The arms trade is a deadly, corrupt business. It supports conflict and human rights abusing regimes while squandering valuable resources. It does this with the full support of governments around the world.

Combat helicopter at the Farnborough arms fair, July 2006

The trade is dominated by the US, with the UK, France and Russia usually vying for second place. In 2004, the five permanent members of the UN Security Council (the above four plus China) produced 87% of the $35 billion of arms exported.[1] While relatively few countries sell large volumes of weaponry, the buyers are spread across the world. Some of the largest purchasers are in the Middle East, especially Saudi Arabia, and South and East Asia.

The arms themselves range from fighter aircraft, helicopters and warships with their guided missiles, radar and electronic warfare systems, to tanks, armoured vehicles, machine guns and rifles. There is often confusion about the legality of the arms trade, with the impression given that it is the illegal trade that is damaging while the legal trade is tightly controlled and acceptable. However, the vast majority of arms sold around the world, including those to human rights abusing governments or into conflict areas, are legal and actively supported by governments.

This briefing focuses on this legal, if essentially corrupt, trade. It relates primarily to the UK, as one of the world’s largest arms exporters and, of course, the arms exporter that is most relevant to CAAT and its supporters. Within the briefing, ‘CAAT is calling for’ identifies some steps that would make significant progress towards the end of the UK arms trade and the destruction it wreaks.

What the arms trade means

The arms trade exists to provide weapons to those who can pay for them. What the buyers do with the arms, what political approval the sales signify, and how the money could have been better spent appear irrelevant to the arms companies and the governments that support them.

Conflict

Selling arms to a country in conflict – either internal or external – makes the conflict more deadly and last longer.[2] If there is tension between countries or within a country, arms purchases are likely to increase this tension and make actual conflict more likely. Even when a conflict has ended, arms, particularly small arms, may remain in large numbers creating further problems, whether conflict- or crime-related. The casualties of conflict are now overwhelmingly civilian, increasing from around 50% of war-related deaths in the first half of the twentieth century to 90% by the mid-1990s.[3]

It is often difficult to establish where the arms used in conflicts have originated, but documented cases of the use of UK arms in conflict zones include: by Israel in Lebanon and the occupied territories, by the Indonesian military in East Timor, Aceh and West Papua, and by the US in the 2003 invasion of Iraq. UK arms have also been used in the Democratic Republic of Congo war, the Iran-Iraq war, the military coup in Chile and by Argentina in the Falklands War.

Human rights

Human rights abuses are facilitated by arms sales in three main ways: they can be used to carry out human rights abuses directly; all arms sales increase the military authority and capability of abusing governments; and the sales convey a message of international acceptance and approval.

The UK Foreign and Commonwealth Office’s (FCO) 2005 Human Rights Annual Report identified 20 ‘major countries of concern’. In 2005, the UK approved arms export licences to 12 of these, including Saudi Arabia, Indonesia and Israel.[4] Saudi Arabia has been the focus of UK arms promotion since the fall of the Shah of Iran in 1979, the UK has been Indonesia’s main weapons supplier over the past decade and Israel has received a steady flow of UK arms regardless of the situation in the occupied territories.

Development

Wasting money on arms prevents it being spent on health, education, clean water or other public services. In addition, arms sales damage development through the conflicts they provoke and sustain. Conflict often creates refugee movements, internal displacement and the disruption of public services, wrecking the lives and livelihoods of millions of people not directly involved in conflict and making them dependent on an overstretched state, or neighbouring states.

South Africa with its appalling AIDS situation is an important UK arms market. Pakistan is a recipient of a wide range of UK arms even though it commits a quarter of government spending to the military, more than health and education combined. Kenya, Malawi and Nigeria are regular purchasers of UK arms despite being ranked by the United Nations Human Development Index as having ‘low human development’.[5]

• CAAT is calling for an immediate end to the supply of military, paramilitary and police equipment to countries that are involved in armed conflict, governments with records of sustained human rights abuse, and countries with serious development needs

How the arms trade works

Government support and regulation

The UK government authorised the sale of arms to over 100 countries across the globe in 2005.[6] This is hardly surprising given that it is government policy to vigorously support arms exports and that the government allows arms companies unrivaled influence in its policy-making. In fact, arms companies and the government have a unique relationship and are inseparable when it comes to selling arms abroad.

DESO: The government’s Defence Export Services Organisation is a vital part of the UK’s arms dealing. Its website states that ‘Successive Customer Satisfaction Surveys of the UK defence industry revealed that over 75% of [arms export orders] would not have been achieved without the assistance of DESO.’[7] It employs around 500 civil servants to sell weaponry on behalf of arms companies but also has an official remit to coordinate government support for arms exports. It is headed by a seconded arms industry executive who has a formal role advising government ministers on arms exports and whose access extends to the Prime Minister.

DESO’s most recent available ‘Strategic Market Analysis’[8] identifies 18 ‘priority markets’ and 10 ‘other key markets’.[9] Saudi Arabia and the US are the ‘premier league’ with the rest being spread across the globe, from South America through Africa, Europe, the Middle East and Central, South, East and South-East Asia. DESO also identifies ‘emerging markets’, which currently include Iraq and Libya.[10]

The government asserts that it is effective in ‘controlling’ arms exports. In the UK, this regulation is led by the Department for Trade and Industry (DTI) and carried out in conjunction with the Ministry of Defence (MoD) and the Foreign and Commonwealth Office (FCO) (and sometimes the Department for International Development, though it has little say). Companies apply for licences to export their arms which are then considered and, except in exceptional circumstances, approved. In 2005 the departments issued 6,902 licences, refused 127 and revoked one. Most of the refusals related the proliferation of Weapons of Mass Destruction or the existence of embargoes, with a paltry 44 refused or revoked on the basis of all other criteria including contributing to internal repression, conflict or regional instability.

The token nature of the controls is evident through the wider activities of the controlling departments. While civil servants in the FCO, MoD and DTI discuss the licence applications, the FCO’s embassies, the MoD’s DESO and the DTI’s Export Credits Guarantee Department (ECGD, which insures UK exporters against payment default) are all promoting and supporting arms sales. And, since 1997, when there has been disagreement within these over granting a licence, Tony Blair has stepped in on the side of the arms dealers.

• CAAT is calling for DESO to be shut; ministers, civil servants and royalty to stop promoting arms exports; and an end to subsidies for arms exports

Arms companies

The arms industry is dominated by a small number of major corporations including Lockheed Martin (US), Boeing (US), Northrop Grumman (US), BAE Systems (UK) and EADS (Europe). They are the producers of the aircraft, warships and vehicles that carry the weapons and ‘systems’ of the armed forces. Though these companies are not massive by international business standards, they are incredibly powerful due to their political connections.

The major corporations are themselves supplied by engine producers such as Rolls-Royce (UK) and General Electric (US), and component and ‘sub-system’ manufacturers including Smiths Group (UK) and Cobham (UK). These in turn are supplied by a vast array of smaller companies. Other weapon providers include the major missile producers led by Raytheon (US) and MBDA (Europe) and small arms producers such as Heckler & Koch (Germany) and FN Herstal (Belgium).

• CAAT is calling for arms companies to be taken out of government policy-making

Arms fairs

Arms fairs are a key part of the arms trade and there is an international circuit of them, from DSEi and Farnborough in the UK, to DefExpo in India, SOFEX in Jordan, African Aero & Defence in South Africa and Latin America Aero & Defence in Brazil. The attending companies are guaranteed potential customers in vast numbers: from military delegations to individual trade, government and armed forces representatives. They make contact, negotiate and sign contracts over the course of a number of arms fairs and a number of interim meetings. There is almost no possibility of regulation or accountability.

The government of the host country provides support for arms fairs, sometimes arranging them in concert with an events organising company. Defence Systems and Equipment International (DSEi) in London is one of the world’s largest arms fairs. It is formally owned by Reed Elsevier and organised in conjunction with DESO, with the full political and financial support of the UK government.

• CAAT is calling for the end of UK government support for arms fairs, both in the UK and abroad

Secrecy and corruption

The arms trade is the most corrupt legal trade. Transparency International estimates that the official arms trade “accounts for 50% of all corrupt international transactions” and that a conservative estimate of the level of arms deal commissions (the means by which bribes are generally made) is around 10% of the value of contracts.[11] Corruption is not just an add-on to the trade, it is central to it, increasing spending on arms by giving decision makers an incentive to purchase weapons. As one commentator has stated, arms deals are ‘hard-wired’ for bribery.[12] The projects are often large, there is competition amongst the sellers, the market is opaque and complex with each contract having special requirements (making them difficult to compare) and, perhaps most importantly, they are cloaked in secrecy under the rhetoric of ‘national security’.

• CAAT is calling for the UK government to increase transparency around arms deals and rigorously apply tough anti-bribery rules

Why the government sells arms

The UK government puts forward a number of arguments, many of them disingenuous, as to why it exports arms. These are considered below, along with the main underlying real reasons.

Political arguments: the UK government claims that it sells arms to promote international security and support its allies. But most of the 100-plus countries that receive UK arms are not allies and it is difficult to envisage situations where the unrestricted sale of arms (including to both sides of a dispute or conflict) will lead to an increase in genuine human security rather than have the opposite effect. The other main political argument is the catch-all ‘everyone has a right to self-defence’. However, purchasing countries are not assessed as to their ‘defence’ needs. Governments collude in using the term ‘defence’ to cover any military matter, from ‘homeland security’ to invasion. The term is simply irrelevant to the present reality of arms exports (by the UK or globally).

Strategic arguments: the government’s primary official argument for arms exports is that they are needed to support arms production in the UK – the so-called 'Defence Industrial Base' (DIB) – which can then supply the UK’s military. But arms exports are not necessary for a DIB. If exports were ended, the MoD might have to pay more for some equipment because of shorter or disrupted production runs, but offsetting this would be significant savings due to the end of arms export subsidies. There are also serious questions as to the very existence of a meaningful DIB. There is certainly little security of domestic supply as arms production is dominated by international businesses that will move production away from the UK if this increases profits for their international shareholders. Some of the largest producers of arms in the UK are European- and US-headquartered companies. Meanwhile, the main UK-headquartered companies are increasingly focused on producing in and for the US.

Economic arguments: the government and arms companies exploit the ingrained perception that arms production and export is a vital element of the economy. However, the truth is that it is now an unexceptional, and increasingly economically peripheral, sector. The major UK-headquartered arms companies comprise less than 2% of the FTSE index, arms exports account for only 1.8% of total exports, arms export employment comprises only 0.2% of the workforce (and is concentrated in the South East which has almost full employment); and technical innovation is dominated by the civil sector with even the MoD acknowledging that Research & Development 'supporting the rapidly changing civil sector markets dwarfs that of defence.'[13]

Actual reasons

Despite the array of justifications the government and companies put forward to persuade us that the arms trade is necessary and useful, the primary reasons for the government’s support are straightforward:

• the arms companies, government and armed forces are intimately connected through a web of formal arrangements (such as DESO and the plethora of advisory quangos) and numerous personal relationships (often due to the ‘revolving door’)
• there is a militaristic approach to security and problem solving within government that makes it extremely receptive to the approaches of arms companies
• the government, more generally, panders to large companies and the corporate agenda

The combination of these factors provides the major arms companies with potent influence, far beyond what the public or ordinary MPs could muster, and more than enough to ensure that arms are promoted and sold regardless of ethical or economic arguments.

Presently, the only meaningful constraint on arms exports is political embarrassment. Restrictions in arms sales are put in place when particularly shaming sales are uncovered or when a buyer, usually to the UK government’s apparent shock, uses UK weaponry in anger. Arms embargoes are generally the result of pressure following media revelations of the ‘misuse’ of weaponry and are few and far between.

Conclusion

The arms trade is driven by the same corporate philosophy that drives big business as a whole, but it has a particularly privileged place in the hearts of governments. In practice this means the arms trade is incredibly adept at taking taxpayers money, in both vendor and buyer countries, and giving it to arms companies, and convincing governments that the arms trade should be promoted rather than restrained. The power of the arms lobby (including many in government) has so far persuaded the media and much of the public that the promotion of arms exports is, if not actually good, necessary. If the arms trade is to end, changing this perception is the first step.

There is increasing understanding that arms do not lead to security. To create the climate where an end to the arms trade is possible, there must be a widespread recognition that military spending reflects vested interests rather than security requirements, that arms exports are subsidised and thus an economic drain, and that greater numbers of jobs and safer jobs would be created by investing in more useful and productive industries.

Published in August 2006

Notes

1. Richard Grimmett, 'Conventional Arms Transfers to Developing Nations, 1997-2004', Congressional Research Service, August 2005, pp. 79 & 83
2. see, for example, Department for International Development and Foreign and Commonwealth Office
3. see Ruth Leger Sivard, 'World Military and Social Expenditures 1996', 1996 and World Bank Economics of Conflict program
4. Foreign and Commonwealth Office, 'Human Rights Annual Report 2005'. The 20 'major countries of concern" are Afghanistan*, Belarus*, Burma, China*, Colombia*, Cuba, Democratic Republic of Congo*, Democratic People's Republic of Korea, Indonesia*, Iran, Iraq*, Israel*, Nepal*, Russia*, Saudi Arabia*, Sudan, Turkmenistan*, Uzbekistan, Vietnam, Zimbabwe. (* indicates that arms export licences were approved in 2005)
5. The United Nations Development Programme, 'Human Development Report 2005'. The Human Development Index ranks 177 countries according to life expectancy, education and average income. Of these countries, 32 are categorised as having Low Human Development.
6. Foreign and Commonwealth Office, Strategic Export Controls Quarterly Reports, 2005
7. DESO website, but now removed. The same quote is available on the MoD website 'The best job in defence? Meet Britain’s defence exports chief', 21 June 2006
8. DESO, 'Strategic Market Analysis: Country Analysis & Overview', 2004
9. The 28 countries are Brazil, Brunei, Bulgaria, Canada, Chile, Czech Republic, Greece, Hungary, India, Italy, Japan, Kazakhstan, Kuwait, Malaysia, Oman, Poland, Qatar, Romania, Saudi Arabia, Singapore, Slovak Republic, South Africa, South Korea, Switzerland, Thailand, Turkey, UAE, USA
10. Defence Manufacturers' Association, 'DMA News', July 2005
11. Transparency International, press release, 25 April 2002 [pdf]
12. Joe Roeber, 'Parallel Markets: Corruption in the International Arms Trade', CAAT, February 2005
13. Ministry of Defence, 'The Future Strategic Context for Defence' [pdf]

Box notes

i There are 65,000 arms exports jobs (Defence Analytical Services Agency (DASA), UK Defence Statistics 2005) and the total number of UK jobs is 30,747,000 (Office for National Statistics (ONS), Labour Market Statistics. Workforce figures relate to December 2004.)
ii Total exports in 2004 were £293,949m (ONS, Exports and Imports of Goods and Services); Total arms exports in 2004 were estimated to be £5,162m (DASA, UK Defence Statistics 2005)
iii Department of Trade and Industry website: 2003-4 "defence spent" is 32% of total R&D expenditure (within the UK)
iv ECGD Annual Review and Resource Accounts, 2004-05, 2003-04 and 2002-03. The figure is the average of the three most recent years (38%, 39% and 50% military, respectively)