House of Commons - Defence - Written Evidence

Quadripartite Select Committee Written Evidence

Appendix 7: Memorandum from Saferworld

This briefing covers a number of key areas:

— Export Control Act Secondary Legislation

Brokering

Transporters

Licensed production overseas

— End-use

— Export control

— Prior parliamentary scrutiny

EXPORT CONTROL ACT—SECONDARY LEGISLATION PROPOSALS

Brokering

Saferworld regrets that despite an election manifesto commitment, the Government has rejected calls from the Quadripartite Committee to introduce full extraterritorial controls on arms brokering.

Criminalising legitimate activities

The Government response states:

"The new controls will criminalise anyone trading, without a licence, in military equipment from the UK or a UK person anywhere trading in "Restricted Goods" and in arms to embargoed destinations. This latter control should capture many of the circumstances in which arms are transferred to areas of conflict or rogue states." (6)

(Emphasis added)

This argument reveals the limited scope of the Government's ambition. It is not enough to design legislation to capture "many of the circumstances" comprehensive controls are needed. Indeed, the secondary legislation will not capture "many" of the circumstances in which arms are to transferred to areas of conflict or rogue states. The new controls would not prevent UK arms brokers overseas transferring machine guns and helicopters to the Lords Resistance Army in Uganda, FARC rebels in Colombia or the war torn Ivory Coast. It will also be legal for British dealers to supply surface-to-air missiles to governments that have been accused of sponsoring terrorism such as Lebanon, Saudi Arabia and Syria. There continues to be a real risk that arms brokers will carry out activities overseas in order to side step the legislation.

The need for such powers to be extended to non-embargoed destinations was demonstrated in an article in the Observer of 27 April 2003. It was reported that Essex-based arms-dealer, Mick Ranger, who "runs a lucrative arms brokerage with operations in Bulgaria, Cyprus, Nigeria, Australia, South Africa and Vietnam" was prepared to organise the transfer of 200 rifles from Bulgaria to Syria, despite the fact it was "clear the weapons might be used in Iraq."[2] However, Mick Ranger "would not agree to any deal where Iraq was mentioned in official documents."[3] The Observer contacted Mick Ranger in Bulgaria, and although it is not clear from the article where the arrangements were made, the possibility of deals such as these being organised from offshore and thus escaping UK jurisdiction is clear. A succession of reports on sanction-busting by UN expert panels have shown how arms brokers evade arms embargoes by supplying weapons through neighbouring countries. But British arms brokers overseas will not need to apply for a licence to transfer weapons to a country neighbouring an embargoed destination. Such a loophole clearly undermines one of the main rationales behind the current proposals, ie that UK persons should not be able to broker arms to embargoed destinations.

Conflict of jurisdiction

"it would also be likely to lead to conflict of jurisdiction where other countries take a different view to us on individual cases, and to enforcement difficulties and administrative overload." (6)

The Government is already proposing to assert extraterritorial controls on the brokering of arms of certain torture equipment and of arms to destinations subject to a national embargo. In both of these cases there is no international consensus.

The concern of dual criminality (the argument that prosecutions in cases of extraterritorial jurisdiction only occur where the crime is also an offence where the activity takes place) has been over-ridden by the Government on a number of occasions, notably the extraterritorial controls on corruption in the Anti-Terrorism Crime and Security Act 2002.

— Does the Government believe that it will be easier to obtain a prosecution for corrupt payments to foreign officials made overseas than for the unauthorised trafficking in conventional weapons to a non-embargoed destination?

When will a UK broker be controlled?

The Government have not clarified when the activities of a UK broker will be controlled. Members of the electorate who have written to the Government on this point have had replies which stress that "UK controls will apply where any part of the activity takes place in the UK, for example a single phone call, email or a fax" (emphasis in the original). In her evidence to the Quadripartite Committee, Patricia Hewitt similarly referred to "controls . . . where any part of the transaction, including an email, fax [or] phone call, . . . takes place within the UK."[4]

However, the Secretary of State in response to a question regarding "a company being able to enter into a provisional agreement relating to the sale of equipment that it owns in one overseas country to another overseas country before actually acquiring the licence", replied that a licence would only be required when a "commitment" was "entered" into.[5] Moreover, controls are "expressly disapplied" to those who are providing only marketing and promotion services, and "responding to an initial enquiry from a potential buyer as to whether a company or person might be able to assist in the purchase of equipment from a third country, would not require a licence, provided no commitments were entered into."[6] On this basis it would seem that only certain types of email, fax or phone call will trigger a licensing requirement, and there is clearly the risk that UK regulations could be avoided by carrying out the "marketing and promoting" in the UK while "brokering" the deal offshore.

In order to avoid this potential loophole, the most straightforward and effective approach would be to licence all arms transfers brokers by UK persons regardless of their whereabouts. If all transfers are regulated, the control of negotiations becomes redundant.

Activities of other countries

The Government response states that:

"We alone cannot realistically hope to control all exports of military goods arranged and undertaken wholly within other states. To attempt to do so would expose the futility of a unilateral approach and undermine the credibility of our strategic export control regime as a whole."(7)

The UK Government's refusal to extend extraterritorial controls is also out of step with recent and current legislative developments in other European countries. Legislation in Finland and Poland now provides for full extraterritorial control over their respective nationals, while a similar law is about to enter into force in Belgium, Austria, the Netherlands, Norway and Sweden all require their residents to apply for licences when brokering arms between third countries, regardless of where the brokering activities are carried out. A similar proposal, supported by all the main political parties, is currently before the French Senate. And a number of other EU member states are now looking at updating or introducing laws on arms brokers. Under the US system, all US nationals wherever located, plus foreign nationals residing in the US, are required to register and obtain licences for all brokering deals.

— Does the Government believe that the US and other extraterritorial systems lack credibility?

— When many European countries are introducing comprehensive extraterritorial controls on arms brokers, why is the UK not going as far?

Resources

"Extending extraterritorial controls would spread our licensing and enforcement resources ever more thinly, distracting our efforts from enforcing controls on the activities of greatest concern."(8)

The Government have calculated that the additional costs of the new controls sould be £750,000 to £1,050,000 in the first year and £520,000 to £820,000 per year afterwards. These amounts are small in terms of public expenditure.

With the current international security environment, with increased concern of the activities of terrorist organisations, it is crucial that the Government allocates the necessary resources to ensure that the brokering of arms is effectively regulated.

In the wake of the tragic shootings in Birmingham at the start of the year, the Government announced its intention to allocate significant resources to prevent the illicit trafficking of weapons into the UK. According to the police, this will require enhancing police, customs and intelligence systems and links with law enforcement agencies in the regions from which the weapons are sourced and through which they pass, primarily Eastern Europe and the Balkans. The NCIS UK threat assessment 2002 states "there appears to have been an increase in firearms traced to Central and Eastern European countries ."[7] These are the same regions that are the main sources of arms transferred to conflict zones by UK arms brokers. This provides for considerable potential law-enforcement synergies: the same information exchange and co-operation systems that will need to be established to prevent illicit arms entering the UK will also be of use in enforcing new controls on UK arms brokers operating overseas.

— What does the Government estimate would be the extra cost of introducing full extra-territorial controls?

— Is this extra cost not justified in the current international security environment?

TRANSPORTATION

Saferworld is disappointed that the Government will not be extending controls over UK transportation agents.

"To extend the controls, further would mean regulating an overwhelming amount of legitimate freight traffic without adding any further control over the undesirable activity of legitimate arms dealers."(9)

The nature of the international transportation industry is complicated; included within it are a wide variety of actors, from freight forwarders to pilots, from large-scale national carriers to individuals flying their one plane below radar range in Africa or sailing their one vessel under a flag of convenience (FOC). According to the International Federation of Transport Workers (ITF), certain governments "do not see registration as a means of imposing sovereignty and control over their flag shipping [but instead] as a service that can be sold to foreign ship owners wishing to escape the financial, safety and social consequences of registration under their own national flags."[8]

The Washington Post, in December 2002, reported that "US intelligence officials have identified approximately 15 cargo freighters around the world that they believe are controlled by al Qaeda or could be used by the terrorist network to ferry operatives, bombs, money or commodities over the high seas"[9] It is anticipated that most or all of these vessels would be flying FOCs. The ITF, in evidence to the US Government, stated that "Bin Laden's covert shipping interests were first revealed during the trial of suspected bombers of the U.S. embassies in Kenya and Tanzania in 1998. A rusting freighter was found to have delivered supplies for the bombers to the port of Mombassa, Kenya." [10]

Controlling the people moving the goods is in some ways more straightforward than controlling brokers: in addition to evidence by audit trait, there is the physical evidence that comes with the activity. For example, in the case of air transportation, transporters must arrange for permission for over-flight and landing rights, and they must file flight plans with the International Civil Aviation Organisation. Aircraft are tracked to ensure they follow their projected routes, and this information is available to governments (however it should be noted that in areas without effective air traffic control systems, eg much of Africa, diversion from official flight plans is a relatively simple task). Most examples that have come to light in the last decade of UK persons being involved in questionable brokered arms shipments have related to their role in the shipping, rather than the arranging, of the transfer.

LICENSED PRODUCTION OVERSEAS

It is welcome that the Government intends to seek additional information from exporters about the intention of use in a licensed production facility, but this does not address many of the concerns.

Saferworld believes that licensed production agreements themselves should be licensed by the UK Government. Crucially, the LPO licence could contain certain post-export conditions. In particular, it should establish production ceilings and end-use(r) restrictions, with an explicit commitment to re-evaluate all licences for exports of controlled goods and technology to that recipient if undertakings are not honoured. A further advantage to licensing the LPO deal could be to streamline and simplify the licensing process, and to provide greater certainty to business.

Saferworld is convinced that such an arrangement could prove beneficial to all concerned. As well as providing for the maximum feasible level of control over LPO, it would assist the Government in focussing its resources on the most difficult licensing decisions (a principle to which the Government has repeatedly expressed itself committed). It would also provide an increased level of certainty and, if carefully managed, a reduced administrative burden to industry.

END USE

The secondary legislation sets out clearly the power that licences issued under the Export Control Act 2002 may be amended, suspended or revoked. This is welcome, however despite the 1997 Labour Manifesto commitment to "strengthen the monitoring of the end-use of defence exports to prevent diversion to third countries and to ensure that exported equipment is used only on the conditions under which the export licence has been granted", Saferworld is concerned that the Government has failed to introduce an effective end-use monitoring system.

In the last year a number of reports have surfaced regarding the diversion of military equipment from third countries into Iraq. India, Jordan, Ukraine, the UAE and Yemen, all countries to which the Government authorised weapons sales in 2001, were all suspected of being links in the Iraqi military-equipment supply-chain. In February, it emerged that UK forces had found UK-made equipment in an Iraqi weapons-store outside Basra, and MoD sources were reported to have said "the find highlighted the threat from the burgeoning black market arms trade across the Middle East." [11]

Despite the obvious concerns surrounding this situation, the Government has declared itself satisfied that existing pre-licensing checks are sufficient to prevent diversion or unauthorised export, and refuses to institute a system of end-use monitoring to ensure that in cases where there are grounds for concern, UK personnel should have the right to conduct post-export checks on the use to which UK-sourced arms are put. The UK Government has argued that it does not "consider that it is either practical or useful to monitor the end-use of all military goods exported from the UK." It has made this point on a number of occasions, however most observers have never called for such a system.

In the US, several formal end-use monitoring systems have been put in place, eg the State Department's Blue Lantern programme. Under this programme, 54 (or 25%) of the 218 post-export checks carried out in 2000 produced a "negative response".[12] This "hit rate" would suggest that a system of end-use monitoring, prioritised to those countries and for those transfers where there is the greatest danger of diversion or misuse, could be a very useful addition to the UK export control regime. As is the case in the US, targeting the use of limited resources against a matrix of likely risk factors, for example where there is a history of diversion, should be undertaken by the UK Government. It is welcome that following the Foreign Secretary's evidence to the Quadripartite Committee in March 2003, the Government has undertaken to look into the Blue Lantern system further.

— Following the Government's commitment to look at the US system of end-use further—what progress has been made?

EXPORT CONTROL POLICY CONCERNS

Saferworld's forthcoming Audit of the Governments 2002 Annual Report on Strategic export controls,[13] highlights concerns over potential breaches of the consolidated criteria in arms export licences granted to over 40 countries. This is compounded by the concern that since September 11 2001, there appears to have been a weakening of export control policy, and an increase in support to countries that are seen as on-side on the war on terrorism.

Country concerns

There has been a twenty-fold increase in the value of arms sales licensed to Indonesia over the past two years. Last year the value of licences granted was £41 million (2001 £15.5 million) (2000 £2 million). Yet the 2003 FCO Human Rights report states: "Indonesia's human rights record continues to give some cause for concern" (p 41)

Licences granted to Indonesia last year included components for military training aircraft, munitions launching equipment, tanks, armoured personnel carriers. Furthermore, open export licences were granted for equipment including armoured all wheel drive vehicles. This is of particular concern as earlier this year the Government faced controversy over the use of British made Scorpion tanks in Aceh. The value of arms sales to Saudi Arabia have continued to cause concern. Last year the value of licences granted was £29 million (2001 £20.5 million). Individual export licenses granted for equipment including rocket launching equipment and assault rifles, general purpose machine guns. The FCO Human Rights report states that there are: "deep concerns about Saudi Arabia's failure to implement basic human rights norms". There have been some newspaper reports that there are plans for some more large sales to Saudi.

Exports of concern were also licensed to: Colombia—licences for toxic chemical precursors, technology for the production of toxins, technology for the use of combat aircraft, components for—torpedoes, surface to air missile launching equipment, heavy machine guns, combat aircraft, small calibre artillery; India—export licenses granted for equipment including components for anti-aircraft guns, ballistic test equipment, electron beam guns, fast attack craft, frigates, gun laying equipment, military helicopters. Open export licences were granted for equipment including components for combat aircraft, combat helicopters, military transport aircraft, military training aircraft, military aero-engines and small arms ammunition; Pakistan—individual export licenses granted for equipment including components for—air to air missiles, combat helicopters, frigates. Open export licences were granted for equipment including small arms ammunition; Morocco—Individual export licenses granted for equipment including sub-machine guns, combat helicopters, small arms ammunition.

PRIOR PARLIAMENTARY SCRUTINY

The Quadripartite Committee have long called for the introduction of Prior Parliamentary Scrutiny. The exports of concern listed above highlight the need for MPs to have the power to scrutinise export licence applications. The Government have stated that the Prior Parliamentary Scrutiny would:

"not be right into principle, and could not be made to work in practice without having a materially adverse impact on the efficiency and effectiveness of the export licensing process without causes significant damage to the competitiveness of UK exports."

Saferworld supports the introduction of Prior Parliamentary Scrutiny and has made a number of submissions [14]that address the concerns that the Government has raised. Legal advice sought by NGOs has confirmed that despite the Government's argument to the contrary, there is no constitutional impediment that would prevent Parliament from legislating to give itself a role in scrutinising arms export licences.

"We do not accept the arguments of principle raised by the Government against our predecessors proposals for prior scrutiny. . . . We recommend that the Government . . . come forward with proposals for a system of prior parliamentary scrutiny of export licence applications by a select committee, or committees, of this House." [15]

— What steps have been taken by the Government to respond to the Committee's recommendation to introduce a system of prior parliamentary scrutiny?

November 2003

1 "The Government's proposals for secondary legislation under the Export Control Act"-Government response to the Quadripartite CM59/5988 October 2003. Back

2 Anthony Barnett, "Exposed: global dealer in death," The Observer, 27 April 2003. Back

3 Ibid. Back

4 Minutes of Evidence to the Quadripartite Select Committee 3 April 2003, qu 9. Back

5 Ibid, qu 49. Back

6 Government Consultation document on the Secondary Legislation para 4.27, underlining in original. Back

7 NCIS UK threat assessment 2002. Back

8 Statement of David Henkel, 2nd Vice Chairman of the Seafarers, Fisheries and Inland Navigation Section of the ITF, before the US House Armed Services Committee Special Oversight Panel on the Merchant Marine Vessel Operations under "Flags of Convenience" and National Security Implications, 13 June 2002, http://www.house.gov/hasc/openingstatementsandpressreleases/107thcongress/02-06-13heindel.html. Back

9 John Mintz, "15 Freighters Believed to Be Linked To Al Qaeda; US Fears Terrorists at Sea; Tracking Ships is Difficult," Washington Post, 31 December 2002. Back

10 David Henkel, op cit. Back