Geoff FordenDialing for Proliferation Dollars

Proliferation for profit is in the air. You can hardly turn on your TV or radio without seeing David Albright talking about his excellent new book, “Peddling Peril.” I have long advocated thinking about proliferation as a business and applying the results of research on the diffusion of technology to understanding how countries get the infrastructure and know-how for making WMD and the means to deliver them. As such, it would be nice to understand the amount of profit a proliferation profiteer like A. Q. Khan or North Korea makes on selling various technologies the world would rather see end. If we could understand the amount of profit to various forms of proliferation, say selling missiles vs. missile factories, we might be able to understand how the nature of proliferation is changing.

Unfortunately, it is very hard know the profits associated with any given sale or even industry. It is even hard to get firm numbers of the gross transaction much less the profit made. I have tried to assemble a collection of prices for various missile component, system, and production plants that can be used to give a feeling for the order of magnitude of the problem. The ones I feel relatively confident in are shown in the table below. Prices have been adjusted to be in 2010 dollars.

Missile Component/System/Plant Price (in 2010 Dollars)
1 Iraqi Badr-2000 missile $9,900,000
1 SCUD-B plus TEL $220,000
SA-2 Sustainer Engine $14,000
Badr-2000 Factory $185,000,000

The Badr-2000 was a virtual missile sold to Iraq in 1984 by a consortium of countries that were hoping to use Iraqi financing to develop a missile that was being sold by as “equivalent to the Pershing II.” Since the Badr-2000 was never actually built, it is possible that these numbers are unrealistic, though you could make an argument either way as to whether the actual price would be more or less expensive. It does establish a ball park number for a sophisticated, long-range missile production facility. The number I am using for the SCUD-B comes from reports on what a “collector” in the US is reported to have paid for a fully militarized missile and it’s TEL. It is hard to imagine this collector paying less than the price of such a deal would be on the “open” market. Nevertheless, I would love to have other examples of SCUDs being sold to check this. (Hopefully without the TEL. Of course, any well documented numbers for missile prices in the developing world would also be greatly appreciated.)

Let’s try using this table on a media report from 1992. Bill Gertz reported on March 10th of that year, that North Korea shipped a complete ‘SCUD’ factory to Syria for a reported $300 million. (Again, this is in today’s dollars.) Of course, this was about the time that North Korea was shipping Nodong factories to Syria, Iran, and Pakistan so it seems quite possible that this was actually a Nodong factory. The “misidentification” is, of course, quite reasonable since Nodongs hadn’t become as well known as they are now. Also, they are, after all, derived from SCUD technology. But the point I want to talk about is: how believable is this price? Comparing it to the Badr-2000 factory complex, it seems too high. After all, the Badr-2000 was supposed to be a very sophisticated missile with both solid- and liquid-fueled stages.

I am, however, inclined to believe it as a ballpark figure though not enough to include it in my table. If true, it would seem that today’s market is willing to pay a premium for the know-how to build a larger, more powerful missile. If we consider the costs to North Korea in developing the production line to be sunk costs, then this know-how is pure profit. This might explain why North Korea is willing to sell factories to proliferators as opposed to insisting on selling missiles. Of course, there are a number of other reasons for selling factories (with a “small” number of example missiles). For instance, it is possible that North Korea is doing exactly what Iraq’s Badr-2000 suppliers tried to do: get other countries to pay for the missile’s development.

Note Added:
“Know-how” is a technical trade term that refers to a written description of the product and process for its manufacture. Wikipedia has an article on it though they seem to also include the tacit knowledge needed to operate the machines. I disagree with that somewhat since all the contracts that I have seen have made a distinction between know-how and training.

Comments

  1. James (History)

    I disagree with your assertion that the 300 million for a missile factory is “pure profit.” I presume that they would have to deliver the tooling for that and producing this tooling would require the diversion of industrial resources that might have been used for other things. Unless, of course, they are decommissioning an existing plant and selling it secondhand.

    It seems more likely to me that North Korea prefers to deliver whole plants because the tooling is plausibly dual use and less likely to be intercepted en route.

    I also think it’s very possible that the collector paid less than the open market rate for a SCUD. It may have been stolen, in which case the collector got a five-fingered discount.

  2. simorgh (History)

    Steven Zaloga puts the export price of a Scud-B missile in the late 1980s at one million dollars (Scud Ballistic Missiles and Launch Systems 1955-2005 p.39)

    Regarding the Syrian factory, I don’t think it was a Nodong factory. Due to its proximity to tiny Israel Scuds are pretty much sufficient for them. They have acquired a number of Nodongs later on, so they can reach Irael even from within the most Northern parts of their country but in general the Nodong is a bit of an overkill.

  3. Geoff Forden (History)

    James,

    I said transferring “know-how” was pure profit, though perhaps I didn’t fully explain what “know-how” is. Let me take this opportunity to clarify it. The phrase is a standardized trade term that means a written description of the product and the process for manufacturing it. Today, that could all be contained on a 25 cent CD so ignoring the cost of FedExing it (and the 25 cents) its pure profit. The cost is less than $300 million but that is a subject for another post.

    I would need to see more evidence than Mr. Zaloga’s book before I believe $1 million for a SCUD. As for $300 million for a SCUD factory. That was one of the reasons I quote the cost of a SA-2 Volga engine: $14,000 (a number I am certain of). That engine and a SCUD simply dont differ all that much so a price of $1 million dollars just seems far too high.

  4. James (History)

    I’m sorry; I was conflating the two paragraphs. You’re right, of course, in that intellectual property is nearly all profit. But on a 300 million dollar factory deal, I think the know-how is really just a tease to sell the equipment. As you say, it’s all sunk costs, anyway.

    North Korea’s decision to sell entire factories may be driven by a cold analysis of the missile market. Proliferating entire factories may make offer less profit than selling individual missiles, but that’s over the long run. Over the short run you make a large profit up front and the problem of the SCUD’s obsolescence is transferred to your customer.

    At the time of the purported Syria deal China was marketing their M-9 and M-11 missiles and Russia’s economic problems seemed poised to release unlimited numbers of aerospace engineers-for-hire onto the global market. The North Koreans may have decided the future value of their SCUD line was declining in the face of Chinese competition. Offering to sell the production capability would seem to be a marketing response to the introduction of a superior product by a rival.

  5. MarkoB

    yes, the nuclear industry is very capital intensive. so there will always be a premium to innovate in order to lower capital costs.

    But lowering capital costs is bad from a non-proliferation perspective.

    Uranium enrichment seems to be peoples exhibit A for the effect. Gas centrifugation and now laser enrichment (i.e. silex) have lowered capital costs but in a way that poses challenges for the non-proliferation regime.

    I’m doing research on this myself, but from the perspective of the economics of externalities.

    I kinda see proliferation as an externality. That’s why we have regulations like safeguards for in a perfectly free market in nuclear technology it would not be rational to factor in proliferation concerns; it’s a cost.

  6. Josh (History)

    Geoff:

    A meaty choice of topic.

    I’ve been doing some research lately into the market for North Korea’s ballistic missile exports – stay tuned! – and wound up not using any of the dollar figures that I came across. The sourcing and accuracy are hazy, and numbers only crop up so often. It’s not so easy to fashion a coherent picture out of these dribs and drabs, so I’ve set this material aside.

    So here, for whatever they may be worth, are the figures that I’ve spotted in assorted reports and documents for various offers, transactions, or expenditures, but not used. Some relate to prices (e.g., what did North Korea or AQ Khan charge for this or that), and some relate to costs (e.g., what did it cost the North Koreans to launch a rocket). I’m sure there’s more out there, yet to be unearthed.

    Caveat lector: Rather than sweat the price deflators, I’ve simply provided the date of publication. (Note that this is not always close to the date of transaction or expenditure!) Shifts in exchange rates are also disregarded, when figures are given in non-USD currencies.

    1. An unknown number of Scud-C missiles from North Korea for Peru.

    Peru, embarrassed by its military’s performance in the recent border war with Ecuador, is secretly negotiating with North Korea to buy Scud-type missiles in what U.S. officials view as a major missile proliferation threat to the Western Hemisphere.
    …U.S. intelligence sources said Peru would spend $52.5 million for the surface-to-surface Scud-C missiles, related equipment and training in their use. The number of missiles being negotiated was not known.
    (Washington Times, Dec. 19, 1995)

    2. Ten Nodong missiles and a Nodong factory for Iran.

    IRAN is about to receive a new North Korean missile that, with a range of 1,300 km., threatens Israel, Egypt, and other countries, according to the Italian newspaper Corriere Dela Sera….
    Corriere Dela Sera said that a secret agreement, signed in November 1992 in Teheran by several Iranian and North Korean generals, states Iran will help North Korea complete the missile’s developement by providing more than the $50 million already invested in the project.
    In return, the newspaper said, North Korea will give Iran the first 10 missiles by April. After the first shipment, Iran agreed to pay an additional $70 million to receive the technology needed for building an Iranian missile factory in Isfahan or Hasmanan.
    (Jerusalem Post (Israel), March 25, 1993)

    3. Ten Nodong missiles and a Nodong factory for Pakistan.

    [Malik] Did you go to North Korea in 1994?
    [Khan] Yes, I had a visit to North Korea to discuss missile technology. Then the North Koreans came to Pakistan and received money from Benazir Bhutto so that we could start the missile program.
    [Malik] How costly was the deal?
    [Khan] It was not that costly; I think it was hardly worth $50 million.
    (Aaj News Television (Pakistan), Aug. 31, 2009)

    And:

    Khan said [in a written statement from late 2003 or early 2004] he negotiated the purchase of 10 Nodong missiles and related technology for $150 million after visiting North Korea in 1994 at the request of Benazir Bhutto, then Pakistan’s prime minister, and top army officials. “As a result of this deal, 10 North Korean experts came to Kahuta and were housed within the complex,” Khan said, referring to the city in northeastern Pakistan where his laboratory is situated.
    (Washington Post, Dec. 28, 2009)

    4. Downpayment on a Nodong factory for Iraq.

    [In 2001], the goal was to obtain a full production line to manufacture, under an Iraqi flag, the North Korean missile system, which would be capable of hitting American allies and bases around the region, according to the Bush administration officials….
    In return for a $10 million down payment, Mr. Hussein appears to have gotten nothing.
    (New York Times, Dec. 1, 2003)

    5. North Korean missile sales – numbers and types not stated.

    North Korea is believed to have exported missiles worth $580 million to Pakistan, Iran, Libya, Syria, Egypt, Yemen and the UAE in 2001, the US military said today.
    (Associated Press, May 13, 2003)

    6. A shipment of conventional weapons from North Korea to Iran:

    Thai officials impounded the Ilyushin Il-76 transport plane when it landed in Bangkok on Saturday to refuel, and discovered what they said was 35 tons of explosives, rocket-propelled grenades, components for surface-to-air missiles and other armaments – exported in defiance of a U.N. embargo against North Korea.
    Col. Supisarn Bhakdinarinath, head of the Thai police inspection team, estimated the value of the weapons at about 500-600 million baht ($15 million-18 million).
    (Associated Press, Dec. 15, 2009)

    7. North Korean weapons sales over long periods.

    North Korea sold approximately $800 million in weapons to countries in the Middle East and Southeast Asia from 1991 to 1998, according to a material that the Ministry of National Defense presented to the National Assembly to be used for the National Assembly’s inspection of state affairs. The weapons sold were, mostly, Scud missiles, anti-aircraft artillery weapons, multiple rocket launchers, mortars, and AK rifles….
    Meanwhile, North Korea exported an average of approximately $50 million in weapons a year for the past three years. This accounts for 7.1 percent of the total exports. It shows that the weapons exports are a mainstay for the North Korean economy.
    (Hankyoreh (South Korea), Sep. 28, 1999)

    And:

    South Korean and U.S. intelligence agencies believe the North exported some US$800 million worth of weapons including missiles, submarines, multi launch rockets and field artillery to Iran, Syria and Burma between 2000 and last year.
    (Chosun Ilbo (South Korea), Jun. 29, 2009)

    And:

    A source close to North Korea issues said, “North Korea’s weapons exports have surpassed 100 million U.S. dollars this year, more than doubling from last year.” The exports approached 100 million dollars last year, and are expected to near 200 million dollars this year, the source added.
    (Dong-A Ilbo (Sourth Korea), Dec. 17, 2009)

    8. Scud-B missiles from Libya.

    Libyan leader Mu’ammar al-Qadhafi demanded from the United States to buy from him all his 417 Scud missiles at $2 million apiece, according to secret reports reaching the senior political level in Jerusalem in recent days.
    According to these reports, it seems that the question of disarming Libya of its missiles has not yet been solved. The Americans initially sought to buy 10 missiles to be used in tests, but the Libyans seized the opportunity to demand from them to buy all the 417 missiles in their possession at the astronomic total of $834 million.
    (Yediot Achronot (Israel), Feb. 1, 2005)

    9. Estimated costs of North Korea’s 2009 missile and nuclear tests.

    [Lee Dok-joo, professor of aerospace engineering at the Korea Advanced Institute of Science and Technology] estimates the cost of a satellite at $100 million, in addition to between $200 million and $300 million for the rockets or missiles needed to send it into space. “There is some mystery” about the North Korean launch, he says, but believes “they built a dummy to save money.”
    (Christian Science Monitor, April 7, 2009)

    And:

    IMPOVERISHED North Korea has spent an estimated $US700 million… this year on nuclear and missile tests, enough to solve its food shortage for at least two years, South Korean news reports say.
    The figure includes the estimated $US43 million… cost of test-firing five Scud and two Rodong missiles on Saturday, according to unidentified government officials quoted by Chosun Ilbo newspaper….
    Officials quoted by Chosun estimated it cost $US300 million… to launch a long-range Taepodong-2 missile on April 5, and another $US10 million… to launch 10 short-range missiles in recent weeks.
    In addition, they estimated the May 25 underground nuclear test – the country’s second since 2006 – cost between $US300 million to $US400 million…
    JoongAng Ilbo gave similar figures. Neither paper gave the methodology for the cost calculation.
    (Courier-Mail (Australia), Jul. 6, 2009)

    10. Costs associated with Pakistan’s nuclear weapons program.

    Moreover, Munir Ahmed Khan, the PAEC Chairman had a meeting with Prime Minister Zulfikar Ali Bhutto on February 15, 1975. At this meeting, Munir Khan sought the formal approval from the government for a $450 million nuclear weapons programme that involved (a) the building of a centrifuge plant for the enrichment of uranium, (b) the development of a uranium mine at Baghalchor in Dera Ghazi Khan (BC-1), and (c) the inception of a nuclear weapons design programme led by Dr. Riazuddin of the PAEC. He obtained the government’s approval and the uranium enrichment programme was formally launched under the name ‘Directorate of Industrial Liaison’ in the barracks of Chaklala airport under the leadership of the nuclear engineer Sultan Bashiruddin Mahmood who, under the direct supervision of Munir Ahmad Khan formed the team that started R & D on uranium enrichment and centrifuge development. [xix]
    [xix] Shahid-ur-Rehman, “Long Road To Chagai”, (Islamabad: 1999, Print Wise Publication), p.50
    (M.A. Chaudhri, “Pakistan’s Nuclear History: Separating Myth From Reality,” Defence Journal, May 2006)

    And:

    [On the centrifuge enrichment program at Kahuta, starting in the mid-1970s]
    [Malik] Where will the funding come from?
    [Khan] We had very limited funds. I had written an article to tell that it was not an expensive program. Our annual budget was just $20-25 million, with the help of which we searched a location for the program and sketched out a detailed map of the construction site. We purchased land from the local people. We hired scientists for the program and started purchasing the required material from abroad and so on. Our total budget for 25 years was less than half the amount of 58 billion rupees given as loan by the previous government and which Pervez Musharraf had decided to write off in the end.
    (Aaj News Television (Pakistan), Aug. 31, 2009)

    And:

    To solve his dilemma, [ca. 1975], Pakistan’s nuclear spy [A.Q. Khan] set out on a search for suppliers. At Leybold Heraeus in the German city of Hanau, a global leader in vacuum technology, Khan found what he was looking for in a young engineer, Gotthard Lerch. Lerch soon attracted the attention of German export inspectors, who wanted to know what he was doing in Pakistan. He admitted that Leybold Heraeus had shipped valves, vacuum pumps and a gas purification system worth 1.3 million German marks to Pakistan.
    (Der Spiegel (Germany), Mar. 13, 2006)

    And:

    Pakistan had to spend a period of 10 years and an amount of 300 million U.S. dollars to get it.
    (“Project A.B.” sales document found in Iraq, dated to 1990, via ISIS)

    11. Price of the AQ Khan network’s services.

    Now with the practical experience and world-wide contacts Pakistan has already developed, you have have A-B in about three years time and by spending about 150 million U.S. dollars.
    (“Project A.B.” sales document found in Iraq, dated to 1990, via ISIS)

    And:

    During investigations, BSA TAHIR alleged that his involvement with the nuclear expert started sometime in 1994/1995. That year, the latter had asked BSA TAHIR to send two containers of used centrifuge units from PAKISTAN to IRAN. BSA TAHIR organized the transshipment of the two containers from DUBAI to IRAN using a merchant ship owned by a company in IRAN. BSA TAHIR said the payment for the two containers of centrifuge units, amounting to about USD$3 million was paid in UAE Dirham currency by the Iranian.
    (Press Release by Inspector General of Police, Polis Diraja Malaysia, Feb. 20, 2004)

    And:

    The [CIA] report concluded that North Korea probably received a package very similar to the kind the Khan network sold to Libya for more than $60 million — including nuclear fuel, centrifuges and one or more warhead designs.
    A senior American official described it as “the complete package,” from raw uranium hexafluoride to the centrifuges to enrich it into nuclear fuel, all of which could be more easily hidden from weapons inspectors than were North Korea’s older facilities to produce plutonium bombs.
    (New York Times, Mar. 14, 2004)

    And:

    According to Tahir’s testimony to the German investigators, large chunks of which remain classified, Libya spent $85 million with the Khan network — Tahir himself received payment.
    (Der Spiegel (Germany), Mar. 13, 2006)

    12. Compensation received by members of the A.Q. Khan network:

    Lerch, in pre-trial detention in Mannheim, allegedly worked for Khan as something of a division manager for the Libyan business – with responsibility for South Africa as a production site. According to the investigation conducted by the Mannheim district attorney’s office, Lerch received 55 million German marks for his services for a total profit of some 25 million marks….
    The authorities caught up with Gotthard Lerch, who Tahir calls his “main contractor,” in Switzerland. They also arrested members of the Tinner family — Friedrich Tinner and his two sons, Urs and Marco — all on the suspicion of having built parts for Gadhafi’s nuclear weapons program in return for 15 to 20 million Swiss francs. South African authorities captured German engineer Gerhard Wisser, who confessed to having collected €850,000, although after questioning Tahir, German authorities believe that Wisser may have earned as much as €10 million on the deal. Finally, Swiss authorities arrested Wisser’s right-hand man, Swiss citizen Daniel Geiges, who broke his long silence for the first time last week….
    Tahir was one of the first one named. He claimed that Lerch signed an agreement with Khan in 2000, which guaranteed him a payment of 55 million German marks — an estimated 30 million marks for the project and 25 million marks for himself.
    (Der Spiegel (Germany), Mar. 13, 2006)

  7. Hairs (History)

    Geoff, Josh,

    Is a Scud sufficiently comparable (technologically) to some older missile from France, UK, USA? If so then maybe it’s possible to use actual prices from these countries’ historic defence budgets to put some bounds on what it costs to produce a Scud. Admittedly production technologies have moved on since a few decades ago, but I’m guessing that the answer may still be within a factor of five or so. I suppose if one knew how much skilled labour it takes to build a Scud then – on the assumption that material costs remain about constant relative to the rest of the economy – it might even be possible to refine the estimate using a labour-cost price escalation.

    Missiles are out of my expertise, but it would certainly be handy if there were some way to reject patently implausible reported values in Josh’s summary, and then maybe just average the rest.

  8. Geoff Forden (History)

    Hairs,

    Unfortunately, being within a factor of five isn’t very useful. It wouldn’t, for instance, see any difference between the $220 K for a SCUD that I derive from reports about what a California collector paid for a SCUD (and TEL) and the $1 million quoted in the Zaloga book. However, all the other numbers in my table have a high level of confidence.

    The problem with some of the numbers Josh has quoted is that it is uncertain exactly what is being referred to. Take the Khan $50 million. He says it was for “technology.” That could mean for know-how. If so, it is probably fairly reasonable. That implies that Pakistan thought it was sufficiently familiar with production processes etc that it could design its own production line. Pakistan (and India) did almost exactly that when they licensed solid propellant technology from France for producing sounding rockets. In that case, however, France did supply a list of production equipment to be used as well as a list of suppliers for that equipment. That too, might be possible for North Korea to do and to include in “know-how.” (I think this is what proliferation will look like in the future, but again, that is the subject for a future post.) Then again, Khan could have meant production equipment when he said “technology.” In that case, it is unreasonably low. It is that ambiguity in many of these reports that makes them hard to use.

  9. Josh (History)

    I’d be careful to distinguish the manufacturer’s costs from the buyer’s price. As we see in the Khan network examples, as in economic life more broadly, there can be considerable mark-up. But we can at least see what’s in the ballpark.

    Somewhere out there, there are bound to be price lists issued by the North Koreans, just as there were quotes issued by Khan. But I wouldn’t know where to look to find those.

    Re: Khan, I omitted one of the more interesting details from the “Project A.B.” document that appears on the ISIS website: $5 million for a bomb design!

  10. Josh (History)

    Here’s another item of interest:

    North Korea has sold at least 490 Soviet-style Scud missiles to Pakistan, India and Middle Eastern countries since 1991, a South Korean scholar said Wednesday.
    The sales have earned the Asian country $ 1 billion a year in badly needed cash, said Kim Chul-hwan, a professor at the Korean National Defense University.
    “North Korea builds missiles for exports,” he said at an international seminar.
    Washington has identified North Korea as the world’s No. 1 exporter of missile equipment and technology.
    This week, the North’s communist government pledged to freeze testing of its long-range missiles during talks with the United States on improving relations.
    Kim said North Korea completed plants in 1991 that enable the country to produce up to 150 Scud-B and Scud-C missiles a year.
    So far North Korea has sold 160 Scud-Bs to Iran, 100 to Iraq and 18 to the United Arab Emirates, Kim said. The Scud-B is believed to have been modified from the old Soviet design and to have a range of 210 miles, the distance between New York and Washington, D.C.
    Syria has bought 150 North Korean Scud-Cs, which have a range of 341 miles. Iran bought 42, and India bought 20, Kim said.
    Since 1996, the United States has held a series of talks with North Korea on curbing its development and export of missiles. North Korea has rebuffed U.S. demands, saying self-defense is the inalienable right of any sovereign nation.
    It reportedly has demanded $1 billion annually for three years in return for stopping exports of missiles and missile technology.
    (Associated Press, Sep. 15, 1999)

  11. Geoff Forden (History)

    Josh,

    Thanks very much for your thoughtful and very informative comments. I look forward to the publication of your study on North Korea’s role in missile proliferation around the world. It will be an important contribution to the field on proliferation studies.

  12. Rubin (History)

    North Korea has sold at least 490 Soviet-style Scud missiles to Pakistan, India and Middle Eastern countries since 1991, a South Korean scholar said Wednesday.

    India did not buy a single missile from North Korea. It already had the indigenously-built Prithvi missile.

    Politically speaking, missile proliferation provides the leverage for North Korea against the US. This kind of leverage has usually been in the hands of USA, Russia & China. It forces the USA to play nice with North Korea.

  13. George William Herbert (History)

    It’s almost impossible to figure out what “the cost” is to manufacturers of the missiles – labor rates vary so much, absent active commercial efforts to amortize capital and industrial investment the overhead to be applied per unit is often unknown, etc.

    The experience from the Russians entering the space launch market pretty much made it clear that the costing / pricing for non-fully-commercial parties is essentially monopoly money. Someone’s getting paid, but you need to see the full books and understand all the system effects with the way that nation’s economy is managed to see what’s really going on.

  14. James (History)

    Well, they haven’t necessarily been playing nice, but the point is taken: not all proliferation is for money. If you want to keep the firemen busy, you set lots of fires. Sharing the weapons creates a global constituency that opposes non-proliferation efforts, which can be priceless in itself. In such cases the money exchanging hands is a mere formality based on the presumed ability to pay, the desire of the seller to attach the buyer politically or economically, and the marginal strategic value of the weapons themselves, rather than their marginal production cost.

    Analyzing the sale of major weapons as a purely free market may not be entirely useful. In far more open exchanges of advanced weapons there are frequent accusations of unfair competition, politicization, and bribery. Have we become so cynical that we now believe the North Koreans and Syrians are more logical and professional in their arms deals than we are?

  15. Rubin (History)

    The missiles are almost never delivered on a standalone basis. They are usually part of a defense package (like US) or a barter for another technology (North Korea & Pakistan).
    The money exchange is the difference between the value of the exchanged commodities.

  16. Geoff Forden (History)

    Rubin,

    Even if that were true, which it is not, they would still have a price both sides agreed to. Otherwise, they would always be trying to solve questions like “How many oranges for a SCUD?” Money is a very useful concept, even when it is totally abstract.

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