APPLYING THE SAME STANDARDS OF TRANSPARENCY AND ACCOUNTABILITY TO ALL EXPORTS OF MILITARY EQUIPMENT

  In line with the Governments stated aim of developing an ethical foreign policy, BASIC believes that the Government should apply high common standards and controls across all exports of military equipment. This section outlines some serious omissions in current UK export control policy.

1.   Increasing Control on Government to Government and Surplus Transfers

  Since the Import, Export and Customs Powers (Defence) Act 1939 does not "bind the Crown", no licences are required for Government transfers. These transfers include:

—  Government to Government agreements, which involve the sale of new equipment;

—  Government to Government agreements which involve the sale or transfer of suplus equipment; and

—  Government-to-Commercial transactions, where new or surplus equipment is sold to private purchasers in the UK and abroad.

  The fact that no licences are required has served as justification for why practically no information about these transfers has been included in the Annual Report. Only brief descriptions of the Government to Government Saudi Armed Forces Project, Al Yamamah, and the Government to Government supply agreement with Kuwait are given. No real information is provided regarding the Government's sale of surplus defence equipment through the Ministry of Defence's Disposal Sales Agency.

This is a serious omission that is not sufficiently addressed by the table on export statistics given in the Report. Information on actual exports (as opposed to decisions to export) from the Government is included, albeit aggregated with the commercial transfers, making it difficult to distinguish between all of the different kinds.

1.1  Transparency and accountability in surplus sales policy

  Lack of controls over the sale of surplus weaponry: In many ways, the sale of "surplus" weaponry is similar to normal commercial exports of weaponry. However, there are some fundamental differences between the sale of surplus weapons and commercial arms exports:

—  surplus weapons involve the sale of government property, which has implications for the tax-paying public;

—  surplus weapons are often be sold off cheaply, or given as gifts; and

—  controls over surplus weapons tend to be less stringent than those over new ones.

  There seems to be an underlying assumption that "old" weaponry is not as lethal or strategically important as "new" weaponry and is therefore not subject to the same levels of control. However, although the sale of surplus weapons may not be as financially profitable as new weapons they are equally as devastating and therefore should be subject to stringent controls.

  UK Government policy on surplus weapons: Responsibility for overseeing the sale and disposal of UK surplus military equipment falls to the Disposal Sales Agency (DSA), a subsidiary of the Defence Export Services Organisation (DESO), within the Ministry of Defence (MoD). With "Agency" status, the DSA has a considerable flexibility and control over its finances and planning.

  While the DSA has the responsibility for executing the sales of surplus military equipment, it remains unclear whether the policy decisions regarding strategic considerations or sales are made within the DSA, within DESO, or within another department of the MoD. It is also unclear whether other relevant ministries are consulted regarding potential sales or whether these decisions are reviewed by Parliament.

  The export licensing procedure for non-surplus weaponry has been outlined by the Government. In contrast, there is little clear or open information made available to the public regarding surplus sales policy and procedure, and there is no information contained in this Annual Report. BASIC is gravely concerned about the lack of transparency and accountability over UK sales of surplus weaponry.

  UK policy on surplus transfers lacks transparency and accountability: Surplus equipment (both lethal and non-lethal) can be sold in two ways, either through a Government to Government transaction where the buyer is a foreign government or through the commercial market. Surplus can also be exported as part of an "off-set" agreement, or donated as part of a defence diplomacy programme.

  The DSA does have an Annual Report, however only the most basic information on surplus sales of military equipment is given. For 1997, the following sales of surplus weaponry took place:

  Ships: Government to Government sales included the sale of one Type 22 Batch 1 frigate to Brazil and three Hong Kong Patrol Craft to the Philippines. The total amount of Government to Government sales of ships is £34 million. It is not indicated if this is the total of these two sales, or if other Government to Government sales took place as well. On the commercial market, 38 vessels were sold for a total of £4.9 million. Details of all sales are not given, only that these sales include a Fleet Replenishment Ship, two Leander Class Frigates, an Admiralty Floating Dock, Two-Ton Class Minesweepers, a County Class Destroyer, Fleet Tenders, Lighters, and miscellaneous craft.

  Armaments and Aircraft: General details are only given on "major" sales. These are stated as: six Wessex Helicopters and spares sold to the Uruguayan Air Force; five Wessex Helicopters to the Uruguayan Navy; disposal of all surplus 105mm light gun assets through a marketing agreement with Royal Ordnance; a buy-back agreement with a US company for Mk 46 lightweight torpedoes; and aircraft auction sales. Further information on an aircraft auction, conducted by Phillips, is provided, mostly relating how successful it was. Forty-two lots were sold, which included Meteor Night Fighter, Victor Tanker, Piper Chieftain, Jaguar (battle-damaged), Wessex and Gazelle helicopters, Avon and Viper aero-engines, Gypsy Manor, Gypsy Queen, and a de-activated Bloodhound Surface to Air Missile (SAM). £410,000 was raised and the buyers were noted as being mostly in the UK, USA, and New Zealand. Promotional material from Phillips included pitches such as "this could be just the thing if you are in dispute with your neighbour, to show that you intend to escalate matters."

  The DSA report then states that in general "other overseas sales were made to countries across four continents". The only details of these sales that is given is that the equipment sold included aircraft, artillery, torpedoes, missile system assemblies, armoured vehicles, spares, and support services.

  The UK Government in the past year has just sold almost £45 million worth of surplus weaponry, and the details outlined above is the only information provided to the public on these sales. The paucity of information given with regards to the armaments is cause for grave concern. The UK's surplus weapons sales, at least the Government to Government ones, should be required to be given to the public in as much detail as any other licensed export.

  In addition, no analysis or even recognition of political and security considerations relating to surplus sales is given throughout the DSA Annual Report. It is worth noting that the aims of the DSA are to:

—  secure the best financial return to the Ministry of Defence from the sale of surplus equipment and stores;

—  minimise the cost of holdings by securing savings in the storage of surplus items; and

—  operate as an intelligent contracting organisation conducting Government to Government sales to overseas customers.

  A survey of publicly available documents, the MoD website, and telephone calls to the DSA itself have not shed any light on these matters.

 

BOX 3: EXAMPLES OF SURPLUS WEAPONRY POLICY IN OTHER COUNTRIES   In South Africa and the Netherlands, it is now national policy to destroy their small arms rather than look for export markets. Other countries, such as the United States, have created systems of selling and "gifting" surplus to meet strategic goals. —  South Africa, acknowledges the devastating impact of small arms in destabilising communities and contributing to violence, has decided this year to destroy all its surplus holdings of small arms. For example, in March of this year, Armscor declined a request from foreign private agencies to buy 100,000 surplus R1 rifles inherited from the former South African Defence Force. The Defence Minister Joe Modise announced that the rifles would be destroyed together with other surplus stock. —  The Netherlands has decided to destroy surplus small arms only if no "reliable buyer" can be found within a five-year waiting period. However, because surplus equipment is considered to be something for which the Government is accountable to the public, since 1996 Parliament requires pre-notification of any surplus equipment sales, even though they do not even have pre-notification for commercial exports. —  The United States has very detailed legislation dealing with its surplus weapons, partly because the sale or gift of surplus weaponry plays a large part not just in terms of financial profit but also in achieving foreign policy goals. The Departments of Defence, Commerce and State are all involved in deciding when sales or grants of surplus can take place. The US Congress must be notified as well of any pending surplus transfer. Unless Congress opposes the transfer, the Pentagon can deliver the equipment 15 to 30 days after notification. The exception to this is with naval vessels: transfer of those under 20 years old must be authorised by law.

  Increasing transparency and accountability on surplus weapons sales: Currently the sale and transfer of surplus military and dual-use equipment does not have to be licensed and it remains unclear how political and security implications of transfers are considered before export. The DSA Annual Report suggests that the main consideration governing transfers seems to be a financial one. The DSA aims are twofold. Firstly, to make as much money for the MoD as possible, partly to finance the MoD's procurement activities. Secondly, to promote UK business in opening markets for further spares, replacements, and servicing agreements and generally making sure that "overseas customers have been given British orientation." (p5 1997)

  The DSA Report also constantly refers to the Agency's commitment to "operate in the interest of the tax-payer at all times". This calls into question what is in the interest of the taxpayer? The DSA assumes that the tax-payer's interest is primarily in saving money and jobs. However, in a poll of the UK public taken by Omnibus in 1998, 79 per cent of those polled felt that the Government should introduce tougher controls on the export of weapons from the UK even if it meant some job losses.

  The DSA also prides itself in the way its work in selling surplus equipment should spark more business for UK defence companies. However, in the same poll, 79 per cent of the public polled again felt that the Government should actively help UK companies to change from the manufacture of arms to the manufacture of civilian products. How would tax-payers feel if they knew how much the UK Government works to encourage the manufacture of arms in the UK? As it is, the public is generally unaware of how much their taxes goes towards subsidising the export of armaments through the Export Credit Guarantee Schemes and other types of off-sets. There is a growing tide of public opinion which is geared toward increasing transparency and restraint in arms exports, the Government should urgently consider this opinion when developing future policy towards surplus equipment.

—  Recommendation: At a minimum the public should be reassured that the sales of surplus weapons follow the same guidelines as those of new weapons. In the future, the UK shoud consider include reviewing policy surrounding surplus weapons sales in any discussion of arms export control.

—  Recommendation: The 1998 Annual Report on Strategic Export controls should contain a clear statement of the UK Government policy towards the sale or destruction of surplus weapons. This statement should outline the process of decision making that takes place before a surplus weapons sale can be made.

—  Recommendation: All sales of surplus weaponry should be subject to parliamentary pre-notification. As the Dutch and US policy toward surplus weapons illustrates (see Box 3), surplus weapons as government property are a concern of the tax-payer. Often it is argued that there should be no prior notification because of "commercial confidentiality" however, in the case of surplus sales, there is no private commercial interest to be protected thus removing any perceived obstacle.

—  Recommendation: All details of surplus sales should be included in the Annual Report on Strategic Export Controls. Currently, it is unclear whether the limited information on sales available in the DSA report is included in Table 8 of the Annual Report [Statistics on Exports of Military Equipment] detailing exports over the year. If it is not included, the picture of the actual exports of UK weapons is unclear. Details of all sales of surplus military and dual-use equipment should be recorded in a separate section of the next Annual Report, distinct from information on commercial sales.

  Although it could be argued that information is already available in the DSA Report, and therefore it does not need to be duplicated in another report, the DSA information is incomplete. Furthermore, all export information: commercial, government surplus, and government negotiated "new deals" such as Al-Yamamah, need to be presented in one place, using consistent levels of detail.

2.   Increasing Controls on Arms Brokering and Shipping Agents

  Lack of controls on brokering: A further example of how, the Annual Report fails to show the full extent of arms exports by failing to include the activities of arms brokering and shipping agents.

  Brokering has been defined by the UK government in its White Paper of July 1998 on Strategic Export controls as "acting as an agent in putting a deal together between supplier and customer, or making the practical arrangements for the supply of goods". This can involve the buying and selling of arms, mediation in, or facilitation of, arms transfers, promotion and marketing of arms, and the transportation of arms.

  Controls at the time of embargoes: The Government has stated that the regulation of arms brokering should be limited, because the export will have to comply with the controls of the country from where the goods originate. However, brokers generally choose to export from countries with lax export laws and loose border controls. Although most of the deals brokered by UK dealers would comply with UK export policy, there are many cases which would not comply. Thus, in line with its stated commitments on transparency and accountability, the UK Government should regulate arms brokering and shipping agent activities.

  Currently, arms brokering by UK nationals is only regulated by the UK Government when a UN arms embargo is in place, making it illegal for any UK national to participate in brokering or trafficking of arms to the embargoed destination. However, if there is no registration of brokers and no established list of regulated activities, controlling brokering at the time of embargo becomes very difficult.

 

BOX 4: BREAKING AN ARMS EMBARGO: THE RWANDAN GENOCIDE   UK and South African based arms brokering agents and their network of shipping and other subcontractors in other countries violated the international arms embargo against Rwanda in 1994. They did this by evading inadequate national laws in their home countries, and by easily disguising the routes of their deliveries, choosing to operate where there were loose customs, transport and financial regulations.   The UN Security Council had imposed an arms embargo on Rwanda more than a month after the genocide began in early April 1994. This was already too late but the situation was compounded when, even after the UN embargo was agreed, more small arms and ammunition were supplied to the perpetrators via routes inadequately monitored by international observers. Amnesty International and Human Rights Watch drew attention in mid-1995 to reported arms deliveries via airports in former Zaire. Goma airport in particular had become the main delivery point for the supply of further arms and ammunition to the perpetrators of the genocide, and the Zairian authorities were collaborating in this arms build-up. Human Rights Watch exposed officially sanctioned Chinese and French arms deliveries, as well as supplies by South African traders, while Amnesty International reported that supplies of small arms were delivered from Albania, Bulgaria and Israel by UK-based traders using secret international networks. Both NGOs warned that further deliveries from various sources were being reported locally.   Interviews by investigative journalists with aircrew associated with these deliveries revealed that the UK brokers and traders had used a host of sub-contracting companies to conceal their activities. For example, UK aircrew stated that in May 1994 aircraft flew empty from Ostend in Belgium to Tirana in Albania where small arms were loaded under Israeli supervision and then flown to Goma in the former Zaire with no checking of documentation, despite a refuelling stop in Cairo. Secret documents from the military archives of the exiled Rwandan armed forces revealed that a UK company, Mil Tec, registered in the Isle of Man, was centrally involved during April to July 1994 using links in Albania, France, Israel and Italy. The NGOs warned that, in the context of cross-border attacks and counter-attacks, further serious human-rights abuses were escalating. As a result of international public pressure, in mid-1995 the UN Security Council decided to establish an International Commission of Inquiry to investigate the matter and recommend action. EU states have so far failed to prosecute those responsible for arming the perpetrators of the Rwandan genocide even though such complicity is a crime under the Convention on the Prevention and Punishment of the Crime of Genocide (1948).   From: "Controlling the Gun-Runners: Proposals for EU action to regulate arms brokering and shipping agents", by Brian Wood, BASIC/NISAT, and Liz Clegg, Saferworld, February 1999.

  The regulation of brokers in the United States: The US Government has recently adopted new regulations to control international arms brokering. Any US citizen, wherever located, and any foreign person located in the United States, or subject to US jurisdiction, who engages in brokering activities involving military goods or services, must first register with the US Department of State. Each transaction must then be given prior written approval by the Sate Department. Although, a loophole may remain in respect of some crime control equipment on the Commerce control list as opposed to the Munitions list, this new regulation would appear to be a big advance and its operation should be closely monitored.

  In contrast, UK arms brokers and shipping agents are not registered with the UK government. No licence is required for each transaction involving UK brokers or for foreign nationals resident or registered in the UK. The activities of arms brokering and shipping agents is currently shrouded in secrecy. No information in these activities is publicly available. Parliament and the public are left in the dark about an important aspect of the UK arms trade that is carried out by UK companies and individuals and by foreign companies and individuals resident or registered in the UK. The UK Government should therefore push for greater accountability and controls over brokers in order to allow for greater transparency over this aspect of the arms trade.

—  Recommendation: The UK Government should regulate the activities of arms brokering and shipping agents. The Government has already identified the need to regulate the activities of its citizens in order to ensure adherence to a UN arms embargo. BASIC believes that it should also regulate the activities of UK national arms brokers and shipping agents in line with the Code of Conduct criteria. The UK Government should also push for controls on brokering to be included within the framework of the EU during the Annual Review of the Code.

—  Recommendation: In line with the new US legislation on brokering the UK Government should establish a register of all arms brokering and shipping agents with a view extending the register to the rest of the European Union.

—  Recommendation: Following the Establishment of controls, as outlined above, the next Annual Report should include a section on the activities of arms brokers and shipping agents in facilitating the export of arms.

3.   Increasing Controls on Licensed Production

  Currently, there is no UK regulation on licensed production, that is, agreements between UK based arms companies with companies abroad to permit the manufacture of weapons or other related equipment in that country.

  Increasingly, UK firms are conducting their export business through licensing the production of armaments to manufacturers in third countries. This is a serious loophole in both the UK Guidelines and the EU Code of Conduct, which seriously undermines the effectiveness UK measures on responsibility and restraint. It is crucial that these export guidelines are extended to licence not just the transfer of arms, but also the manufacturing rights for these arms. It is also imperative that this type of export be included in the Annual Report.

  The case of Heckler and Koch: The problems encountered by the lack of control on licensed production are illustrated in the case of Heckler & Koch. Heckler & Koch, previous German owned, but a subsidiary of BAe since 1991, has been licensing the production of its products, mostly small arms to countries around the world for years. Many of these countries, because of records of internal repression, conflict, and/or human rights violations, would not be granted these export under the terms of the June 1998 EU Code of Conduct on Arms Exports. For example, last year Heckler & Koch licensed production of US$18 million worth of HK33 5.56mm assault rifles at Machinery & Chemical Industry, in Turkey.

  Other countries were Heckler and Koch licensed production agreements have been established include Myanmar (Burma), Pakistan, Thailand, Saudi Arabia, and Mexico.

  Not only could the sale of such weapons violate the principles of the UK guideline and the EU Code of Conduct, but once the weapons are produced, the third country will be able to export UK arms according to its own exporting standards. The UK will have effectively lost control of its own weapons.

  Control in the United States: In contrast, in the United States, any manufacturing licensing agreement, technical assistance agreement, distribution agreement, or off-shore procurement, distribution agreement, or off-shore procurement agreement must be approved by the Office of Defense Trade Controls (ODTR) in the State Department, before being entered into. This process involves submitting the proposed agreement to the ODTR and waiting for written confirmation of approval. Any major changes or amendments in the approved agreements must get another approval. All agreements are recorded and made public in the US Section 655 report.

—  Recommendation: Licensed production of UK arms should be subject to the same controls as all other commercial exports.

—  Recommendation: The UK should keep detailed records of all agreements entered into by UK companies. This should then be included within the Annual Report.