Lockheed Flies Into the Twilight Zone

It's been more than a year since cries of "whose side are you on?" broke out at the Pentagon, over a plan to help Iraq buy new military helicopters. Problem was, the helos in question weren't Hueys from Textron (NYSE: TXT  ) , nor Black Hawks from United Technologies (NYSE: UTX  ) -- but Russian-made Mi-17 "Hips" from Rosoboronexport.

At the time, I said the decision seemed a bit strange, seeing as we had recently finished fighting our second war against a Russian-armed Iraqi army. Then again, considering we won those wars, maybe keeping Iraq's arsenal well-stocked with second-rate Russian military hardware is a good idea -- in case we ever have to fight round three. It would be much easier dealing with that stuff, than with the 140 M1A1 Abrams main battle tanks that General Dynamics (NYSE: GD  ) sold Iraq last year. Worse, in this week's edition of Surreal Defense Contracting news, it seems Iraq's next big weapons contract is going to be for three dozen Lockheed Martin (NYSE: LMT  ) F-16s, an effort the Pentagon hopes will help Iraq better contain militant neighbor Iran.

Foolish takeaway
Flush with billions of dollars of oil revenues, Iraq is evolving into a major patron of America's beleaguered military-industrial complex. This latest deal will be worth perhaps $8.4 billion to Lockheed, and is good news for shareholders.

Is using foreign weapons sales to prop up American defense contractors good policy? Or are we risking "blowback" akin to U.S. support for Iran's shah in the 1970s? Tell us what you think, below, and add Lockheed to your Fool Watchlist to see whether this deal goes through.

The Motley Fool owns shares of Textron, General Dynamics, and Lockheed Martin.

Fool contributor Rich Smith does not own shares of (or short) any company named above. The Motley Fool has a disclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


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