APPENDIX III
Memorandum from Saferworld
The Quadripartite Select Committee (QSC) has
played a significant role in increasing the focus on the development
and implementation of UK arms export policy. In advance of the
next Parliamentary session, Saferworld would like to suggest some
possible areas for the QSC to focus inquiries on.
1. THE ECONOMIC
COSTS AND
BENEFITS OF
ARMS EXPORTS
When questioned about controversial recent arms
exports to India, Pakistan and Israel, the Prime Minister responded
by saying that he did not want to see the defence industry closed
down. Yet critics are arguing against specific deals, not the
defence industry as a whole. And there is increasing evidence,
from Ministry of Defence economists amongst others, that the oft-cited
argument that defence exports are good for the domestic economy
as a source of jobs is unfounded. Saferworld believes that this
underlines the importance of the QSC examining the economic costs
and benefits of arms exports.
In 2001, a significant report was published
by two senior MoD economists and two independent academics, "The
Economic Costs and Benefits of UK Defence Exports" (aka
The York Report, Centre for Defence Economics, University
of York, November 2001). The report examines the economic impact
of a sudden 50% cut in UK exports and concludes that: "The
significance of our results for the wider debate about defence
exports is twofold. Firstly they suggest that the economic costs
of reducing defence exports are relatively small and largely on
off. Secondly as a consequence, they suggest that the balance
of argument about defence exports should depend mainly on non-economic
considerations."
The York Report states that "a 50% reduction
in defence exports would result in the loss of nearly 49,000 jobs.
This would be offset by the creation over a five-year period of
around 67,000 new jobs (at lower wages, on average) in non-defence
employment, most of which would be created in the first two years."
This conclusion is supported by Adair Turner,
the former head of the CBI in his new book "Just Capital".
In a section on "Mercantilism and morality: why we don't
need to sell arms to brutal regimes" he argues that "The
cost of ethical conduct in the trade affairs of developed countries
is massively less than often supposed. We are not condemned by
some economic necessity in a harsh competitive world to sell arms
and instruments of torture to dictatorial regimes, or to stay
silent about human-rights violations, and our attainable rate
of employment will not be reduced if we cease doing so."
The QSC could:
— Review the findings of the York Report,
examine the economic costs and benefits of arms exports and identify
the implications for Government export policy.
2. NEW FACTORS
IMPACTING ON
ARMS EXPORT
POLICY
(i) The globalisation of the defence industry
The increasingly international nature of the
defence industry is clearly having a significant impact on UK
arms export policy. The announcement of the new incorporation
criteria creates a serious anomaly at the centre of our export
controls as the QSC has recognised. Saferworld believes that it
would be valuable to pursue this issue in more detail to assess
the impact that the new policy will have on exports and whether
there are alternative policies that could be pursued.
There are a number of issues that could be raised:
— Has the Government made an assessment
of the likely impact of the new policy, for example which licences
will now be granted that would not have been before?
— How will the new criteria be considered
alongside the Consolidated Criteria?
— The need to enter into dialogue with
the US on the incorporation issue. It is important to make it
clear that the UK will not grant incorporation licences for exports
of components to the US (or another country with whom we have
a strong defence and security relationship) regardless of the
ultimate destination. It is interesting to note here that the
US refuses to allow another country to export any piece of military
equipment that includes US components without prior authorisation.
— The possibility of developing "white
lists" of agreed export destinations for collaboratively
manufactured defence equipment. This is one of the measures under
the Framework Agreement and it could be useful to extend this
model to avoid disagreements about which countries it is appropriate
to export arms that are manufactured collaboratively.
(ii) EU enlargement
It now looks likely that a significant number
of the 10 applicant states may join the EU in 2004. This will
potentially have serious consequences for arms export policy.
The applicant states have already signed up to the EU Code of
Conduct and the EU Joint Action on controlling the proliferation
of small arms but it is clear that many of them do not yet have
the legal framework or the law enforcement capacity to implement
controls effectively. This has resulted in a series of controversial
exports being granted, for example last year Bulgaria supplied
six artillery systems to Chad (possible breach of criteria 2,
3 and 7) and the Czech Republic supplied 25 tanks to Sri Lanka
(possible breach of criteria 2 and 3), 10 howitzers to Zimbabwe
(breach of criteria 2, 3, 4, 6 and 7) and 100 tanks to Yemen (breach
of criteria 4, 6 and 7). Concerted action is needed now by the
UK and other EU member states to ensure that EU enlargement does
not undermine the credibility of the EU Code and lead to a reduction
of export standards across the Union. Issues that the QSC could
examine include:
— What technical and financial assistance
can the UK and EU member states provide to enhance the capacity
of applicant countries to implement the EU Code? (For example,
assistance in establishing effective licensing systems, compiling
annual exports reports).
— What can be done within the operations
of the EU Code to help encourage effective implementation in applicant
countries? (For example, including applicants in the information
exchange on export denials and consultation processes on undercutting).
— What changes are needed to the EU
Code to ensure that it continues to operate effectively after
enlargement and does not lead to a "lowest common denominator"
export policy? (For example, introducing a no undercutting policy,
and agreeing common standards for annual reports).
(iii) The war on terrorism
The QSC's last report said that "Great
vigilance is required to ensure an appropriate balance is maintained"
between the competing pressures on the Government to supply arms
to countries which are allies in the war on terrorism, in order
"to remain alert to the threat of violations of human rights".
Saferworld believes that this issue should be pursued further.
There are strong indications that export controls are being relaxed
and that the possible impact of arms sales on human rights and
regional stability are sometimes being sidelined.
For example, in 2001 the UK licensed 6,780 assault
rifles to Nepal and this year used funds from the Global Conflict
Prevention Pool to purchase two military helicopters for the Nepalese
Government. There is no doubt about the brutality of the Maoist
insurgents but the UK Government's 2002 Human Rights Report states
that "in Nepal the conflict has escalated dramatically, human
rights concerns continue to fuel the conflict." It is therefore
questionable whether these arms exports are in keeping with criteria
2 and 3 of the Consolidated Criteria.
Last year, Open Individual Export Licences for
unlimited exports of an extremely wide range of equipment including
small arms and light weapons, light and heavy artillery, armoured
vehicles including main battle tanks, combat aircraft, helicopters
and selected rocket systems and missiles were granted to Tajikistan,
Turkmenistan and Uzbekistan—all countries that received
highly critical human rights assessments in the UK's 2002 Human
Rights Report. Similar open licences were granted to Bahrain,
Jordan, Kuwait, Oman, Pakistan, Qatar, Saudi Arabia and UAE—all
countries with poor human rights records and in regions of instability.
There are a number of issues that the QSC could
examine including:
— How should the legitimate need of
countries for self defence and the desire to supply allies in
the war on terrorism be balanced with the Consolidated Criteria
and the need to consider the longer-term impact of arms sales
on human rights and regional stability?
— Is it legitimate for the Government
to use funds from the Global Conflict Prevention Pool (established
in April 2001 to "improve the effectiveness of the UK contribution
to conflict prevention and management") to purchase military
equipment to give to other countries?
3. SECONDARY
LEGISLATION
Many of the most critical issues for the Export
Control Act will be addressed in the forthcoming secondary legislation.
The QSC has stated that it intends to scrutinise the dummy orders
when they are published and Saferworld believes there are a number
of important issues to be addressed (these have been dealt with
in more detail in previous Saferworld and UK Working Group on
Arms submissions):
Extra-territorial controls on arms brokers
Saferworld is concerned that the Act will be
undermined if the Government fails to introduce full extra-territorial
controls on arms brokers. Enforceability has been one of the key
problems raised by the Government, yet the increased levels of
law enforcement cooperation and intelligence exchange since 11
September should create a conducive environment. Evidence of arms
brokers' activities frequently comes to light in the media and
UN reports, for example the recent allegations in a UN report
that John Bredenkamp, an arms broker based in the UK, supplied
spare parts for Hawk jets to Zimbabwe. Without extra-territorial
controls, UK-based brokers will simply be driven overseas.
Licensed production overseas
Saferworld has long argued that British companies
wanting to licence the production of weapons overseas should first
have to apply to the UK Government for a licence. The Government
has rejected this, arguing that it does not need to licence the
deals itself and the most effective method of control is to licence
exports of component parts from the UK. However, the recent admission
by the Foreign Secretary that officials did not spot the fact
that parts for the manufacture of Hawk Jets were licensed to India
last year highlights the need to regulate the licensed production
deal itself in addition to carefully scrutinising exports of components.
End-use controls
Saferworld is disappointed that the Government
in its response to the last QSC report did not take up the recommendation
of producing clear guidelines for, and clarification of, the circumstances
under which end-use monitoring should be undertaken. Saferworld
believes that the establishment of a formal system for end-use
monitoring is a priority for secondary legislation.
Prior parliamentary scrutiny
Although not necessarily an issue for secondary
legislation, the consultation period will provide an important
opportunity to keep the focus on the need to introduce prior parliamentary
scrutiny of arms exports. The series of recent export controversies
have further highlighted the importance of ensuring that MPs can
raise concerns about human rights, regional stability and sustainable
development before the Government decides whether to grant an
export licence.
4. GOVERNMENT'S
2001 ANNUAL REPORT
ON ARMS
EXPORTS AND
ANALYSIS OF
GOVERNMENT'S
RESPONSE TO
THE LAST
QSC REPORT
The QSC's scrutiny of the Government's annual
reports has been of great value in increasing transparency and
accountability. Saferworld's initial assessment of the Government's
2001 annual report is attached in a separate note.[1]
Saferworld is currently preparing a full audit of the exports
contained in this report that will be published in January.
6 November 2002
1 Not printed. Back
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