Memorandum from the Ministry of Defence
The Committee requested a memorandum from the
MOD prior to the evidence session with the Defence Secretary on
17 January 2008.
MOD ROLE
IN ASSESSING
EXPORT LICENCE
APPLICATIONS
Export Licence Applications (ELAs) for military
and dual-use goods and technology are referred by the Department
for Business, Enterprise and Regulatory Reform (BERR) to the MOD,
FCO and DFID for advice. Within the MOD, relevant specialists,
including those in equipment capability and security, and defence
intelligence, consider applications against the Consolidated EU
and National Arms Export Licensing Criteria. They consider particularly
closely Criterion Four (Preservation of regional peace, security
and stability), Criterion Five (The national security of the UK,
of territories whose external relations are the UK's responsibility,
and of Allies, EU Members States and other friendly countries)
and Criterion Seven (the existence of a risk that the equipment
will be diverted within the buyer country or re-exported under
undesirable conditions). The advice is consolidated and provided
to BERR.
When considering ELAs for items controlled on
the Military List, MOD's ability to respond to BERR in the required
timescale is helped by the MOD Form 680 (F680) process. F680 clearance
is the means used by the Government to consider authorisation
of the release of classified information held by companies for
use in export promotion. Although separate from export licensing
in terms both of process and purpose, clearance benefits industry
by indicating, when necessary, technical concerns which industry
would need to take into account when making a subsequent ELA.
Where F680 clearance is in place, the company can seek Government
support for its marketing efforts, and an ELA can often be processed
more quickly, because much of the groundwork has already been
done. The process helps to limit the number of licences that need
to be refused. Having an F680 approval is also a requirement to
allow companies to use certain Open General Export Licences.
MOD processes F680 applications in the same
way as ELAs, seeking advice from the same MOD specialists as well
as the FCO, and where sustainable development issues are involved,
the DFID. F680 applications are considered against the Consolidated
Criteria, in the same way as ELAs.
US/UK DEFENCE TRADE
CO-OPERATION
TREATY
The Defence Trade Cooperation Treaty will simplify
and make more effective the controls on transmission of military
goods, technology and information between the United Kingdom and
United States, in support of our joint operations around the world
and collaborative efforts aimed at developing future defence capabilities.
Currently, controlled information and material
supplied by the US to the UK is passed under an individual export
licence, which is issued by the US Government to the exporter.
This process is time consuming and can add significant delays
to procurement projects. It also makes it difficult for UK and
US companies to work together to develop new defence capabilities.
Under the treaty, the need for individual licences
from the US will be removed. Instead, US material will have a
UK security classification attached to it, meaning that its handling
will be subject to the Official Secrets Act. HMG will take enforcement
action in the event of any unauthorised disclosure. This builds
on the many years of the UK and US protecting shared information
under the overarching security agreement between the two countries.
The current system for exporting equivalent material from the
UK to the US, including under Open General Export Licence, will
not be changed.
Only material that is destined for UK and US
sole end-use, in support of UK/US joint operations, cooperative
defence and security programmes, and certain HMG-only projects
that rely on US material, will be covered by the treaty. The treaty
will only cover material listed for export control on the US Munitions
List, and will include a small number of additional restrictions
on certain sensitive technologies.
The treaty will allow for such material to pass
without additional authorisation within an "Approved Community"
of UK and US Government establishments and UK and US companies
that have met certain criteria, including the ability to protect
classified material. Only personnel who meet appropriate security
standards and have a need to know will be able to access material.
EU DEFENCE INDUSTRY
RESTRUCTURING
With pressure on defence budgets throughout
Europe, it is essential that work be undertaken to develop a rationalised,
integrated and efficient European industrial base that can responsively
and cost-effectively meet capability requirements. Achieving this
goal will necessitate a number of steps by EU Member States collectively.
Major initiatives are being pursued by the European Defence Agency
(EDA), the European Commission and under the Letter of Intent/Framework
Agreement (LoI/FA).[1]
EU Member States that participate in the EDA
(all Member States apart from Denmark) have agreed that work must
be undertaken to develop an effective European defence industrial
base through aligning and combining our needs in shared equipment
requirements and meeting these through an integrated, interdependent
but less duplicative European Defence Technological and Industrial
Base (EDTIB).
The first steps were completed in September
2006 when the EDA Steering Board agreed the "Characteristics
of a strong future EDTIB"—namely that it should be
capability driven; competent; and competitive. This was followed
in May 2007 with the approval by Defence Ministers of a Strategy
for the EDTIB which aims to achieve these characteristics. In
September 2007, National Armaments Directors approved a series
of roadmaps that will take forward the initiative in the areas
of:
— Clarifying the key defence-related
industrial capabilities for the preservation or development in
Europe.
— Achievement of mutual confidence
on security of supply between EDA Member States.
— Increasing competition in the
European Defence Equipment Market.
— Developing diversity and depth
of the European defence related supplier base.
— Increasing Armaments Co-operation
amongst participating Member States.
Other, complementary initiatives are being pursued
by the European Commission and the LoI nations. These include
reducing the bureaucratic burden of intra-community transfers
of defence goods and services; providing procurement rules which
are more appropriate to defence procurement, in order to facilitate
greater competition; and addressing security of supply issues,
such that nations have greater assuredness in procuring from other
nations.
ROLE OF
DEFENCE ATTACHES
Changes to the Defence Attaché network
were announced by Defence Secretary in a Written Ministerial Statement
on 17 September 2007 (Hansard, Column 125WS).
A key role of Defence Attachés is to
promote the Government's policies in the area of international
security co-operation. The principal components of this policy
are to strengthen international peace and stability by preventing
conflicts, by contributing to the transformation of the security
structures of vulnerable states, by assisting and building partnerships
with those who may contribute to peace support operations and
by helping to reduce the risk of terrorism through greater co-operation
and communication. Another role of Defence Attachés is
to provide support to current or potential UK operational commitments.
They also give support for defence exports, where that contributes
to security co-operation, and the Defence Industrial Strategy.
Defence Attachés do not have a formal
role in export licensing issues. Policy advice on licensing issues
is given to BERR by MoD staff in London and by the FCO. Monitoring
activity after sales have taken place is under the direction of
the FCO, who may ask the relevant Ambassador to ensure the task
is carried out. Ambassadors may request any suitable staff to
perform this function.
Where the number of attachés in a post
has been reduced, such functions as were performed on export licensing
or other international obligations will continue to be undertaken
by reprioritising workloads amongst the remaining attachés.
In the small number of countries where the Defence Section is
closing, the MOD and FCO will work closely together to ensure
we continue to sustain our high standards in meeting our obligations
under the EU Code of Conduct on Arms Exports and other obligations.
CLUSTER MUNITIONS
Cluster munitions deliver suppression and destruction
capabilities against dispersed and mobile armoured targets, other
combat forces and military facilities in a defined footprint of
terrain. There may be situations where using a larger number of
unitary munitions causes more collateral damage than would be
the case with cluster munitions. The UK Armed Forces only use
cluster munitions in strict accordance with International Humanitarian
Law. Having carefully considered the military and humanitarian
factors regarding cluster munitions, the Government took steps
domestically to address them on 20 March 2007 when the Defence
Secretary announced the immediate withdrawal from service of two
of the UK's cluster weapon systems: the air-launched BL-755 and
the ground-launched MLRS M26. These two "dumb" systems
had neither target discrimination nor fail-safe capabilities.
The UK continues to urge other countries to take similar action.
The Government is retaining certain types of
cluster munitions that have a valid role in modern warfare. A
ban on the use of all types of sub-munitions would adversely impact
on the UK's operational effectiveness, impose serious capability
gaps on our Armed Forces and take away one element of force protection.
UK policy addresses humanitarian concerns while
at the same time retaining the capabilities essential for operational
effectiveness. The UK shares the humanitarian concern about certain
basic types of cluster munitions, which the Government also believes
should be subject to a defined prohibition. The UK is engaged
in the Conference on Certain Conventional Weapons (CCW). The UK
supports the UN Secretary General's call to address cluster munitions
in the CCW. The UK has also declared its support for the "Oslo
Process" which aims to prohibit the use of those cluster
munitions which cause unacceptable harm to civilians. The UK view
is that this does not mean a total ban but a ban on certain types,
such as the so-called "dumb" cluster munitions that
the Government took out of service in March of this year.
DEFENCE TRADE
PROMOTION RESPONSIBILITY
TRANSFER
The Prime Minister's statement of 25 July 2007
announced a machinery of government change moving responsibility
for defence trade promotion from the Defence Export Services Organisation
to UK Trade and Investment. On 11 December the Secretary of State
for Business, Enterprise and Regulatory Reform announced (Hansard,
Column 16-17WS) the arrangements under which this transfer will
take place. A copy of the Statement is attached at Annex [not
published].
SUPPLY OF
TYPHOON AIRCRAFT
TO SAUDI
ARABIA: THE
SALAM PROJECT
In December 2005 the Government signed an Understanding
Document which was intended to establish a greater partnership
in modernising the Saudi Arabian Armed Forces and to develop closer
service-to-service contacts, especially through joint training
and exercises. Under the terms of the document it was also agreed
that Typhoon aircraft would replace Tornado ADV aircraft and others
currently in service with the Royal Saudi Air Force.
Following detailed discussions between the Governments
on the commercial arrangements for the supply of the Typhoon aircraft,
the Saudi Arabian Government announced on 17 September 2007 that
agreement had been reached to purchase 72 Typhoon aircraft for
the Saudi Armed Forces at a cost of £4.4 billion. We hope
that this new defence programme, known as "the SALAM Project"
and separate from the former Al Yamamah deal, will eventually
include weapons, logistical and training packages, and provide
an opportunity for RAF and Royal Saudi Air Force aircrews and
ground technicians to train alongside each other in the UK. This
Project also includes a commitment to a substantial programme
of inward investment in the Saudi aerospace industry, including
technology transfer and training for Saudi nationals that will
provide thousands of skilled jobs in Saudi Arabia.
This agreement is clearly good news for the
close relationship that exists between the United Kingdom and
Saudi Arabian Governments and their armed forces, as well as for
the sustainment of important UK industrial capabilities. It also
recognises the outstanding qualities of the Typhoon aircraft and
the UK's ability to support Saudi Arabia's legitimate defence
requirements.
BRIBERY ALLEGATIONS
CONNECTED WITH
DEFENCE EXPORTS
TO SAUDI
ARABIA
In November 2004, the Serious Fraud Office (SFO)
commenced an investigation into allegations of fraud and corruption
involving BAE Systems and defence contracts with Saudi Arabia.
MOD officials co-operated fully with the SFO investigation, disclosing
all relevant material to the SFO investigators. In December 2006,
the Attorney General announced the decision of the Director of
the SFO to discontinue the investigation to protect national security.
On 26 June 2007 BAE Systems announced that the
US Department of Justice had commenced a formal investigation
into the company's compliance with anti-corruption laws, including
the company's business dealings with Saudi Arabia. The Solicitor
General subsequently confirmed during the debate on Alleged Overseas
Corruption on 16 July 2007, that the Home Office had received
a request for mutual legal assistance, associated with this investigation
from the United States. This request is currently being considered
by the Home Office in the normal way.
December 2007
1 In July 1998, the six major arms-producing European
nations (France, Germany, Italy, Spain, Sweden and the UK) signed
a Letter of Intent aimed at facilitating cross border restructuring
of defence industries. The final agreement that was signed in
2000, the Framework Agreement, is a legally binding international
treaty outside of the EU. Back
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