Implications of JASTA on the U.S. Defense Industry

When Donald J. Trump is sworn in as America’s forty-fifth president, a slew of foreign and security issues will be front and center in the Oval Office. Not receiving enough attention however is the pre-presidential election Congressional legislation, Justice against Sponsors of Terrorism Act (JASTA). The House and Senate buried their partisan politics and overrode U.S. President Barack Obama’s veto of JASTA, which allows 9/11 victims to sue Saudi Arabia’s government for the Kingdom’s alleged involvement. The implications for the defense industry are paramount.

Already, there are voices saying that Saudi Arabia is threatening to launch ARAMCO’s IPO outside of the United States as a result of JASTA. This sentiment spells out directly the hardships ahead between America and the Kingdom.

Saudi Arabia is on the frontline in the beginning of this long-term legal drama, as JASTA now enables Saudi citizens to sue the U.S. government and its employees in foreign courts. Given the Kingdom’s leading role in the region under the guidance of Saudi King Salman, other Arab countries, specifically those who are partnered with Riyadh in Yemen, could also be part of JASTA’s fallout.  American arms producers may have reason for concern about becoming mixed up in the forthcoming legal drama.

How might this legal action occur?  JASTA risks opening the door for numerous foreign governments to return the gesture by amending their own laws, allowing their citizens to sue the U.S. government and its employees in foreign courts, most likely state security courts. This may envisage defense manufacturers either being hauled into a foreign court, or worse, facing financial or criminal persecution.

States in varying circumstances can change their policies on diplomatic immunity to pursue political aims by arresting American soldiers, intelligence officers, and government officials.  The American defense industry and its personnel are not exempt; If, for example, disagreements break out between the U.S. and Turkey over Ankara’s use of American defense products, Turkey may pursue extraordinary legal measures unilaterally against American personnel with this action perhaps ending up being fought in politicized courts. Other countries can use this example on a case by case basis. In other words, JASTA can backfire in an extremely negative way for Washington now that the U.S. has set the precedent of allowing its citizens to sue foreign governments for the actions of some of their own citizens. That type of action will inevitably cause economic, strategic, and operational disruptions to the overseas operations of U.S. defense manufacturers.

This will cause quite a headache for Washington and even more so for the American defense industry given how active the United States is abroad with everything from drone strikes to foreign surveillance, to the backing of foreign militias. A cottage industry is brewing where foreign law firms are hiring specialists, who have intricate knowledge of warzones and how to conduct forensics on the battlefield, to generate third party non-affiliated after action reports.  These reports can be used in the discovery process in the most liberal of legal systems or in hybrid or authoritarian legal codes that promote the pragmatic application of jurisdictional preferences potentially resulting in harsher outcomes.

Many in the world have seen American action in Afghanistan, Iraq, Libya, Syria, and Yemen as acts of terrorism. The idea that Washington is guilty of destroying the Middle East, and allowing the rise of the Islamic State is prominent. To boot, the notion that American weaponry maims civilians fills conversations and social media. Other examples of perceived U.S. aggression and expansionism include the membership of U.S. citizens in the Kurdish People’s Protection Units (YPG). These Americans joined the YPG at a time when violence between the Turkish military and Kurdish forces was escalating throughout Turkish/Syrian Kurdistan. As the battlefield evolves, these U.S. citizens may find themselves in new, uncharted legal territory if captured or involved in a violent act with American-made weapons either direct from a U.S. allied third party and sent to the warzone. This fact holds true for other Middle East and North Africa (MENA) conflicts with those holding American passports in conflict zones or in key countries where U.S. defense industry representatives live and work.

In an age when America is trying to lead the global fight against terrorism through numerous international organizations and coalitions, JASTA is possibly opening the door to accusations of terrorism flying in numerous directions where sovereign immunity is worthless.  Defense companies who find themselves operating in countries in MENA and the wider region may find that selling weapons will become riskier for their financial operations and their personnel.  It is notable that the British government is reviewing its defense industry sales policy through the annual Strategic Defense and Security Review process because of exactly the reasons spelled out by JASTA’s impact:  British weapons are being sold to Saudi Arabia and killing innocent civilians in Yemen.

While discussion of changing JASTA is being ironed out, the fact remains that foreign countries can establish legal frameworks that target Americans. The exacerbation of the U.S.’ political-military relations with foreign states not only has the potential to reduce arms sales, but also the ability of Washington to ensure long term security and stability. If every U.S. citizen, or employee of a U.S. firm that is engaged in an overseas U.S. government contract is a potential target for politically charged motivations, the U.S. will be forced to retreat its international presence. A similar scenario played out in 2011 when the U.S. pulled out of Iraq; the result was a destabilized Iraq that in turn was infiltrated with Iranian influence and was left so weak that extremists such as the Islamic State could succeed in holding nearly half if its sovereign territory. Could similar scenarios occur in Bahrain, Lebanon, Jordan, or even Saudi Arabia? The Trump Administration will need to focus on how to conduct transactional foreign policy with the protection of the U.S. defense industry and regional security in mind.

Dr. Theodore Karasik and Matthew Hedges are Advisors to Gulf State Analytics, a geopolitical risk consultancy based in Washington, DC.  Dr. Karasik is an adjunct fellow of the Lexington Institute.