Written evidence submitted by The Campaign
Against Arms Trade
1. The Campaign Against Arms Trade (CAAT) in
the UK works to end the international arms trade, which has a
devastating impact on human rights and security, and damages economic
development. CAAT believes that large scale military procurement
and arms exports only reinforce a militaristic approach to international
problems. Established in 1974, CAAT receives around 80% of its
funding from its individual supporters.
2. The re-establishment of the Committees for
Arms Export Controls (CAEC) in the new Parliament is welcome.
CAAT would suggest that CAEC should also consider whether it is
appropriate for the UK government to be encouraging and promoting
military exports since this undermines the very notion of arms
export controls.
3. This submission looks at the Coalition government's
programme with regards to arms exports and the justifications
given for Government support for them as well as the ways this
support is given and the alternatives. It also briefly addresses
other current arms trade issues—lack of accountability,
the proposed arms trade treaty, corruption, cluster munitions
and private military and security companies.
THE COALITION
GOVERNMENT AND
THE ARMS
TRADE
4. The Coalition government's programme, published
in May 2010, says: "We will support defence jobs through
exports that are used for legitimate purposes, not internal repression,
and will work for a full international ban on cluster munitions".
5. The programme does not define "legitimate
purposes". Since 1997 there have been criteria, now the Consolidated
EU and National Arms Export Licensing Criteria, that say that
exports will not be permitted if they might be used for internal
repression. That, unfortunately, has not stopped UK military exports
going to countries such as China, Israel, Sri Lanka and Thailand
where it is impossible to be sure that they will not contribute
to internal repression. Military equipment exported from the UK
was used by Israel in Lebanon and Gaza; the sale of fighter jets
to Saudi Arabia took precedence over the possibility of effective
UK government protests over human rights concerns and a criminal
investigation for bribery; and an expensive and useless military
radar system was successfully sold to Tanzania.
6. The Coalition government has adopted an even more enthusiastic
approach to the export of military equipment than its predecessor.
Secretary of State for Defence Liam Fox MP, speaking on 25 October
2010, said: "The long-term prosperity of the UK defence industry
therefore depends on two things—offering better value for
money to the British taxpayer; and being competitive and market
sensitive so that the successful export of what is produced is
more likely". He went on to say: "We have pledged our
full support to a re-invigorated export strategy as the best way
to protect and promote the best of British industry. I will chair
the new Defence Exports Group, fully supported by Gerald Howarth
and Peter Luff. We need to create a more stable base for industry,
less dependent on the UK economy alone".
7. The message from this appears to be that, despite the negative
consequences of military exports, and the fact that they can undercut
other Government policies, such as the promotion of human rights
or economic development, or efforts to stamp out corruption, the
Coalition government will be promoting arms exports even more
aggressively than has been the case to date.
THE WRONG
BASIS FOR
INTERNATIONAL RELATIONSHIPS
8. The Coalition government has been justifying
its promotion of arms exports by saying they would, according
to Gerald Howarth MP, International Security Minister, (Hansard,
1.11.10 Col 596w) form part of "a broader diplomacy
initiative by enhancing relationships with key strategic partners".
9. However, the past record does not auger well
for this. The UK has found itself overlooking human rights abuses
by, for instance, Saddam Hussein in Iraq as it has attempted to
sell arms. The desire to sell arms to Saudi Arabia is another
instance where the buyer has leverage over the seller, rather
than the reverse.
10. This focus on the military relationships
actively increases international instability. Conventional weapons
proliferation leads to greater insecurity as does way it can alienate
opposition groups within the buyer countries. A less militaristic
approach, with the emphasis on cultural and civil economic relationships,
would be much better for UK and global security.
ARMS TRADE
NOT NECESSARY
FOR JOBS
11. The statement in the Coalition programme
implies that the main rationale for promoting military exports
is to support jobs. However, a Government concerned about boosting
employment should not look at military export jobs to do this.
Arms export jobs are heavily subsidised by the taxpayer. As Alan
Beattie, International Economy Editor of the Financial Times,
wrote on 10 August 2010: "You can have as many arms export
jobs as you are prepared to waste public money subsidising".
12. It is also a misconception that vast numbers
of jobs are currently supported by arms exports. In fact, these
account for 0.2% of the UK workforce and around 2% of manufacturing
employment. The buying countries also increasingly want to have
part of the production progress. The sale of Eurofighters to Saudi
Arabia illustrates this. Two thirds of the 72 Eurofighters sold
to Saudi Arabia are to be assembled there. Similarly, the '700
million deal signed during Prime Minister David Cameron's visit
to India in July 2010 will see 57 Hawk aircraft manufactured under
licence there by Hindustan Aeronautics Limited. The logical extension
of this is that HAL will produce Hawks for the global market.
The number of UK jobs said to be supported by this deal is just
200.
NEED FOR
RETHINK ON
TECHNOLOGIES
13. The Coalition programme also says: "We
will ensure that UK Trade and Investment and ECGD become champions
for British companies that develop and export innovative green
technologies around the world, instead of supporting investment
in dirty fossil fuel energy production". This sounds excellent,
but makes no mention of any break from the current and recent
realities.
14. At the moment the arms industry is the one
that receives the disproportionate subsidy, yet arms are totally
unsustainable goods so to continue to support for them would be
at odds with the commitment to supporting green technologies.
15. Though
precise figures are hard to find, this subsidy of the arms industry
arises in a number of ways including, most importantly, Government
research and development funding. The
Coalition government has also committed itself to considering
export potential when making decisions about procurement for the
UK armed forces. (Hansard, 1.11.10 Col 596w) This is not
new. In 2003 the RAF bought BAE Hawk trainer aircraft with a view
to persuading the Indian government to buy the Hawks for its air
force. The Treasury did not believe the Hawks offered value for
money.
16. Military industry also benefits hugely from
promotion of its wares by ministers (William Hague's first external
meeting as Foreign and Commonwealth Secretary was to discuss BAE's
concerns about overseas commercial opportunities) and members
of the UK armed forces, and from the assistance given by UK Trade
and Investment's Defence and Security Organisation (UKTI DSO)
and the Export Credits Guarantee Department (ECGD).
UKTI DEFENCE &
SECURITY ORGANISATION
17. Since April 2008, responsibility for promoting
military exports has rested with UK Trade & Investment (UKTI).
Military exports account for just 1.5% of all exports, with 40%
of the value for these being imported. However, it is the arms
industry through UKTI DSO and not "green technologies"
that UKTI's current priority. UKTI DSO has 160 staff working to
promote arms sales whereas there are only 130 UKTI staff specifically
allocated to all the other industrial sectors put together. The
remaining 2,300 UKTI staff are available to support all industries,
including military companies.
18. UKTI DSO gives assistance to companies without
seemingly considering any ethical questions, or the security or
economic benefits, or costs, of the sales. Claims by the industry
of the benefits to the UK economy are frequently reported unquestioningly
by politicians and the media, but Freedom of Information requests
made on several occasions by CAAT have failed to unearth any Government-commissioned
analysis.
19. One oft-quoted report, commissioned by the
industry, is The economic case for investing in the UK defence
industry by Oxford Economics (2009). However, studying this
report more closely, it shows the arms industry has a very average
record relative to the sectors Oxford Economics chose to compare
it against. The arms industry came 15th out of 27 in terms of
value added contribution to Gross Domestic Product, and is actually
below average, 13th out of 22 on export intensity despite all
the support it receives from Government which other industries
do not.
20. Even if ethical questions are put to one
side, there can be no justification of such disproportionate support
for one industry. However, the arms industry is hugely, and rightly,
controversial.
21. This controversy is likely to come to the
fore again in September 2011. UKTI DSO is co-organiser of the
biennial London arms fair, now called Defence and Security Equipment
international. The invitation list at the last DSEi fair, one
of the world's largest, included Angola, Colombia, Iraq and Pakistan.
EXPORT CREDIT
GUARANTEES
22. The Export Credits Guarantee Department (ECGD)
uses public money to ensure that companies are paid, even if the
buyer defaults. It charges the exporter a premium, but, in 2005,
even the Treasury accepted there was an element of subsidy.
23. In 2007-08 57% of all support given by the
Export Credits Guarantee Department was for military deals; in
2008-09 (after BAE Systems withdrew from cover for its arms deals
with Saudi Arabia) 73% of support went to Airbus. Between them,
military and aerospace exports have dominated the ECGD's business
over the last decade.
24. With the proportion of cover for military
goods currently just 1%, it is now an ideal time for the Government
to exclude such projects from cover in future.
SUPPORT FOR
GLOBAL COMPANIES
25. UK-taxpayer funded support for arms exports
could be given even when the equipment is not being manufactured
in the UK. Alan Garwood was Head of the previous government arms
export promotion unit, the Defence Export Services Organisation
(DESO), between 2002 and 2007. In a letter dated 9 September 2005
he told CAAT: "The broad test for assessing DESO support
to a UK-based defence exporter is not company ownership, but the
added value that the export would bring to the UK defence industrial
base". In April 2008 the acting Head of UKTI DSO told Alan
Garwood, now working for BAE as Marketing / Business Development
Director and asking about support for BAE's US exports, that his
own DESO stance still applied, but was told that "... these
things evolve and it was worth discussing when a specific opportunity
arose".
26. While UKTI DSO has not quantified the UK
content of the exports it supports, the ECGD has. In June 2007
it announced that it would support projects by multi-national
commercial enterprises with a foreign content of up to 80%.
SUPPORT COULD
BE REDIRECTED
27. If the current support and subsidies enjoyed
by the arms industry were to be directed towards developing and
exporting "innovative green technologies around the world"
the UK could establish its presence in a vibrant, growing sector
with vast potential rather than languishing in a static destructive
one.
28. Many arms industry workers are highly
skilled, a point made by Dr Sandy Wilson, President and Managing
Director, General Dynamics UK, when he gave evidence to the Defence
Committee on 8 September 2010: "A point that I have made
to this Committee previously is that the skills that might be
divested of a reducing defence industry do not just sit there
waiting to come back. They will be mopped up by other industries
that need such skills. We are talking about high-level systems
engineering skills, which are often described as hen's teeth.
It is an area in which the country generally needs to invest more.
You can think of the upsurge in nuclear and alternative energy
as being two areas that would mop up those people almost immediately".
29. As this acknowledges, workers will go where
there is investment. In 2008 UK government-funded research and
development (R&D) for arms was over £2,500 million. That
for renewables, necessary to meet the acknowledged threat to national
security of climate change, was around £66 million. If the
money changed sector it is likely the arms industry workers, many
of whom have skills much needed for renewables development, would
follow.
30. To this end, CAAT was encouraged by the establishment,
by Secretary of State for Business, Innovation and Skills Vince
Cable MP in October 2010, of the Skills and Jobs Retention Group,
to explore how skilled arms industry workers can be retained in
the advanced manufacturing sector, by working with industry to
redeploy affected employees to other sectors such as civil aerospace,
automotive, energy and marine.
LACK OF
ACCOUNTABILITY
31. Between 1999 and the coming of the Coalition
government, the junior minister directly responsible for military
export promotion, formerly by the Defence Export Services Organisation
in the Ministry of Defence and more recently UKTI DSO, has sat
in the House of Lords. Some of these ministers were directly appointed
from industry to do the job.
32. This tendency to appoint unelected persons
to trade posts appeared to have ended in May when Mark Prisk MP
assumed responsibility for UKTI and Ed Davey MP for the Export
Credits Guarantee Department. However, the appointment of Stephen
Green as Trade & Investment Minister designate has dashed
CAAT's hopes that MPs might be able to question the trade minister
in their own House on a continuing basis.
33. As CAAT has recently pointed out in written
evidence to the Public Administration Select Committee's inquiry
into "What ministers do", this seems to be based on
the incorrect assumption that trade, including that in military
equipment, is uncontroversial. This is far from the case, but
without exposure to constituents who might question the morality
of arms export promotion, or to local political parties or human
rights or development groups which might raise the issue in debate,
there is little to offset the direct lobbying of the minister
by companies and trade associations.
34. Just how strong this arms industry influence
can be was shown when it was revealed during the discussions around
the Strategic Defence and Security Review that it would cost more
to cancel one of aircraft carriers ordered by the last Government
than proceed to build the two.
ARMS TRADE
TREATY
35. The Coalition government's programme says:
"We will support efforts to establish an International Arms
Trade Treaty to limit the sales of arms to dangerous regimes".
What constitutes a "dangerous regime" is not defined.
36. CAAT continues to have major reservations
about an arms trade treaty. As presently envisaged, the arms companies
support it as they do not believe that it would "bring new
obligations for UK industry" and do not feel that their sales
would be constrained. Since the Coalition government is, as described
above, heavily promoting arms sales its commitment to an arms
trade treaty that makes a real difference must also be questioned.
The danger is that an arms trade treaty would further legitimise
the arms trade without reducing sales, even to governments, such
as those of Israel or Saudi Arabia, that many would consider dangerous
regimes.
CORRUPTION
37. The Serious Fraud Office' (SFO) investigation
into BAE Systems' arms deals in central Europe, South Africa and
Tanzania ended in February 2010. BAE agreed a plea bargain with
the SFO and the United States' Department of Justice. It was commonly
considered that the plea agreement reached with the SFO, limited
as it was to "accounting irregularities" in a contract
with Tanzania, did not reflect the seriousness and extent of BAE's
alleged offending, which includes corruption and bribery, or to
provide the court with adequate sentencing powers. The case goes
before a magistrates court on 23rd November 2010.
38. The news in October 2010 was more welcome. The Accountancy
and Actuarial Discipline Board (AADB) is to investigate KPMG's
audits "in relation to the commissions paid by BAE through
any route to subsidiaries, agents and any connected companies"
between 1997 and 2007. These companies include British Virgin
Islands registered Red Diamond, Poseidon and Novelmight.
39. The AADB may help those in central Europe, Saudi Arabia,
South Africa and Tanzania whose rulers spent money on military
equipment which might otherwise have gone towards improving health
or education find out what happened.
CLUSTER MUNITIONS
40. CAAT is pleased that the UK has ratified
the Convention on Cluster Munitions (CMC) which entered into force
on 1 August 2010. Although it seems that it may already have been
illegal to advertise cluster munitions or their components, see
the guidance notes for the 2008 amended Trade Controls, this does
not appear to have stopped all advertising of such weapons.
41. The January 2010 edition of Jane's International
Defence Review contains an advertisement from Indian Ordnance
Factories for "cargo ammunition". One pictured, is the
130mm cargo projectile which contains 24 bomblets. CAAT hopes
that now the CMC has come into force it will be rigorously policed
to make sure that such advertisements do not appear.
42. It is also hoped that the Government will
work to encourage governments, such as India, China, Russia and
the United States, which have not joined the CMC to do so.
PRIVATE MILITARY
AND SECURITY
COMPANIES
43. The UK private military sector has increased
enormously following the invasions of Iraq and Afghanistan with
personnel employed by "corporate mercenaries", or Private
Military and Security Companies (PMSCs) as they prefer to be known,
take on many tasks previously undertaken by members of national
armed forces. This growth has been accompanied by hundreds of
allegations of human rights abuses committed by mercenaries. How
to address this prompted nearly a decade of consultation by the
Labour government.
44. CAAT was disappointed that, in September
2010, the Coalition government decided to take forward the Labour
government's April 2009 proposals. Under these the Government
will abdicate responsibility for regulating the industry to a
trade association; make sure that it itself only contracts PMSCs
with high standards; and liaise with other governments on the
international level regarding this issue.
45. This is totally inadequate, not least because
it fails to address the fact that overseas governments, mining
companies, media organisations, aid agencies and others also have
contracts with PMSCs—withholding UK government purchasing
power is not a solution in these cases.
46. The Government intends that these proposals
be reviewed two years after they have been acted on. CAAT hopes
that, in the meantime, CAEC will monitor what happens regarding
PMSCs.
November 2010
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