House of Commons - Defence - Written Evidence

Quadripartite Select Committee Written Evidence

Appendix 16: Further memorandum from Saferworld

Quality of the Annual Report

The Government announced some time ago that there would be no more improvements to the Annual Report for three years, however those three years were up by the time the 2002 Annual Report was produced. Nevertheless, the format of the 2002 Annual Report was effectively identical to that of 2001. It is now generally accepted that it is in the public interest for the maximum possible level of disclosure regarding export licensing. Saferworld has long argued that the Annual Report should function as a "one stop shop" which enables outside observers to assess whether the UK Government is honouring its export control commitments. Currently this is not the case.

The Report does not provide information on all transfers of controlled items which are either sourced from the UK or authorised by the UK Government (for example, the Annual Report does not provide information on disposal sales).

Can the Government give an assurance that the Annual Report will in future provide appropriate information about all controlled goods or technologies transferred or brokered from the UK, making clear the nature of the transfer (eg commercial sale, disposal sale, gift, government-to-government contract etc.)?

Furthermore, for those transfers on which the Annual Report does report, the information provided is insufficient to allow effective analysis. While certain observers may have access to additional information, for example the QSC gathers more detail through written questions to the Government), many are completely dependent upon the Annual Report: more comprehensive data is therefore necessary.

Key elements missing from information on licences granted (and refused) include:

— Quantities

— Approximate values

— End-user

— End-use (this would be of particular value, as the summary descriptions in themselves often leave many questions unanswered. For example, what is the intended end-use of "components for military infrared/thermal imaging equipment" to China? Is it to monitor the gatherings of Falon Gong supporters in Chinese cities? Information on the use of dual-use goods would also be of significant value, for example, is "radioactive material" for use in a hospital or for a nuclear programme?)

What plans does the Government have to improve the nature of information on export licences in the Annual Report so that outside observers are better able to assess whether the Government is honouring its commitments?

There is also a need for greater disclosure regarding the management of the open licensing system, for example through information on deliveries made under open licences and compliance procedures (see section on OIELs). There are still some doubts about how the new types of licence will be reported, but the indication that Global Project Licences (GPLs) issued under a Framework Agreement[20] project will be reported on in a similar fashion to OIELs is disappointing.

Will future Annual Report's provide details of the finished product to which licences issued under a Framework Agreement GPL refer?

Will the Government seek to persuade his Framework Agreement partners to agree to publish those states agreed as possible recipients of goods produced under a Framework Agreement project?

Open Licences

It would appear that despite Government reassurances to the contrary, the use of open licensing is increasing. This is supported by analysis of the total number of countries listed as destinations on OIELs since the Annual Report has been inexistence, and by the opinion of industry. That the nature and scale of this increase requires further examination has been made clear by the QSC in its report on the 2001 Annual Report, in which it was stated: "it is curious that industry recognises that there has been an increase in the scope of open licensing, given that the Government has consistently denied that this is the case."

Will the Government explain why the use of OIELs in comparison to SIELS would seem to be increasing?

—

Saferworld is concerned that this apparent increase in the use of open licences by the Government may be undermining the licensing process. Open licences allow for a lower level of scrutiny and transparency than SIELs, and while we appreciate the rationale behind their use (ie to allow for limited resources to be targeted more effectively), we are concerned that convenience could here become the enemy of responsible policy.

The fact that OIELs typically place allow multiple deliveries, place no limits on value or quantity, and do not specify end-use or end-user, create particular concerns against a number of the Consolidated Criteria. For example, the transfer of large quantities of arms and military equipment under OIELs could adversely affect regional or internal stability in situations where there are tensions or conflict. The use of OIELs can also be problematic in terms of diversion, where unscrupulous end-users may continue to import arms and equipment beyond their needs in order to re-export them to a third party. Additionally, transfers made under OIELs can negatively impact development where potentially large-scale exports of arms and equipment could undermine sustainable development in very poor countries.

What steps are taken to ensure that OIELs do not allow for exports on such a scale as to threaten regional stability or hamper sustainable development in the recipient state?

What steps are taken to ensure that exports, permitted under OIELs to countries which are acknowledged as diversionary risks, are not re-exported or put to inappropriate use?

In transparency terms, moreover, because quantities or values of equipment exported are not recorded in the Annual Report, there is no way of Parliament or the public knowing the volume or value of exports that have taken place under OIELs, thereby preventing an objective assessment of the impact of particular licences and therefore of Government arms export policy. This lack of information also undermines the significance of the data included in the Annual Report on SIELs. Examples from 2002 which illustrate how this selective provision of value data paints an extremely partial picture at the level of individual countries include:

— Cameroon: no SIELS granted (total value £0); 10 OIELs granted;

— Philippines: 5 SIELs (total value <£250, 000); 34 OIELs.

At the very least, the Government should revise the system of open licensing to stipulate maximum quantities and values, and these should be reported upon in the Annual Report.

Will the Government commit to providing information in future Annual Reports on the maximum quantities and approximate values that may be exported under OIELs?

The Government has in place a range of audit and compliance procedures to ensure that companies are honouring their OIEL commitments. This system is a welcome component in the UK export licensing regime. However, no information about the result of these procedures is included in the Annual Report, and it is thus impossible to judge what effect they are having. In order to build confidence in the use of open licences, the Government should report on the management of the compliance system, including information on number of visits or audits, incidences of anomalies or wrongdoing, and the remedial measures taken in response to problems.

What plans has the Government to include information on the OIEL compliance system in future Annual Reports?

Saferworld is also concerned that OIELs are being ordered for a broader range of equipment than is appropriate to some destinations. For example, in 2002, it would appear that 42 countries were named on an OIEL for an extremely wide range of equipment with offensive utility. This equipment would appear to be predominantly naval, but there was also equipment of concern that could have been for use in other environments. [21]lncluded among the 42 states to which goods may be exported under this OIEL are:

Angola	India	Nigeria	Surinam
Argentina	Ivory Coast	Paraguay	Trinidad & Tobago
Brazil	Malaysia	Peru	Turkey
Cameroon	Martinique	Philippines	Uruguay
Colombia	Mexico	Senegal	Venezuela
Ecuador	Namibia	South Africa

It may be that many of these countries have little interest in a large proportion of the equipment on this licence, which raises questions about why they should be included in the first place. Conversely, if they are in the market for most of the items listed, this would raise other, but no less important questions, with regard to their suitability in light of various of the Consolidated Criteria. In either case, Saferworld has serious doubts about the wisdom of including these countries as permitted destinations under this licence.

For example, what proportion of these predominantly naval items listed is Paraguay, a landlocked country with a reputation as a transshipment point, expected to buy over the lifetime of the licence? If this is typical of the way open licences are being issued it raises serious doubts about the system as currently conceived. OIELs should be tied more tightly to actual requirements of the individual countries concerned; only where there is a reasonable expectation that there is a legitimate requirement for particular equipment should that equipment appear on the licence.

Saferworld understands the concerns of the QSC, as expressed in its response to the 2001 Annual Report, in which it recommended that "the Government should consider how open licensing might best be extended to minimise the regulatory burden on legitimate business, and in particular to ensure that new business is not lost." However, without a strong link between licences issued and equipment intended for export, the integrity of the export risks being undermined.

Will the Government clarify whether OIELs are issued in circumstances where permitted destinations are not expected to have an actual demand for all the goods listed on the OIEL? If so, what steps are taken to ensure that this use of OIELs does not lead to unforeseen exports of controlled goods?

In the case of OIEL number 10 to Paraguay, as listed in the 2002 Annual Report, can the Government explain why this landlocked country with a reputation as a transshipment point was included on this licence (predominantly for offensive naval equipment)?

Country concerns

Saferworld's Audit of the Governments 2002 Annual report on Strategic Exports, contains a comprehensive country-by-country analysis of UK Government export licensing decisions during 2002. Drawing on this, the Audit has a full assessment of the Government's implementation of the Consolidated EU and National Arms Export Licensing Criteria (Consolidated Criteria). Below is a list of countries where Safer world has raised concerns about the sale of military equipment in relation to the different criteria, full details are outlined in the Audit, along with assessments of Criterion 6: International Law and Criterion 7: Diversion.


Consolidated Criteria	Countries where concern is raised under criteria

Criterion 1: International commitments	Afghanistan, Armenia and Azerbaijan, Bosnia-Herzegovina, China, Cyprus, Iran and Iraq, Somalia, Sudan
Criterion 2: Human rights	Brazil, Egypt, Jamaica, Jordan, Kuwait, Morocco, Nigeria, Pakistan, Philippines, Russia, Saudi Arabia, Sri Lanka, Thailand, Turkey
Criterion 3: Internal stability	Indonesia, Morocco, Pakistan, Philippines, Russia, Saudi Arabia, Sri Lanka, Turkey
Criterion 4: Regional tensions	India and Pakistan, Jordan, Egypt, and Israel, Kuwait, Saudi Arabia, UAE, Oman and Qatar
Criterion 8: Sustainable development	Angola, Bangladesh, Egypt, India, Indonesia, Cote d'lvoire, Jordan, Kenya, Nigeria, Pakistan, South Africa, Sri Lanka

There have recently been two developments in relation to Pakistan and China:

Pakistan

The recent revelations about the role played by Pakistani Dr Abdul Qadeer Khan in proliferating nuclear technologies, and the possibility of widespread complicity by other senior Pakistani officials raises very serious concerns about Pakistan as a diversionary risk.

What steps are the Government taking to tighten its export licensing policy to Pakistan as a result recent disclosures with regard to proliferation of nuclear technology, not only on key technologies but also on conventional strategic goods?

Has information generated by Libya's recent openness caused changes of policy on licences granted for exports to other countries?

China

The UK interprets the EU arms embargo on China as covering lethal weapons such as machine guns, large calibre weapons, bombs, torpedoes, rockets and missiles; specially designed components of the above and ammunition; military aircraft and helicopters, vessels of war, armoured fighting vehicles and other such weapons platforms; any equipment which might be used for internal repression. This interpretation does not prohibit the licensing of components and technology for military aircraft and helicopters, vessels of war, armoured fighting vehicles and other such weapons platforms.

In 2002, both the scale of export licensing to China and the type of the equipment were of concern. For example, licences were issued for the export of inter alia components for combat aircraft, technology for the use of test equipment for combat aircraft, test equipment for combat aircraft, components for combat helicopters, technology for the use of combat helicopters, technology for the development of components for combat helicopters, components for frigates, components for electronic warfare equipment, components for nuclear reactors, sporting gun ammunition, toxic chemical precursors and technology for the production of toxins. It is not at all clear how effective this interpretation can be in pressurising the Chinese Government to improve its human rights record. With regard to the licences relating to combat aircraft and combat helicopters, very few licences for complete aircraft or helicopters to any countries were issued in 2002, which raises questions regarding whether the UK interpretation has any impact on the licensing of this type of equipment to China.

Can the Government explain the purpose behind the embargo to China, and explain how, in 2002, the issuing of £50 million worth of SIELs and 26 OIELs for a wide range of equipment is consistent with this purpose?

In view of the ongoing and systematic abuse of human rights abuses in China, how is the current UK policy and the licensing of such a large quantity of equipment serving to pressurise the Chinese Government to have greater respect for human rights?

The French Government has recently proposed ending the EU arms embargo to China. A number of other EU states have responded, with the tide apparently running in favour of the French position. The Netherlands, for example, has recently changed its opinion and is now open to such an idea. The US has expressed its strong preference for the embargo to remain in place. The position of the UK is so far unclear. On the basis of the ongoing human rights situation, the significant procurement ambitions of the Chinese Government and relations with Taiwan, Saferworld would recommend that rather than ending the embargo, it should be strengthened to include components of all embargoed systems.

What is the UK Government's position with regard to changing or ending the EU arms embargo on China?

F-680 process

In recent years, more and more information has come to light regarding the way in which the F-680 process is used in a variety of ways within the UK export control milieu. From being used by industry to get approval for the release of classified information or to receive a non-binding indication as to whether they are likely to (at a later date) be awarded an export licence for a particular deal, it is also used in a number of ways by government to manage its own conduct, for example to determine whether the Government should become involved in supporting a possible sale or to approve a disposal sale or gift.

The Government has given assurances that an F-680 assessment lends full weight to the Consolidated Criteria, which begs the question of why not then use the standard export licensing process. The use of two overlapping processes inevitably creates confusion about how the system works. Furthermore, as the Government has itself stated, considerable time may pass between an F-680 approval and a subsequent transfer, with potential for significant change in the security environment. For example, the UK Government recently threw considerable weight behind a BAE bid to sell Hawk aircraft to India. But negotiations for the deal started almost two decades before the sale was agreed. It is not clear what role the F-680 process had in the Government's involvement, or when any F-680 assessment might have been made. In order to build confidence in the use of F-680, the Government must set out full details of exactly when and how the F-680 is used in different circumstances. This must cover all uses of the process.

Can the Government provide information regarding all those circumstances where the F-680 process in used with regard to the transfer overseas of controlled goods, including specific and comprehensive details of when and how it is used?

Military gifts and the global Conflict Prevention Pool

One of the important issues raised by the QSC in its response to the 2001 Annual Report on Strategic Exports concerns the Government's role in gifting military equipment to overseas governments and using funds from the Conflict Prevention Pool to finance the gifts. The Export Control Act 2002 does not bind the Crown and as such "no licence is generally required for Government-to-Government transfers by gifting".[22] This raises the prospect of the Government participating in transfers of military equipment which have not been scrutinised against the Consolidated Criteria. Indeed, in its response to the QSC, the Government has acknowledged that "gifts of [strategically controlled goods] made in recent years have not always been assessed formally against the [consolidated] criteria"[23] while maintaining that any gifts funded from the Conflict Prevention Pool will have been subject to "appropriate inter-departmental consideration." [24]In the interests of transparency and accountability, it would be instructive if the Government were to reveal the nature of this consideration.

In addition, reference is made to the potential for the Government to facilitate the transfer of controlled goods by way of a letter of Crown Immunity which "confirms to HM Customs that the item is either wholly owned by the Crown or is one over which the Crown has the right of disposal, and will therefore not be subject to licence".24 While this information is helpful, again in the interests of transparency and accountability, it would be useful to know under what circumstances a transfer would be classed as eligible for Crown Immunity rather than constituting a Disposal Sale, for example.[25]

When a Government Department wishes to make a gift in excess of £100,000, it is normal practice for the Ministry in question to place a Minute before Parliament, giving Members 14 days to consider the proposal. If during the 14-day period an MP signifies an objection to the gift through tabling a question or a motion or otherwise, then the Government cannot approve the gift until the objection has been considered. [26]

During 2002, controversy was generated by the manner in which the Government gifted 114 Challenger I MBTs and 19 training tanks to Jordan and 2 Russian-made Mi17 helicopters to Nepal. With regard to the former, a memorandum regarding the intention to gift the tanks to Jordan was deposited in the House of Commons Library during parliamentary recess, thereby depriving Parliament of the opportunity to scrutinise the proposal. The Government explained subsequently that the need to keep UK-based tank refurbishment facilities open lay behind the timing of the notice. [27]With regard to the gift of two Mi17 helicopters to Nepal, a Minute giving notice of the government's intention to gift the two helicopters to Nepal was laid before the House at the end of July 2002. Unfortunately the Minute was tabled only two days before the parliamentary recess and so Members were not given the requisite 14 day period during which to scrutinise the proposed gift. [28]

A related issue that arises in connection with the gifting of helicopters (and other equipment) to Nepal concerns the source of Government funds used to pay for the goods. The cost of the gifts to the Government of Nepal, which came to £4.077 million, was borne by the Global Conflict Prevention Pool. The QSC concluded that Conflict Prevention Fund should not have been used to purchase the military equipment.

In December 2003, it was reported that Britain had agreed to supply two used Short-Take-Off-and-Landing (STOL) planes to the Government of Nepal. [29]There had been no announcement of this in Parliament. The Foreign Office confirmed the purchase and said it planned to make a statement to Parliament once the aircraft had been ordered. [30]However,this does not explain why a statement was made by an embassy official in Nepal that the Government had "agreed" to provide the planes, when the correct approval system had not been followed. [31]

Under what circumstances is a transfer classed as eligible for Crown Immunity rather than constituting a Disposal Sale?

What authorisation was given to the British Embassy Official in Nepal to make a statement on 21st December 2003 that the British Government had agreed to supply two Short-Take-Off-and-Landing planes to the Royal Nepalese Army?

What is the decision making process for granting military gifts under the global conflict prevention fund?

Prior parliamentary scrutiny

For a number of years the QSC has been engaged in dialogue with the Government regarding the possibility of the Committee having sight of certain export licence applications in advance of the decision being made, and thereby serving in an advisory capacity. In July 2002, the Committee stated that "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." Unfortunately, the issue of prior scrutiny appears to have reached a stalemate and the Government has not come forward with proposals or discussed it further with the QSC. In April 2003, the Secretary of State for Trade and Industry was asked whether the introduction of prior scrutiny would assist the process of coming to decisions quickly over licences. [32]The Secretary of State dismissed the argument stating that "I fear that this is one we are going to go on disagreeing for some time to come." [33]

A system of prior scrutiny would be particularly appropriate with regard to decisions over the gifting of military equipment and also in terms of licences granted for disposal sales and government-to-government contracts since these are a direct expression of Government policy and can involve the transfer of publicly owned equipment. Under the QSC's recommendations for a two-stage system of prior parliamentary scrutiny of arms export licence applications, proposed gifts, disposal sales or government-to-government contracts, should automatically be notified to the Committee in Stage 2 (in which comprehensive details of the proposed transfer are provided). Issues of delay, confidentiality or principle do not apply, as in the case of gifts over £100,000, Parliament should have to approve the gifts anyway and the recent Nepal case illustrated that the intention of the Government had been announced publicly.

What discussions has the Government had recently on the introduction of prior parliamentary scrutiny?

Will the Government consider introducing a system of prior scrutiny for the granting of military gifts, disposal sales and government-to-government contracts?

End-use monitoring

Effective monitoring of the end-use of arms would go a long way to allay many of the concerns that are raised about selective arms exports. Despite the efforts that the Government makes to ensure that arms which might be used for internal repression or external aggression are not sourced from the UK, the danger remains that unscrupulous or irresponsible end-users may themselves re-export arms of UK origin to countries in conflict and human rights crisis zones.

In 2002 and 2003 a number of reports 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 2002, were suspected of being links in the Iraqi military-equipment supply-chain. 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. The 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 and the QSC have never called for such a system. During a debate in March 2003 the Foreign Office Minister Mike O'Brien said "It would not be possible to have a formal requirement for end-use monitoring, because if we did that on a formal basis everywhere, it would consume a vast amount of resources." [34]MPs in the debate challenged this stating that the call was not "a blanket check-it is on those deals in which there is most likely to be a problem." [35]However, this clarification has not served to forward the debate.

The Government have stated that they "often impose certain, re-export conditions and much informal checking is carried out by posts." [36]However, when the QSC called on the Government to "provide us, in confidence if necessary, with a copy of the guidance issued to overseas posts and desk officers on the circumstances in which end use monitoring should be considered"[37] the Government refused, but explained that the guidance advises "the desk officer to consider where monitoring would be feasible and would make a genuine contribution to our efforts to prevent diversion or misuse of defence exports. It makes clear our commitment that we are prepared to carry out such monitoring where possible and appropriate." [38]The Government have failed to answer when and under what conditions end-use monitoring takes place and it is clear that it remains an ad hoc, informal process.

The QSC asked the Government to look at the end-use system in the US. In the US, several formal end-use monitoring systems have been put in place, eg the State Department's Blue Lantern programme. Under this system, while some checks are random, the majority are triggered by the expert judgment of licensing and compliance officers using intelligence, law enforcement and a comprehensive list of "red flag" indicators. Depending on the nature of the specific problem. In 2001 and 2002, the US Government conducted 428 and 410 Blue Lantern end-use checks respectively, of which 50 and 71 were determined to be unfavourable. [39]Crucially it is considered that end-use monitoring has a deterrent effect.

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, could be undertaken by the UK Government. In February 2003, the Foreign Secretary Jack Straw said that he would follow-up on the system. However, a parliamentary answer in September revealed that Government officials had not had discussions with the US state department on end-user controls. [40]This changed in November when a parliamentary answer revealed that officials in the FCO had been researching the US system and would be "informing Ministers of their findings in the near future." [41]

The Government should strengthen provisions for end-user certification and monitoring. The Government should adopt a system whereby end-user assurances provided by prospective recipients of UK arms and dual-use goods take on the form of a legally-binding agreement—and it should forbid re-export without the express permission of the UK Government. If these assurances are found to have been broken at any point, sanctions should be invoked, such as the revoking of the licence, the suspension of further deliveries and the withholding of spare parts and servicing.

In its response to the 2001 Annual Report the QSC requested that the Government explain how providing information on the identity of the end-user of UK export licences would be to the commercial disadvantage of the exporter. In response the Secretaries of State asserted that revealing end-user information could compromise commercial confidentiality and highlighted concerns put forward by the UK Defence Manufacturers Association (DMA) that any information on lower-value contracts, in particular, is much sought after and of significant potential value. [42]However, the DMA has in discussions with Saferworld expressed its frustration with the Government's refusal to release certain additional information on end-users in circumstances where greater disclosure would protect against erroneous claims of irresponsible licensing decisions and commercial activities. [43]

The Government also state that details of the end-user combined with other information in the Annual Report could reveal sensitive information regarding a recipient country's defence strategy and could lead to difficulties with the UK's bilateral relationships as well as making the UK a less desirable source of defence goods. 43[44] These arguments remain theoretical and unsubstantiated and, moreover, have not proven a barrier to the disclosure of such information on the part of the US government.

What discussions has the Government had with the US regarding the Blue Lantern System of end-use monitoring?

What impact has the discovery of the breaking of end-use assurances (eg in Indonesia and Israel) had on export licensing decisions?

Amending the Consolidated Criteria

Despite the entry into force of the EU Code of Conduct in 1998, the UK Government has continued to face controversies on arms sales. In some cases this has prompted a review of how the criteria are applied, as was the case with the publication, in August 2002, of the new guidelines on sustainable development, or a clarification of how the Code is applied, as with the Government's statement, in July 2002, on the issue of incorporation. In spite of these developments, broader questions remain as to how effectively the criteria are being implemented.

In terms of the thousands of licences granted during 2002, it should be acknowledged that only a relatively small proportion raise concerns. As discussed in the end use section, it may be that in most cases the concerns would be alleviated if the Government were to reveal some limited information concerning the end-user of the equipment. Information on any guarantees regarding the use of the equipment given by the recipient could also be helpful in alleviating certain concerns. Indeed, when the QSC have undertaken further checks on a number of licences, often fears are allayed.

In the absence of this information, however, substantive questions remain with respect to the Government's implementation of the Criteria. Whilst NGOs and the QSC continue to urge the Government to provide additional information in future Annual Reports so as to facilitate a fully informed appraisal of UK arms export policy on the part of Parliament and the public, the fact that the same concerns are being raised year after year is suggestive of deeper problems.

It is clear, in fact, from the evidence given by the Government to the QSC that judgements under the criteria can be problematic. At the last evidence session, the Foreign Secretary, Jack Straw, admitted, with regard to the licensing, in 2001, of artillery to Pakistan that ". . . on some initial reading of the criteria, you could refuse every single application from every single country, unless the idea of the sale was that the equipment should never ever be used for the use for which it is contemplated." [45]A Government official went on to explain that at the time of the decision "the circumstances across the line of fire were taking place, were involving at that time small arms rather than artillery." [46]However, as the QSC noted "that artillery exchanges across the line of control were widely reported in both 2000 and 2002." Despite the fact that the Consolidated Criteria states "if there is a clear risk that" the goods could be used for internal repression, regional stability or affect development, licences continue to be granted. The answers above show how inadequate the risk assessment is, for example in the case above even if at the exact time the circumstances were involving small arms and not artillery (which is disputed) surely there was still a high "risk"?

Therefore, as evidence shows, if the UK Government can still approve the export of significant quantities of arms to countries where there are concerns relating to human rights, internal and regional stability, International law and development, while still adhering to the Consolidated Criteria, then a revised approach to export licensing must be considered.

There are plans to review of the EU Code of Conduct and it may be an opportunity to re-examine the Code Criteria (and therefore of the Consolidated EU and National Arms Export Licensing Criteria), with the express objective of strengthening the Code further and eliminating the loopholes and inconsistencies and ambiguities that threaten to undermine the laudable objectives of the Code as agreed in 1998.

Does the Government have any proposals for the EU Code review and how will the QSC feed into this process?

Incorporation

A continuing concern is the change in the guidelines for goods which would be incorporated into products for onward export that were announced in July 2002. The release of the guidance was forced by the fact that a decision had to be made regarding a licence for the sale of heads-up display units to the US for incorporation into F-16 fighter aircraft for onward export to Israel. Application of the Consolidated Criteria and the tightening of sales to Israel would have made granting the licence problematic. The Government therefore chose to issue the new licence at the same time as announcing that the licence had been granted, with no consultation.

In his recent book, Robin Cook illustrates the concern about this issue. "Ben Bradshaw waits behind to share with me his anxiety over the decision Jack Straw is announcing today that we will allow the US to incorporate British avionics in the F-16's that they are exporting to Israel. He is visibly upset by it, as he regards it as a flat breach of our own domestic ban on the export of weapons to Israel, and he personally resisted it during his time as the junior minister responsible for the Middle East..." [47]John Kamphner, in his book "Blairs Wars" quotes a member of the Government who said at the time: "the Israelis had given us assurances that the planes wouldn't be used in the occupied territories, we knew those assurances to be worthless. We knew similar planes had been used to bomb refugee camps." [48]If this is the case, it begs the question why the Government continues to licence equipment in this way?

The QSC raised the issue of incorporation in the May 2003 report and recommended that the Government should identify in the Annual Reports those licences for which the additional factors were a consideration and that the final destination of the equipment licensed for export should be identified in such cases as well as the incorporating country. This reporting has not appeared in the Annual Report.

Does the Government agree that by not seeking guarantees regarding the use of Heads-Up Display Units—exported to the US for incorporation into F-16 aircraft for subsequent export to Israel—that the Government is effectively circumventing its own avowed policy not to allow UK equipment to be used in the Occupied Territories?

How many arms export licences currently extant have conditions attached to the use of the equipment and to which countries do these apply?

Does the Government agree that, when it comes to the export of major components and subsystems which are for incorporation overseas, the Government should always be aware of the final destination of the product and their intended use?

What has happened to the promised reporting in the Annual Report on incorporation cases?

Brokering

The Government has chosen to assert extraterritorial control on brokers only where the brokering activities are in relation to long-range missiles or torture equipment, or to embargoed destinations. In doing so the Government has rejected calls from the QSC to introduce full extraterritorial controls on arms brokering. Subsequent to the publication of the secondary legislation in October 2003 there has been additional debate about the adequacy of UK arms brokering controls, with particular reference to the transfer of surface to air missiles (MANPADS), which have become an increasing concern. [49]The ease of transfer of these weapons makes them a particular concern when addressing trafficking and brokering of arms.

Janes estimates there are about 500,000 MANPADS in the world. Of these, only 350,000 are held in defence stockpiles: 150,000 shoulder-fired missiles are in the hands of unauthorised parties. Some of the simpler systems are available on the illicit arms market for as little as $1,000. Janes further estimates that 27 militia groups and terrorist organisations own shoulder-fired missiles. [50]In December 2003, the 33 participating states to the Wassenaar Arrangement agreed to "apply strict national controls on the export of MANPADS." [51]These measures are to be aimed in particular at "preventing acquisition by and diversion of these weapons to terrorists." [52]

However, the Government has given confused statements about how they are controlled. In a House of Commons debate in November 2003, the Minister, Nigel Griffiths, stated that: "The trafficking in shorter-range missiles by terrorists or for the purposes of terrorism is covered in many circumstances by the anti-terrorism legislation, which also has extraterritorial effect." [53]Roger Berry MP asked "Will he advise us in which circumstances the issue had not been addressed? Does he acknowledge that if missiles are not covered through the extraterritoriality provisions, they could be supplied to one or two individuals who could subsequently supply them to terrorists . . .?" The Minister responded that "My hon Friend's point is covered. One reason that we consider exports on a case-by-case basis is to review reports on where they end up. It is our intention to stop exports being passed on by anyone beyond the designed destination. That is the most effective way to keep weapons out of the hands of terrorists or anyone else." The Minister is completely wrong to claim that in this case the broker would be under the regulatory control and be assessed on a "case-by-case basis". A UK broker located overseas and supplying arms indirectly to terrorists, will in most cases not need to apply for a licence, thus there will be no assessment. UK law will not apply. This is exactly why there is a need for extraterritorial controls.

The Government has since at further controls on MANPADS. In a parliamentary question Foreign Office Minister, Denis MacShane, stated that "to counter the threat from [MANPADS] the Government will decide over the next few months whether anything further needs to be done to control brokering of these weapons." [54]

What decision has been made about the extension of extraterritorial controls on arms brokering to cover MANPADS?

February 2004

20 The Framework Agreement, to which France, Germany, Italy, Spain, Sweden and the UK are party, provides for streamlined licensing procedures for co-production projects. One Global Project Licence is to be issued for transfers among the co-production parties which will cover all transfers connected with the project among those parties. Exports to other countries will be licensed by the country of final assembly. Back

22 UK Strategic Export Controls Annual Report 2002, p 18. Back

23 Government response op cit, point 17. Back

24 Ibid, point 20. Back

25 Ibid, point 19. Back

26 The Departmental Minute Process is described in Erskine May (Parliamentary Practice, 22nd edition, Butterworths, 1997). Back

27 The Guardian, 29 October 2002. Back

28 The Guardian, 5 August 2002. Back

29 Kantipur new online 24 December 2003 www.kantipuronline.com/php/kolnews.php?&nid=4860. Back

30 Peace fund used to buy military planes, The Guardian, 23 January 2004. Back