THURSDAY 27 FEBRUARY 2003

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Members present:

Mr Roger Berry, in the Chair
Mr David Chidgey
Ann Clwyd
Mr Tony Colman
Mr Bruce George
Mr Piara S Khabra
Mr Andrew Lansley
Mr Martin O'Neill
Sir John Stanley
Rachel Squire
Tony Worthington

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RT HON JACK STRAW, a Member of the House, Secretary of State for Foreign and Commonwealth Affairs, MR EDWARD OAKDEN, Director, International Security, and MR TIM DOWSE, Head of Non-Proliferation Department, Foreign and Commonwealth Office, examined.

Chairman

Foreign Secretary, may I welcome you and your officials this afternoon. It is our intention to take the first hour and a half of evidence session in public session and then have half an hour or so in confidential session at the end. Could I start by raising our role in scrutinising licences. As you are aware, this year we have had a little bit of difficulty in the sense that we asked a number of questions in November to which the Government kindly responded promptly. We then raised a number of other questions which it proved impossible for the Government to reply to. We had thought these were straightforward, factual questions about licences the information for which would be on a database somewhere. Could you start off by telling us why it has proved to be somewhat difficult this year to provide that additional factual information about licences that the Committee requested?

(Mr Straw) First of all, thank you to the Committee for the invitation to be here. I am joined by Edward Oakden, Director of International Security, and Tim Dowse, Head of the Non-Proliferation Department. We have always worked and I have always worked on the basis of trying to provide as much information as possible to Select Committees, not least to your Select Committee and that is what we have sought to do. There is simply an issue of physical capacity. You and I have had two meetings and one phone call about this. There are only so many hours in the day and only so many officials and the degree of detail which the Committee was requesting meant that we had already spent 900 person hours in answering your questions which you can work out in terms of weeks, and the ability of Mr Dowse's department to deal with export licences was having to be put on hold. That is not an issue here, it is just about, if I may say so, physical capacity, that is all and no unwillingness to be helpful; far from it. I think colleagues here will recognise that personally I have always gone out of my way to provide more information rather than less to the House when asked a PQ and in written PQs, and Home Office and Foreign Office officials know that. That is the issue. I am responsible for both the quality of the answers and their number, and I also have to bear in mind my responsibility for ensuring that the licensing system itself stays intact because what we are charged with principally - and in a sense this Committee shares in this responsibility - is ensuring that the licensing system operates so that we can license defence exports according to criteria. To end up in a position where the number of questions that your Committee was asking meant that the whole of the system was having to be put on hold for a month is not acceptable to me, so that is why. We are answering the questions and in any event we have already answered more questions in greater volume than we did last year.

I would have to say I am shocked if the system was put on hold for a month, that would be quite worrying.

(Mr Straw) It is not an issue of being shocked. Life is a matter of consequences and I think the numbers of questions asked was at least twice, if not higher, than that last year, with a greater degree of complexity. Officials, contrary to the parody, are very assiduous and want to provide information, that is my injunction to them too, but that is the situation we are in. When I realised there was a problem I dealt with it by inviting you to come and have a conversation we me. From recollection, aside from conversations in the lobby, we have had two official conversations and one official phone call.

(Mr Dowse) Can I add a little. I think the problem we faced was the degree of detail in the questions that were being asked about individual licence applications and decisions on specific licences. The initial set of questions that was asked, somewhat over 90, required us to examine over 1,000 individual export licences. You are right in the sense that the data is available but it is not available readily in the format that the Committee was requesting. It required us to interrogate a number of databases and in some respects go to individual case files to look at why decisions were taken. This is the problem that we had. It was not a matter simply of pressing a button and drawing the information electronically. I would say as well it is not solely the Foreign Office that was facing the pressure from this, it ran across four departments, the Department of Trade and Industry, the Department for International Development and the MoD as well.

I do not want to prolong this. If there is any way in which we can ask the information in a form that is easier for you to give it to the Committee, we would be delighted. We look at the Annual Reports and we look at which countries, given the criteria - are there human rights issues, weapons of mass destruction issues, regional instability issues - we should look at carefully. We look at the detail in the Annual Report which is far better - I say this, Foreign Secretary, before you do - than ever before.

(Mr Straw) And any other countries.

Absolutely.

(Mr Straw) Thank you.

But we look at that information and that naturally gives rise to questions. We then get the information back. Having looked at this in some detail some of the information does not always clarify the position and we have to ask for further clarification. The fact that a widget is exported to Bloggs in Bahrain, who is Bloggs? I am not trying to be facetious about this but a lot of the information we get back from that initial set of questions we as a Committee do not know how to interpret and therefore we have to ask the subsequent questions, which is where the problem arose this year. If you have any suggestions about the way in which our retrospective scrutiny can be improved in the sense of you providing information in a different format perhaps, we would be happy to look at them, but you will appreciate our problem, we have to access the information to enable us to do our job properly.

(Mr Straw) And you will appreciate our problem, which is it would be an absurd situation for both of us to get into where because the number of questions that we are being asked was completely disproportionately, we ended up in a situation where the licensing system could not operate. This is in a context - thank you for your compliment on the Report that is published and the work that is done by officials - and it is also against a comparison that this is the most open and comprehensive system of scrutiny anywhere in the world. It is not as though we are starting from a low base. We are starting from an exceptionally high base. What we have to do is talk to you Chairman and your Clerk, and I will ask my officials to do so, on an informal basis to ensure we arrive at a balance. I should say that it is just a question of securing a balance. We want the system to work. On the whole it does work. We want the public to have confidence in it and therefore we want you to have confidence in it. There are limits. I am not going to get into the point I was making to you in private conversation about some of the requests, but I think it is also about what the focus of the Committee is.

Mr Lansley

Again, I do not want to elaborate this too far but on average you seem to be working on the basis that it is something like a full day's work to answer each of our questions. Clearly that cannot, strictly speaking, be true, for many of them are statements of fact or statements of policy which should take much less than that time, unless it is taking a lot of time in the clearance of questions. I speak for myself, I do not know what the rest of the Committee feel, I think it would be a great pity if the amount of time taken answering the questions substantially consisted of time between departments and officials in securing clearance and co-ordination of responses and that was held against the Committee for the time it takes to answer them.

(Mr Straw) Some of the questions were multiple questions, an example of which concerned all licences for India. That is a rather large question, it may be one question but it is a huge question, and there are four departments involved. I have said to my colleagues I am very happy to streamline the whole system to take it over in the Foreign Office but others may have a view about this and pro tem we have to stick to you folk from the non-Foreign Office Committees and we have to stick to this arrangement. In terms of clearance, there is an issue of clearance. I have never ever signed off an answer to Parliament or a parliamentary committee without approving it. I simply will not do it. I live in fear and trembling that one night late at night I have ticked a question. Sir John will remember this because he and I were on opposite sides and I am quite sure it was not quite like that either, but you have this overwhelming responsibility for accurate answers for which you are responsible. Thus I go through every PQ answer and I go through every piece of paper that goes to a select committee and I can tell you that every so often --- I remember not a memorandum for here but for a memorandum for the FAC Committee recently, it looked all pretty straightforward, the Government's response to an FAC report and I was sitting in my sitting room at about 11 o'clock at night and I thought, "Why have I got to do this? Oh, I had better read it through", and I got to page 46 and there was something that was completely wrong on something which is now very highly topical and I thought, "It is just as well I have got it." If I had ticked it, I tell you this would have been a story, so I have to clear the stuff and that takes time. I turn the stuff round very quickly and so do officials, and I will ask Mr Dowse to do a bit more explaining.

(Mr Dowse) Just to follow that up I think the request was for information of details of all licences for India, and maybe Pakistan as well, and it required us to access, pull out and in fact put into a form that was at least approximating the form that the Committee had asked for over 800 single licences, so one question but 800 separate pieces of work. That is just an example. I would say we very much would welcome the opportunity to work with the Committee to see how we can co-operate better in future years and meet the sort of requirements that you want. I would also say the questions that we have not been able to answer, the follow-up questions for clarification, I think there were 36 or so, we have not given up on those and we hope that we can answer some of them today if you wish to put them to us and those that were left outstanding we are happy to continue to follow up on. It was a question of what we could do in the time available given that the officials who are tasked with doing this work are also the same officials who are processing new licence applications and indeed, in the Foreign Office's case, the same officials who are attending EU meetings, so there is simply a question of capacity.

Chairman: We appreciate that and we will pursue it but we will move on. I will say, Foreign Secretary, your fear is not spotting something in a signed-off answer but our fear is reading the Annual Report and finding there are questions we should have asked on the Annual Report that we failed to ask and then we are seen not to be doing our job of retrospective scrutiny properly. Let's move on. Martin?

Mr O'Neill

On the government-to-government questions we get the impression that because the government does not itself require a licence to export controlled military goods that there may be some items which are not included in the Annual Report on strategic export controls. Maybe you could explain to us whether or not all sales of equipment by the UK government agencies have been included within the report on strategic export controls.

(Mr Dowse) They are included in the summary in totals. The government-to-government transfers are included in summary form.

So if we were to subtract everything else from the total we would get the number that would be there; is that right?

(Mr Dowse) Yes, that is correct.

Chairman

There are no transactions not included in that total?

(Mr Straw) We also consider them on a case-by-case basis against consolidated criteria. A lot of the transfers are government-to-government.

Mr O'Neill

This gets onto the other point about the F680 process. Are they all done under the F680 process or are they done against the criteria separately? Maybe you could explain to us because I think this is a grey area.

(Mr Straw) Where the transfer takes place outside the UK in connection with the sale of surplus equipment, the F680 procedure may be used in place of an export licence, but all of them are considered on a case-by-case basis.

(Mr Dowse) It depends when the transfer of ownership takes place. If there is a government-to-government transfer, which may be a sale or a gift in some cases, and the transfer of ownership from the British government to the recipient government takes place while the equipment is in the UK, then an export licence will still be required and it will feature in the Annual Report in the normal way because the recipient government will have to apply for a licence to export the equipment from the UK. If the transfer of ownership takes place outside the United Kingdom, then we may use the F680 procedure. I think we responded on this point to the Committee's last report last October and we said that even in the cases where an F680 procedure is used we still consider these sort of government-to-government transfers against the consolidated criteria, as we would do for a normal export licence.

Mr George

Secretary of State, on the topical issue of weapons of mass destruction and the proliferation thereof, can you tell us what information is available about the action taken other than being taken under the Export Control Act to transform the effectiveness of British arms export controls and to encourage others to do the same in the face of the increased threat from proliferation of weapons of mass destruction?

(Mr Straw) I would be grateful for some more detail about the question. It goes without saying that we do not permit the export of any items ourselves which are banned by these criteria, by definition, or if they are unlawful under various international conventions then they cannot be exported full stop before you get to the criteria. Are you talking about the development of measures to deal with poisonous gases and so on?

What negotiations are you having with other countries with whom we have a good relationship to encourage them to develop the standards that we have evolved?

(Mr Straw) The general standard of export licences? Okay, I have got you.

(Mr Dowse) I think the first thing one would say is that we are participants in the various multi-lateral export control regimes that deal specifically with various weapons of mass destruction, the Nuclear Compliance Group, the Missile Technology Control Regime and also the Australia Group, which deals with chemical and biological material. All those groups continually review their control lists to ensure that the items that are being controlled are the ones that should be controlled. One thing that has happened is that since 11 September all those groups have taken action to add "the need to prevent WMD falling into the hands of terrorists" to their overall guidelines and their raison d'etre. Their lists are being reviewed. The Australia Group took the lead in this respect to ensure that the items and quantities that are controlled and recommended and all the members commit to control are appropriate for terrorist groups as well as from state-to-state transfers. Domestically, we have got stricter controls for exports or trafficking in relevant materials for weapons of mass destruction and we have conventional weapons controls. For example, under the new Export Control Act, aiding and abetting a WMD programme or providing materials that would assist in a WMD programme is subject to extra-territorial jurisdiction, which is not the case for conventional weapons. I think our controls are pretty robust as they stand. To give you a figure, of all the export licence refusals that we issued last year, 50 per cent were because of WMD concerns.

Is the Foreign Office satisfied that the organisations you mentioned, the Australia Group et cetera, et cetera, have reached the requirements that we believe are necessary, because very often organisations reach shabby compromises and this is too important to be left to shabby compromises. Are you generally happy that the structures, the arrangements, the enhancements post 9/11 are satisfactory?

(Mr Dowse) I think there is always room for improvement and we have made a number of proposals ourselves in these groups to improve their procedures. One of the things that we have done, for example, is with all these groups we have encouraged and succeeded in setting up meetings of enforcement experts, so that it is not simply those that look at technical details and decide what the control lists should be but we bring Customs experts together to exchange information, to network, and sometimes information on the experience that our Customs or some of our European partners' Customs have is useful to pass to other countries that are involved in some of these regimes. The Japanese may be interested in learning from our experience and vice versa. There is one step. As I say, I think there is always room for improvement and we are always looking for new ideas.

As a slight extension of that, what are the mechanisms that exist between our government and its international counterparts to exchange information on proliferation and diversionary activities and how does this information feed into your licensing process and decisions?

(Mr Dowse) All the export control regimes have as part of their annual process of meetings what they call "information exchanges" where papers are presented on countries and programmes of concern. The UK is one of the most active in presenting papers of this sort.

Sir John Stanley

Foreign Secretary, we are all deeply, deeply exercised on the risks of weapons of mass destruction falling into the hands of terrorist organisations. Recently Rachel Squire and I, as members of the Defence Committee and the NATO Parliamentary Assembly, had a briefing in Washington on the scale of the continuing Russian stockpile from the former Soviet Union of their chemical weapons. I should like to ask you whether you have had recently - and if you have not perhaps you would consider asking your officials for it - a full statement of the current position of nuclear warheads, fissile material and chemical weapons held inside Russia and the degree of security arrangements, or not, in relation to their safeguarding? Included in that briefing would you also seek advice as to the rate - we were advised minimal - of destructions of these weapons and fissile material? Would you agree, Foreign Secretary, that this is an issue of the most acute priority for the responsible international community? It is an issue of money, as you know. The Russian government is not holding these willingly and would be delighted to dispose of them but unless the international community is prepared to produce the money, and it is very sizable indeed, there is going to be this continuing huge risk of a massive source of weapons of mass destruction that could get into the hands of terrorist organisations.

(Mr Straw) It is a very important issue. I cannot remember the date when I was briefed about this and had a submission about it but it is a matter of continuing concern. I will ask Mr Oakden to come in on this. It is partly an issue of money but it is partly an issue of capacity of the Russian authorities to spend the money in a way that would produce an effective result. I speak from recollection but I think I am right in saying that we have allocated about US $750 million over ten years for this. I remember looking at this rather closely when the Spending Round was coming up, which was last year, and there is money factored in for the current spending round as there was in the previous one but we had not actually spent all we had factored in before, as I recall. The money is there from our point of view ready to be paid but it obviously has to be paid to the Russian system in a way that the Russian Federation government and its agencies can spend effectively.

(Mr Oakden) Perhaps just to add that broadly the analysis you describe is very much what drove the G8 initiative at Kananaskis last summer which launched an initiative for global partnership with the Russian Federation exactly to address both aspects - the nuclear and the chemical weapon aspect - of the problem. It is, as you have described, a very substantial problem and very substantial funds and organisation will be needed to set it up because just a simple issue of how you destroy safely is substantial. Just on the G8 front, there are a number of processes going forward, firstly on the nuclear side to agree the arrangements under which the money from the G8, and we hope from other international partners too, and there is an outreach programme that is now being taken forward, will be taken to Russia and spent in an effective way. On the chemical weapons side similarly, the Russians have recently come forward last month with some proposals which we and other partners are studying. As soon as we, the G7, can agree with the Russians on the procedures under which the funds should be started, we can get under way. We have got a series of projects designed across the DTI, MoD and ourselves which are ready to start, but there are a number of important liability issues, for example, which need to be resolved. I might also say it is not just the G8, the EU too through the Northern Dimension, for example, is looking at how you dispose safely of decommissioned Russian nuclear submarines.

(Mr Dowse) Can I add just one point to that. You specifically highlighted the problem of chemical weapons and chemicals that required destroying. The Russians themselves have said, and President Putin said at Kananaskis that this was one of his top priorities. They have got obligations to meet under the Chemical Weapons Convention to destroy their chemical weapons, and it is a huge challenge for them, both in terms of size of cost and organisation. In that area the UK is already pursuing projects and we have in fact completed a first project in support of a very large chemical weapons destruction at Schuch'ye in Russia - the MoD is the controller of the budget for this money - and we are starting on our second project. So in that area we are already moving ahead. The areas where we are still having to have further discussions with the Russians are primarily in the nuclear area.

Tony Worthington

In an Iraq situation, either in war or before war, if the weapons inspectors discover weapons of mass destruction or materials to make them, will it be standard practice to call the weapons inspectors back to identify the countries of origin of those materials and publicise that?

(Mr Straw) Yes, of course they will do their best to ensure that there is a full tracking back because in any of these cases if there has been a breach of sanctions, for example, which is already becoming apparent, the sanctions breach will not only have been by the government of Iraq but also by the export nation as well. It may have been in some cases not so much a direct, conscious breach of sanctions but a failure of control by the government, so, yes, it is very important.

Mr Chidgey

Returning quickly to Sir John's point regarding Russia, Foreign Secretary, could you tell us when the programme for the destruction of the Russian arsenal was first agreed, including the radioactive material, after identifying the problem following the collapse of the Russian Empire, what the scale and quantity of these materials was and how much has been destroyed?

(Mr Straw) I think we will have to write to you.

(Mr Dowse) I can give you a partial answer but I think we should write to give you a more full answer. Some countries started co-operative programmes with Russia very soon after the fall of the Soviet Union. The most notable is the US which concluded what they call a Co-operative Threat Reduction Agreement with Russia in 1992, I believe it was.

Ten years ago?

(Mr Dowse) And has spent very large sums since that time. US assistance to Russia has run at $500 million a year in recent years. That has been going on for a long time. Germany has had a long-term programme, again under a bilateral agreement. In our own case we undertook certain specific areas of assistance, though focused less in the WMD area and more on the military conversion, dealing with the problems for Soviet forces withdrawing from Eastern Europe, more into the conventional area. The more recent activity and the creation of the G8 Global Partnership dates from last year and the Kananaskis Summit and that was really setting up an umbrella to bring together, to co-ordinate a whole range of bilateral programmes that individual G7 members were undertaking with Russia, the aim being to identify gaps, to identify priorities and see if there were areas of overlap with the aim of getting the biggest bang for our buck.

So the programme started in 1992?

(Mr Dowse) The US programme started in 1992, other countries came in.

Can you give us any idea in terms of percentage how much of that material has currently been destroyed ten or 11 years later?

(Mr Dowse) I think we will have to write to you.

Rachel Squire

Foreign Secretary, can I move on and ask you about incorporation. In a written answer of 8 July 2002 you announced new guidelines to be taken into account alongside the existing consolidated criteria for licensing a very particular category of export, namely equipment for export to a second country which was to be incorporated into equipment being built in that second country for onward export to a third country. Can you tell the Committee what your motivation was in introducing these new guidelines on incorporation in July last year?

(Mr Straw) The trigger for this was an application for the Heads-Up Displays for F16s. British Aerospace have got a long-term contract for supply of these Heads-up Displays for F16s exported all over the world and most of the destinations raise no issues at all, but it was an application for a licence for the Heads-Up Displays in respect of Israel and it raised questions about the whole issue of incorporation and whether our policy in general, and the policy in particular, had taken full account of the changed nature of the defence industry. It had always been to a degree an international supply chain and an international assembly line, but this has become more formalised and much, much more extensive and it is very rare to find, as far as the UK defence suppliers are concerned, any single item of finished equipment that has not got items of import inside it and also a large proportion of the work of the defence industry is parts which are then assembled elsewhere. I looked at this and there was a small group of Ministers which looked at this, and my judgment was rather than try to either make an exception for the F16s, if we wanted to list it and it was consistent with the criteria, what we needed to do was to sit down and say, "We are likely to face a number of these applications, what are we going to do about it?" then having decided what we are going to do about it, be completely open about it. What I did was publish a statement to run alongside the criteria and then to announce the decision in respect of the F16s at the same time. People may or may not agree with the decision but what I hope people may recognise is that I was anxious to bring this out - I knew it was going to be controversial - and try and establish some principles on which we should deal with some very difficult issues, so that is the background.

Are you saying, Foreign Secretary, that the existing consolidated criteria failed then or fail now to deal adequately with exports of military equipment for incorporation?

(Mr Straw) I looked at whether we should try and change the consolidated criteria. Let me say this was a similar exercise I had undertaken in the previous December when in a written answer to Roger Casale I announced our approach to the application of the criteria which would relate to terrorism. Because I was very concerned in post-11 September circumstances that we may not be taking proper account of the imperative need of the States to defend themselves against terrorism, I said to officials I thought we ought to change the criteria and announce that. I came to the view in the end that I did not need to change the criteria but I did need to make public how I was going to interpret those criteria. In this case I did not judge it necessary to change the criteria but Criterion 7, which is on diversion, already deals with the overall principle, but my judgment was that these cases required a particular consideration of all the factors listed. I could have simply said, if having judged that other things being equal within the criteria, we should license this application rather than not and to say we did it within Criterion 7 and leave it at that, but I thought it better to be explicit about the principles involved because that seemed to me to be a new circumstance because of the changing nature of the defence industry, and therefore required a new statement.

Chairman

Foreign Secretary, most of the items in the Annual Report refer to components, they do not refer to final products. Heads-Up Displays are a component. I am not clear why the government does not simply apply the consolidated criteria, the EU Code, to those components in the same way the government applies criteria to all the other components that feature in the Annual Report.

(Mr Straw) We have applied the criteria. With great respect, Chairman, you could say to me you would be happy with my answering in each case when you ask the question "why did you license this?" that we applied the criteria. What I thought was going to be helpful was to explain why we had applied the criteria here and had we done so against any principles which we thought would apply in other respects and whether or not they are going to be controversial, had we thought this through. A lot of things of course are components, you are absolutely right about that, it is about exports to one country for re-export to another, and where you have got a very large contract, as you have with the Heads-Up Displays worth some hundreds of millions of pounds, one is bound to take account, and the criteria allows one to, that is why I talked in my answer to Paddy Tipping about the importance of the UK's defence and security relationship with the incorporating country, the export control policies and the effectiveness of the export control systems of the incorporating country, which in this case is the United States, whose system is a very effective one, and so on. As I say, materiality and significance of origin are the matters laid out there. You cannot regard the criteria as hewn in tablets of stone. What, however, it seems to me it is right that Parliament should absolutely require is that where we are providing some gloss on the criteria - and that is the nature of any kind of living law which is quasi law - then we provide an explanation.

Was it a gloss on the criteria or the introduction of new considerations that would weaken the criteria? Were you advised for example that this would be in breach of the EU Code?

(Mr Straw) Of course not, because this is not in breach of the EU Code - because if it were it would be in breach of the consolidated criteria, which are EU national. What we also did was to look at other countries' practices and I may say it is quite difficult to unearth other countries' practices because in almost every case they do not publish their criteria, still less the practice of those criteria. So this is a very unusual arrangement here - very unusual indeed - but by delving into it (and I am afraid officials had almost as many questions from me as they have had from you recently) to go round posts in Europe to find out how they were operating their systems. In many number of cases we only got information about how they were really operating their incorporation procedures and arrangements on condition of strict confidentiality that I would not identify the countries. Again, I am satisfied that what we are doing is on all fours with the best practice in Europe.

(Mr Dowse) I think this is an issue which is currently under negotiation with the United States in the context of the ITAR waiver, the International Transfer and Armaments Regulations. We do not have a final decision on those negotiations yet so I think I would rather not get into what is a rather delicate international negotiation at the moment and the details on that particular issue, not at this point.

We can come back and ask again on that?

(Mr Straw) Yes, any time.

Mr Lansley

I quite understand the need for additional factors to be taken into account over and above the consolidated criteria. What I am not quite sure about is that in (b) "the importance of the UK's defence and security relationship with the incorporating country", what precisely is intended to be meant by that as distinct from Criterion 5 of the Consolidating Code and the reference there to the potential effect of the export on the UK's "defence and security interests". I suppose my question is whether there is a danger here, having written the factors around the very particular case to which this gave rise, in the use of the word "relationship" as opposed to "interest"? It gives rise to the question whether in fact the relationship with the US is seen as a distinct and overriding factor which would not be the case for the Consolidated Code as a whole, where the Americans would be viewed, quite rightly, by Criterion 6 and treated according to its behaviour and ability to satisfy our export regime.

(Mr Straw) There are some criteria which are of higher authority than others but in terms of these ones no one which is set out in Criterion 5 or here is paramount over and above others. What you have to do is weigh up all the criteria against the application and make the best judgment that you can. Yes, it is true there is a difference between our defence and security interests and our defence and security relationship with the incorporating country, or at least the latter is an explicit part of the former. Yes, where you are dealing with general issues being raised by a particular application, there is always a danger that the general conclusion you come to is coloured by the particular application, but what I thought I ought to do here (because I knew it was going to be controversial) and my first thought was that it was extremely important that since it was going to be controversial, the detail of any decision one way or the other was made available to Parliament immediately because openness is paramount here. The next thing was rather than simply say, as I could have done and we do in most cases, we are going to do what the criteria require which is judge people on a case-by-case basis and leave it at that, I thought I should be explicit about the basis for making the judgment, and that is what we did. Aside from anything else, if I had simply announced it and then had the PQ asking what is the decision in respect of Heads-Up Displays, that I had agreed them and here is a copy of the criteria, quite legitimately, there would have been a very large number of PQs asking why had I done that. I could not possibly have just come along and say that I agreed the criteria, I would have had to say why. It seems to me quite sensible to be so explicit.

My point is quite narrow really. It is what is intended to be comprised by reference to our defence and security relationship with a country that needs to be included in the factors that are applied to incorporation that do not need and are not included in the Consolidated Code?

(Mr Straw) Mr Dowse is saying all these factors are new. This is an issue of proportion and it emerged in our review of how other European countries were operating that they did distinguish between export of a final product and export of components, and in one case, I think I am right in saying, Mr Dowse is speaking to a recollection, that where the value was less than 20 per cent of final product then they basically bypass the criteria altogether and give it a tick. In other cases it was smaller than that. What is the significance of (b) here? Really what it means is if in the case of our largest defence contractor BAES they have a huge long-term relationship with defence industries in the United States, then no sensible government can ignore the implications for that relationship of decisions on one individual application. That does not mean that you automatically go along with the application, but it does mean you need to take account of it.

What you are telling us is this is a factor you would apply to all components, not solely those for incorporation?

(Mr Straw) It arose more explicitly in respect of incorporation because of the potential controversial nature of this particular item which was then going to be re-exported to Israel. That is why.

(Mr Dowse) You are right in the sense that not all the items that were listed as factors were new. For example, factor (a) is already expressed in slightly different words under Criterion 7. What we were trying to do was to bring together the specific factors we thought were applicable to incorporation in order to be clear. In respect of the particular reference in Criterion 5, of course Criterion 5 deals with criteria for refusal rather than approval, so it is not quite on all fours.

Do by all means feel free to let us have a further explanation but my point is a very narrow one; if this is intended to reflect the importance of the UK's defence and security interests, that as I understood it would be something that would be taken into account, I do not see in the Consolidated Code a reference to the importance of the UK defence and security relationship with a buyer country or incorporating country as a specific factor to be taken into account in export licences.

(Mr Straw) This is your point but I want to offer you a response to this. Criterion (a) talks about the following will be considered: "the legitimate defence and domestic security interests of the recipient country, including involvement the UN and other peace-keeping activity", and elsewhere there is reference to the importance of the United Kingdom's defence industries, that is the recipient industry there. If you put those two together you end up with the importance of the UK's defence and security relationship. I understand the point you are making, there is a difference between a relationship and an interest, but I suggest that relationship is part of interest.

Chairman: We are going to have to move on to another topic. Ann?

Ann Clwyd

Secretary of State, end use has been a very controversial subject at various times in the past and, as Linda Chalker once said, there is no such thing as end use control. There are various systems in existence in other countries. I wonder what you thought of the US system of end-use monitoring through its Blue Lantern programme which is administered by the Department of State and uses a system of 20 specific criteria or red flags, for example requested equipment does not match the known requirement or inventory of the foreign end user. I wondered if you thought this targeted system in the US was a good system for us?

(Mr Dowse) I think the problem we have with any system which tried to impose a rather rigid set of rules is that you would continually come across cases which did not fit the rules. If you have 20 criteria for monitoring end use, you might find a case where the 21st criterion, which you did not have, actually applied. Our view has always been that the surest way to prevent UK defence exports ending up in the wrong hands is to look at the export licence application carefully at the licensing stage and refuse an export licence if we think there is an unacceptable risk of diversion or misuse. Inevitably, once items have been exported the degree of control and monitoring you are going to have is going to be limited. In very sensitive cases we do our best, but there are inevitably going to be limits on what we can do once the equipment has left our shores. That is why we try to ensure that our controls are applied before we approve the export licence.

(Mr Straw) I am very happy subject to the issue of officials' time to get myself further briefed about the State Department system.

Chairman

We are very grateful. Clearly the system the United States operates is fundamentally different from the way that we operate end-use control.

(Mr Straw) When I am next in Washington in the State Department on normal business I will follow that up.

(Mr Oakden) If I may just add one thought, without cutting across that in any sense - if the EU has got across the piece a system it would make sense for us to have a system that is congruent with that.

Except we heard earlier, from Mr Dowse, that there was a problem with consistency across the EU.

(Mr Straw) They all sign up to the consolidated criteria but, as is often the case, what is in the text and what actually happens are two different things.

(Mr Dowse) In respect of end-use monitoring, there is no consistent practice across the EU. I would say that the approach that we take is as rigorous as any other EU Member State, but not the same, I accept, as the United States.

Chairman: We can pursue that.

Ann Clwyd

You say that you take account of information provided by non-governmental organisations, but that does not seem to be backed up by experience. For instance, when non-governmental organisations were reporting on the use of Hawks by Indonesia, the use of armoured vehicles by Indonesia, then in my experience there was very little follow-up on those points.

(Mr Dowse) If I can reply particularly on the specific case you mention, I think I really would have to challenge that. In the case of the allegations of the use of Hawk by Indonesia, there was very, very intensive follow-up that was made, to the extent that our air attache in Jakarta personally inspected the logbooks of every Hawk aircraft that was being operated by the Indonesian Air Force. I would say that was an exceptional level of end-use monitoring.

Chairman

What year or years would that have been, as a matter of interest?

(Mr Dowse) 1999.

(Mr Straw) May I also say that when I was in Indonesia in January I raised this issue too with the government at every level, as I recall.

Ann Clwyd

Can I put another point to you, the use of vehicles supplied by the UK to spray demonstrators with dye so they could be identified subsequently by the Indonesian authorities. I remember protesting at the time but I do not remember any follow-up. I do not recall any Embassy staff reporting on such things.

(Mr Straw) Was this a recent one, Mrs Clwyd?

No, not recent.

(Mr Straw) The ancien regime?

Not under your watch.

(Mr Straw) I will chase it up. I simply do not know the answer.

Chairman: Let's move on to sustainable development.

Ann Clwyd

Could I ask one other point. Under what circumstances are overseas posts asked to investigate the alleged misuse of controlled exports from the United Kingdom?

(Mr Straw) When we get information about this. In some cases, defence attaches and others spot things themselves which, as I recall, is what happened, correct me if I am wrong, in respect of the use of those carriers in the Occupied Territories. It was a very, very assiduous defence attache who spotted, with pretty good forensics skill as well, that these carriers were built on the chassis of 40-year old British tanks and then he followed it up terrier-like and discovered they were in breach of their export licence.

(Mr Dowse) There are specific circumstances. In some circumstances it is not unknown for a particular condition to be put onto a licence as to the circumstances in which the item can be used, and in those circumstances - I know they are fairly specialised - we do try to do what we can to ensure that the conditions are met, and the Israel case was a particular one where we had received certain assurances from the Israeli government that British equipment would not be used in the Occupied Territories. We obviously then made an effort to ensure those assurances were being met and our attaches in Israel, at considerable personal risk in some cases, did make tours in the Occupied Territories with this in mind.

Chairman

That is very important to this. This discovery by the Military Attaché was not just an accidental "just happened to see", was it?

(Mr Straw) No.

(Mr Dowse) No, it was part of his task.

It is very important that we appreciate that it was specifically looking for any breaches of the agreement. That is the important point.

(Mr Straw) And he found them. Obviously he would have responded, had it been an NGO, but it was he who spotted it. He worked this out. He knew enough about tank chassis to form the opinion there might be a connection.

Yes, because there had been conflicting accounts about how that arose, had there not?

(Mr Straw) Indeed.

Chairman: That has qualified that. Perhaps we can move on.

Tony Worthington

Can I move on to Criterion 8, sustainable development. You will recall that we have the sort of anomaly of the Government saying that this is a very, very important criterion, that one should not export if it is going to damage the sustainable development of a country, but unfortunately in, say, 2001, we could not find any instance, and it was agreed that there was no instance, of where sustainable development had been a grounds upon which a licence had been turned down. Is that still so?

(Mr Straw) Mr Worthington, can I just ask officials to talk about the licences where Criterion 8 has been a reason for turning them down. It does not follow that a criterion is worthless, or that it has not been applied, just because we have not had applications where we have had to turn them down on that basis, because in all of this it is self-policing. There are plenty of criminal offences on the statute book which are very rarely subject to prosecution - in some cases not at all. That does not mean that we should remove the offence from the statute book. It may be that the law is working really rather well. So it cuts both ways. As to the numbers, I do not know, they are very small and rare.

There have been none.

(Mr Straw) As far as I know, that is correct. But, as I say, that does not mean the criterion is not working.

If it happened year after year, that you had a very, very important criterion, but it was never used, you do not automatically conclude that the law is working well. You ask other questions, do you not?

(Mr Straw) Hang on a second. These criteria are public, and in many cases the applicants make the application against the criteria, so that it is in their interest to look at the criteria, take advice about how they operate and seek to ensure that their applications come within the criteria, because if they do not come within the criteria they will not be accepted. So that is it.

But you have tightened up on the criteria, have you not?

(Mr Straw) Mr Dowse is saying that there were only ever 20 -----

(Mr Dowse) Across the entire EU, our understanding is that there have only ever been 20 refusals on a Criterion 8 basis alone, since the code was adopted. It does not mean that the assessment is not undertaken, but the fact is that the criterion is one that we have looked at quite extensively in the last year. We have developed our understanding of how the criteria should be interpreted interdepartmentally. We have identified a certain number of benchmarks, if you like, indicators.

Could you say more about those?

(Mr Dowse) In general terms, I can give you some examples of what the indicators are. We have agreed that levels of military and social expenditure are one indicator. Dependency on international aid is another. Balance of payments issues is another. The level of debt servicing requirements is another. These were developed between the experts in DFID, the Treasury and ourselves, as a way of making more systematic and consistent the way in which we applied Criterion 8. So we do take it seriously. Just because we have never had a refusal on the basis of Criterion 8 does not mean that we are not taking seriously the application.

Does that mean that the Tanzanian air traffic control system would not get through now?

(Mr Straw) The Tanzanian air traffic control system did get through. There was an interesting debate about it - I think some of that was really your side. I happen to think that on the basis of the information we had available at the time, it was a correct judgment.

But there has since been further information, has there not?

(Mr Straw) There has not been since further information which tells me it was an incorrect judgment. I know, Mr Worthington, you did agree with the air traffic control system. I did not, and I thought my colleagues in Government took the same view. There we are.

Do you have any further information about that application, how it went through and whether it has been altered in any way, or whether the whole thing has been exported?

(Mr Dowse) We do not monitor exports as such, but when an export has been completed, the licence is then exhausted and is returned to the DTI. To date, I understand the DTI has not received the exhausted licences for the air traffic control system.

Chairman: I think we need to move on to another topic.

Mr Chidgey

Foreign Secretary, I would like to ask you a few questions about licences granted in 2001 potentially giving rise to human rights concerns. I would like to ask you in particular some questions about handcuffs and restraints, particularly over-sized cuffs. To refresh the Committee's memory, in a written answer back in 1997, the Government said it "would take the necessary measures to prevent the export or transhipment from the UK" of various equipment designed primarily for torture, including "leg-irons, gang-chains, shackles - excluding normal handcuffs", amongst other things. As late as 20 February this year, in a letter to the Clerk of the Committee, the Government explained that it had implemented the necessary measure, and it also added that "having further considered the issue of the manufacture of the specified items it has been decided that there would be little reason to ban the manufacture or sale of equipment covered by the ban" against instruments of torture, because - and I quote - "There is no market for leg-irons and shackles." You know the definition, I am sure, Foreign Secretary, of what these instruments are?

(Mr Straw) Yes, I do.

If I may refresh your memory, we are talking about over-sized handcuffs -----

(Mr Straw) No, I remember, sure.

----- defined as handcuffs with a locking circumference of greater than 240 millimetres.

(Mr Straw) I refused a licence, I think, in this case, for over-sized handcuffs.

Mr Chidgey: I just wanted to bring your attention to the background.

Chairman: Let us have the question.

Mr Chidgey

What is the Government's policy on the export of over-sized handcuffs? When are licences for such handcuffs allowed? How does the Government assess the likelihood of such handcuffs being used as manacles or leg-irons, in contravention of the Government's ban on the export of such items?

(Mr Straw) As I said, the handcuffs come in various shapes and sizes - and I know this from my previous responsibility for the Home Office - but we in this country do not use leg-irons or shackles, and their export is also prohibited. So in a particular case there was an application which came before me, I think, some time before the end of the year, for what were over-sized handcuffs which would require a very large hand to restrain and plainly could be used as a leg-iron, so I refused a licence. There is not an issue here between you and me, Mr Chidgey. It is fairly straightforward.

I understand, Foreign Secretary, that you and I share the same sentiments on the control of this, but there are serious issues here which I would draw to your attention. You may recall that during your time as Home Secretary a particular company was brought to the attention by many of us here - Hiatts of Birmingham - who were manufacturing these items and then selling them elsewhere through a subsidiary in the United States, Hiatt Thompson. I can tell you that today, despite the legislation that your Government introduced, it is advertising on the website that "We are great fans of Hiatt Thompson in the States. They offer a number of unique designs. The cuffs themselves are manufactured in England. The speciality chainwork to convert these cuffs into manacles is added in the United States." Consequently, the attempts by the Government so far to prevent the export of leg-irons is singularly failing. To make matters more interesting, I have here an invoice for purchase of these implements via the internet from a company called Discount Handcuff, for a Hiatt model 5000 heavy-duty nickel leg-cuff manufactured clearly in this country, purchased in the United States for the princely sum of $82.95 a number of months ago. At the same time these items are on sale in Hiatts in Birmingham. I draw it to your attention, Foreign Secretary, not to try to embarrass you, but to refresh your memory.

(Mr Straw) My embarrassment threshold is slightly higher than this.

Nevertheless, it is a very serious issue. The legislation clearly is not working.

(Mr Straw) If you have information, Mr Chidgey - which you do - we will examine it. I shall look at it very carefully. In the example I gave, since I prohibited the export of the over-sized handcuffs which could be used as leg-irons, the question of their then being attached to chains obviously by definition cannot arise, because we are not exporting them anyway. But I will look at the information you have.

Another question from me is that in a written answer in December of last year, the Government's statistics show that four SIELS were issued for over-sized handcuffs during 2001. Can you tell us how this information could be reconciled with the six countries shown as destinations for licensed over-sized handcuffs in the 2001 Annual Report?

(Mr Dowse) We are trying to investigate the discrepancy. At the moment we do not have an answer. We will write and tell you. It came as a surprise to us.

It is a shambles, is it not? Thank you.

(Mr Straw) Hang on a second, Mr Chidgey. With great respect to you, I do not accept that for a second. There may be discrepancies sometimes, but this is a very carefully administered system, all right, and I do not think that kind of description is at all justified. It is a complex system, complex because Parliament, quite properly, required that it should be thorough.

Mr Chidgey: I think that when you see my evidence you might want to change your mind.

Chairman

I think the important thing is that there is discrepancy which has now appeared in the record, so if you could let the Committee know about that, I would be very grateful.

(Mr Straw) Yes, we will let you know.

Tony Worthington

Can I turn to the helicopters in Nepal and the gift? I think we both accept that the way that information came out, there was an oversight at the time and it was not given to the House. I think it was at the end of a session just before a recess. I must admit, I was surprised about helicopters being given to the Nepal Government as a gift. Then obviously there comes into question for what purpose the helicopters were used. Among the things that it says is "logistical purposes" which can mean anything. These were Russian helicopters that were, I think, used for troop carrying. I believe that they were sent in a hurry because the Nepal Army had lost helicopters, they had been shot down. I think there is an issue there about whether that is an appropriate use for a gift, and whether it should be under the heading of "gift". I think the other issue which is there is that it was funded out of ----- I have lost the name.

(Mr Straw) The Global Conflict Fund.

Yes, the Global Conflict Prevention Fund of which there are two. It does not sound like being appropriate for a global conflict prevention fund, if its purpose was mainly in support of war. Another issue to put in there is that I believe you chair one of the Global Conflict Prevention Funds, and that the Secretary of State for International Development does the African one. If you go onto the websites for the two, there is much more openness on the African website about what the money is used for, in comparison with the Foreign Office one. I wonder if you could look at that?

(Mr Straw) I will certainly look at that as well. I chair the Cabinet ministerial committee that deals with Nepal. There are two. There is the Sub-Saharan Africa Global Conflict Prevention Pool and then there is the rest of the world one. Clare Short chairs the Sub-Saharan Africa one and I chair the other one, and then there are some specific ad hoc ministerial committees one in respect of Nepal, another in respect of Afghanistan, another in respect of Sierra Leone which I chair. The Global Conflict Prevention Pool, amongst other things, is specifically for providing military equipment, as well as many other things, where we judge that that is a means to prevent conflict. That is the case in Sierra Leone and it is also the case in Nepal. The requirements in Nepal are classic candidates for funding under the Global Conflict Prevention Pool, because you have there a very, very serious terrorist insurgency. You also have a fragile government which is the subject of considerable criticism. We have had to take a strategic decision about how best we can support Nepal, against a background, number one, that it is important that we should not allow countries, where we can, to descend into insurgency and terrorism - and we all know what can happen there - but number two, that if we do, the consequences are not only pretty grave for that country, but also for surrounding countries, including in this case India which has a very natural regional interest in the stability of its neighbours. So we as ministers have come together - and this particularly applies to Clare Short, Geoff Hoon and myself - and have worked through what I think is a pretty coherent strategy for support for Nepal. Part of that is obviously humanitarian, it is good governance, it is diplomatic and political support, but also - and we have looked at this in considerable detail - it includes the provision of these helicopters and other military support. Yes, in order sometimes to prevent wider conflict, you have to arm armed forces and make sure they are effective, because one of the major problems leading to the insurgency has been the lack of equipment, some lost through accident and others through lack of training by the Royal Nepalese Army. If I may say so, I am very happy to justify the use of the money, but that is not directly the issue you want to pursue.

I do not really have a quarrel with the purpose of it, although there is a conflict in what you said about arming people for insurgency, arming people in these situations, with what is said in our information, which is that they are not being used for arms, for waging a war.

(Mr Straw) No. We are not arming them for insurgency. The helicopters are not armed. We are providing them for the Royal Nepalese Army, and they are restricted to logistical, medical and ongoing humanitarian tasks. Of course, if you are saying to me indirectly, "Isn't that assisting in the combat capability, not directly but indirectly, of the Royal Nepalese Army?", yes is the answer, it must be the case, because if you enable them to get their troops there, if they are able to be extracted more quickly for medical support, of course that assists their capability, but I still think it is justifiable.

But it should be made transparent.

(Mr Straw) It is.

It should be made transparent that that is what one is doing, one is assisting the Nepalese Army in the conduct of its war. That is not conveyed by the expression "Global Conflict Prevention Pool".

(Mr Straw) No, I am really sorry, Mr Worthington, I do not accept that. Unless one is a pacifist - and I respect those who do take that view - then I think that it is accepted that in order to prevent conflict, you have to use force in many circumstances, and that is certainly true in Nepal. It is impossible to prevent this insurgency from these Maoist terrorist groups, who are vicious beyond belief, without both a military strategy alongside, as we have been urging on the Nepalese Government, and a political, governmental human rights strategy. One of the things we have sought to do in the British Government since these pools were established on the initiative of Clare Short and Robin Cook in the first Parliament, is to bring together the combined resources of various government departments here and to develop a single strategy which we then apply.

Finally, could you undertake to have another look at the issue of the information which is given out? My memory is that on the Africa pool you can see how the money has been spent, but not so on the Foreign Office one.

(Mr Straw) I am happy to do that.

Sir John Stanley

Foreign Secretary, I declare that I am Chairman of the Britain Nepal All-Party Parliamentary Group, a wholly unremunerated office. In that capacity, I would wish wholly to endorse what you said about the viciousness and brutality of the actions which the Maoists take, but I want to focus on the conditions under which the gift of helicopters has been made. As very often in life, what looks in committee room 15 to be an entirely sensible and rational statement of ministerial policy does not always actually have the effects intended on the ground. The policy is to restrict the use of helicopters exclusively to logistical, medical and ongoing humanitarian tasks. I would just like to focus your attention on the medical dimension. Foreign Secretary, I do not know whether your officials have advised you that when the Maoists go into attacks on usually district headquarters, the two top priority targets are first of all, of course, to murder all police officers and members of the Royal Nepalese Army, target one; target two are the available medical supplies. If you were able, by any chance, in your incredibly busy schedule, to see the excellent Channel 4 programme on 21 February "Nepal Raising the Red Flag", you would have seen vivid testimony of that. It was also featured in the Observer newspaper. Medical supplies are a top currency as far as the terrorists are concerned. They want the medical supplies for their own use. They are a keen means of basically securing the cooperation and coercion of the civilian population, and they are a means of extorting money and gifts in kind for their operations. Therefore, I wish to ask you, if these British-gifted helicopters are used to deliver medical supplies on a large scale, under the existing well-established pattern of Maoist terrorism the places to where they are delivered are going to become absolutely top targets for the Maoists. I am speaking for real. You may laugh.

(Mr Straw) No, I am not laughing.

They are going to be top targets. Unless the delivery of these medical supplies is accompanied by hugely greater security for those medical supplies, you are going to be gifting medical supplies and everything that goes with them to the Maoist terrorists.

(Mr Straw) You are very well informed on the matter, Sir John. Allow me to look into that and come back to you.

Chairman: Let us move on.

Mr Khabra

For the whole year from September 2001 to September 2002 the Government denied issuing a licence to export parts -----

(Mr Straw) Hawks, yes.

----- aircraft equipment and production equipment to India. It then acknowledged it did, in September 2002. How was this oversight possible, and what measures have been taken to ensure that such an oversight cannot recur? That is one question, but I want to ask you another question. How does the Government ensure that its activities in promoting the British arms industry do not in any way prejudge, and are not seen to prejudge, decisions on licence applications? Is it conceivable that a licence for their export could be refused, even after the Prime Minister has urged the Government of India to buy Hawk aircraft?

(Mr Straw) On your first question, Mr Khabra, when I came last year I said that the application for the export of Hawk aircraft to India had been received. It was incorrect, and it was an entirely innocent inadvertence, because there had not been an application for the aircraft, but there had been an application, which had been approved, for components and production equipment to make up the aircraft, so amounting to the same thing. As soon as I discovered this error, I wrote to the Committee and have since put it on the record of the House. As to how these things happen, certainly I am not perfect, and I apologise for that, but that was the background to this. On your second point, the licence that had been issued will enable there to be, as I recall - but I will double check this - the export of the sale which British Aerospace, BAES, is seeking with the Government of India, which sale has not yet been finalised by the Government of India, I believe.

(Mr Dowse) Yes.

(Mr Straw) There we are.

Chairman

The press tell us that the Prime Minister has been urging the Indian Government to buy Hawk aircraft.

(Mr Straw) So have I.

Fine, then the unity of Government is demonstrated by this brief exchange. Is it conceivable in these circumstances that a licence for their export could ever be refused?

(Mr Straw) We would judge any outstanding licence applications on the criteria, just as the existing ones have been, just that.

(Mr Dowse) That is essentially the case. The contract that is under negotiation, but has not been finalised, would involve production of Hawk aircraft in India. The licences that were approved in September 2001 were for production equipment and components. No exports have taken place against those licences, because the contract has not been signed. They were approved at that point in order that British Aerospace could move very quickly to meet delivery schedules if and when the contract is signed.

(Mr Straw) Mr Berry, if there are outstanding applications, they will be considered against the criteria. Would either the Prime Minister or I have been urging on the Government of India the merits of Hawk, if we believed that the sale of Hawk would be contrary to the criteria? No, of course we would not. It is an entirely legitimate part of British ministers' role overseas to support British industry, including British defence industries, and I am totally unapologetic about my very active support for all British industries, including the British defence industry. For reasons which this Committee well understand, I cannot, when I go to talk to a minister about a particular defence sale or prospective sale, say that of course a licence will be forthcoming, because that would be quite improper, but neither would I ever in any circumstance go and canvass for a sale if I thought, on the information as at the time that I was making those representations, that the licence was likely to be refused.

Clearly there is a very delicate balance here. On the one hand, it could be argued that in promoting, quite legitimately, UK exports - take the case of Hawk to India - you are effectively prejudging. You can say to people, "Well the licence has not been granted", but you are the Foreign Secretary, so the reasonable assumption is that if you have been satisfied that should an application be made it will be granted, they can be satisfied that should an application be made it will be granted.

(Mr Straw) In the case of the Hawk anyway, it is hard to see on what basis any outstanding licences will be refused, given the fact that we have already agreed licences for the components, so it amounts to the same thing. The criteria are there. They have to be applied objectively and reasonably and with integrity, but they are applied by the same ministers who also have responsibilities to make representations to support British industry. That is entirely proper, it seems to me, and we are accountable for how we apply them. But in the real world, in the case of Hawk actually, the circumstances have not arisen with me, because some of these licences were going through in any event. But sometimes a licence has not been granted. As I say, I know what the criteria are, so do officials. I would not dream of canvassing for a sale if I thought the application for a licence was going to be refused. The company concerned - most of these companies are quite rational - would not have wasted their time pursuing a sale in those circumstances.

You assume your view on that, Foreign Secretary, would be shared by the other three Secretaries of State who have responsibility?

(Mr Straw) Yes is the answer. Hawk, after all, is hardly secret, if you want to sell a Hawk or if British industry wants to sell a Hawk to the Indians.

Briefly, you are saying that of course before you promote a particular export to a particular country, you would satisfy yourself in your own mind that this would not be in breach of the export control criteria, because otherwise you would not do it. My question was simply, presumably therefore that means you can sell to the other three Secretaries of State beforehand, because it is things where the Government presumably will not collectively be promoting?

(Mr Straw) Sure, where appropriate. Sometimes these are questions which do not arise, because it is perfectly obvious that it is a sensible thing to do, and there is not any remote argument.

It is obvious to some, but it is not obvious to everyone.

(Mr Straw) Mr Dowse is saying we have been trying to sell Hawk for 20 years, and it is perfectly open. Mr Hoon, when he is over there -----

Yes, I do not think anyone doubted that. I do not think that was the issue at stake.

(Mr Straw) And the Deputy Prime Minister.

Sir John Stanley

Foreign Secretary, can you tell us whether the apparent change of arms export policy from Britain to Algeria, as reflected in our Ambassador's interview in the Algerian press on 26 January, reflects the wishes of the British Government to give assistance to the Algerian Government in their very, very serious internal security situation they face, or whether it is due to the British Government's wish to secure more fuller cooperation from the Algerian Government in dealing with and receiving information about the potential terrorist threat inside the UK from those of Algerian nationality and background?

(Mr Straw) My understanding, first of all, is that the Ambassador did not make any statements about possible arms export licences. I say that is my understanding. I have not seen the newspaper interview, neither have I seen any report by the Ambassador as to what he exactly said or did not say, but that is my understanding at the moment. The Committee may also like to know that as part of its role in supporting British defence industry winning export businesses, two Defence Export Sales Organisation officials paid a short visit to Algiers, the first in ten years, to explore the scope for the British Government to do business there. The visit was cleared in advance with the Foreign Office and the British Embassy. During discussions with the Algerian officials the requirements of the export licence system were made clear, and no commitments were made on either side. No contracts were signed during the visit. Any proposal to supply Algeria with defence equipment would be subject to normal export licensing procedures. I may say too - and we know what the criteria are - that they would also take into account in this particular case the statement that I made to Roger Casale on 17 December 2001 about how I intended to apply the criteria where there were terrorism issues concerned.

Where you refer to terrorism issues, can you just address my question?

(Mr Straw) I was trying to.

In terms of the British Government going down this path - which one can wholly understand, given where we are - is the motivation in relation to internal security inside Algeria, or given the fact of the Algerian connection with the ricin discovery in London, is it related to the threat of Algerian terrorism inside this country?

(Mr Straw) No. I have seen a good deal of information about the ricin problem and so on, but at no stage have I seen any piece of paper suggesting that there should be some improvement in our defence sales to Algeria because we needed intelligence cooperation. However, what we do want is better, more normal relationships with Algeria. We have had an Ambassador there. We also want to see an improvement in the Algerians' human rights record, but we certainly need cooperation with them on counter-terrorism. That is very important.. What often happens is that when you try improve relations with a country for one reason, you end up improving them with the country on a much wider agenda. You will also be aware, Sir John, that Brian Wilson, the Energy Minister, was out there recently. So as relations improve, a much broader agenda opens up.

Chairman: We need to move into confidential session for a brief period. Could I thank the public for their attendance. Perhaps they could leave us as quickly as possible so that we can move into a brief confidential session. Thank you.