In its annual study made available Monday, the Congressional Research Service said global arms sales had fallen dramatically since the beginning of the millennium due primarily to an economic slowdown and consequent austerity policies adopted by leading arms buyers around the world.

International arms agreement values have decreased from 41 billion dollars in 2000 to 25.6 billion last year, affecting all the major suppliers, including the United States, Russia and Western Europe.

While Americans continued to lead the world in arms sales, raking in 14.5 billion dollars in signed agreements in 2003, their sales to the developing world fell from 8.9 billion dollars in 2002 to 6.2 billion last year, the study found.

Russia still remained in second place, but its arms exports plummeted from nearly six billion dollars two years ago to 4.3 billion in 2003.

Germany ranked third with worldwide weapons exports reaching 1.4 billion, but it registered practically no new arms orders from the developing world last year. The collective share in that market of four leading West European suppliers -- France, Britain, Germany and Italy -- shrank from 6.5 percent in 2002 to 5.8 percent, according to the report.

All in all, the United States now controls 45.4 percent of the arms market in Asia, the Middle East, Africa and Latin America while Russia has a 23.4-percent share.

Congressional researchers say international arms merchants see an answer to their woes in former Warsaw Pact nations that have joined the transatlantic alliance over the past decade.

The Western bloc now has 26 members, including 10 new arrivals that will have to undergo rapid modernization of their forces in order to meet NATO requirements.

That overhaul offers "the potential" for increased arms sales to the region -- as well as new rivalry between the United States and its major allies, warned the congressional report.

"It seems likely that competition will continue between the United States and other European countries or consortia over the prospective arms contracts within the European region in the years ahead," it predicted.

The United States already secured a 3.5-billion-dollar deal last year for the sale 48 F-16 fighter jets to Poland. Germany, meanwhile, persuaded Greece to buy 170 Leopard main battle tanks for 1.7 billion dollars.

These sales, experts say, are likely to mark the beginning of a frenzied scramble over the emerging Eastern European market, particularly in light of the fact that weapons sales elsewhere were not expected to rebound soon.

"In the short term, that trend is going to continue given the lack of a major threat that stimulates the kind of concerns and anxieties" that pushes governments to buy weapons, said a US official closely monitoring arms exports.

The official, who spoke to AFP on condition of anonymity, said the 2003 US-led invasion of Iraq has had a cooling effect of the arms market in the Gulf region, with Saudi Arabia reducing its arms purchases 43 percent, to 3.4 billion dollars, over the last three years.

This softening of the market, said the official, can be explained by the removal of Iraqi leader Saddam Hussein, a major local irritant, as well as expectations that US and British forces will probably remain in Iraq for the foreseeable future, thus forestalling the emergence of any unexpected new power players.

The report said East Asia, led by China and India, now accounted for more than half of arms sales to the developing world. But Russia worked aggressively to corner that market, securing 16.5 billion dollars in regional sales, or nearly 49 percent of the total, over the past three years.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.