arms sales by foreign suppliers might havebeen to support a foreign policy objective, today that motivation may be based as much on economicconsiderations as those of foreign or national security policy. The developing world continues to be the primary focus of foreign arms sales activity byconventional weapons suppliers. During the period of this report, 2000-2007, conventional armstransfer agreements (which represent orders for future delivery) to developing nations comprised66.6% of the value of all international arms transfer agreements. The portion of agreements withdeveloping countries constituted 67.7% of all agreements globally from 2004-2007. In 2007, armstransfer agreements with developing countries accounted for 70.5% of the value of all suchagreements globally. Deliveries of conventional arms to developing nations, from 2004-2007,constituted 64.7% of all international arms deliveries. In 2007, arms deliveries to developing nationsconstituted 55.6% of the value of all such arms deliveries worldwide. The data in this new report supersede all data published in previous editions. Since thesenew data for 2000-2007 reflect potentially significant updates to and revisions in the underlyingdatabases utilized for this report, only the data in this most recent edition should be used. The dataare expressed in U.S. dollars for the calendar years indicated, and adjusted for inflation (see boxnotes on page 3). U.S. commercially licensed arms export delivery values are excluded (see box noteon page 20). Also excluded are arms transfers by any supplier to subnational groups. The definitionof developing nations, as used in this report, and the specific classes of items included in its valuestotals are found in box notes on page 3. The report's table of contents provides a detailed listing anddescription of the various data tables to guide the reader to specific items of interest. The value of all arms transfer agreements worldwide (to both developed and developingnations) in 2007 was nearly $60 billion. This was an increase in arms agreements values over 2006of 9.2% ( Chart 1 )( Table 8A ). In 2007, the United States led in arms transfer agreements worldwide , making agreementsvalued at over $24.8 billion (41.5% of all such agreements), up significantly from $16.7 billion in2006. Russia ranked second with $10.4 billion in agreements (17.3% of these agreements globally),down from $14.3 billion in 2006. The United Kingdom ranked third, its arms transfer agreementsworldwide were $9.8 billion in 2007, up from $4.1 billion in 2006. The United States, Russia, andthe United Kingdom collectively made agreements in 2007 valued at over $45 billion, 75.2% of allinternational arms transfer agreements made by all suppliers ( Figure 1 )( Tables 8A, 8B, and 8D ). For the period 2004-2007, the total value of all international arms transfer agreements($208.3 billion) was substantially higher than the worldwide value during 2000-2003 ($147.6billion), an increase of 29.2%. During the period 2000-2003, developing world nations accountedfor 67.7% of the value of all arms transfer agreements made worldwide. During 2004-2007,developing world nations accounted for 67.7% of all arms transfer agreements made globally. In2007, developing nations accounted for 70.5% of all arms transfer agreements made worldwide( Figure 1 )( Table 8A ). In 2007, the United States ranked first in the value of all arms deliveries worldwide , makingnearly $12.8 billion in such deliveries or 41.3%. This is the eighth year in a row that the UnitedStates has led in global arms deliveries. Russia ranked second in worldwide arms deliveries in 2007,making $4.7 billion in such deliveries. The United Kingdom ranked third in 2007, making $2.6billion in such deliveries. These top three suppliers of arms in 2007 collectively delivered nearly$20.1 billion, 64.8% of all arms delivered worldwide by all suppliers in that year ( Figure 2 )( Tables9A, 9B, and 9D ). The value of all international arms deliveries in 2007 was $31 billion. This is a decrease inthe total value of arms deliveries from the previous year (a decline from $33.6 billion). The totalvalue of such arms deliveries worldwide in 2004-2007 ($134.9 billion) was lower than the deliveriesworldwide from 2000-2003 ($143.6 billion, a decline of nearly $10 billion) ( Figure 2 )( Tables 9Aand 9B )( Charts 7 and 8 ). Developing nations from 2004-2007 accounted for 64.7% of the value of all internationalarms deliveries. In the earlier period, 2000-2003, developing nations accounted for 65.1% of thevalue of all arms deliveries worldwide. In 2007, developing nations collectively accounted for55.6% of the value of all international arms deliveries ( Figure 2 )( Tables 2A, 9A, and 9B ). Worldwide weapons orders increased in 2007. The total of nearly $60 billion was an increasefrom $54.9 billion in 2006, or 9.2%. Global arms agreement values for the other years covered hereranged from $48.7 billion in 2005 to $32.6 billion in 2003. Of the major arms orders secured in2007 most were made by the traditional major suppliers. In some instances these orders representedsignificant new acquisitions by the purchasing country. In others they reflected the continuation oracceleration of a longer-term weapons-acquisition program. The increase in new weapons sales can also be explained, in part, by the decision of somepurchasing nations to acquire major systems they had deferred buying due to budgetaryconsiderations. Some nations were completing the integration of major weapons systems they havealready purchased into their force structures. Some of the growth in arms transfer agreements morerecently also reflects contracts related to training and support services, as well as upgrades ofexisting weapons systems. Individual orders such as these can be expensive, and in given instancesprove to be nearly as costly as orders for new units of military equipment. Because the international arms market continues to be intensely competitive, severalproducing countries have focused sales efforts on prospective clients in nations and regions whereindividual suppliers have had competitive advantages resulting from well-establishedmilitary-support relationships. Arms sales to new NATO member nations in Europe to support theirmilitary modernization programs have created new business for arms suppliers, while allowing theseNATO states to sell some of their older generation military equipment, in refurbished form, to otherless-developed countries. There are inherent limitations on these European sales due to the smaller defense budgets ofmany of the purchasing countries. Yet creative seller financing options, as well as the use ofco-assembly, co-production, and counter-trade agreements to offset costs to the buyers continue tofacilitate new arms agreements. It seems likely that the United States and European countries orconsortia will compete vigorously for prospective arms contracts within the European region in theforeseeable future. Such sales seem particularly important to European suppliers, as they canpotentially compensate, in part, for lost weapons deals elsewhere in the developing world that resultfrom reduced demand for new weapons. Developed nations continue their efforts to protect important elements of their nationalmilitary industrial bases by limiting arms purchases from other developed nations.