Will the U.S. Send $4 Billion and Boeing's ScanEagle Drones to Iraq?

ScanEagle. Photo: Boeing. 

In 2013, more than 8,000 Iraq civilians lost their lives. That's the highest level of violence since 2008, and it represents a troubling turn in the Middle East -- namely, that Al Qaeda-affiliated militants are gaining territory in western Iraq and Syria.

In response to this growing threat, the U.S. promised more than $4 billion in foreign military sales to Iraq. Further, this sale may include a number of Boeing's (NYSE: BA  ) ScanEagle drones. Here's what else you need to know.

Escalating unrest
The Middle East has been a hotbed of unrest for a long time; however, over the past few years President Obama has generally praised Iraq for its growing stability. Unfortunately, that trend changed a few months ago, as militant groups found a foothold in Syria and began pushing their way into Iraq.

ScanEagle. Photo: Boeing.

In fact, the Los Angeles Times reported, "Kenneth M. Pollack, a former U.S. official and longtime Iraq analyst, told a House committee this month that violence in Iraq was 'multiplying by orders of magnitude,' and that the country was on a pace to double its civilian deaths in 2013 compared with 2012." None of this is good news, and is especially troubling given America's recent War on Terrorism. So, to help counter this threat, the Obama administration has begun sending weapons to the Iraqi government. And one of the requested items is ScanEagle drones.

Seek, but not destroy
So far, the U.S. hasn't sent the requested drones to Iraq, but it seems highly likely that it will. Unlike General Atomics Predator Drone, the ScanEagle isn't armed. Moreover, as Boeing reports, the ScanEagle is ideal for loitering "over trouble spots and provide intelligence, surveillance and reconnaissance (ISR) data, or communications relay."  This will help Iraqi forces locate terrorist groups, and hopefully stem the growing tide of violence.

This also represents why defense contractors, like Boeing, make great long-term investments. It's an unfortunate fact that the world is a violent place, and defense companies provide something that's always in demand -- military assets. In this case, hopefully the military assets will be used to save civilians' lives.

What to watch
The growing civilian death toll in the Middle East is horrible, but hopefully, the recently acquired U.S. aid will help put a stop to it. Moreover, while the potential sale of ScanEagle drones isn't a significant source of revenue for Boeing, it does highlight why defense giants like Boeing make ideal long-term investments -- as of its third-quarter report, Boeing had a $70 billion defense, space, and security backlog, and 38% of that was from international orders. Consequently, if you're looking for a buy-and-hold company, you might want to take a look at defense contractors.

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