I agree with much of what you say. On the one hand, I'd love to see a decline in US arms sales to foreign powers, but as many others here have pointed out, there would likely be some serious repercussions to such a move and it'd be irresponsible to make hasty decisions, lest we inadvertantly create a whole new set of nasty problems.

I've read recently that China is a rather eager seller in the international arms biz. If we were to unilaterally cut our arms sales and let China (or anyone else, for that matter) pick up the slack, in practical terms what have we accomplished except to throw Americans out of work and enrich Chinese industry? It could stand as an ethical statement, but it'd be anyone's guess as to whether it would have any sort of real impact. I think what we really need is a coordinated international effort to reduce arms sales, not a unilateral move. Otherwise, in the end, we've really accomplished very little. Such a multinational effort would probably take a long time to pull together, and could very well simply fail.

As far as cultivating enemies (real or imagined) as a political or economic tool, I don't think our government (past or present) can even begin to hold a candle to the Arabic dictatorships, who've honed it to a very fine art. Some people like to talk about the west's "Crusader mentality," suggesting we have some sort of inhbred need to war with Islam. Nonsense. Modern history has seen a west that's been remarkably supportive (in every sense of the word) of the Muslim world (noting that the Muslim world vastly transcends the Arab world). It's the Arabic world, on the other hand, that's been inculcated with the most stunning and irresponsible lies about how the west has systematically suppressed their aspirations. If we ever do see a general conflict between the west and Islam (Allah forbid), it'll be the enormous lies of the Arabic elite that will bear no small responsibility.

This is one big reason why a free Iraq could be an historical lynchpin. A flourishing, democratic Iraq could be instrumental in ending the great lie of the Arab dictatorships.