Memorandum from Ian Pearson MP, then Economic
and Business Minister at the Department for Business, Enterprise
& Regulatory Reform
As you will recall some issues arose during
my appearance before the Committees on 21 January which I
promised to follow up in writing. My officials are still liaising
with colleagues in the Foreign and Commonwealth Office on some
of those issues and where this is the case I am afraid I am unable
to provide a full response at this stage. This includes whether
K-supplied equipment may have been used by the Israeli Defence
Forces during the recent conflict in Gaza and a response to your
question on the Israeli blockade of Gaza. In addition, due to
the sensitive nature of the information, I will be sending you
shortly a separate "confidential" response in response
to the Committees' request for examples of where the Government
has changed its licensing policy. I am, however, now in a position
to provide information on the following issues:
HEAD-UP
DISPLAY EQUIPMENT
At the evidence session I stated, on the basis
of advice that I had received, that no export licences for F-16 Head-Up
Display (HUD) equipment to Israel had been granted since 2002.
While this is correct, I would like to clarify
that this refers to licences for the export of F-16 HUD components
direct to Israel, for use in Israel. Since that date there have
been a small number of licences granted for these goods where,
although not going direct to Israel, we were aware that Israel
was the ultimate end-user.
I was asked by Sir John Stanley whether F-16s
used over Gaza incorporated British Head-Up Displays. I am unable
at the present time to provide this information because it is
still under investigation, but I will respond on that separately
as soon as I can.
INVOLVEMENT OF
A UK COMPANY
IN THE
EXPORT OF
UAV ENGINES TO
ISRAEL
I was asked by Mike Gapes for more information
on British made UAV engines. I can confirm that export licences
have only been granted for the UK Company mentioned to supply
UAV engines to Israel for incorporation into complete UAVs which
were then re-exported to other countries.
The reports in the national press about the
UK Company refer to the Israeli armed forces using a AR80-1010 engine.
This is a 60 horsepower rotary engine and a version of it
is indeed made in the UK. It is capable of powering the Hermes
450 as used by the Israeli armed forces, and also powering
other UAVs used by the armed forces of many other nations, including
our own UK "Watchkeeper" program. Versions of it may
have been exported from the UK to other destinations, but none
have been licensed for export to or via Israel by this company
at least since March 1999. This is the date our database can be
relied upon to provide accurate data. Those licensed for export
to Israel (and then re-exported) were the AR 682, a different
variant with 125 horse power. Our database supports what
the company have told us. In view of the sensitivity of these
exports, we have very strict systems in place under which, at
the time of application, documentary evidence has to be provided
(from the customer of the Israeli concern) of the intention to
re-export. If exporters deliberately supply false information
or make a false declaration when applying for a licence, they
are committing an offence and would be liable for prosecution.
Where this is the case any licence issued is void.
The UK exporter has advised us that Elbit, its
parent company (an Israeli defence manufacturer) attached prestige
to the engines supplied from the UK and, for those reasons, the
term "UEL" has become a designator of a type of engine,
rather than an indicator that it was UK manufactured. This might
explain the confusion: it is therefore possible that engines used
by the Israeli armed forces would be referred to as "UEL"
even though they would have been made in Israel itself.
ISRAEL'S
BLOCKADE OF
GAZA
I am aware that the Committees are due a response
to the question they raised on Israel's blockade of Gaza. My officials
are still liaising with FCO on this, and I apologise for the delay
in responding.
CHANGE IN
LICENSING POLICY
FOR AN
END USER/DESTINATION
A separate "confidential" response
will be sent on this issue.
RE -EXPORT
CLAUSES
Sir John Stanley referred to a previous recommendation
of the Committees that: " the Government make export licences
for supplies to licensed production facilities or subsidiaries
subject to a condition in the export contract preventing re-export
to a destination subject to UN or EU embargo."
I was asked to set out why this approach might
cause us difficulties.
It is of course, perfectly possible to include
a condition in an export licence that requires the exporter to
require the importer—any importer—no to re-export
to a destination subject to an embargo. The question is what purpose
would that serve. Would any value added by such condition be sufficient
to justify imposing it?
First of all, we need to consider the legal
powers we have at present. Sir John referred to the importance
of having a power to revoke licences in situations where a licensed
production facility is sending arms to an embargoed destination.
We agree, and we already have a power to revoke licenses in our
secondary legislation. We do not therefore need to provide for
this in licence conditions. If we had evidence that an exporter
was sending military equipment or technology to a licensed production
facility that was using it to breach an arms embargo, we would
have the power to revoke the licence. The impact of doing so would
be limited if the goods had already been sent, but we would always
factor that information into subsequent licensing decisions.
If we were to make exporters enter into contractual
obligations with their overseas licensed production facilities
to stipulate that onward exports would not breach arms embargoes,
it would not take us any further forward. We would have another
administrative burden for exporters, and another aspect for compliance
officers to check. But in reality, we would still lack any further
power to stop equipment from the licensed production facility
reaching sensitive destinations. Perhaps the exporter would take
active steps to ensure it knew what the licensed production facility
was doing and to enforce the contractual obligations — we
could oblige it to do so in the licence conditions or perhaps
even require that the contract allow us to enforce the obligation
in the exporter's place. However, stating that something should
happen in a contract is no guarantee that it will happen, and
we would usually only become aware of breaches after the equipment
in question had been exported. By that time, it would be too late
to apply for an injunction to stop the export. We might not even
be granted an injunction in the UK, because the relevant supply
contract might not be subject to UK law or the jurisdiction of
UK courts. Furthermore there would be no guarantee that any injunction
would be enforceable in the country of the licensed production
facility. So taking legal action to enforce a breached contract
could not prevent an undesirable export and our real world powers
would be limited to those we already possess.
For these reasons we continue to prefer to base
our approach on thorough pre-licensing assessment rather than
on licence conditions that are of questionable value.
19 February 2009
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