House of Commons - Defence - Appendices to the Minutes of Evidence

Select Committee on Defence Appendices to the Minutes of Evidence

APPENDIX X

Memorandum from Sibylle Bauer, Institute for European Studies Comments on the evidence of 27 February 2003

LIMITED CAPACITY TO DEAL WITH PARLIAMENTARY QUESTIONS

It is interesting that the argument of physical capacity was raised—the alternative to putting licensing on hold is to employ another competent individual. A substantial number of people are employed by DESO, and if the same importance were attached to export scrutiny as there is to export promotion, physical capacity would not be an issue.

BEST REPORTING PRACTICE IN THE EU

I would question Jack Straw's statement that the UK's Annual Report is far better than any other country. With regard to a number of elements of arms export policy, other countries' annual reports are more transparent. In fact, at least one element of best practice can be found in most EU countries' reports.

Belgium[11] and, since the 2001 report, Denmark[12] provide information on the type of recipient within the country. Belgium distinguishes between "public sector" and "private sector". The latter is further broken down into industry, personal use and "other purposes". Denmark distinguishes between defence, police and industry.

The Dutch government is the most transparent with regard to export licenses refused. Denial notifications that have been circulated to other EU governments are annexed to the national report. For each denial, the following details are given: the intended destination (eg Pakistan), the recipient within the country (eg the Pakistani Airforce), the end-use (if not identical with the recipient), a detailed description of the equipment (eg "turbojet engine for training aircraft, adjusted for military use", WA ML 10), the reason(s) for the denial based on the Code criteria (eg criteria 4+6), and date and number of the denial notification within the EU information exchange (eg NL/8 of 19 June 1998).

The German report[13] breaks down denials by recipient country, referring to specific EU Code criteria evoked. It thus provides less information than the Dutch government, but still more than most others, including the UK.

Finland[14], Italy[15] and Spain[16] provide information on the quantity of arms exported in their national reports. This is in addition to information on quantities of major conventional weapon exports with the framework of the UN Arms Register, to which all EU governments supply data on quantities.

Italy provides statistics on banks involved in transactions. Italy also breaks down licensing and delivery data per company and includes a detailed description of the weapons and the value of each individual export.

Ireland[17] provides statistics on a monthly basis.

Ireland[18], Finland and Spain make their national submission within the EU Code reporting requirements publicly available.

France[19] informs about the outcome of consultations about potential undercuts in the framework of the EU Code of Conduct.

The Italian report lists the contract values for each company. The Swedish report[20] names the companies that exported military equipment within certain value brackets.

None of these aspects of arms export policy are included in the UK report.

Limits of transparency

It would be interesting to further explore the limits of transparency from the perspective of the UK government and whether they might consider adopting any of the above proven practices. Interestingly, most EU governments use similar arguments to justify the confidentiality of certain aspects of arms export policy: commercial confidentiality, foreign policy considerations, legal and constitutional provisions, and the recipient countries' national security. However, this results in the disclosure of different aspects of information, as was shown above. Furthermore, not all arguments are applicable to all aspects of arms export policy. For example, commercial confidentiality cannot be evoked regarding government-to-government transfers.

Incorporation

The issue of incorporation, and therefore of indirect exports, is a crucial one to pursue. It is as old as arms exports, but has increased in scope and importance with the development of complex weapons systems for modern warfare. Already in 1972 the French and German government signed an intergovernmental agreement wit the sole purpose of laying down principles for incorporation. The country of final assembly was to decide on exports to third countries. Germany thus basically handed over responsibility for the export of joint products to France. The right to oppose the export of components for a joint product was limited to exceptional circumstances.[21]. A similar agreement was signed between Germany and the UK in 1983[22] the key difference being that the two governments generally reserved the right to raise objections to an export. Conversely, the US requires other countries to obtain authorisation before re-exporting equipment that contains US-produced "significant defence articles".

Indirect exports have largely been ignored in parliamentary and public scrutiny, partly because of the lack of transparency. No country currently reports explicitly on indirect exports, although a sufficient level of detail about direct exports can permit conclusions about the final destination. The French tank Leclerc Tropicalisé was exported to the United Arab Emirates, equipped with a German engine produced by MTU.[23] This is not reflected in German national reporting since only direct exports are included. The export of this key component is included in German exports to France, but the lack of sufficient disaggregation of data precludes conclusions about the final destination. The Swedish combat aircraft Gripen contains US, Austrian, Swedish, British and German parts,[24] but only the country of final assembly will report on future exports. Export figures are therefore considerably distorted if indirect exports are not considered.

The categorisation of recipients practised in Belgium and Denmark would permit further scrutiny of equipment exported to industry abroad, and therefore possibly subject to re-export once integrated into the final product. It is very interesting that Jack Straw in many cases only got information about other EU members' incorporation practices under the condition that these remain confidential. This point deserves further examination—maybe it was elaborated on in the confidential part of the session.

End-use control

End-use monitoring is another important issue to pursue. The German and Swedish guidelines provide for a suspension of new export licenses to a given country if an end-use agreement was violated. However, little is known about the implementation of this provision, and more generally about these and other countries' implementation of end-use controls. The evidence session offers some insight into the British practice.

Nepal

On Nepal, there was a major debate in Belgium last autumn over the export of machine guns. In July 2002, the Belgian government granted an export licence for 5,500 FN Herstal machine guns (type Minimi) to Nepal in spite of receipt of a German denial notification for a similar export of Heckler und Koch G-36 at the end of May. According to the Code's operative provisions, the Belgian government was obliged to consult the German government about the intended undercut and, as a second step, to inform its counterpart about the decision to undercut and give detailed reasons for the decision. To what extent these provisions were actually followed was subject to extensive controversy. The Belgian undercut offers some insight into how differently EU governments have applied the EU Code to Nepal. It also illustrates practical problems of implementing the Code's consultation procedures.

20 March 2003

11 Only recent reports available via http://www.diplomatie.be. All reports available via http://www.grip.org Back

12 Available via http://www.um.dk Back

13 Available via http://www.bmwi.de (select "Politikfelder", select "Au enwirtschaft & Europa", select "Exportkontrolle"). Back

14 Available via http://www.puolustusministerio.fi Back

15 The 2000 report is available at the Italian Parliament's website: http://www.camera.it/-dati/leg13/lavori/documentiparlamentari/indiceetesti/lxvii/005/pdfel.htm Back

16 For small arms and light weapons only. All reports are available at http://www.mcx.es/sgcomex/mddu/publicaciones.htm Back

17 Available via http://www.entemp.ie/export/statistics.htm. Back

18 Available via http://www.nisat.org Back

19 Available via http://www.defense.gouv.fr Back

20 Available via http://www.ud.se Back

21 The text of the agreement has never been officially published in German, but can be found in French as an annex to National Assembly report no 2334 of 25 April 2000. Available via http://www.assemblee-nationale.fr Back