Examination of Witnesses (Questions 20
THURSDAY 21 MARCH 2002
MP, MR WILLIAM
20. Can I follow up what Rachel Squire was asking
about? Looking at the Annual Report, it becomes obvious that India
and Pakistan really are two countries for which there has been
a relatively large number of refusals. So it begs the question
in my mind: if you are proceeding on a case-by-case basis, trying
to operate against criteria, but leading to a significant number
of such refusals as compared to any other country. Does that not
indicate that there is a certain lack of understanding on the
part of those in the defence industry essentially on what the
criteria are and how they are being applied? Would it not point
to a moving on to say that there has to be a more consistent position
here, there has got to be something more explicit by way of explaining
the Government's approach to such applications?
(Mr Straw) Mr Dowse has just whispered into my deaf
ear, but I managed to catch it, nonetheless, that quite a lot
of these refusals are for dual use, which by definition are bound
to involve questioning not just about the goods themselves but
also about their use. That is where it becomes rather more argumentative,
although I think the system works very well. At any one time,
the number of refusals as a proportion of the total number of
applications does vary according to local circumstances specifically.
It may be, Mr Lansley, that over a period there are certain lessons
to be drawn about how the criteria are applied or drafted from
a high number of refusals or the need better to brief potential
exporters. I accept that. This whole thing is an iterative process.
It is also a new process and, as I say, it is a remarkable improvement,
I think, on what was there before just a few years ago. There
is a degree of transparency. So we are saying this in an iterative
area where we are developing systems and trying to improve them
all the time.
21. Do you not draw a conclusion from this,
notwithstanding the point about dual use, that in relation to
other countries, where presumably there will also from time to
time be similar proportions of potential dual use items, there
is a particular characteristic in India and Pakistan, even if
they do not necessarily lead to a more explicit position which
I will anticipate in advance. Precisely what mechanism are you
using to make sure
(Mr Straw) There is other background which I can give
you in private session about this. To pick up Rachel Squire's
question, because self-evidently there is potential for conflict
between India and Pakistan, and there has been a significant degree
of tension between the two countries which at any one time has
varied from significant to high and back to significant, we have
to look very carefully at the applications. So I do not think
it is intrinsically a surprise that there is a high proportion
of these countries. Indeed, I think it would be odd if that were
not the case.
22. Could I just ask you, Secretary of State,
in seeking to achieve regional stability and taking into account
that factor when assessing whether you should approve a UK defence
export, do you take into account also the activities of exporters
from other countries who might, in the event of our withdrawing
from that competition, if you like, substitute us?
(Mr Straw) The answer to that is that the criteria
are the criteria. They are laid down and provided by Ministers
but they have been put before Parliament and under the new Bill
there will be a more formal process for their approval, and so
we have to apply them. That, as it were, is that. If you are judging
what is going to happen if you do something, then obviously you
have to take account of the likely possibilities. One of the likely
possibilities, if country X does not make a supply, is that country
Y could. That cannot be a decisive factor in this because on that
basis, since you could always argue that there is always a country
which is going to apply the criteria less stringently than you
or apply no criteria, you end up effectively watering down the
criteria altogether and you are saying that it is the country
whose behaviour is the worst which should dictate the standard
for everybody else. By definition, you cannot do that. This is
a common problem in all areas of international operation, but
within the more reasonable parameters than perhaps the ones I
have described, those possibilities are bound to be taken into
account in judging regional stability.
23. If you take Taiwan, for exampleand
I know we are talking about India and Pakistan herewe have
a ban on aircraft exports but the French are perfectly happy to
do so. I would have thought that would be a rather good market
(Mr Straw) We make our judgments, and this underlines
the point that I made earlier, without going into that detail.
I am not familiar, without looking at my file, with the exports
or non-exports to Taiwan. That underlines the point I make, which
is that, if you have criteria, you have to apply them. However,
there is a background which you need to take into account.
Sir John Stanley
24. Foreign Secretary, in your written answer
on 13 December last year, column 974, you indicated how you were
responding to UN Security Council Resolution 1373 on terrorism
and its implications for the UK Government arms exports policy.
You indicated a number of conclusions by way, in effect, of amendments
to the policy which you had been following previously. The question
I want to put to you is that, having I think entirely sensibly
made a number of changes as far as the UK is concerned, do you
not agree that the existing EU Code of Conduct for arms exports
should not itself be amended quite substantially to take into
account the threat from terrorist organisations like Al-Qaeda,
particularly their evident intention, as has come out from what
has been uncovered in Afghanistan, to try to obtain access to
weapons of mass destruction?
(Mr Straw) The answer, Sir John, is "probably",
and it is something we need to look at. May I make a point about
this, that once 1373 was, as it were, international law, I took
the initiative myself to say that we should review inside the
Department whether the consolidated criteria were consistent with
the obligation in international law imposed on us and every other
member of the United Nations by 1373. I was not certain that they
were. I think this was triggered in my mind by one particular
case that came before me in the subsequent weeks. What I concluded,
in the end, was that the criteria themselves did not need amendment,
for reasons which I set out. I think they are pretty robust. As
I say in the third paragraph of my answer: I believe there is
no need to amend the consolidated criteria for us to comply fully
with the terms of the UNSCR 1373, but I then set out why I thought,
nonetheless, although I was not amending the criteria, I should
draw to the House's attention and to the public attention that
this was an additional factor which we had to take account, although
as it happens I thought the drafting of the criteria was robust
enough for the two to fit together. On the EU point, I will come
back to the Committee and let Mr Berry, if I may, have a letter
about this. It is a point which I have not raised with the EU
and I should have done.
25. It is the EU point I am raising with you
and I just want to put it to you, Foreign Secretary, that the
EU Code of Conduct is very much couched in terms of conventional
weapons and I would suggest we have got to go wider than that
now. We have to take into account the evidence that Al-Qaeda cells
were operating in a number of EU countries, and indeed Al-Qaeda
people have been involved in the campaign in Afghanistan. I believe
there is a total of five British citizens who are in Guantanamo
Bay at the moment, so every country in the EU has a potential
Al-Qaeda dimension. Given also the way in which Al-Qaeda is clearly
thinking in terms of possible weapons of mass destruction, does
this not call quite urgently for a thorough-going look at the
EU Code of Conduct in the light of events since 11 September?
(Mr Straw) In view of what you have said, I will look
at the EU Code. I hear what you said, Sir John. I will give it
a thorough look and report to the Committee about it. Can I ask
Mr Dowse if he has other points to add?
(Mr Dowse) I can just add one or two points. First
of all, so far as the EU Code is concerned, certainly there is
a number of references to the need to guard against diversion
of weaponry to terrorists and issues of that sort. As far specifically
as weapons of mass destruction are concerned, all members of the
EU are members of a number of multilateral export control regimes.
The Australia Group already deals with chemical and biological
material; the Missile Technology Control Regime; and the Nuclear
Suppliers Group. All these international export control regimes
have, since 11 September, been undergoing a process of looking
at their control lists, looking at their aims and objectives,
amending where necessary these lists and aims and objectives,
with a particular focus on the need to guard against terrorism.
They have tended up till now to be focussed on states and the
proliferation and seeking of weapons of mass destruction. They
are now looking as well at the issue of non-state actors, such
as terrorist groups. In that sense, the EU, as members of all
these regimes, is very actively engaged in this.
26. It is not just a question of guarding against
terrorism, but looking at those members of the coalition for whom
one might have a rather warmer response because of the role they
are playing in the current war against terrorism and the criteria
themselves really do not need amending because they are couched
in very general terms. Can the Secretary of State give examples
of areas where countries which are being particularly helpful
in the war against terrorism are likely to have now a warmer response?
One thinks of areas like, for example, Uzbekistan, the Kyrgyz
Republic and Tajikistan, where perhaps the interpretation may
be a little kinder?
(Mr Straw) I do not think, if I may say so with respect,
warmer or kinder interpretations, as it were, because they were
not quite so much on our side, is what is called for. What we
have to have is a consistent application of these criteria and
the EU Code. Where a country itself has changed its own approach,
then for sure the decisions which are likely to follow in respect
of export licences to that country are themselves going to be
changed. They may not be changed from yes to no but if the circumstances
change, then obviously their consideration will change. The best
example of all to give is Afghanistan itself, which moved from
being a pariah in respect of which no arms exports were licensed
by the UK, or most other members of the civilised world, to a
country where we are actively supporting the interim authority.
27. They are awash with weaponry.
(Mr Straw) I cannot recall having received any application
for a licence for them. I was not saying that, but they are awash
with small arms, certainly.
28. Can you bring us up to date on the Tanzanian
Air Traffic Control system? The version that I heard was that
it had been approved on 21 December but there are still reports
in the newspapers about continuing developments. Before we go
on to questions, that would be helpful.
(Mr Straw) Since I rather anticipated, Mr Worthington,
that there might be a question about it, and I am happy to take
further questions afterwards, I have a short statement which I
thought might be helpful to the Committee. Do not take too much
notice of the first sentence. It is not Government policy to discuss
licensing details with the Committee before they have been published
in our Annual Reports nor to comment on individual cases. However,
given the level of interest in the supply of air traffic control
equipment to Tanzania and the fact that information is already
in the public domainput there other than by the British
GovernmentI should like to make a statement on this case.
I can confirm that in December 2001 Her Majesty's Government approved
two licence applications for the export of air traffic control
equipment to Tanzania. These export licence applications were
carefully considered against the consolidated EU and national
export criteria. This included careful consideration of whether
the proposed export could seriously undermine Tanzania's economy
or seriously hamper Tanzania's sustainable development contrary
to Criterion Eight of the consolidated criteria. The Government's
decision to approve the export licences stands. However, this
in itself does not oblige Tanzania to continue with the purchase
and the final decision must be for them. I would just like to
underline two points here. First of all, it is well known to members
of the Committee but I think some members of the public outside
might be forgiven for thinking otherwise: this is not directly
about British Government aid; it is about whether we approve or
not a licence for the sale of an air traffic control system, which
in itself is a private transaction, or would be a private transaction,
between the Government of Tanzania and the contractor, who happens
to be a British contractor. That is the first point. The second
point is: as with all export licences for arms, military equipment
or dual-use equipment, which is what we are talking about here,
this is permissive. It requires nobody to do anything, but if
they want to do it, then they have permission. I will continue
with the remainder of this statement. We have good bilateral relations
with Tanzania. As one of their major development partners, we
remain committed to working with the government to promote growth
and to reduce poverty. Our bilateral development assistance programme
stands at around £65 million a year. This goes towards strengthening
economic and political governance, to improving public services,
including health and education, and in helping to provide key
infrastructure, such as water and roads in rural areas.
29. Can I say how I interpret that? The critics
of the approval of these licences are being proved right by the
reconsideration of that contract for the Tanzanian Government.
The World Bank and the International Civil Aviation Organisation,
both of whom were critical of the £28 million deal when a
£10 million air traffic control system would have been approved
by the World Bank, are edging towards where that is what is going
to occur. Is that a wrong interpretation?
(Mr Straw) It is not for me to make that judgment
in this particular case. What we had to do, Mr Worthington, was
to make a judgment on the basis of our law and our criteria and
that alone for these purposes. There are other decisions which
are made elsewhere within government about this, but this is a
discrete function. I might also add that amongst the other factors
we were able to take into account when a decision was made about
this just before Christmas, as I recall, was the fact that the
HIPC Completion Point had been reached for Tanzania on 27 November
of last year. It had been reached and the IMF had given it at
that point, knowing about this particular proposition. As to value
for money, part of that is set out in the arguments which the
Government of Tanzania made. That is a matter for them, not for
me. There are other matters, Mr Berry, which I am happy to go
into in detail but it would have to be in private session. I will
try and answer other questions.
30. Could I ask a simple question on the use
of the Criterion Eight, and I do not see why this cannot be in
public. Criterion Eight, the so-called development criterion,
specifically refers to taking information from certain bodies
such as the World Bank, and the World Bank is specifically mentioned.
Is it the case that the decision to grant the licence was taken,
having considered the World Bank's view on this issue?
(Mr Straw) Again, in terms of the detail, I would
need to go into the detail when we go into private session, but
in terms of the overall context in which we made our decision,
we had a huge amount of information before us when we came to
make the decision and that obviously included the decisions which
had been made by international organisations. As for the IMF in
respect of the HIPC Completion Point and so far as the examination
by the International Civil Aviation Organisation, we were aware
that from their point of view there was this further examination
that would take place. That was another hurdle, a separate hurdle,
that Tanzania for their own purposes would require to pass. As
I have said, what we had to do was to make a judgment on the basis
of these criteria.
31. You have heard that the view of the International
Civil Aviation Organisation would influence the view of the World
Bank. That was known.
(Mr Straw) Yes. There is a series of different hurdles
32. The International Civil Aviation Organisation
had already pronounced on this particular system that had been
bought and said the system is not suitable to support civil terminal
air traffic control equipment; it was old-fashioned and being
superceded by solid state equipment. There was doubt about the
spares. The point was that additional equipment would be required
to render it useful for civil air traffic control. That is what
the International Civil Aviation Organisation had already said
because Tanzania had gone for a joint military and civil system.
The World Bank had already said that £10 million could buy
what was needed and here was a £28 million system that was
not going to do the job.
(Mr Straw) I can go into more detail about this in
the private session. Our job is not to stand in the shoes of the
Government of Tanzania. They have their own debates about what
system is likely to give them the best value for money, their
own debates about the suitability of this system as opposed to
other systems. That, as I discovered in the course of about three
months whilst I was personally seeing all the papers on this,
is a matter of considerable argument. That is a matter for them.
The question before us was: would this application meet the criteria,
including specifically Criterion Eight? We made a judgment in
respect of that. I believe the judgment was right at the time;
I believe it is right now.
33. I take the point about standing in the shoes
of the Tanzanian Government. Could you explain the 680 procedure,
the Arms Working Party procedure, where government departments
give a nod and a wink to proposals and basically say, "You
will be all right; you will get approval for this" or "you
will not get approval". There have, I think, been thousands
of such 680 proposals over the last 10 years, about five of which
in fact the government has turned down in the end for export licences.
What was said was that the Government had approved this scheme,
had approved the air traffic control system, and that it was there
in crates, having been built on the Isle of Wight at a time when
Ministers were then considering whether to give it approval or
not. That was what the public record was saying. Is that accurate?
(Mr Straw) Tim Dowse will explain the 680 procedure.
(Mr Dowse) On the 680 procedure, that is essentially
an MOD approval which gives an exporter approval to market a system.
It is made very clear when an F680 is issued that approval to
market does notabsolutely and underlinedmean that
a licence will necessarily be forthcoming. It has to make that
very clear because, of course, for many defence exports the marketing
process and the seeking of a contract can take years, and indeed
with the Tanzanian case it took many years to move from the beginning
of the marketing until contract. Circumstances can change in that
time. It is entirely possible that an approval to market may not,
when the time for contract comes, result in approval of a licence.
So it does not carry that implication.
(Mr Straw) Mr Worthington, if you are asking me if
I knew whether or not this was part-manufactured and did I take
that into account, the answer to both questions is "no".
I have no idea whether this equipment had been part-manufactured
and I do not want to know because it is not remotely a relevant
criterion. If a manufacturer, as it were, takes a risk through
an F680, or in any other way, about getting a licence, that cannot
possibly be a relevant consideration for the Committee. We have
to look at the application and then make a decision on the basis
of the criteria.
34. Finally, the point is that you say that
the Government takes into account sustainable development criteria,
Criterion Eight, and here is a situation of an air traffic control
system which would take one-third of Tanzania's education budget
in a country that was subject, as you say, and the government
came to realise, to the HIPC procedure. The fact is that it had
already in effect been approved, is it not?
(Mr Straw) That is not the case. I am sorry, it is
simply not the case. Whatever side of the argument you may be
on, let us be clear about this, that neither I nor any other Minister
is going to get involved in a process which is a charade, and
neither was I. There was no question in the consideration that
was given to this but that we sought to apply the criteria. Mr
Worthington, I am not going to be party to a set of circumstances
of licensing where an additional criterion not made available
to Parliament is introduced, namely that the company has already
spent some money and they would like to sell them, because that
is not the criterion and it would wreck the whole system.
35. Foreign Secretary, can you give me an example
where Criterion Eight has been the ground on which an export licence
has been turned down?
(Mr Straw) I will, with notice; I am very happy to
do that. I gather the answer is that there has not been. Mr Worthington,
that does not mean that the criteria are not criteria that are
worth having, not remotely.
36. Her Majesty's Government is, of course,
a collective government and it would therefore be reasonable to
infer that it is the decision of the Secretary of State for International
Development to suspend bilateral development aid to Tanzania pending
Tanzania's decision as to whether or not they wish to pursue this
(Mr Straw) We are indivisible in government.
37. Secretary of State, could you tell us at
what point ECGD support for this project was given?
(Mr Straw) I have no idea and it is not a relevant
criterion, with respect. I have not the faintest idea.
38. The point I am getting at is that this project
is a beneficiary, as I understand it, of an export credit guarantee,
a loan which in popular parlance is a soft loan, and that would
not be approved, other than by the British Government. What I
am trying to say is that this is a project that has had two-fold
consideration by the United Kingdom Government, both by your Department
and also by ECGD
(Mr Straw) As you understand, ECGD is not directly
the responsibility of our office. I will seek information on that
and write to the Committee.
39. May I say that I entirely applaud the decision
you made to grant this export licence. I quite understand it is
permissive and it is a matter for the Tanzanian Government. I
have no doubts that you are aware that the Tanzania Government
has issued a statement saying that it is pleased by the decision
of the British Government to issue a licence to BAe Systems to
sell the radarand BAe Systems of course is in my constituency:
"Tanzania is grateful for the British Government decision
and it is the right decision given at the right time". Perhaps
I could ask you one final question, Secretary of State: have you
ever flown in a civil airline over Africa?
(Mr Straw) I have flown in a DC10 over Africa. Yes,
I have, on a number of occasions.