DSEi 2003internationalarms market

Published in the UK by Campaign Against Arms Trade11 Goodwin Street, London N4 3HQ

September 2003

ISBN 0 9543329 3 8

4 Summary

6 Introducing DSEi

8 DSEi statisticsInvitations to DSEi 8Companies at DSEi, listed by home country 10World top 20 arms companies 10

11 The companiesAgustaWestland (see GKN)Alvis 11Arsenal Co. 11BAE Systems 13Chemring 15Denel 16EADS 17FN Herstal 19General Dynamics 19GKN 21Heckler & Koch 21INSYS 22Israel Military Industries 22Lockheed Martin 24MBDA (see EADS)MKEK 25Northrop Grumman 26Pakistan Ordnance Factory 30PW Defence (see Chemring)QinetiQ 30Rafael 30Raytheon 33Rolls Royce 33SAAB 34Smiths Group 35Thales 36

39 Company references

IssuesArms export subsidies 35Cluster bombs 23Company influence 37Conflict 13Corruption 36Depleted Uranium 18Development 16Globalization of the arms industry 38Human Rights 17Landmines 15Small arms 20Son of Star Wars 29

Conflicts and countries

Democratic Republic of Congo 22Indonesia 12India & Pakistan 31Iraq 28Israel 32Saudi Arabia 27South Africa 34Turkey 26USA 25

Contents

IssuesArms export subsidiesEven though arms account for only around 2% of UKexports, they form the most heavily subsidised sectorapart from agriculture. The UK government provides arange of services for arms exporters including face-to-facemarketing by Tony Blair and his ministers, assistance withfinancing and, most obviously, the 600-person MoDDefence Export Services Organisation (DESO) which isentirely dedicated to the arms trade including support forarms exhibitions. See page 35

Cluster bombsCluster bombs dispense a number of submunitions thatare supposed to explode on impact. But many do not.They lie waiting to be disturbed, possibly years after aconflict has ended. It has been estimated that more than athousand children have been injured in Iraq by unexplodedmunitions, including cluster submunitions, since the end ofthe 2003 conflict. The UK alone delivered over 100,000cluster submunitions during the invasion and at least 2,000of these remain unexploded and potentially lethal. DSEi willfeature companies that helped leave this legacy.See page 23

Company influenceUK government support for arms companies seems irra-tionally strong. It supports DSEi, promotes arms sales tocountries against its own guidelines, subsidises theseexports, and allows companies like BAE Systems todemand domestic contracts and increase prices. There isno convincing economic or political reason for this; themotive appears to lie somewhere between the influence ofthe arms companies and the desire of ministers to strut theworld stage. See page 37

ConflictEvery hour, about 35 people are killed as a direct result ofarmed conflict. Arms sales increase the likelihood that ten-sions will lead to fighting and prolong conflicts once theybegin. Since the Labour government was elected in 1997,the UK has licensed arms and military equipment to 20countries engaged in serious conflict. 14 of these countrieswere invited to DSEi 2001 and many have received invita-tions to DSEi 2003. See page 13

CorruptionThe secrecy together with the huge amount of moneyinvolved in arms deals, provides ideal conditions for cor-ruption, generating demand where none might otherwiseexist. Transparency International has estimated that ‘theofficial arms trade accounts for 50% of all corrupt interna-

tional transactions’. Arms exhibitions are a crucial elementof this ‘official’ arms trade. See page 36

Depleted UraniumDepleted Uranium (DU) is a toxic heavy metal used inarmour-piercing weapons. It has been estimated that over100 metric tonnes were used during the invasion of Iraq,often in densely populated areas. Few studies have beencarried out on people exposed to DU, though experimentson animals have indicated that internal exposure may leadto kidney damage, cancer and central nervous systemproblems. At least two producers of DU shells will beexhibiting at DSEi. See page 18

DevelopmentMoney spent on arms cannot be spent on education,water, health or housing. It is essentially unproductive. UKarms export controls are supposed to take ‘the technicaland economic capacity of the recipient country’ intoaccount, but it is difficult to find an example where this hashappened. Two cases where it clearly didn’t were a multi-billion dollar deal with South Africa, where there is massivesocial need and no relevant military need, and Tanzania,where a military air traffic control system was exporteddespite opposition from the World Bank and cabinet minis-ters. Both South African and Tanzania have been invited toDSEi 2003. See page 16

Globalization of the arms industryThe arms industry has metamorphosed since the end ofthe Cold War, changing from mainly nationally-ownedenterprises into privately-owned internationally-structuredcompanies. International production is able not only toprovide a cheaper source of labour for the dominant west-ern arms companies but also has the effect of underminingnational export controls. Arms exhibitions have changed inparallel with the industry. DSEi’s forerunners were show-cases for UK companies. Now companies come from allover the world and sales are arranged that are not subjectto UK export controls.See page 38

Human RightsIsrael, Turkey, Saudi Arabia, the US, Colombia, China andRussia all received UK arms in 2002, and have all receivedinvitations to DSEi 2003. The willingness to invite humanrights abusing governments to arms fairs and to licencearms exports to them provides implicit approval of theiractions. See page 17

LandminesIn 2001 there were new mine/unexploded ordnance victimsreported in 69 countries, and around 230 million anti-per-sonnel mines remained in the world’s arsenals. However,

4

SummaryEvery two years, arms dealersgather in the UK for the DefenceSystems and EquipmentInternational (DSEi) exhibition. Theassumption behind the exhibition isthat selling arms is just a normal

commercial activity. The fencing,police presence and secrecysurrounding the event suggests thatit is not. Consideration of theweapons, the conflicts they are usedin and the relationships between

arms companies and politiciansconfirm that it is an extraordinary,and an extraordinarily damaging,business. This report sets out tohighlight some of the many issues ofconcern.

there is some cause for optimism – 128 states, includingthe UK, have ratified the Ottawa Teaty which obliges coun-tries to destroy stocks. The UK Landmines Act makes itillegal for any person to be involved in the production, sale,promotion or transfer of anti-personnel landmines. Therestrictions cover all activities in the UK, but two allegedbreaches during and post-DSEi 1999 did not lead to anycharges. See page 15

Small ArmsSmall arms are the weapons that produce actual massdestruction, killing more than 500,000 people every year.There are already over 600 million of the weapons world-wide but several major small arms producers will be hop-ing to use DSEi to add to that number.See page 20

Son of Star WarsIt would be hard to dream up a corporate welfare packagethat competes with the US’s Ballistic Missile Defense pro-gramme – the new face of Star Wars. But the waste ofresources is only one of the problems. BMD is an aggres-sive system. It is designed to give the US the freedom tointervene wherever and whenever it chooses. It will lead tomissile proliferation, probably among enemies but certainlyamong present ‘allies’. Most of the major US BMD compa-nies will be at DSEi, alongside UK companies pushing forUS dollars and a UK-government sign-up.See page 29

CountriesDemocratic Republic of CongoCongo’s rich mineral deposits should be its fortune butinstead these resources have been plundered by militiasand foreign armies in conflicts that began in 1998 andhave left an estimated four million dead. Angola, Namibiaand Zimbabwe all sent troops to fight for the post-Mobuturegime against rebels backed by Rwanda and Uganda.The governments of Angola, Namibia, Zimbabwe andUganda all received invitations to DSEi during the war.See page 22

IndonesiaIn May 2003, Indonesian troops launched an all-outoffence against Aceh separatists. Despite Indonesianassurances that UK-supplied equipment would not beused offensively or in violation of human rights anywhere inIndonesia, Alvis Scorpion tanks and BAE Systems Hawkjets are in use in Aceh. The Indonesian military seems tohave little knowledge of these assurances and little interestin the UK government’s embarrassment-induced concerns.As Indonesia was invited to DSEi 1999 despite orchestrat-ed violence around the East Timorese referendum, it per-haps has good reason to take any protestations with apinch of salt. See page 12

India and PakistanDespite, or perhaps because of, teetering on the brink ofwar a year ago, India and Pakistan continue to be primesales targets for weaponry. BAE Systems has been tryingto sell its Hawk jets for years and even at the height of thetension over Kashmir it had the enthusiastic support of UKgovernment ministers including Tony Blair. Earlier this yearLord Bach spearheaded the Hawk pitch at the AERO India2003 arms exhibition. Both India and Pakistan havereceived official invitations to DSEi 2003. See page 31

IraqFollowing the invasion of Iraq, the UK and US govern-ments and arms companies seem very keen that thewrong lessons are learnt. Rather than accepting theabsurdity of arming repressive regimes, they are pushingfor more military spending at home and, at the same time,continuing their relentless pursuit of exports. In Iraq itself,US ‘private military companies’ are training a new armyand, incredibly, the US-led authority has ordered 34,000AK-47 assault rifles for their use. See page 28

IsraelIsrael uses an array of imported weaponry in its illegaloccupation of the West Bank and Gaza and its oppressionof the Palestinian people. It has used its many relation-ships with western, primarily US, companies to build up amilitary industrial base that, in turn, is willing to export toalmost anyone. Israel has been invited to DSEi 2003 andits military industry will be represented by five companies.See page 32

Saudi ArabiaIn the 1980s, Saudi Arabia signed the huge Al Yamamaharms deals with the UK, deals that amounted to ‘thebiggest [UK] sale of anything to anyone’. An investigationof corruption allegations relating to the deals was carriedout but its findings were, and continue to be, suppressed.Post-September 11th, UK and US government views ofSaudi Arabia appear to be rapidly changing, but the coun-try remains one of the UK’s most important arms marketsand will be, as always, present at this year’s DSEi. Seepage 27

South AfricaDespite urgent social needs and the lack of a militarythreat, European companies have managed to sell thecountry $4.8 billion worth of advanced military equipment.After much internal debate in South Africa, the packagewas finally secured by incredible offers of industrial ‘com-pensation’. Allegations of corruption have surrounded thedeal and one prominent politician has been sentenced tofour years in prison for fraud. Both the vendor companiesand South Africa will be well represented at DSEi. In fact,no fewer than 36 South African exhibitors are listed. Seepage 34

TurkeyTurkey has an appalling record of human rights violationsagainst Kurds and has used imported weapons in carryingout these abuses. Its military spending has increasedsteadily since 1990 despite the country’s relative povertyand serious financial problems. Much of this spending hasbeen used to purchase arms from abroad to build up anindigenous high-tech arms industry. US and Europeancompanies are heavily involved in this process and manyof these are exhibiting at DSEi, as is MKEK, a majorTurkish small arms manufacturer. See page 26

USAThe US government appears to have a preferred means ofsolving problems – military means. It seeks the ability tocontrol any situation on its own and unashamedly termsthis ‘Full Spectrum Dominance’. This is perhaps not sur-prising given the enormous influence of both the armsindustry and right-wing think tanks in the US administra-tion. The US arms companies dominate the internationalarms market and, as such, will be a key part of DSEi, withover 100 companies exhibiting. See page 25

5

This report provides an overview of DSEi, including shortprofiles of some of the main companies attending andinformation on many of the damaging aspects of the armstrade. The companies are presented in alphabetical orderthroughout the report and the main issues and countriesare considered in information boxes near relevantcompanies (see Contents for an alphabetical list).

DSEiFrom 9th–12th September 2003, East London will be takenover by arms dealers. Defence Systems and EquipmentInternational (DSEi) is a weapons fair and conference ofenormous proportions and is likely to be one of the world’slargest ever arms exhibitions.

The ExCel centre, a modern complex in London’sdocklands, will host over 1,000 arms companies, sellingsmall arms, missiles, planes, tanks, military electronics andwarships, as well as surveillance and riot controlequipment to buyers from all over the world. One in threeof the world’s governments will be at the arms fair,shopping for military equipment. Adversaries will shopside-by-side for weapons to use against each other. Allthis will take place in secret, behind heavily protectedsecurity fences and police lines.

DESO – the government’s arms dealerDSEi is run in association with the MoD’s Defence ExportServices Organisation (DESO), whose mission is ‘tomaximise legitimate UK defence exports in co-ordinationwith industry’. DESO is central to the UK government’ssupport of the arms trade. It is responsible for thepromotion of UK arms exports and co-ordinates armstrade support within Whitehall and the MoD.

The Defence Sales Organisation (DSO), as the DESOwas then known, was set up by the Labour government in1966. Denis Healey, Minister of Defence at the time, said:‘While the government attach the highest importance tomaking progress in the field of arms control anddisarmament, we must also take what practical steps wecan to ensure that this country does not fail to secure itsrightful share of this valuable commercial market.’1 TheDSO changed its name to the Defence Export ServicesOrganisation in 1985 to ‘more accurately reflect its role’ 2,namely to ‘assist British defence industries to promote andsell their goods abroad’.

Today, DESO has over 600 staff in London and in itsoverseas offices.3 Its net cost was £11,077 million in2001/2.4 It is headed, as it always has been, by asecondee from an arms company, giving the industry apowerful voice inside the government. The currentincumbent is Alan Garwood, whose career has been withBAE Systems.

DSEi’s forerunnersPrior to 1999, DESO organised the government’s militaryexport exhibitions. From 1976 until 1991 the British ArmyEquipment Exhibition (BAEE) and the Royal NavyEquipment Exhibition (RNEE) were held in alternate yearsin Aldershot and Portsmouth respectively. In September1993 the first combined Royal Navy & British ArmyEquipment Exhibition was held in Aldershot and othersfollowed in 1995 and 1997. Overseas delegations attendedby invitation only. Some of the visiting delegations camefrom governments with poor human rights records such asIndonesia and Chile, or from countries in conflict. In 1986Iraq was represented at the BAEE by a five-strong

Introducing DSEi

6

delegation led by its Director ofArmaments and Supplies, despitehaving already been at war with Iranfor almost six years.

On display at these exhibitionswas everything that might be of useto the armed forces, from tanks andfrigates to footwear and musicalinstruments, as well as supportservices like banking.

DSEi – public or private?With the arrival of ‘New’ Labour andits obsession with privatisation, theRoyal Navy & British Army EquipmentExhibition was pushed out to thecommercial sector. An exhibitions firmcalled Spearhead Exhibitions Ltdlaunched DSEi 1999 at Chertsey inSurrey, with boats on display atLondon docklands. Thoughrun by a private firm, thegovernment arrangedinvitations and contributed£250,000 and hundreds ofmilitary personnel to help runthe show. DSEi 2001, whichtook place at the Excelcentre, London docklands,received even moregovernment support, withDefence Secretary GeoffHoon, and Foreign SecretaryJack Straw in attendance.

This year’s DSEi shows nolet up in governmentassistance. The MoDestimates that DSEi will set itback £400,000 in ‘directcosts’, and ‘in addition,representatives of HerMajesty’s Government maycarry out activitiesassociated with theexhibition, as part of theirnormal duties, which couldbe identified only at disproportionatecost.’5 DESO activities at DSEiinclude ‘conducting Army equipmentand waterborne demonstrations’.6

DSEi is still very much the UKgovernment’s arms fair, and thegovernment’s responsibility.

The invitation listsThe official invitation list is entirely aproduct of the UK government. AsDESO states in its introduction to thisyear’s official list, ‘the Defence ExportServices Organisation prepares thelist of countries to receive officialinvitations. In doing so they takeaccount of current marketingcampaigns and longer-termprospects for business with thecountries concerned. Political issues,arms embargoes and current

international relations imperatives areconsidered in the process.’7

There is also a second invitationlist, provided by Spearhead. Theextent to which the MoD is involvedin discussions and decisions aboutthe content of this list is unclear.What is clear is that the MoD doesnot object to the presence of any ofthe governments invited. TheSpearhead lists have containedaround 20 more countries than theofficial lists, some of which are highlycontroversial. (DSEi invitation lists arecollated in Table 1 overleaf.)

On August 28th 2003, Spearheadstated that it would not be hostinginternational delegations this year,and that it had produced ‘1/2 millionflyers to be inserted in defence

journals to generate the 20,000visitors expected to attend DSEi’.8

However, the following day a list ofcountries became available fromSpearhead, introduced with thesentence ‘Invitations to attend DSEi03 were sent to the following Londonbased Embassies by the organisersof DSEi 03’. The countries includedAfghanistan and Israel, neither ofwhich were on the official list.

Human rights abuse,conflict, terrorism... inassociation with DSEiEighty countries have receivedinvitations to DSEi 2003. These havebeen sent to governments of some ofthe world’s worst human rightsabusing states, including Colombia,Israel and Saudi Arabia. Inviting

delegates to arms exhibitions likeDSEi provides countries with not onlythe opportunity to buy the weaponsand tools with which they canperpetrate human rights abuses, butalso gives moral and political supportto their actions.

DSEi is also directly engaged infueling conflict around the world,allowing arms companies to sellweapons to countries on the brink of,and actually in, conflict. Without theinternational arms trade, countriescould not go to war on the scale theydo, civilian and military casualtieswould be far less, and the worldwould simply be a safer and betterplace. India and Pakistan have bothbeen officially invited to this year’sDSEi. Angola, Namibia, Uganda and

Zimbabwe have receivedinvitations to previous DSEiexhibitions regardless of theirinvolvement in the horrors ofthe Democratic Republic ofCongo conflict. As if this acceptance ofconflict and human rightsabuse was not shockingenough, DSEi appears to beambivalent about terrorism.Though the US and the UKmay have accused countrieslike Syria and Pakistan ofsponsoring or supportingterrorism, both of thesecountries were invited toprevious DSEi exhibitionsand have both receivedofficial invitations for DSEi2003.On 11th September 2001,just as terrorists were flyingairplanes into the WorldTrade Centre and thePentagon in the United

States, 11 different Middle Easternnations were shopping for weaponsat DSEi 2001, side by side with theUS, Israel, Australia and the UK.While thousands of other eventsacross the world were cancelled outof respect for the dead, arms dealerscarried on selling weaponry at DSEifor three more days.

1 Hansard, 25.1.662 Hansard, 9.6.863 Hansard, 1.7.024 Hansard, 24.3.035 Hansard, 20.5.03, Col. 677/8W6 www.deso.mod.uk/events.htm, accessed

27.8.037 www.deso.mod.uk/latest.htm, accessed

27.8.038 Letter from Alex Nicholl, Project Director DSEi,

28.8.03

7

8

DSEi statisticsTable 1. Invitations to DSEiThe UK government column refers to countries that have received official invitations from the UK MoD. The Spearhead columns refer to invitations from theexhibition organisers.

Africa

Americas

Asia-Central &South

Asia-East &South East

Australasia

AlgeriaAngolaBotswanaEgyptGhanaKenyaMauritiusMoroccoNamibiaNigeriaSouth AfricaTanzaniaTunisiaUgandaZimbabwe

ArgentinaBarbadosBrazilCanadaChileColombiaEcuadorJamaicaMexicoPeruTrinidad and TobagoUruguayUSVenezuela

AfghanistanBangladeshIndiaKazakhstanPakistanSri Lanka

BruneiChinaIndonesiaJapanMalaysiaPhilippinesSingaporeSouth KoreaThailandVietnam

AustraliaNew Zealand

Region Country 2001 UKgovernment

2001Spearhead

2003Spearhead

1999 UKgovernment

1999Spearhead

2003 UKgovernment

9

Invitations to DSEi (continued)

Middle East

Europe

UN

BahrainIsraelJordanKuwaitLebanonOmanQatarSaudi ArabiaSyriaTurkeyUAEYemen

AustriaBelgiumBulgariaCroatiaCzech RepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyLatviaLithuaniaLuxembourgNetherlandsNorwayPolandPortugalRomaniaRussiaSlovakiaSloveniaSpainSwedenSwitzerlandUKUkraine

Region Country 2001 UKgovernment

2001Spearhead

1999 UKgovernment

1999Spearhead

2003Spearhead

2003 UKgovernment

Table 2. Companies at DSEi,listed by home country

North AmericaCanadaUS

Other EuropeanAustriaBelgiumBulgariaDenmarkEurope (Eurofighter)FinlandFranceGermanyIrelandItalyItaly & UKNetherlandsNorwayRomaniaRussiaSpainSwedenSwitzerland

UK

OtherAustraliaChinaIsraelMalaysiaPakistanSingaporeSouth AfricaThailandTurkeyUAE

Total

1 www.dsei.co.uk/exhibit_list_2003.htm, the list is dated 17.8.03 andwas the most recent list as of 29.8.03

2 DSEi 2001 Show Guide

Table 3. World’s top 20 armscompanies(Defense News, 21 July 2003)

10

20031 20012

589 265

24102

1517

2846161

15141119

18

15

10

6184821

1310

85

2002 Country(US unlessotherwise stated)

UK

FranceNetherlandsItaly

Japan

FranceUKUK

1 Lockheed Martin2 Boeing3 Raytheon4 BAE Systems5 Northrop Grumman6 General Dynamics7 Thales8 EADS9 Finmeccanica2

10 Honeywell11 United Technologies12 L-3 Communications13 SAIC14 Mitsubishi Heavy Ind15 General Electric16 DCN17 Rolls Royce18 GKN3

19 Computer Sciences20 Alliant Techsystems

24113

1749

2615311

36111

21

101

232

1

1002 525

Confirmed atDSEi 20031

1 www.dsei.co.uk/exhibit_list_2003.htm, the list is dated 17.8.03 andwas the most recent list as of 29.8.03

2 Exhibiting as AgustaWestland and MBDA3 Exhibiting as AgustaWestland

DSEi statistics contd.

The following is a selection of some of the largestand/or most controversial companies attending DSEi.Unless otherwise indicated, the basic company figuresrefer to 2002 and world ranking (by military sales),military sales and military sales percentage aresourced from Defense News (21.7.03)

Alvis [UK]World ranking: 79Total military sales: $362mMilitary sales as % of total sales: 100%Employees: 2,5001

Military products include: armoured vehicles and tanks

Alvis plc, 34 Grosvenor Gardens, London SW1W OALTel: + 44 (0) 207 808 8888www.alvis.plc.uk

BackgroundAlvis is dedicated to the production of armoured vehiclesand tanks and has a long history of providing vehicles forboth UK and overseas armed forces. Its website proudlystates that it has exported military vehicles to more than 60countries. In September 2002 Alvis acquired VickersDefence Systems from Rolls-Royce, making it the solearmoured vehicle manufacturer left in the UK. Alvis’s UKoperations now take place under the auspicies of AlvisVickers Ltd, a subsidiary of Alvis plc, which has facilities inNewcastle upon Tyne, Telford, Leeds and Wolverhampton.Alvis also has major manufacturing facilities in Scandinaviaand South Africa (through a 75% stake in Alvis OMC).2

Exports

Middle EastThe Middle East is a favourite market for Alvis. The Piranhaarmoured vehicle has been sold to Oman, Qatar and SaudiArabia and is ‘currently under detailed consideration by sev-eral other GCC [Gulf Cooperation Council] countries.’ 3 Inaddition to Piranhas, Oman operates Stormer and Scorpionarmoured vehicles. Jordan also operates the Scorpion andboth countries have selected Alvis for Scorpion upgrades. InOctober 2002 Jordan declared that it had chosen Alvis asthe supplier for gunnery training equipment for the AlHussein Main Battle Tank. Kuwait operates hundreds ofWarrior infantry fighting vehicles, the UAE operates the RG-12 armoured personnel carrier, and a new armoured vehicle(the RG-32) is now ready for production with a version hav-ing been specifically developed for sales to the MiddleEast.4

The Piranha is to be produced in Turkey for the Turkisharmed forces following an agreement signed at DSEi 2001(on the day following the attack on the World Trade Centre).

East AsiaEast Asia has also been, and remains, an important market.Malaysia provided the first customer for the Stormer, oper-ates the Bv206 armoured vehicle (including a long-termsupport contract with Alvis), and has trialed the Cv90120tank. Brunei confirmed the selection of Alvis for the upgradeof its Scorpion vehicles in June 2002. In January 2002 anorder was made for Bv206 armoured vehicles for the SouthKorean armed forces. More coyly, Alvis states that a ‘FarEastern Army’ has received an initial quantity of Supacatvehicles and has now ordered a second tranche.5

IndonesiaAlvis has a long-standing relationship with the Indonesianmilitary, having sold 15 Saracen armoured personnel carri-ers to the Indonesian Army in 1955, 30 Ferret armoured carsin 1958, 15 Saladin armoured cars in 19606 and, morerecently, the Stormer armoured vehicle.7 Moreover, aftercoming to power in 1997, the Labour government honouredan export order of 50 Scorpion light tanks worth £100m,which had been approved by the Conservative govern-ment.8 Scorpions have been deployed to Aceh (see page12), in contravention of restrictions placed on their use bythe UK government at the time of sale.

Arsenal Co. [Bulgaria]World ranking: outside the top 100Employees: over 4,0009

Military products include: assault rifles, grenade launchers,anti-aircraft guns

Arsenal Co., 100, Rozova Dolina St., 6100, Kazanluk,Bulgariawww.arsenal-bg.com

BackgroundIn 1999 Arsenal was sold to its management team for $2.1mby the Bulgarian government as part of its privatisation pro-gramme.10

What it makesArsenal produces many models of assault rifles, grenadelaunchers and anti-aircraft guns including small quantities ofNATO calibre weapons.11 Its most notable weapon is theKalashnikov, ‘regarded as one of the East bloc’s finest, andover 1 million of the submachine guns found their way fromhere (Bulgaria) to the armies and armed gangs of theworld’.12

ExportsOnce the Cold War ended, Bulgaria was left with hugestocks of arms that had no market in Eastern Europe. Itturned its attention to other areas of the globe and, as a1999 Human Rights Watch report noted, ‘earned a reputa-

Companies exhibitingat DSEi 2003

11

tion as an anything-goes weapons bazaar whereKalashnikov assault rifles, mortars, antitank mines, ammuni-tion, explosives and other items are available for a price – nomatter who the buyers are or how they might use the dead-ly wares.’13

Arsenal was one of the beneficiaries of these deals.Saferworld quotes a 2001 Sofia Novinar article that report-ed that Arsenal ‘sold arms for $7-8 million to Chad andAngola’.14 And in 1998 the Sunday Times said it had

obtained documents that allegedly named Arsenal as a sup-plier of arms to Sierra Leone in breach of a UN embargo.15

Saferworld reports that, since 1998, the Bulgarian gov-ernment has ‘repeatedly promised to tighten national con-trol on arms trading to bring them into line with model inter-national standards’.16 There appears to have been someprogress in terms of sales to Africa, but vast numbers ofsmall arms and light weapons continue to flow out ofBulgaria. In 2000, a contract was reported to have been

12

Indonesia has been at the centre ofcontroversy over UK arms exportsfor decades. Indeed, the 1997Labour government’s first importantarms export decision was to refuseto revoke licences for Hawk jets andScorpion tanks to Indonesia,ditching the brand new ‘ethicalforeign policy’.

East TimorOpposition to arms exportsfocussed on the massive humanrights abuses in East Timor by theIndonesian military and surgedduring the orchestrated violencesurrounding an East Timoreseindependence referendum in 1999. Itis generally accepted that theIndonesian Army created, financed,and ran paramilitary death squadswhich carried out the majority of theviolence against civilians (thoughIndonesian Army and Police unitswere also directly involved inviolence).1

Eventually, at the peak of thisviolence, the UK supported an EUarms embargo, though it lasted amere four months and wasconveniently situated in a gapbetween Hawk deliveries. Thelicences affected by the embargowere extended by four months. Twoweeks after the embargo was lifted,the UN-backed InternationalCommission of Enquiry2 and theIndonesian National Human RightsCommission (KOMNAS HAM) bothreported that grave violations ofhuman rights abuses had takenplace in 1999, and KOMNAS HAMdescribed them as crimes againsthumanity.3

Continued conflictFollowing East Timoreseindependence there was optimismsurrounding other Indonesianconflicts. But human rights abusescontinued unabated in West Papua4

and peace moves relating to Aceh,

where Free Aceh Movement (GAM)rebels have been fighting forindependence since 1976, collapsedin 2003. More than 12,000 people,mostly civilian victims of the TNI,have died in the Aceh conflict.5 Inearly May 2003 more than 2,000Indonesian government troops weredeployed to Aceh to reinforce a26,000-strong force already there.On May 19th the Indonesiangovernment placed the provinceunder martial law and the Indonesianarmy, or TNI, launched an all-outoffensive against GAM.

UK exports to IndonesiaIn the 1990s, the Conservativegovernment licensed the sale of 40Hawks (24 in 1993 and 16 in 1996)and 50 Scorpion light tanks (worth£100m). After coming to power in1997, Labour honoured these dealsdespite introducing new exportcriteria that stated the governmentwould ‘take into account respect forhuman rights and fundamentalfreedoms in the recipient country’.6

From 1997 to the end of 2002, theLabour government has issued atotal of 377 arms export licences forIndonesia. According to thegovernment’s Annual Reports onStrategic Exports Controls, the valueof licences granted to Indonesiaincreased from £2m in 2000 (29licences issued) to £15.5m in 2001(60 licences issued) to £41m in 2002(184 licences issued).7 Items coveredby the 2002 licences include aircraftcannons; components for missilelaunching equipment; componentsfor combat aircraft, combathelicopters, and tanks; andarmoured all wheel drive vehicles.

UK arms used in AcehUK-built Scorpion tanks8 and Hawkaircraft9 are in use in Aceh despiteassurances by the Indonesianmilitary that UK-supplied equipmentwould not be used offensively or in

violation of human rights anywherein Indonesia. On June 1st 2003Jakarta rejected UK appeals not touse Hawk aircraft in its currentmilitary offensive against GAMrebels, saying it has a right to do so.On June 22nd 36 Scorpion tankswere deployed to Aceh.10 Moreover,the senior military spokesman inAceh, Col. Ditya Sudarsono, said theScorpions will be used offensively as“a key part of our campaign to finishoff the [GAM]”.11 A useful overview ofthe use of UK equipment in Acehhas been provided by Tapol, theIndonesia Human RightsCampaign.12

DSEiThe two major UK suppliers toIndonesia are BAE Systems, whichmake the Hawk, and Alvis which hassupplied several types of armouredvehicle including the Scorpion tank.There may be many other supplyingcompanies, but official secrecymeans we do not know. Both BAESystems and Alvis are exhibiting atDSEi. Indonesia received an officialinvitation for DSEi 1999, though notfor DSEi 2001.

1 etan.org/news/2001a/04dunnrl.htm,accessed 15.8.03

2 www.unhchr.ch/huridocda/huridoca.nsf/(Symbol)/A.54.726,+S.2000.59.En, accessed15.8.03

3 www.etan.org/action/issues/smh.htm,accessed 15.08.03

4 tapol.gn.apc.org/st020717.htm accessed17.8.03

5 tapol.gn.apc.org/st020131.htm, accessed15.8.03

6 Hansard 28.7.977 tapol.gn.apc.org/st030702.htm 8 Observer, ‘British-made tanks lined up

against rebels in Indonesia’, 11.5.039 Times, ‘British-made jets used in attack on

Indonesian villages’, 26.5.0310 Jakarta Post, ‘TNI deploys British tanks to

Aceh’, 23.6.0311 Guardian, ‘Scorpions move in on rebels as

Indonesia reneges of weapons pledge toBritain’

12 www.tapol.gn.apc.org/st030702.htmaccessed 17.8.03

Indonesia

agreed for 300,000 Kalashnikovs for India and the followingyear Turkey received over 1,000 heavy machineguns fromthe Arsenal factory.17

BAE Systems [UK]World ranking: 4Total military sales: $15bnMilitary sales as % of total sales: 77%Employees: more than 100,00018 (approx. 43,000 in the UK)19

Military products include: fighter and trainer aircraft, warships,submarines, torpedoes, radar, tactical communicationssystems and missiles.

BAE Systems (Headquarters), Farnborough, HampshireGU14 6YUTel: + 44 (0) 1252 373 232(Registered Office), 6 Carlton Gardens, London SW1Y 5ADwww.baesystems.com

BackgroundBAE Systems is the result of the 1999 merger of BritishAerospace and Marconi Electronic Systems. It has officesthroughout Europe, Asia and North America, as well as inAustralia and Africa. Less than 20% of its output is sold tothe UK. A similar amount is sold to the Middle East but thereal focus of BAE Systems’ activity is North America. BAE

Systems has a strong presence in the US, through BAESystems North America, and sells more to the Pentagonthan it does to the UK MoD.

Over the past couple of years the company has receiveda vast amount of media attention. Some has resulted fromdomestic practices: its poor project management relating tothe Nimrod and Astute programmes; its aggressive salesposture towards the MoD; its boardroom machinations; anda dive in its share price. Other coverage has resulted fromits plethora of overseas sales, many of them controversial.

Subsidiaries and joint venturesBAE Systems’ joint ventures and interests include: RODefence (100% – see below), AMS (formerly Alenia MarconiSystems, 50%), missile-maker MBDA (37.5%), EurofighterGmbH (33%), Aerosystems International (50%), Airbus(20%), Flagship Training (50%), Fleet Support Ltd (50%) andSTN Atlas (49%) although BAE Systems has recently agreedwith Rheinmetall DeTec AG of Germany to split STN Atlasinto two companies, Atlas Elektronik, which will be whollyowned by BAE Systems, and Rheinmetall DefenceElectronics.20 BAE Systems holds a 35% state in Sweden’sSAAB which produces the Gripen fighter. In August 2003,BAE purchased GKN’s 29% stake in Alvis plc for £73m.

13

The World Health Organizationestimates that around 191 millionpeople lost their lives because ofarmed conflict in the 20th century.1

But tragically war is not a thing ofthe past. The WHO also estimatesthat currently around 35 people arekilled every hour as a direct result ofarmed conflict. Harrowing as thesefigures are, there are other, perhapsless obvious costs, including theenormous numbers of people forcedto flee their homes because ofconflict. While some people arguethat war is inevitable and there islittle that can be done to prevent it,there is growing evidence of thedirect connection between theproliferation of weaponry through thearms trade and the likelihood ofdisputes breaking out into armedconflict. Once conflict has started,the arms trade helps sustain it.

Contrary to constant assurancesfrom the government, the UKcontinues to sell arms and militaryequipment to countries engaged inconflict. Earlier this year, CAATresearch2 showed that the UK hasexported arms and militaryequipment to 20 countries engagedin serious conflict since 1997:

Algeria, Angola, Burundi, Colombia,India, Indonesia, Israel, Kenya,Nepal, Nigeria, Pakistan, Peru,Philippines, Russia, Senegal, SierraLeone, Sri Lanka, Turkey, Ugandaand Zimbabwe.

Fourteen of these countries wereinvited to DSEi in 2001 and two ofthe others were invited to DSEi in1999.

UK export controlsThe UK government’s export criteriaspecifically refer to ongoing conflict.Criteria three and four state,respectively:

‘The Government will not issuelicences for exports which wouldprovoke or prolong armedconflicts or aggravate existingtensions or conflicts in thecountry of final destination.’ ‘The Government will not issue anexport licence if there is a clearrisk that the intended recipientwould use the proposed exportaggressively against anothercountry or to assert by force aterritorial claim’.These criteria appear to be

irrelevant while a governmentagency, the Defence Export Services

Organisation, is tasked with pro-actively pushing arms sales aroundthe world, including to an official listof 20 ‘UK Priority Markets’. While thegovernment will not disclose thecurrent list, the list for 2001/02 hasbeen released and included Indiaand Turkey.3 In the past, it has beenreported that India and Pakistan havebeen identified as ‘highly valuablepriority markets’.4 They have bothbeen officially invited to DSEi 2003.

As one of the largest producersand exporters of arms and militaryequipment in the world, the UK hasto take a large measure ofresponsibility for fanning the flamesof conflict around the globe. DSEi isone of the UK government’smechanisms for selling arms, but itis also an opportunity for companiesfrom all over the world to ensure thatcountries in conflict and regions oftension are not left wanting for arms.

1 World Health Organisation, ‘World Report onViolence and Health’, 2002

2 CAAT, ‘Fanning the Flames’, January 20033 Letter from Lord Bach, MoD, 17.3.034 Hansard, Memorandum submitted by The

British Defence Manufacturers ExportLicensing Group to the Select Committee onInternational Development, 7 February 2000

Conflict

What it makes

AircraftWell known for its seemingly ubiquitous Hawk trainer andlight combat jet, BAE Systems also produces the troubledNimrod maritime surveillance aircraft and is a partner in theCold War legacy Eurofighter project. It has a significantstake in the US/Lockheed Martin Joint Strike Fighter pro-gramme, with work amounting to 10-15% of the total, worth£25bn.21 3,000 JSFs are due to be built for the US and UK(the UK possibly ordering 60-land and 150-carrier-basedmodels) and the manufacturers are anticipating selling asimilar number around the world.

NavalBAE Systems produces underwater weapons, warshipsincluding frigates, destroyers, auxiliary vessels and sub-marines (including the over-cost Astute class nuclear sub-marine) and, they hope, aircraft carriers. It is the prime con-tractor for the UK Navy’s Future Carrier project, which is dueto see two new carriers enter service in the mid 2010s.

MissilesThe company owns 37.5% of MBDA, the world’s secondlargest missile manufacturer. MBDA has 32 missile pro-grammes underway and a further 23 in development22 (seeEADS, page 17).

Ballistic Missile DefenseBAE Systems is a member of the new UK Missile DefenceCentre launched on July 18th 2003. The centre is a joint UKgovernment and industry project that is intended to providean interface with the US Missile Defense Agency.23 BAESystems had already signed up with Boeing in July 2002and Lockheed in June 2003 to work on Ballistic MissileDefense, and its North American arm is working on THAAD(a US BMD programme missile interceptor).

RO DefenceRO Defence, formally Royal Ordnance, is a wholly-ownedsubsidiary of BAE Systems which specialises in munitionsand armaments. It currently employs 3,500 staff located inthe UK, USA, Germany and the Netherlands and has anorder book of nearly £1 billion.24 RO Defence’s products,which are exported to almost 50 countries worldwide,include high explosives, artillery and artillery ammunition,small arms and medium calibre ammunition, mortars andmultiple launch rocket systems.25 It also makes 105mm and120mm Depleted Uranium-tipped shells.26

Playing the ‘Jobs’ cardThough it studiously dropped ‘British’ from its name in 1999,is majority foreign-owned, and is searching for a US part-ner/buyer, BAE Systems still wraps itself in the Union Jackwhen bidding for MoD contracts. It is very willing to go tothe press and play its ‘Buy British’ or ‘jobs’ card, howevermeaningless that is in an internationalised arms industry.And it often succeeds. In January 2003 it won the MoD’s air-craft carrier competition despite not having the best design.The cost of constructing the carriers was put at £2.8bn atthe time, but a few short months later BAE Systems ‘told theMinistry of Defence that it would cost up to £4bn to con-struct the pair’.27

July 2003 provided another, even more spectacular,example of the level of BAE Systems’ influence (also seeCompany Influence, page 37) and marketing abilities. Thecompany let it be known that it would not enter an open

competition for the fighter trainer aircraft for the RAF,demanding instead that it just be given the contract. It hadalready persuaded the government to drop its plan for a pri-vate finance initiative contract.28 However, the Treasury waspushing hard for an open competition and estimated thatthis would save the tax-payer around £1 billion.29 Set againstthis, BAE Systems had announced that if it was not giventhe contract by July 31st it would make 470 workers at itsBrough plant redundant.30 No one seemed to notice that £1billion amounted to over £2 million for each of the much-dis-cussed 470 jobs. On July 30th, the day before BAESystems’ deadline, the government gave the company a£800m contract to supply the RAF with 20 Hawk 128 train-er jets with an option for a further 24 aircraft.

The precise extent to which potential exports influencedthe Hawk purchase will never be known, but there are plen-ty of indications that it was important. BAE Systems wasreported as saying that if the government did not supportthe Hawk it would ‘ruin the company’s chances of sellingthe aircraft abroad’,31 and Patricia Hewitt, the industry sec-retary, highlighted the Hawk’s ‘significant export potential’ inher reflection on the decision.32

ExportsBAE Systems has export markets across the world. ItsHawk jets alone have been sold to Brunei, Indonesia,Kenya, Kuwait, Malaysia, Oman, Saudi Arabia, South Africa,South Korea, UAE and Zimbabwe. In the past year there hasbeen angry reaction to the use of its Hawks in Aceh, to thesale of head-up displays for US-built F16s destined forIsrael, and to the marketing of arms to India in the midst ofconflict over Kashmir. It has also been the subject of allega-tions of bribery regarding deals with the Czech Republic,India and South Africa, and of UN allegations of sanctionsbusting to arm Zimbabwe. BAE Systems has denied bothbribery and sanctions-busting allegations.

ZimbabweBritish Aerospace supplied 12 Hawk jets to Zimbabwe in theearly 1980s. In May 2000 an arms embargo was imposed onZimbabwe by the UK in protest at the violent treatment ofPresident Robert Mugabe’s opponents.33 This was followedby an EU arms embargo in February 2002. However, it hasbeen reported that this did not prevent Hawk spares andother military equipment getting through to Mr Mugabe’sregime. A United Nations Security Council panel publisheda report in October 2002 that stated:

‘John Bredenkamp, who has a history of clandestine mil-itary procurement, has an investment in AviationConsultancy Services Company (ACS). The Panel has con-firmed, independently of Mr Bredenkamp, that this compa-ny represents British Aerospace, Dornier of France andAgusta of Italy in Africa. Far from being a passive investor inACS as Tremalt representatives claimed, Mr Bredenkampactively seeks business using high-level political contacts.In discussions with senior officials he has offered to mediatesales of British Aerospace military equipment to theDemocratic Republic of the Congo. Mr Bredenkamp’s rep-resentatives claimed that his companies observedEuropean Union sanctions on Zimbabwe, but BritishAerospace spare parts for [Zimbabwe Defence Forces]Hawk jets were supplied early in 2002 in breach of thosesanctions. Mr Bredenkamp also controls RaceviewEnterprises, which supplies logistics to ZDF. The Panel hasobtained copies of Raceview invoices to ZDF dated 6 July2001 for deliveries worth $3.5 million of camouflage cloth,batteries, fuels and lubricating oil, boots and rations. It also

14

has copies of invoices for aircraft spares for the Air Force ofZimbabwe worth another $3 million.’ 34

South AfricaIn June 2003 the Guardian alleged that ‘BAE Systems paidmillions of pounds in secret commissions’ to win a SouthAfrican Hawk jet contract.35 Astonishingly, it reported thatthe UK government had confirmed the payment, but refusedto reveal the amount paid. The DTI did, however, say it was‘within acceptable limits’. (see Corruption, page 36)

Czech RepublicIn December 2001, the Czech cabinet selected GripenInternational’s bid to supply 24 Gripen fighters in a £1bndeal after rival bidders pulled out of the process. TheGuardian reported that it had seen documents that demon-strated that the ‘US has accused Britain’s biggest weaponscompany, BAE Systems, and its British government spon-sor of “corrupt practice” over the deal.36 The CzechRepublic withdrew funding for Gripens’ purchase followingthe floods in summer 2002.

IndiaIn July 2003 the Sunday Times reported details of a televi-sion interview given by Indian Defence Minister GeorgeFernandes. He was quoted as saying, ‘I am afraid that AJT[Advanced Jet Trainer] may wait for another two or five yearsbecause the Americans have said that British Aerospace ...are bribing people, including the people in India.’37

Chemring [UK]World ranking: outside the top 100Total military sales: £64m 38

Military sales as % of total sales: 66% 39

Employees: 1,575 40

Military products include: countermeasures and militarypyrotechnics

Chemring Group plc, 1650 Parkway, Whitely, Fareham,Hampshire PO15 7AHTel: + 44 (0) 1489 881 880www.chemring.co.uk; www.pwdefence.com

BackgroundChemring Group dates back to 1905 with the incorporationof the British, Foreign and Colonial Automatic LightControlling Company Ltd. In 1986 Chemring acquiredSalisbury-based Pains Wessex Ltd and the Group now hasoperations in the UK, US and Australia.

Chemring’s military business includes countermeasures,made by Chemring Countermeasures in the UK, Kilgore andAlloy Services in the US, and Pains Wessex Australia; andmilitary pyrotechnics, made by PW Defence in the UK andPains Wessex Australia. 44% of sales are to the UK, 17% tothe US, 12% to Europe and 27% to the rest of the world.41

CountermeasuresIn 2002, nearly half of Chemring’s turnover was from coun-termeasures42 – expendable decoys for air, land and sea. Itclaims that it is the largest supplier of infra-red and radio fre-quency passive expendable decoys worldwide,43 with salesto the Pentagon forming an important source of revenue.Alloy Services, in conjunction with Raytheon, is involvedwith the Comet pre-emptive decoy which has been demon-strated on the A-10 ‘Tankbuster’ and Lockheed Martin’s

The ‘Convention on the Prohibition of the Use,Stockpiling, Production and Transfer of Anti-PersonnelMines and on Their Destruction’, or Ottawa Treaty,came into force on March 1st 1999. The UK was anactive supporter of the treaty and, along with 127 otherstates, has ratified it. Unfortunately some of the world’smost prolific users of landmines, including China,Russia and the US, have not. The Treaty obligessignatory countries to destroy stockpiles within fouryears, to clear minefields within 10 years, to assist minevictims and to report annually on progress. It alsoprohibits them from manufacturing, trading oradvertising landmines.

Landmine Monitor estimates that there remain about230 million anti-personnel mines in the arsenals of 94countries, with most estimated to be held by China (110million), Russia (60-70 million), United States (11.2million), Ukraine (6.4 million), Pakistan (6 million), India(4-5 million), and Belarus (4.5 million).1 The same reportidentifies 90 countries that are affected by landminesand/or unexploded ordnance (UXO) and estimates thatthere were new mine/UXO victims reported in 69countries in 2001. 46 of these countries were at peace,not war.

The 1998 UK Landmines Act brought the OttawaTreaty into UK law. It rules that any person involved inthe production, sale, promotion or transfer of anti-personnel landmines should face up to 14 years inprison. The restrictions cover the activities of allcompanies on UK soil and should therefore cover armsexhibitions, including DSEi. However, there have beenembarrassing lapses, including two at DSEi.

DSEi 1999At DSEi 1999, an undercover journalist revealed that aRomanian state arms firm, Romtechnica, hadpromotional material for anti-personnel landmines on itsstand, and that he had been told the equipment couldbe supplied.2 Other undercover journalists were offeredanti-personnel landmines by Pakistan Ordnance Factorya couple of months after having met companyrepresentatives at DSEi.3 The police investigated bothcases but failed to bring any charges.

ChemringA further embarrassment for UK authorities came as aresult of allegations by the BBC that the Overseas SalesManager of a UK company, PW Defence (a subsidiaryof Chemring Group), had offered to supply anti-personnel fragmentation mines to an undercover BBCjournalist in April 2002.4 Chemring denied theallegations and stated that the product was no longermanufactured and had not been sold since 1997. Again,a police investigation followed the allegations and nocharges were brought.

1 International Campaign to Ban Landmines, ‘Landmine Monitor Report2002’, September 2002

2 Gideon Burrows, ‘The No-Nonsense Guide to the Arms Trade, Verso,2002

3 Gideon Burrows, 2002; Observer, ‘Whatever happened to Diana’slandmines legacy?’ 25.8.02

4 www.bbc.co.uk/radio4/today/reports/archive/features/landmines.shtml,accessed 16.8.03

Landmines

15

C130 transport aircraft. Kilgore has commenced productionof Lockheed Martin’s F/A-22 countermeasure decoy.44

Military PyrotechnicsPW Defence, based in Derby, evolved from the merger ofthe military division of Pains Wessex Ltd, Haley & Weller Ltdand Schermuly Ltd, all of which are subsidiaries ofChemring.45 PW Defence’s military pyrotechnics includeflares, smoke flares, rockets, smoke grenades and incendi-ary grenades.46 In 2002, military pyrotechnics accounted for19% of Chemring’s turnover.47

On June 5th 2003 the MoD signed a ‘PartneringAgreement’ with PW Defence covering the procurement andthrough-life management of a range of pyrotechnics.48 PWDefence also supplies the canopy cutting charges for theUK’s Hawk, Harrier, Jaguar and Tornado aircraft.49

Landmine allegationsIn May 2002 the BBC reported that, the previous month, aBBC journalist posing as a member of a security firm inLondon had been offered five hundred illegal anti-personnellandmines by PW Defence’s regional marketing manager.50

According to Landmine Action, the weapon offered was a‘high explosive fragmentation grenade fitted with a trip-wire... therefore it is an anti-personnel mine and bannedunder the Landmines Act 1998.’51 In response, Chemring

stated that the fragmentation grenade combined with thetrip-wire mechanism had not been sold since April 1997 andthat it had removed the product from its PW Defence cata-logue in 1999.52 However the trip-wire mechanism and thegrenade were listed as ‘in production’ in the 2001-2002 edi-tion of Jane’s Infantry Weapons. Landmine Action statesthat, ‘at the very least PW Defence have been marketinganti-personnel landmines’.53

ZimbabweIn November 2001, following a police gas attack onUniversity of Harare halls of residence, AmnestyInternational examined canisters left lying at the scene.They claimed that one canister, date-stamped June 1999,showed ‘markings that appear to be identical to those ofPains Wessex’.54 The company denied making the tear gasin question or selling it to Zimbabwe.

Denel [South Africa]World ranking: 93Total military sales: $277mMilitary sales as % of total sales: 80%Employees: 10,000 55

Military products include: artillery, ammunition, missiles andhelicopters

16

Money spent on arms is wasted; it isfundamentally unproductive. Armsdo not promote education, health,housing or improve the water-supply.Two recent UK deals that stand outas being tailor-made for companiesrather than people, are those toSouth Africa and Tanzania.

South AfricaIn 1998, European companiesobtained contracts worth $4.8 billionfrom South Africa for advancedfighter and trainer aircraft, utilityhelicopters, warships andsubmarines. South Africanorganisations concerned withdevelopment, the environment andhuman rights, as well as churchbodies, have opposed the deal. Theyare concerned that it will severelyundermine their country’s economicand social development, and willfurther aggravate the poverty ofmost South Africans. Many live inshacks, whilst the provision of cleanwater and electricity remains aluxury for all but the elite. Perhapsmost urgently, South Africa is facinghorrific problems as a result ofHIV/AIDs. (See page 34)

TanzaniaIn 2001, the UK government grantedan export licence for a £28m militaryair traffic control system to theTanzanian government. Tanzania haseight military aircraft. Many paperswere highly critical, with severalusing cartoons (‘Fight poverty with aBAE Systems weapons deal’,suggested Steve Bell in TheGuardian) and running opinionpieces. Criticism of the proposedexport had already come from theWorld Bank, which said that thesystem ‘is primarily a military systemand can provide limited support tocivil air traffic control purposes. Thepurchase of additional equipmentwould be required to render it usefulfor civil air traffic control’.1 A civilianair traffic control system, costing aquarter of the price, would have metTanzania’s needs. However, thesystem had already been built byBAE Systems on the Isle of Wight.

Chancellor Gordon Brown andInternational Development SecretaryClare Short were against the deal,which would add to Tanzania’s debtburden and do nothing to help thehalf of its population lacking cleanwater, or the one in four of itschildren who, because of poverty,die before the age of five. However,

Prime Minister Tony Blair, ForeignSecretary, Jack Straw, and DefenceSecretary, Geoff Hoon, were said tohave argued for the deal. Blairobviously having forgotten thecommitment he made at theprevious Labour Party Conference totackle poverty in Africa.

UK export licensingThe UK does have an exportlicensing criterion (Criterion Eight)that states that account will be takenof the ‘compatibility of arms exportswith the technical and economiccapacity of the recipient country’,with this information to be gatheredfrom bodies such as the World Bankand the IMF. Clearly, the adverseinformation gathered concerningTanzania and South Africa did notovercome BAE Systems’ lobbyingand the Prime Minister’s predilectionto sell arms.

DSEiBAE Systems and other companiesinvolved in the South Africa deal willbe exhibiting at DSEi, and bothTanzania and South Africa havereceived invitations.

1 World Bank technical study, quoted inGuardian, 21.12.01

Development

Denel (PLY) Ltd, Denel building, Jochemus Street,Erasmuskloof, Pretoriawww.denel.co.za

BackgroundDenel was formed in 1992 with the South African govern-ment as the sole shareholder. In the late 1990’s the govern-ment began a restructuring programme in which Denel wasscheduled for at least partial privatisation, and in 2000named BAE Systems as its preferred strategic partner forDenel. BAE Systems was to take a 30% equity stake, butthe deal fell through unexpectedly in 2003.

The company is organised into Aerospace, Ordnanceand Commercial businesses, with a number of subsidiariesin each. Aerospace subsidiaries include Eloptro andKentron, and Ordnance subsidiaries include LIW, Naschem,PMP, Somchem, Swartklip Products, and Vector. All of theseare exhibiting at DSEi 2003

What it makesDenel manufactures a wide variety of military productsincluding artillery and artillery ordnance, missiles, avionics,the Rooivalk attack helicopter, unmanned aerial vehicles,infantry weapons and ammunition, thermal imaging prod-ucts and communication and control systems.

ExportsOver 50% of Denel’s sales are now from exports.56 It definesits markets as: Europe, North America, South America,Middle East, Asian Pacific and Africa (including SouthAfrica).57 Its ‘leading ordnance technologies... find readyexport markets in the North Atlantic Treaty Organisation(NATO) and elsewhere.’58

Its deals include a 1998 agreement with the Algeriangovernment to supply unmanned surveillance planes worthUS $25m, at a time when the Algerian government wasinvolved in violent conflict with Islamist opponents.59 It ispresently trying to sell a new variant of its G5 towed how-itzer to meet the Indian Army’s requirement.60

European Aeronautic Defenceand Space Company (EADS)[Netherlands]World ranking: 8Total military sales: $6.3bnMilitary sales as % of total sales: 20%Employees: 104,000 61

Military products include: fighter and transport aircraft,helicopters, missiles

Head OfficesEADS Deutschland GmbH, P.O. Box 801109, 81663 Munich,

GermanyEADS France S.A.S., 37, boulevard de Montmorency, 75781

Paris, Cedex 16, Francewww.eads.net

BackgroundEADS was established on July 10th 2000 from the link-up ofDeutsche Aerospace Agentur (DASA) from Germany,Aerospatiale Matra from France, and ConstructionnesAeronauticas S.A. (CASA) from Spain, and is registered in

the Netherlands. EADS shares are mainly controlled by theGerman car builder DaimlerChrysler, the French mediagroup Lagardère and the French state.62 It has more than 70facilities in France, Germany, Spain. While Airbus is its dom-inant project it has a wide range of military interests and isseeking to increase the proportion of its turnover that is mil-itary-related.

EADS in the UKEADS has UK locations in Broughton (Airbus), Coventry,Filton (Airbus), Milton Keynes, Newport, Newcastle,Portsmouth (Astrium) and Poynton (Astrium), as well asMBDA locations in Bristol, London, Lostock and Stevenage.

EADS and MBDA in London:MBDA (Headquarters), 11 Strand, London WC2N 5RJTel.: +44 207 451 6000; www.mbda.co.uk

What it makesEADS is a partner in the Eurofighter programme, manufac-tures military transport aircraft, owns Eurocopter which pro-duces the Tiger attack helicopter as well as military utilityhelicopters, is a co-owner of MBDA, the world’s secondlargest missile company, has military space programmesthrough Astrium and produces nuclear missiles.

MissilesEADS brings together the products of missile manufacturersMBDA and EADS/LFK-Lenkflugkörpersysteme, resulting inover 40 guided missile programmes. EADS also developsand manufactures, both alone and in joint ventures, missilesubsystems such as warheads, guidance systems andpropulsion units.63

17

Israel carries out extra-judicial executions, collectivepunishment and torture in its occupation of the WestBank and Gaza; Turkey has a record of brutal treatmentof the Kurdish population within its own borders and inNorthern Iraq; Saudi Arabia’s human rights abuses havelong been the subject of concern but have worsenedsince September 11th; the US has led the way injettisoning human rights in the name of counter-terrorism, not least, but not only, at Guantanamo Bay;Colombian paramilitaries continue to receive thesupport of the army in their attacks on oppositionsupporters; China executed at least 1,060 people in2002, many without a fair trial;1 and Russia continues itswidespread abuses in Chechnya.

And all these countries have been invited to DSEi2003.

As well as the physical ‘benefit’ of military equipmentwhich could be used directly in repression, thewillingness of countries to supply arms gives moralsupport and credibility to the recipient. It undermineslocal attempts at controlling the military, moderating theexcesses of autocratic regimes, or finding non-militaristic solutions to problems. In addition to thecountries mentioned above being invited to DSEi, theyall received UK arms in 2002.

1 Amnesty International Report 2003(web.amnesty.org/report2003/index-eng)

Human Rights

MBDA, owned by EADS, BAE Systems (37.5% each) andFinmeccanica of Italy (25%)64 is the world’s second largestguided missile manufacturer (after Raytheon).65 In 2002,MBDA had 10,000 employees, sales of 2bn Euros, an orderbook of more than 13bn Euros and 70 customers world-wide.66 It has 32 missile programmes in production and afurther 23 in development.67 MBDA is working in coopera-tion with India’s Bharat Dynamics and in June 2003 signed

a co-operation protocol with EADS and Russia’s SukhoiCorporation and sales agency Rosoboronexport.68

MBDA’s main missile programmes are: airborne (air-to-airand air-to-ground) and surface-to-air. Air-to-air missilesinclude Meteor which has been selected to arm Eurofighter,Rafale and Gripen fighter aircraft. MBDA supplies the RAFwith the ALARM air-to-ground tactical anti-radar missile, 45of which were used in Iraq this year.69 MBDA also developedStorm Shadow, a conventionally armed cruise missile

18

What is it?Depleted uranium (DU) – orUranium238 – is a toxic heavy metal.It results from the enriching ofnatural uranium for use in nuclearreactors. Natural uranium consistsprimarily of a mixture of twoisotopes of uranium, fissileUranium235 (0.7%) and Uranium238(99.3%). Nuclear reactors requireUranium235 to produce energy and,as such, natural uranium has to beenriched to obtain Uranium235 byremoving a large part of theUranium238.1

DU is used in weaponry becauseof its high density and pyrophoricqualities, causing it to burnspontaneously on impact. Theseproperties make DU ideal for use inarmour-piercing anti-tank weapons.According to one source, amountsof DU used in bullets, shells andbombs vary from 85 grammes to 4.7kilograms,2 although there isspeculation that some missiles maycontain larger quantities.3 DU is alsoused in tank armour and forradiation shielding, ballast in missilesand aircraft counterweights.

Equipment using DUThe Challenger 2 tank’s 120mm DU-tipped (CHARM 3) shell, made byRO Defence, contains DU fromStarmet Corporation procured fromthe US Department of Energy.4 TheA10 Thunderbolt II ‘Tankbuster’aircraft carries a GAU-8/A Avenger30mm seven-barrel Gatling gunmade by Martin Marrietta ArmamentSystems,5 now part of GeneralDynamics. The Avenger fires the DU-tipped PGU-14/B Armour PiercingIncendiary6 made by the Minnesota-based Alliant Techsystems.7

The US Army’s Abrams tank,made by General Dynamics LandSystems, incorporates steel encasedDU armour.8 The M1A1 Abrams tankhas a M256 120mm smoothborecannon, developed by Rheinmetall

GmbH of Germany, which deploysan M829 Armour-Piercing shellfeaturing a DU penetrator.9 There aretwo types of M829 DU anti-tankammunition made by GeneralDynamics Ordnance and TacticalSystems; the M829A1 ‘silver bullet’,which is compatible with all standardNATO smooth bore 120mm tankcannons; the newer M829A2.10

The use of DU in IraqNo conventions apply specifically tothe use of DU shells so their use iscovered by the same provisions ofinternational law that apply to allweapons.11 The total number of DUshells fired by US and UK forces inIraq in 2003 is not known. What wedo know is that, according to the UKMoD, Challenger tanks ‘expended’1.9 tonnes of DU during the Iraq2003 conflict, approximately twiceas much as in the 1990–1991 Gulfwar.12 One study estimates that ‘100to 200 metric tons [of DU] was shotat tanks, trucks, buildings andpeople in largely densely populatedareas’ by US and UK forces duringthis year’s Iraq conflict.13 (the study’sauthor has since revised theestimate to between 100 and 150tons.) The use of DU munitions indensely populated areas throughoutIraq has put large numbers of Iraqicivilians, as well as UK and UStroops, at risk of exposure to DU,and has the potential to contaminateland, water and livestock.

Health effectsDU is a toxic heavy metal with aradioactive half-life of four and a halfbillion years.14 While it is not asradioactive as Uranium235, it is analpha radiation emitter, which, ifinhaled or ingested in dust orparticle form, can cause damage tohuman health. According to a 1998report by the US Agency for ToxicSubstances and Disease Registry,the inhalation of DU particles can

lead to symptoms such as fatigue,shortness of breath, lymphaticproblems, bronchial complaints,weight loss and an unsteady gait.15

Though few studies have beencarried out on humans, studies onrats indicate that the short-termeffects of internal exposure to DUmay include kidney damage whilelong-term effects may includecancer, central nervous systemproblems, immune system disordersand reproduction effects.16

DSEiBAE Systems, the owner of RODefence, will be exhibiting at DSEi,as will General Dynamics.

1 www.globalsecurity.org/military/systems/munitions/du.htm, accessed 1.8.03

2 Communication with Dan Fahey,Communications Director at GreenbeltAlliance, 13.8.03

3 Guardian, ‘Uranium hazard prompts cancercheck on troops’, 25.4.03

4 Hansard, 15.3.01, Col. 675W5 www.globalsecurity.org/military/systems/

aircraft/systems/gau-8.htm, accessed 6.8.036 www.globalsecurity.org/military/systems/

munitions/pgu-14.htm, accessed 6.8.037 www.atk.com/productsPrecision/

descriptions/products/medium-cal-ammo/gau-8.htm, accessed 6.8.03

8 www.army-technology.com/projects/abrams/,accessed 6.8.03

9 www.globalsecurity.org/military/systems/ground/m1a1.htm, accessed 1.8.03

10 www.gd-ots.com/TankOpe.html, accessed6.8.03

11 Hansard, 8.4.03, Col. 139W 12 www.mod.uk/issues/depleted_uranium/

middle_east_2003.htm, accessed 1.8.03 13 Dan Fahey, ‘The Use of Depleted Uranium in

the 2003 Iraq War’, 24.6.2003,(http://www.antenna.nl/wise/uranium/pdf/duiq03.pdf)

14 Frida Berrigan, ‘Weapons of MassDeception’, 20.6.03 (inthesetimes.com)

15 Frida Berrigan, ‘Weapons of MassDeception’, 20.6.03 (inthesetimes.com)

16 Dan Fahey, ‘Science or Science Fiction?Facts, Myths & Propaganda in the Debateover Uranium Weapons’, 12.3.03

Depleted Uranium

deployed on RAF Tornado for the first time in March 2003against Iraq. Surface-to-air missile systems include Rapier,Gill/Spike, ATM, Gepard, Mistral 2 and Milan.

Nuclear missilesEADS Launch Vehicles, and its predecessors are reported tohave been responsible for the design and production ofevery French ballistic missile since 1960. This includes aDecember 2000 contract with the French government forthe new generation of sea-based missiles, the M-51, whichwill be equipped with a nuclear warhead. The other compo-nent of Frances nuclear force is missile for strike aircraft. InDecember 2001 Aerospatiale Matra Missiles (a subsidiary ofEADS) was contracted for the initial development and pur-chase of such medium-range nuclear missiles.70

Ballistic Missile DefenseIn addition to being involved in nuclear deterrence, EADS,like many other nuclear weapons companies, is involved inthe contradictory strategy of a missile ‘shield’. EADS hasbeen involved in a NATO feasibility study into ‘TheatreMissile Defense’, is part of the Medium Extended AirDefense System (MEADS) programme, and in 2002 itannounced that it was linking with Boeing to work onBallistic Missile Defense. ‘We believe ballistic defence to bean important focus in the shifting defence environment andkey to ensuring peace in a free world,’ said EADS joint chiefexecutives Phillipe Camus and Rainer Hertrich.71

ExportsEADS has so far had little success in its search forEurofighter customers, but other programmes have seenmore impressive results. It has sold Cougar helicopters toBrazil, Super Pumas to Indonesia, Exocet missiles to Omanand Qatar, anti-tank missiles to Turkey and Mistral missilesto South Korea. It has sold hundreds of military transportaircraft to more than 89 operators in 38 countries includingArgentina, Chile, Ecuador, Indonesia, South Korea, Oman,South Africa, Turkey, Thailand; Poland, The United ArabEmirates.72

FN Herstal SA [Belgium]World ranking: outside the top 100Employees: 1,300 73

Military products include: small arms and light weapons,ammunition

FN Herstal, SA, Voie de Liège 33, B-4040 Herstal, BelgiumTel: + 32 4 240 81 11www.fnherstal.com

BackgroundFN Herstal SA is part of the Herstal Group, headquartered inLiège, Belgium. The Group has offices in nine otherEuropean countries, North America and Asia.74 The HerstalGroup produces weapons under the brand names FNHerstal, Browning and Winchester.

What it makesFN Herstal designs and manufactures firearms and ammu-nition for the military and law enforcement agencies, includ-ing pistols, rifles and submachine guns. Its products includethe NATO-standard M16A2 assault rifle (also produced byColt Manufacturing); the M249 Minimi machine gun; theM240 armour machine gun; the FN FAL automatic rifle; and

the P90 submachine gun.75 Herstal also supplies machineguns, mounts, pods and rocket launchers to equip helicop-ters and aircraft.76

Exports and licensed productionFN Herstal’s products are used by the Armed Forces ofmore than 100 countries.77 Its FN FAL automatic rifle is pro-duced under licence in ten countries including Brazil, Israel,India, Mexico, South Africa and Venezuela.78 It has also builtan ammunition factory in Eldoret, about 300 kilometresnorth east of the Kenyan capital Nairobi. The factory pro-duces 20 million 7.62 NATO-standard rounds of ammunitiona year.79

In 2002, FN Herstal received Belgium governmentapproval to export 5,500 Minimi machine guns to Nepal.80

Despite a public outcry and subsequent delay to the deal,delivery began in December 2002.81

General Dynamics [US]World ranking: 6Total military sales: $9.8bnMilitary sales as % of total sales: 71%:Employees: 64,60082 (900 in the UK)83

Military products include: nuclear submarines, warships,armoured vehicles, ammunition

General Dynamics, 3190 Fairview Park Drive, Falls Church;Virginia 22042-4523Tel: 00 1 703 876 3000www.generaldynamics.com

BackgroundGeneral Dynamics was established in 1952. It includesElectric Boat, which built the first nuclear-powered subma-rine, USS Nautilus. In 1982, it added its first CombatSystems unit, Land Systems, which makes armoured vehi-cles and in 2003, it increased this area of work with theacquisition of the Canadian GM Defense. In 2002, GeneralDynamics registered a 25% growth in military business. Thecompany is headquartered in Virginia, US, and employspeople in the US, Canada, Mexico and the UK.84

General Dynamics in the UKGeneral Dynamics UK Ltd, headquartered in South Wales,employs 900 people.85 It professes to be a world leader inthe supply of advanced electronics to military industry andis one of largest avionics suppliers to the EurofighterTyphoon programme.86 In 2001 General Dynamics UK Ltdwas awarded the £1.7bn Bowman communications pro-gramme by the UK MoD. On June 26th 2003, it received arelated contract worth more than £25m from the MoD forthe provision of ground-to-air data connections with theBritish Army Apache helicopters.

General Dynamics UK Ltd (Headquarters), Bryn Brithdir,Units 3&4, Oakdale Business Park, Oakdale, South WalesNP12 4AA; Tel: + 44 (0) 1495 236 300;www.generaldynamics.uk.com

General Dynamics UK Ltd (London office), 11-12Buckingham Gate, London SW1E 6LB; Tel: + 44 (0) 207932 3400

19

What it makes

Marine SystemsGeneral Dynamics designs and builds nuclear-poweredsubmarines, surface combatants, auxiliary ships and largecommercial vessels. It is the leading supplier of combat ves-sels to the US Navy. Electric Boat, located in Connecticut,built and supports the US Navy’s fleet of Ohio class nuclear-powered ballistic missile submarines. It is responsible formanufacturing Los Angeles and Seawolf attack subs andshares construction of the first four Virginia class sub-marines with Northrop Grumman Newport News.

Information and TechnologyAn expanding business area for General Dynamics, special-ising in command, control, communications, computing,intelligence, surveillance and reconnaissance (C4ISR) solu-tions.

Combat SystemsGeneral Dynamics designs, manufactures and supportsland and amphibious armoured vehicles, including tanksand armoured personnel carriers. The company’s Abramstank, currently in service with the US Army, was deployed toIraq in 1991 and 2003. It also makes suspensions, engines,transmissions, guns and ammunition handling systems andordnance.

General Dynamics and depleted uraniumGeneral Dynamics Land Systems’ Abrams tank featuresdepleted uranium armour and deploys a 120mm shell whichcontains a DU penetrator. General Dynamics Ordnance andTactical Systems make two types of DU-tipped anti-tankammunition (see Depleted Uranium, page 18). The compa-ny is also responsible for the ‘Avenger’ 30mm Gatling gunon the A10 ‘Tank-buster’ aircraft. Martin MarriettaArmament Systems originally manufactured the ‘Avenger’but in 1994 Martin Marietta merged with Lockheed Martinand two years later General Dynamics acquired LockheedMartin Defense Systems (combat vehicles) and Armament

20

The real weapons of massdestructionSmall arms, such as assault rifles,machine guns, submachine gunsand pistols are causing devastationin many parts of the world. There arean estimated 639 million small armsworldwide1 and they kill over half amillion people every year.2 The effecton civilians is perhaps mostdisturbing, with non-combatantsaccounting for between 30% and90% of conflict-related deaths.

Small arms can greatlyexacerbate or even create politicalinstability. Charles Taylor, the formerleader of Liberia, triggered a civil warcosting 200,000 lives using a groupof 150 combatants armed with AK-47s.3 But the tragedy does not stopeven when war ends. Once weaponshave flooded a conflict zone, theyremain and undermine efforts toreturn to normality. The Small ArmsSurvey reports that ‘civilian deathrates are known to remain constantor even rise in post conflictsituations’4 as insecurity leads to avicious circle of higher demand forsmall arms.

Small arms suppliersMany of the small arms and lightweapons in circulation come fromCentral and Eastern Europe,particularly since the end of the ColdWar. However, small armsproliferation now has a much widergeographical base with 1,134

companies producing weapons in 98countries.5

The table below shows theworld’s five largest producers ofdifferent categories of small arms.Western European companiesfeature strongly, including Heckler &Koch of Germany and FN Herstal ofBelgium. Much of these companies’production is carried out underlicence in other countries, producedfor the armed forces of that countryand also for export (see Heckler &Koch and FN Herstal sections,pages 21 and 19 respectively).

DSEiThe table indicates in bold thecompanies that will be at DSEi 2003.However, there will be many othersmall arms producers exhibitingincluding: Arsenal Co. and Arcus Co.from Bulgaria; Turkey’s MKEK; South

Africa’s Denel; Pakistan OrdnanceFactory; and Austria’s SteyrMannlicher. BAE Systems subsidiaryRO Defence makes ammunition asdoes Giat of France.

1 www.smallarmssurvey.org/Yearbook/SAS%20press%20release%202003.pdf,accessed 22.08.03

2 Small Arms Survey 2001, Oxford UniversityPress, 2001

3 Klare Michael, ‘The Kalashnikov Age’, Bulletinof Atomic Scientist, 1999, vol.55, No.1,pp.18-22 cited inwww.bicc.de/weapons/gtz_studien/small_arms.pdf, accessed 8.08.03

4 Small Arms Survey 2001, Oxford UniversityPress, 2001

5 www.smallarmssurvey.org/Yearbook/yb2003_en_presskit_ch1.pdf, accessed22.08.03

6 www.smallarmssurvey.org/Yearbook/yb2003_en_presskit_ch1.pdf, accessed21.08.03

Small arms

Source: Small Arms Survey 2003 6

MILITARY SIDEARMS

RIFLES SUB MACHINEGUNS

MACHINEGUNS

SMALL ARMSAMMUNITION

Heckler & Koch(UK/Germany)

Heckler & Koch(UK/Germany)

Heckler & Koch(UK/Germany)

Heckler & Koch(UK/Germany)

Giat (France)

FN Herstal(Belgium)

FN Herstal(Belgium)

Israel MilitaryIndustries

FN Herstal(Belgium)

FN Herstal(Belgium)

Smith andWesson (US)

Norinco (China) Norinco (China) Norinco (China) Nammo(Finland/Sweden/Norway)

Colt (US) Colt (US) KBP (Russia) Saco Defense(US)

Winchester Olin(US/ Belgium)

Berrata (Italy) Izhmash (Russia) Izhmash (Russia) Israel MilitaryIndustries

Sellior and Bellot(Czech Republic)

Systems for $450m.87 The Avenger has a cyclic rate of 3,900rounds per minute and can fire DU-tipped PGU-14/BArmour Piercing Incendiaries. 88

GKN [UK]World ranking: 18Total military sales: $2.1bnMilitary sales as % of total sales: 30%Employees: 48,60089 (10,900 in the UK)90

Military products include: helicopters, aircraft components

GKN plc, PO Box 55, Redditch, Worcestershire B98 OTLTel: + 44 (0) 1527 517715London Office, 7 Cleveland Row, London SW1A 1DBTel: + 44 (0) 207 930 2424www.gknplc.com; www.agustawestland.com

BackgroundGKN is ‘a global engineering company’ with operations inmore than 30 countries. Its activities are divided intoAutomotive and Aerospace businesses. The Aerospacebusiness is comprised of the helicopter manufacturerAgustaWestland, a joint venture with Finmeccanica of Italy,and Aerospace Services, a designer and manufacturer ofvarious propulsion systems such as fighter ducts and tur-bofan cases.91 In 1998, GKN sold its armoured vehicle divi-sion to Alvis Vehicles, retaining a 29.9% stake in Alvis plcand a seat on the board. On August 22nd 2003, GKN soldits stake in Alvis plc to BAE Systems for £73m in cash.

Some 80% of the revenues of Aerospace Services andAgustaWestland are military-related’.92 As the GKN 2002Annual Report states, ‘this focus on defence is a significantstrength, particularly during the current downturn in civilaerospace.’

Aerospace ServicesAerospace Services supplies airframe, engine and othercomponents to manufacturers including Boeing, Airbus,Sikorsky, Pratt & Whitney, Rolls-Royce and LockheedMartin. It is a supplier for aircraft including the Joint StrikeFighter, Eurofighter, SAAB Gripen, F/A-22 Raptor and F/A-18E/F Super Hornet fighters; C17 Globemaster 111 andC130J Hercules transporters; and the Comanche helicop-ter.93

AgustaWestlandIn 2000, GKN signed an agreement with Finmeccanica SpAto merge the two companies’ helicopter divisions in a 50:50joint venture. The resulting entity, AgustaWestland, operatesout of Yeovil in the UK (GKN Westland Helicopters) andCascina Costa in Italy (Agusta).94 Westland brought to thepartnership Lynx helicopters and a contract for the produc-tion of 67 WAH-64 Apache attack helicopters for the UKarmed forces (produced under licence from Boeing). Agustabrought with it utility and attack helicopters and a relation-ship with US Bell helicopters. GKN claims that, ‘on the basisof reported revenues, AgustaWestland is the world’s No.1helicopter manufacturer.’95

At the heart of the joint venture is the EH101 medium-liftmilitary helicopter, in service in Canada, Italy, Japan and theUK.96 In July 2002, AgustaWestland and Lockheed Martinannounced that they had signed a ten-year definitive agree-ment to jointly market, produce and support a US version ofthe EH101 for three ‘key markets’, estimated to represent arequirement of 200 aircraft over ten years.97 AgustaWestland

also has a 32% share of the NH-90 helicopter programme,partnering Eurocopter and Fokker.

AgustaWestland ExportsAgustaWestland has delivered over 7,000 helicopters tomore than 80 countries.98 400 Lynx helicopters have beensold to the armed forces of 11 countries, with the latest Lynxvariant, the Super Lynx 300, having been purchased byOman, Thailand and South Africa. Though no longer in pro-duction by Westland, the Sea King helicopter has beenexported to Australia, Egypt, Germany, India, Norway,Pakistan and Qatar, and the Wasp has been sold toIndonesia and New Zealand. The AB412 military utility heli-copter, one of a long line of helicopters produced by Agustaunder licence from Bell, is in service in Bahrain, Ghana, Italy,Lesotho, Sweden, UAE, Uganda and Zimbabwe.

In early 2002 AgustaWestland signed a deal with Denel ofSouth Africa for the licensed production of the A109 heli-copter. Denel will be allowed to market and sell the A109 tospecified markets in Africa, South East Asia and the MiddleEast.99

Heckler & Koch [Germany]World ranking: outside the top 100Total military sales: Euros130m100

Employees: 700101

Military related products: small arms

Heckler & Koch GmbH; P.O. Box 1329; 78722 Oberndorf;GermanyTel: + 49 7423 79 2305www.heckler-koch.de

BackgroundIn its own words, Heckler & Koch is ‘the global leader fortechnologically advanced small arms.’ It is a German com-pany that was taken over by Royal Ordnance (now RODefence, a subsidiary of BAE Systems) in 1991 but, inDecember 2002, was sold to Heckler & Koch BeteiligungsGmbH, a German registered company established for thepurpose of its acquisition. The company has its headquar-ters in Oberndorf, Germany, where 630 of its 700 employeesare based. Other offices are located in Sterling Virginia is theUSA; Switzerland; and Nottingham in the UK.

H&K in the UKHeckler & Koch (GB) NSAF Limited, PO Box 7151,Nottingham; Tel: +44 (0) 115 9248723

What it makesHeckler & Koch produces pistols, rifles (including the G3),machine guns, sub-machine guns (including the MP5),grenade launchers and grenade machine guns. The 2002Small Arms Survey states that it is one of the world’s largestproducers of small arms, with its weapons in use in 90countries. Over seven million G3 rifles alone have been pro-duced and are in service in 60 countries.102

Licensed productionMuch of the manufacturing of Heckler & Koch weapons iscarried out under licensed production agreements, either forthe armed forces of the producing country or for export.Such agreements have been made with a number of EUcountries and also Burma (now Myanmar), Iran, Mexico,Saudi Arabia, Pakistan, Turkey and Thailand. Heckler &

21

Koch have stated that the agreements with Burma and Iranhave lapsed.103

Licensed production has two main advantages for thelicensee company and its country. Firstly, in-country manu-facture reduces the dependence on weapons imports, pro-viding a cushion against arms embargoes. Secondly, it canprovide export earnings, possibly including sales to coun-tries and situations where it might be difficult or embarrass-ing for the country of the licensor to sell. This has obviouspotential for undermining export controls. If licensed pro-duction agreements do not contain production and exportlimits they blatantly undermine export controls. If they doprovide limits then, as one commentator has stated, ‘theyare being violated with apparent impunity’.104

INSYS [UK]World ranking: outside the top 100Total military sales: £176m 105

Employees: 857106

Military products include: weapon and communicationsystems

INSYS Ltd, Reddings Wood, Ampthill, Bedfordshire MK45 2HDTel: + 44 (0) 1525 841 000

www.insys-ltd.co.uk

BackgroundINSYS is the new incarnation of Hunting Engineering Ltd fol-lowing a £42.3m management buy-out from Hunting plc in2001 (jointly funded by senior management and ABNAMBRO Bank). INSYS has three locations in the UK:Manufacturing facilities are located at the Ampthill site. Thefacilities in Pershore, Worchester, and Dstl Porton Down,near Salisbury, are test facilities. INSYS also has a joint ven-ture with Giat called Euro-Shelter, which is located inRennes, France.

What it makesINSYS’s ‘vision’ is ‘to be a preferred contractor to the UKMinistry of Defence and partner of choice to the globaldefence industry.’107 Its main business areas are:Communications and Information Systems, BattlespaceEngagement (which ‘offers a warhead design, developmentand test capability’ which ‘provides our customers with anunrivalled service.’108), Battlefield Support andManufacturing.

Hunting Engineering manufactured the BL755 clusterweapon from the 1960s to mid-1980s and now INSYS iscontracted by the Royal Air Force to test the safety and ser-viceability of existing stocks of cluster weapons.109 It isunclear whether this includes supplying components for theweapon.110 Each BL755 comprises a main dispenser bodyand 147 submunitions with fragmenting warheads.111 Therefurbished RBL755 is equipped with a radar proximity sen-sor for deployment from medium and high altitudes. Thefailure rate of the submunitions is the subject of debate withthe MoD reporting a rate of 6%.112 It has been reported thatthe MoD has extended the use of BL755 – used inYugoslavia and Iraq (1991 and 2003) – until 2006.113

INSYS has received recent contracts from MBDA andCelerg (a French rocket motor manufacturer) for Aster 15and Aster 30 missile launchers,114 and from the DefenceProcurement Agency to design, build and test a systemdemonstrator of a rocket artillery system for the UK Army.115

It is involved in the Son of Star Wars project as part of a‘foundation group’ of five UK firms in the MoD-led MissileDefence Centre set up in July 2003.116

Israel Military Industries [Israel]World ranking: 73Total military sales: $410mMilitary sales as % of total sales: 100%Employees: 4,100Military products include: small arms, ammunition, missiles,

tank upgrades

Israel Military Industries, 64 Bialik Boulevard, PO Box 1044 or6604, Ramat Hasharon, 47100, IsraelTel: + 972 3 548 5617/9

22

The conflictIn 1997 the dictator Mobutu, after a ruinous reign ofover thirty years, was deposed by opposition forceswith backing from Rwanda, Uganda and Angola.Laurent Kabila was installed as President but there wasno happy outcome. In the following year Kabilaquarrelled with his Rwandan and Ugandan allies, andthe result was a bloody conflict which has taken anestimated four million lives. By ordinary reckoning this isone of the worst disasters of recent history.

With the backing of Angola, Zimbabwe and to alesser extent Namibia, Kabila maintained himself inKinshasa and the north-west, but most of the eastcame under the control of Rwanda and Uganda. In thenorth-east there has been confusion bordering on totalanarchy. At one point Ugandan and Rwandan soldiersfought one another, and both countries have patronisedand armed local ‘rebel’ factions. Rwanda, Uganda andAngola had genuine security reasons for intervention, asthe Congo conflicts spilled across their borders, but theunderlying source of the war is the country’s greatwealth of natural resources. These have beenunashamedly looted by Zimbabwe and Uganda - to thepersonal benefit of leading political and military figures -as well as by local warlords.

UK HawksThe arms used in the conflict have come from a varietyof sources but do not include significant contributionsfrom the UK, with the exception of Hawk aircraft. Inearly 2000 the Zimbabwe government sought spares forits Hawks, which were playing a major role in its Congocampaign. Licences were approved in February of thatyear, but a few months later the UK announced an armsembargo. Of the seven licences granted, five werereturned unused, but most of the goods covered by onelicence and around 20% of another had been exported.

DSEiEven though the foreign powers in the DRC wereengaged in a disastrous war and were apparently notbuyers of significant amounts of UK weaponry, severalof them still received invitations to DSEi during theconflict. Angola, Namibia and Zimbabwe were all invitedto the 1999 event and Uganda and Angola receivedinvitations to DSEi 2001.

Democratic Republic of Congo

www.imi-israel.com

BackgroundIMI is a state-owned military company. It has distributorsand contacts in Western Europe and North America.117 InEurope, IMI’s small arms ammunition is sold under the nameSamson.118

IMI in the UKIn the UK, IMI lists the London-based Eurotaas (Eura) Ltdas its contact: Eurotaas (EUTA) Ltd, 12 York Gate, LondonNW1 4QS; Tel: + 44 (0) 208 458 6636

What it makesIMI manufactures small arms (including the Uzi submachinegun and Tavor and Galil rifles), grenades, tank, artillery and

mortar ammunition, missiles, unmanned air vehicles, elec-tronics, rockets, aircraft equipment, chaff and flare dispens-ing systems and upgrades tanks.119

ExportsIMI is a player on the global stage with 60% of its revenues,worth approximately $550 million, coming from exports120.Some of the export deals are listed below.

USIn October 1998, IMI agreed a joint venture with US compa-ny Primex Technologies in an effort to sell heavy ammunitionin the US and worldwide. This was apparently at the direc-tion of the Israeli Defence Ministry which has encouragedIMI to link up with foreign firms.121 Other collaborations withUS companies include the development of a new shoulder-

23

A cluster bomb, or munition, carriesa number of individual bomblets,known as submunitions, which aresupposed to explode on or neartheir target. They can be launchedby both aircraft and ground forces. Ahigh proportion of cluster bombsubmunitions fail to explode onimpact and remain dangerous foryears. The actual failure rates are amatter of debate. While officialmilitary estimates place them at 6%or less, Landmine Action reports thatthe failure rate of NATO clustersubmunitions used in Kosovo in1999 was between 7 and 11%, andin 1991 up to 40% of clustersubmunitions used in Iraq andKuwait failed to explode.1 Thesubmunitions are colourful andabout the size of a soft-drinks can,making them particularly attractiveto children.

A long term problemUnicef has reported that more than athousand children have been injuredby cluster and other unexplodedmunitions since the end of the 2003conflict in Iraq.2 In the two yearsafter the 1991 Gulf War, unexplodedcluster submunitions killed 1,600Iraqi civilians and injured 2,500more. In Kuwait, after the sameconflict, there were 1,609 deathsand injuries in the first ten months.3

According to Landmine Action, atleast 92 countries are threatened byunexploded cluster bombs or otherexplosive remnants of war.4

Their use in IraqUS and UK forces delivered at least350,000 cluster submunitions duringthe invasion of Iraq.5

UK: The MoD has acknowledged theuse of two types of cluster munition.It stated that, as of May 28th, 66RBL755 cluster bombs had beendropped on targets in Iraq.6 Each ofthese bombs contains 147bomblets, with a government-reported failure rate of 6%.7 Also, theRoyal Artillery fired 2,098 L20Extended Range Cluster Shellsaround Basra.8 Each L20 shellcontains 49 submunitions.9

Estimates by a UK MP indicate thatbetween 2,000 and 17,000unexploded UK-deliveredsubmunitions remain on the groundin Iraq.10

US: The Pentagon has admittedusing nearly 1,500 air-droppedcluster munitions during the Iraq warbut has not revealed informationabout ground-launched weapons.11

The US Air Force dropped 818 CBU-103s Combined Effects Munitionsfitted with the Wind CorrectedMunition Dispenser (WCMD)12 and 88WCMD-equipped BBU-105 SensorFuzed Weapons in Iraq.13 EachWCMD is reported to carry 202BLU/97B submunitions.14 On April3rd, the US reported that it had usedB-52 bombers to drop six CBU-105cluster munitions on Iraqi tanksaround Baghdad.15

On April 1st an undeterminednumber of BLU-97/B submunitionshit Hilla, with reports claiming that atleast 33 civilians were dead andaround 300 injured.16

DSEiA number of companies with clusterbomb interests are exhibiting atDSEi 2003, including INSYS, IsraeliMilitary Industries (IMI) and

Raytheon. INSYS is contracted bythe MoD to support the Royal AirForce’s arsenal of RBL755s (INSYS’sformer incarnation, HuntingEngineering, manufactured theBL755). IMI is reported to be themanufacturer of the L20 ExtendedRange Cluster Shell used by theRoyal Artillery. Raytheon is the primecontractor for the Tomahawk cruisemissile and the JSOW AGM-154,both of which deliver BLU/97Bsubmunitions.

1 Richard Lloyd, ‘No way to win the peace’,New Scientist, 12.4.03

2 Air Marshall Sir Timothy Garden & General SirDavid Ramsbotham, ‘Dangers of clusterbombs in Iraq’, Times, 9.8.03

3 Richard Lloyd, ‘No way to win the peace’,New Scientist, 12.4.03

4 Landmine Action, ‘Explosive remnants of war:a global survey’, 2003

5 www.landmineaction.org/news215.asp,accessed 12.8.03

6 Hansard, 5.6.03, Col. 507W7 Hansard, 16.6.03, Col. 55W8 Hansard, 16.6.03, Col. 55W9 Guardian, ‘British use of cluster bombs

condemned’, 4.4.0310 Guardian, ‘Up to 17,000 unexploded bombs

left in war zone, MP warns’, 4.7.0311 Guardian, ‘Britain and US accused over

cluster bombs’, 5.5.0312 www.globalsecurity.org/military/systems/

munitions/wcmd.htm, accessed 12.08.0313 Jane’s Defence Weekly, ‘Flexibility key to

weapon mix’, 18.6.0314 news.bbc.co.uk/1/hi/world/americas/

2788569.stm, accessed 12.8.0315 www.globalpolicy.org/security/issues/iraq/

attack/consequences/2003/0407irregular.htm, accessed 12.08.03

16 www.globalpolicy.org/security/issues/iraq/attack/consequences/2003/0407irregular.htm, accessed 12.08.03

Cluster bombs

launched multi-purpose assault weapon with LockheedMartin.

UKIMI is reported to be the manufacturer of the British Army’sL20 Extended Range Cluster Shells.122 Each shell contains49 M85 dual-purpose submunitions and has a failure rate ofat least 2%.123 Estimates by a UK MP indicate that between2,000 and 17,000 UK-delivered submunitions remain unex-ploded in Iraq following the invasion in 2003.124 The bulk ofthese will be L20 submunitions.

IndiaIMI has concluded a $30m agreement with India for 3,400Tavor assault rifles and 200 Galil sniper rifles, as well asnight vision and laser range-finding and targeting equip-ment.125 The opening of an office in Delhi strengthens IMI’slinks with India.

TurkeyIn late 2001, IMI won a $105m contract to co-produce heli-copter Counter Measures Dispensing Systems with Turkishcompanies MKEK and Aselsan.126 In March 2002, Turkeysigned a $668m deal with IMI to modernise Turkey’s fleet ofUS-made tanks.127

Lockheed Martin [US]World Ranking: 1Total military sales: $23.3bnMilitary sales as % of total sales: 88%Employees: 125,000 128

Military products include: fighter and transport aircraft,missiles, space systems

Lockheed Martin, 6081 Rockledge Drive, Bethesda, MD20817, USATel: + 00 1 301 897 6000www.lockheedmartin.com

BackgroundLockheed Martin, headquartered in Bethesda, Maryland,was formed in March 1995 with the merger of LockheedCorp. and Martin Marietta Corp. 80% of Lockheed’s busi-ness is with the Pentagon and US government agencies.129

It has $70bn in orders. It is the world’s biggest arms pro-ducer and is particularly dominant in terms of fighter aircraft.

Lockheed Martin in the UKLockheed Martin combines all its military, civil and commer-cial interests in the UK under a single registered company,created in July 1999 and headquartered in central London.It has 75 business partnerships in the UK.130 Its military proj-ects include work on the Joint Strike Fighter programme, C-130J Hercules transport aircraft and the Royal Navy’s Merlinhelicopter programme. Since 1968 Lockheed has providedsupport for the Royal Navy Fleet Ballistic Missiles. Thecompany has sites at nine separate locations in the UKincluding Aldermaston Atomic Weapons Establishment.131

Lockheed Martin International, Berkeley Square House,Berkeley Square, London W1X; Tel: + 44 (0) 20 7412 0555;www.lockheedmartin.co.uk

What it makes

F-16 fighterLockheed produces the ubiquitous F-16 Fighting Falcon, anaircraft which Lockheed calls the ‘world’s premier multi-rolefighter chosen by 24 countries around the world, with over4,000 deliveries’.132 In fact, Lockheed boasts that over itslifetime the F16 will have more foreign sales than all otherwestern fighter aircraft combined. F-16 customers include:Bahrain, Egypt, Israel, Jordan and UAE in the Middle East;Indonesia, Pakistan, Singapore, South Korea, Taiwan andThailand in Asia; and Greece and Turkey in NATO.133 In May2002, the US Air Force finalised a $280m contract withLockheed to build ten F-16s for Chile under the US ForeignMilitary Sales programme.134 In April 2003, the Polish gov-ernment signed four contracts worth $3.5bn for 48 F-16s.135

Apparently Poland will purchase the F-16s using $3.8bn inloans from the US.136

Joint Strike Fighter (JSF)In late 2001, Lockheed won the bid for the JSF programme,securing an initial $19bn development contract for the$200bn project.137 It is the world’s largest-ever military air-craft project. The Pentagon plans to buy 3,000 land- andcarrier-based JSFs, the UK will procure around 200, and afurther 2,000-3,000 are expected to be sold to other coun-tries. Northrop Grumman and BAE Systems are partnerswith Lockheed in the programme.

MissilesLockheed, through Missiles and Fire Control, is a majormanufacturer of missiles including Hellfire, Javelin,Longbow and Predator. The AGM-114 Hellfire anti-armourair-to-surface missile is deployed on Bell AH-1W SuperCobra and Boeing AH-64D Apache Longbow attack heli-copters.138 A thermobaric variant of Hellfire was used in Iraqin 2003. Other weapons include Rafael-designed AGM-142‘Popeye’ missiles, which were reportedly dropped on cavecomplexes in Afghanistan by US Air Force B-52s.139

Nuclear weaponsLockheed Martin is the prime contractor for submarine-launched long-range Trident nuclear missiles deployed onUS Ohio and UK Vanguard nuclear-powered submarines. In2002, Lockheed secured a $248m follow-on productioncontract for 12 Trident II D5 ballistic missiles for the USNavy.140 The company is also involved in the design, pro-duction and testing of nuclear weapons with ScandiaNational Labs.141

Lockheed is also involved in the design and production ofnuclear warheads and is the prime contractor for the TridentII Submarine-Launched Ballistic Missile (SLBM).142

Ballistic Missile Defense (BMD)Lockheed Martin is the overall ‘BMD System’ systems inte-grator with Boeing. It is also the lead contractor for theTheater High-Altitude Area Defense programme designed tointercept medium-to-long range missiles; makes the Patriot(PAC-3) missile (In early March 2003, the US Army gaveLockheed a $100m contract for 212 PAC-3 for use in the2003 Iraq conflict143); and is engaged in the design and thebuilding of launchers of ‘kill vehicles’ for land-based BMD.It is also prime contractor for SBIRS-High, an early warningsatellite system for BMD.

24

ExportsLockheed is the world’s largest arms exporting company.144

In addition to F-16s (see above), Lockheed Martin hasexported other aircraft and a multitude of military equipmentincluding missiles and missile systems. Lockheed has deliv-ered over 2,200 C-130 transporters of which about 1,600are still in service in more than 65 countries.

MKEK [Turkey]World ranking: outside the top 100Total military sales: $290m 145

Military sales as % of total sales: 78%146

Employees: 8,940147

Military products include: ammunition, small arms, rockets,howitzers

MKEK General Directorate, Tandogan 06330, Ankara, Turkey

BackgroundMKEK’s roots go back as far as 1920. The GeneralDirectorate of Military Factories, established in 1920,became the Machinery and Chemical IndustriesEstablishment (MKEK) in 1950. It has always been state-owned. In 1987 MKEK had 20 factories and 20,000 employ-ees148, but both the number of factories and employeesappears to have decreased since then. Information on

MKEK is difficult to come by – indeed its annual balancesheet was classified until 1984. Though not ranked in thetop 100 arms companies by Defense News, SIPRI placed itat 87th in 2000 and as high as 59th in 1998.149

What it makesMKEK is an integrated holding with 12 affiliated factories.150

It makes both military and civilian products, though it hasbeen noted that as far as civilian production goes ‘thesefactories...allow MKEK to provide much of the machinetools and chemicals for arms production’.151 Current prod-ucts include small arms, mortar and howitzer ammunition,ammunition fuses, hand grenades, pistols, machine guns,automatic rifles, sub-machine guns, anti-aircraft guns, mul-tiple launch rocket systems, mortars, howitzers, anti-tankrockets, artillery rockets and explosives.152

Production under licenceMany of MKEK’s products are, or have been, made underlicence from foreign countries or corporations. Reportedexamples include production under licence from:Hecker & Koch: In 1998, MKEK won a contract toproduce HK33 5.56mm assault rifles.153 MKEK has madeG3A3 and G3A4 rifles under licence since the 1970s, andMP5A2, MP5A3 and MP5K sub-machine guns since the1980s.154

Giat Industries (France): In 1992, MKEK won a contractto produce 25mm ammunition under licence.155

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US policy:The US government appears to berunning amok. It has invaded Iraqunder its new doctrine of pre-emption; is threatening othercountries including Syria and Iran; issupporting military operationsaround the world that have suddenlybecome counter-terrorist; is floutingthe human rights of many it choosesto detain in its ‘war on terrorism’;has undermined or pulled out ofmultilateral agreements thatconstrained US interests; isaggressively pursuing BallisticMissile Defense regardless of themissile proliferation and instability itmight cause; is planning a newrange of ‘mini-nukes’; and,underpinning much of this, is rapidlyincreasing its already massivemilitary expenditure.

The US is unashamedly assertingthat it is, and will continue to be, theworld’s number one; and it is veryhappy to use force to achieve this. Itexplicitly seeks ‘Full SpectrumDominance’, i.e. ‘the ability of USforces, operating alone or with allies,to defeat any adversary and controlany situation across the range ofmilitary operations.1 This, crucially,includes control of space.

Arms company influence:It might be assumed that the USadministration is being influenced bythe arms industry, but therelationship is much more intimatethan that. As the US Arms TradeResource Center has stated, ‘morethan any administration in history,the Bush team has relied on theexpertise of former weaponscontractors to outline US Defenseneeds. Thirty two Bush appointeesare former executives, consultants,or major shareholders of topweapons contractors, includingappointees with ties to major missiledefense contractors LockheedMartin, Raytheon, Boeing andNorthrop Grumman.’ 2

The Project for the NewAmerican Century:The other dominant, but notunrelated, component of USpolicymaking comes from theconservative think thanks, the mostworrying of these being The Projectfor the New American Century. Setup in 1997, founders include DonaldRumsfeld (US Defense Secretary),Dick Cheney (Vice-President), PaulWolfowitz (Deputy DefenseSecretary) and Jeb Bush. As John

Pilger reports, ‘it recommended anincrease in arms-spending by $48bnso that Washington could “fight andwin multiple, simultaneous majortheatre wars”. This has happened. Itsaid the United States shoulddevelop “bunker-buster” nuclearweapons and make “star wars” anational priority. This is happening. Itsaid that, in the event of Bush takingpower, Iraq should be a target. Andso it is.’3

Increasingly the US, with the UK intow, is responding to problems withmilitary ‘solutions’. The armscompanies are a vital part of thisapproach, supplying the military’sneeds and assisting with theadministration’s foreign policy. Theydominate the international armsmarket and, as such, will be a keypart of DSEi. Over 100 UScompanies will be there, includingfour of the six largest armsproducing companies in the world.

1 www.defenselink.mil/news/Jun2000/n06022000_20006025.html, accessed18.8.03

2 Michelle Ciarrocca, Missile Defense, Vol 8,Number 1, May 2003

3 pilger.carlton.com/print/124759, accessed18.8.03

The USA

US: In 1990 production of MLRS started under USlicence.156 In 1987, MKEK made FFAR 2.75 inch rocketsunder US licence.157

Oerlikon (Switzerland): In 1988, 35mm gun productionstarted under licence158; MKEK also makes 20mmautomatic guns under licence.159

Royal Ordnance Factories (UK): In 1987, MKEK made105mm tank guns under licence.160

Rheinmetall (Germany): MKEK have signed a licenceproduction agreement for the production of the MG3machine gun.161

Europe: In the 1980s, MKEK was a partner in theEuropean consortium which manufactured Stinger surface-to-air missiles and Maverick air-to-ground missiles.162

ExportsA 2000 report noted that MKEK had ‘increased its exportsin recent years, including many weapons made underlicence’.163 The report went on to catalogue known cus-tomers for 1995–1998: in 1995, MKEK sold weapons to 38countries including Botswana, Brazil, Chile, Ecuador, HongKong, Kuwait, Libya, Macau, Pakistan, Peru, Singapore,and Tunisia; in 1996 its principal customers were Jordan,Norway, Pakistan, Switzerland, Tunisia, Northern Cyprus,

and the UK; and in the first eleven months of 1998, 22 coun-tries were reported to be its customers, including Bosnia,Burundi, Tunisia and the UAE. The Turkish Ministry ofNational Defence values MKEK’s 1999 exports at$6,466,000.165

Northrop Grumman [US]World ranking: 5Total military sales: $12.3bnMilitary sales as % of total sales: 71%Employees: 120,000 166

Military products include: warships, radar and missilesystems, space systems

Northrop Grumman, 1840 Century Park East, Los Angeles,CA 900067-2199Tel: 001 310 553 6262www.northgrum.com; www.vinnell.com

BackgroundNorthrop Grumman was formed in 1994 when NorthropAircraft Co., which made B-2 stealth bombers, bought

26

BackgroundTurkey is seen as a key ally of theWest in the Middle East andMediterranean, and as such hasbeen one of the world’s majorrecipients of sophisticated arms forthe past twenty years. This isdespite the leading role of the armedforces within Turkish society andgovernment, its occupation ofnorthern Cyprus in 1974, its longestablished military rivalry withGreece and its appalling humanrights record with respect to itsKurdish population. During the longwar against the Kurdistan Workers’Party (PKK) in the south-east of thecountry, the region was depopulatedin an attempt to deny the area to thePKK. Two million people wereforcibly displaced and 3,000 Kurdishvillages destroyed, involving massiveviolations of human rights and thelaws of war2. It has beendocumented that weapons suppliedby the US, Germany, Russia and theUK have been used to commitatrocities3. Western powers havealso contributed to the massivebuild-up of the Turkish military-industrial complex.

Turkey’s military spendingand suppliersThough the proportion of NATOcountries’ GNP devoted to military

spending has been decliningthroughout the 1990s, Turkey’sspending has gone in the oppositedirection despite the country’srelative poverty and serious financialproblems. Much of this militaryspending is used to purchase armsfrom abroad and build up anindigenous high-tech arms industry.The latest available figures show thatTurkey’s historic dependence on theUS for its arms imports continues,with 79% of Turkey’s arms importscoming from the US. US companiessupplying Turkey with new attackhelicopters, military transporthelicopters, naval helicopters,AWACS aircraft and the Joint StrikeFighter.

The UK roleThe UK continues a steady butrelatively low level of arms exports toTurkey, accounting for approximately1% of Turkey’s arms imports. UKcompanies have been involved inimportant contracts supplyingTurkey’s military with the type ofweapons it has used in the past tocommit human rights violations.Land Rovers are assembled underlicence in Turkey and converted byOtokar into armoured vehicles. In1995 and 2001 deals, these vehicleswere then sold to Algeria. Heckler &Koch, a subsidiary of BAE Systems

from 1991 to December 2002,manufactures sub-machine-guns inTurkey under licence. The Turkishmanufacturer, MKEK, then re-exports the guns – previous clientshave included Bosnia, Chile,Botswana, Kuwait, Libya, Pakistan,Peru, and the UAE. The UK is alsoinvolved, through MBDA, in a majorco-production deal with Turkey toproduce Rapier surface-to-airmissiles.

DSEiMKEK, BAE Systems, Heckler &Koch and Land Rover are allexhibiting at DSEi along with othersuppliers from Europe, Israel, and,especially, the US. A delegation fromTurkey has been officially invited.

1 Primarily sourced from Nicholas Gilby,‘Nurturing Turkey’s war machine’, CAAT,March 2003

2 www.hrw.org/reports/1995/Turkey.htm,accessed 16.08.03

3 See www.hrw.org/reports/1995/Turkey.htmand Nicholas Gilby, March 2003

Turkey1

Grumman Corp. in a $2.5bn deal. Since then, the companyhas acquired 17 companies including Litton Industries andNewport News in 2001. In December 2002, NorthropGrumman acquired TRW, the military and automotive group,for $6.7bn. Northrop sold TRW’s automotive business for$4.73bn and retained the space and advanced technologiesbusinesses. Northrop Grumman has more than 300 loca-tions worldwide and claims to employ people in 25 coun-tries and all 50 US states.167

Northrop in the UKNorthrop Grumman Electrical Systems International, 16Charles II Street, London SW1Y 4QU; Tel: + 44 (0) 20 79304173

What it makesNorthrop Grumman professes to be the world’s largestshipbuilder.168 It is also one of the three dominant contrac-tors in military space and supplies nearly 60% of the US mil-itary’s airborne radar systems.169

WarshipsNorthrop owns Newport News, the US’s sole builder andrefueler of nuclear-powered aircraft carriers and one of onlytwo companies, along with General Dynamics’ ElectricBoat, capable of designing and building nuclear-poweredsubmarines. It has a contract to build four Aegis guided-missile destroyers, a contract to design the US Navy’s DD(X) destroyer, and develops and produces missile launchingand handling equipment for submarine and land-basedweapons systems.

Fire control radarNorthrop Grumman makes fire control radar for fighter air-craft including Lockheed Martin’s F-16 as well as BAESystems’ Hawk 200 jet. In 2002, it was awarded a $487mcontract to provide engineering services and technical sup-port to the F-16’s fire-control system over a 23-year period.This covers not only the USAF, but also the F-16s of 16other air forces. It is providing the radar for the JSF, under ajoint venture with Lockheed Martin, and, also withLockheed, has developed and produced Longbow multi-mode radar and the AGM-114L Hellfire missile for theApache attack helicopter.170

B-2 stealth bomberNorthrop is the prime contractor for the B-2 Spirit high-alti-tude multi-role intercontinental stealth bomber. Each B-2 isreported to have cost $1.3bn.171 There are 21 operational B-2s, each of which can carry 18,000kg of nuclear or conven-tional munitions. They were deployed in Yugoslavia,Afghanistan and Iraq.

Nuclear missiles and Ballistic Missile DefenseNorthrop Grumman provides navigation systems for tacticalmissiles and nuclear-armed inter-continental ballistic mis-siles (ICBMs). In 1997, it was awarded a 15-year contract tobe the ICBM Prime Integration Contractor. The companyhas involvement in a number of Ballistic Missile Defenseprojects, particularly since its acquisition of TRW.

VinnellThe Virginia-based Vinnell Corp, a subsidiary of NorthropGrumman, ‘is a recognised leader in facilities operation andmaintenance, military training, educational and vocationaltraining and logistics support in the [US] and overseas’.172

The company reports that ‘Vinnell has successfully com-

pleted projects on [five] continents in over 50 countries for avariety of government and commercial customers’. It is, inother words, a private military company – the officially sanc-tioned and sanitised face of mercenary operations.

Protecting the House of SaudIn 1975, Vinnell received a $77m contract to train the SaudiNational Guard, or SANG. This is a force of around 55,000men that Jane’s Defence Weekly has described as ‘a kind of

27

The saviour of British AerospaceLike Iraq until 1990, Saudi Arabia was until 2001regarded as a crucial friend and ally of the West,especially the US and UK. It supplied vast amounts ofoil at a generally moderate price, acting as a restraininginfluence within OPEC, and it recycled the proceeds byinvesting them in the West and buying large quantitiesof expensive Western armaments. In particular itspurchases of Hawk and otherwise unsaleable Tornadoplanes under the Al Yamamah agreements were thesalvation of British Aerospace (now BAE Systems),yielding a cash flow of something like £2bn a year formost of the 1990s. The deals were negotiated by theUK government and are generally believed to have beengreased by large payments to Saudi princes and go-betweens; the National Audit Office report on thesetransactions has never been published.

Post-September 11th Things began to change on 9/11. It was noted that notonly bin Laden but most of the Manhattan assassinswere Saudis, and dark hints were dropped of thegovernment’s complicity. This was manifestly unfair, asthe regime, at least as much as Israel and the US, is thetarget of al Qaeda’s wrath. But US and UK politicianssuddenly noticed that the Kingdom run by the House ofSaud was not a liberal democracy or respectful ofhuman rights. The fact is that the country has outlivedmost of its usefulness. When Iraq’s oil is in full flowunder US control, OPEC will be broken and Saudimoderating influence will no longer be needed. The lastUK aircraft were delivered in 1998, and BAE Systemsnow looks mainly to the US market to secure its future.Rumours of Saudi interest in the Eurofighter/Typhoonwere denied by the company in 2002, and nothing hasmaterialised.

The continuing connectionHowever, since the Saudi armed forces are unable tomaintain (or indeed to fly) advanced planes, thecompany still benefits from a lucrative ‘support andservices solution, including manpower for the RoyalSaudi Air Force’.1 Without giving figures, the company ispleased to note that ‘activity on the Al Yamamahprogramme remains strong, with cash flows benefitingfrom the strong oil price which underpins programmefunding’. According to the UK government’s admittedlyincomplete figures, arms exports to Saudi Arabiaamounted to £63.65m in 2002. And, of course, theSaudi government has been invited to DSEi.

1 BAE Systems Annual Report, 2003

Saudi Arabia

The supply of weapons to IraqPrior to the 1990 UN arms embargo,Iraq was free to purchase armswherever it pleased and the war withIran did anything but put-offsuppliers. Russia and France wereIraq’s major suppliers and their salesincluded Scud and Exocet missiles,respectively. The UK was not in thebig league as a supplier to eitherIraq or Iran, but nonetheless did playa vital role in maintaining bothmilitary machines.

Following the UN embargo, Iraqhad to rely on more clandestinesupplies. Recent examples that havecome to light include allegations thatUkraine sold Iraq four advancedKolchuga military radar systems for$100m,1 said to have occurred in2000.2 According to the InternationalCrisis Group, the government of theFederal Republic of Yugoslavia, pre-and-post President SlobodanMilosevic, provided militaryassistance and weapons to Iraqincluding anti-aircraft systems, jetengines and spare parts for MiGaircraft.3 Moreover, the UN embargodid not stop Iraqi officials attendingarms exhibitions alongside UKdelegations. Only last October(2002), Prince Andrew was seentrying to avoid Iraqi officials at theSOFEX 2002 arms fair in Jordan.4

Learning the wrong lessonThe obvious lesson from Iraq is thatarms should not be sold into areasof conflict or to repressive regimes.But that is not how the armsindustry and its governments think –there appears to be no concept ofprevention. The lesson they havedrawn from the recent conflict is thatmore weapons are needed to fightfuture wars against similar regimes(presumably regimes that were onceas friendly with the West as SaddamHussein was?). US military spendingcontinues to rise and European armscompanies are frantically lobbyingfor increases of their own. Thisdepressing mindset is graphicallyillustrated by reports that the US-ledauthority in Iraq is to import 34,000AK-47 assault rifles for use by thenew national army.5 Coalition forceshave already seized tens of

thousands of the AK47, the world’smost prolific assault rifle. ApparentlyIraq’s administration wants the armyto have new, standardised weapons.

Weaponry used in theinvasion of IraqDuring Operation Iraqi Freedom, US-led coalition forces used a multitudeof weaponry to suppress Iraqopposition forces over the course ofjust one month. UK and US forcesused thousands of cluster munitions(see page 23), depleted uranium-tipped shells (see page 18), dumb aswell as smart bombs, “bunkerbuster” munitions, napalm andthermobaric weapons.

Though the Pentagon has deniedthat napalm was used in Iraq, TheIndependent has reported thatmarine pilots confirmed an upgradedversion of the weapon was droppedon Iraqi troops during the advanceon Baghdad.6 These weapons, Mark77 firebombs, each consist of 20kgof polystyrene-like gel and 285 litresof jet fuel, which sticks to the skin ofits victims as it burns.

Thermobaric weapons are fuel-rich explosives reportedly developedby the US as a replacement fornapalm.7 Secretary of DefenseDonald Rumsfeld confirmed that USforces had, for the first time, used anew thermobaric variant ofLockheed Martin’s Hellfire laser-guided missile during the conflict inIraq.8 The weapon generates a lethalblast wave in confined spaces suchas bunkers, caves and insidebuildings. It was reported to havebeen developed in less than a yearat a cost of $14.8m.9

Benefits for theinternational arms industryAll this military equipment wasproduced by North American andEuropean companies, with the likelyinclusion of components fromaround the world. The armsbusiness is already restockingmissile shelves, fixing damagedhardware, and anticipating thereplacement of worn-out equipment.Arms companies also make full useof the opportunities that a conflictshop window can provide for new

equipment. For instance, Patriotmissiles used in the 1991 Gulf Warreceived an incredible level of hype,and sales increased rapidly after theconflict. Only later was it revealedthat the missiles had missed virtuallyall of the Scuds they targeted; IsraeliMoD data showed that only one ofthe 39 Scuds launched wasintercepted.10 Unmanned AerialVehicles have received similar hypeand post-conflict demand followingthe attacks on Afghanistan and Iraq.

Post-war reconstructingand trainingIn the aftermath of the war in Iraq,‘private military companies’ are vyingfor lucrative contracts. In late June2003, Northrop Grumman’s VinnellCorp., the company responsible fortraining the Saudi National Guard,won a $48m one-year contract totrain the nucleus of a new IraqiArmy.11 In April it was reported thatthe US concern DynCorp had won acontract to re-establish police,justice and prison functions in post-conflict Iraq.12 DynCorp’s record insuch matters is far from blameless;in May 2001 DynCorp personnelcontracted to the UN police servicein Bosnia were fired for allegedsexual misconduct, including rapeand child prostitution.13

1 Financial Times, ‘US may impose furthersanctions on Kiev’, 2.11.02

2 Washington Post, Foreign Service, ‘ExileAccuses Ukraine Leader of Iraq Deal’,11.5.2002

3 International Crisis Group, ‘Arming Saddam:the Yugoslav Connection’, 3.12.2002

4 CAAT, CAATnews, Dec 2002 – Jan 20035 The Times, ‘US guns for Iraqi Army’, 9.8.036 The Independent, ‘US admits it used napalm

bombs in Iraq’, 10.8.03.7 www.guardian.co.uk/uk_news/story/

0,3604,418069,00.html, accessed 01.8.038 Jane’s Defence Weekly, ‘US used

thermobaric Hellfire in Iraq’, 31.5.039 Flight International, ‘New hellfire strikes first in

Iraq’, 20.5.03.10 Defense News, ‘Israelis Resolve to Bury Past,

Add Patriot Improvements’, 17.2.0311 Defense News, ‘$48 Million To Train Iraqi

Army’, 7.7.03. 12 Observer, ‘Scandal-hit US firm wins key

contracts’, 13.4.0313 Joshua Kurlantzick, ‘Outsourcing the Dirty

Work’, The American Prospect, Vol. 14,1.5.03

Iraq

28

Praetorian Guard for the House of Saud, the royal family’sdefence of last resort against internal opposition.’173 Onereport has alleged that ‘there is also circumstantial evidenceto suggest that at times Vinnell employees in Riyadh wantbeyond training people to pull the triggers.’174 In 1998 Vinnellreceived a follow-on $831m five-year contract for SANGtraining.

In November 1995, the SANG headquarters and an adja-cent building complex housing Vinnell employees wasbombed. This event killed five Americans and wounded 30

more, all Vinnell staff. In mid May 2003, in a series of bomb-ings in Riyadh, at least nine employees of Vinnell were killed.

A new Iraqi armyIn late June 2003, Vinnell won a $48m contract to train thenucleus of a new Iraqi Army. Vinnell and its subcontractorsbegan working at various locations on July 1st under thisone-year contract.175

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What’s wrong withBallistic Missile Defense?The US ‘Ballistic Missile Defense’(BMD) programme is not the‘defensive’ system that ourpoliticians would have us believe. Itis aimed at guaranteeing US abilityto intervene wherever it chooses andinvolves developing technology withclear offensive potential. It will leadto weapons in space and missileproliferation around the globe, andwill undermine other means ofdealing with perceived ‘threats’including diplomacy, arms controland international disarmament.Missile proliferation: Even if othercountries do not seek to obtain orincrease missile technology as aresponse to the US system,proliferation is already activelyunderway by the US itself. Last year,Boeing was sent out into the worldto sign up partner companies whichcould pressurise their owngovernments into going along withBMD. It initially signed agreementswith BAE Systems, Finmeccanicaand EADS, then moved on to CAE ofCanada and PIT of Poland. Boeinghas stated that it is ‘scouring theglobe for similar agreements withdefense firms’1 while LockheedMartin ‘would not rule outagreements with South Korean andeven Chinese firms.’2 In addition topartnerships, actual exports of themore progressed systems are in thepipeline. Most notably, Israel hasheld talks with India and Turkeyabout purchasing the joint US-IsraeliArrow system. Though Arrowexports would require clearancefrom the US, this is reportedly beingpushed for by Boeing, Arrow’s co-producer. Meanwhile, opposition toArrow exports is coming fromRaytheon which doesn’t want sales

to threaten exports of its Patriot(PAC-3) system!

But BMD is not only dangerous, itis a massive waste of resources anda staggeringly generous donation toarms companies. US armscompanies, one of the main drivingforces behind the programme, are ina feeding frenzy – not only arebudgets rapidly expanding (presentlyaround $8 billion a year), butdemocratic control of the spendingis being reduced. While the US ispresently the main country throwingits money down this drain, otherswill follow as soon as they arepersuaded to sign up to BMD.

The UK’s positionThe UK has made its first concretesteps towards involvement. InFebruary 2003, after the most tokenof consultations, the UK governmentallowed the US to upgrade theFylingdales early warning radarstation on the North Yorkshire Moorsfor use in the BMD programme. InJune 2003 the UK governmentsigned a Memorandum ofUnderstanding with the USgovernment that ‘prepares the wayfor fair opportunities to be given toUK industry to participate in the USprogramme’3 and on 18th July theMoD announced the launch of a newMissile Defence Centre. The MDChas a ‘foundation group’ of AMS,BAE Systems, INSYS, MBDA andQinetiQ, and ‘other UK companiesand universities will be invited topropose further participation in theMDC’. Funding is provided by theUK government (£5m a year for upto six years) with ‘matchingcontributions’ from UK industry.4

Why is the UK governmentgetting involved? Simply, it feels itneeds to go along with USdemands. However, this isn’t a

particularly convincing argument fora sceptical UK public so it wheelsout the contracts, i.e. ‘jobs’,argument in a bid to sell the scheme.While the UK government freelyadmits it has not identified an‘immediate significant ballisticmissile threat to the UK’,5 it says ithas identified an ‘opportunity for UKindustry to reap the benefits ofparticipation’ in the BMDprogramme.6 What it doesn’t say,however, is that the bulk of themoney that goes to UK-basedcompanies won’t be from the USDepartment of Defense, but from UKtax-payers.

Obviously, the UK’s armscompanies don’t care where themoney comes from. They are playingalong with the governmentimplication that US money will becoming their way but they know thatthe US arms budget is almostentirely spent within the US. While afew contracts are likely to surface asa quid pro quo for the use ofFylingdales and Menwith Hill, thereal prize for UK companies is forthe UK government to sign up toBMD and start spending its moneyon a UK element of the US system.

DSEiMajor US BMD companies will be atDSEi (Lockheed Martin, NorthropGrumman and Raytheon) along withthe UK companies (BAE Systems,MBDA, QinetiQ and INSYS) whichhope, with government support andmoney, to jump on board.

1 Defense News, 17.2.032 Defense News, 17.2.033 Hansard, 12.7.03, Col. WA624 MoD press release, 18.7.035 MoD, ‘Missile Defence: a public discussion

paper’, December 20026 Hansard, 15.1.03, Col. 261

Son of Star Wars

30

Pakistan Ordnance Factory[Pakistan]World ranking: outside the top 100Employees: 40,000176

Military products include: small arms and light weapons,ammunition, landmines

Pakistan Ordnance Factory (POF), Wah Cantt, Pakistanpofwah.com.pk

What it makesPOF is a group of fourteen factories that produce automat-ic rifles, machine guns, mortar and artillery ammunition, air-craft and anti-aircraft ammunition, tank and anti-tankammunition, bombs, grenades, military pyrotechnics andlandmines.177

Part of POF’s strategy is to manufacture weaponry in col-laboration with companies from other countries. It reportssuch collaboration with Royal Ordnance Factories of theUK, Rheinmetal of Germany, ‘many’ with China andCzechoslovakia and ‘an excellent joint venture’ with SAABfor the production of commercial explosives.178 It producesassault rifles, sub-machine guns and pistols under licencefrom Heckler & Koch.179

LandminesPOF has a history of involvement in landmine production. Ithas previously produced six types of anti-personnel mines:minimum-metal blast mines P2 Mk2 and P4 Mk2; boundingfragmentation mines P3 Mk2 and P7 Mk2; and directionalfragmentation/Claymore mines P5 Mk1 and P5 Mk2.180 AfterJanuary 1997, it started production of new, detectable ver-sions of the P2 and P4 Mk2 mines.

ExportsPOF has a strong export focus with one report stating thatits products are ‘in service in over 30 countries with an ever-expanding galaxy of satisfied customers.’181 The destina-tions include countries in Europe, North America, Asiaincluding the Central and East Asia, Africa and the MiddleEast.182 By its own admission, there are very, very few coun-tries it will not sell to (see India and Pakistan, page 31).

QinetiQ [UK]World ranking: 37Total military sales: $1.0bnMilitary sales as % of total sales: 80Employees: over 9,500183

Military products include: battlespace informationmanagement, ‘future concepts’ 184

QinetiQ, Cody Technology Park, Ively Road, Farnborough,Hampshire GU14 0LXTel: +44 (0)1252 392000www.QinetiQ.com

Carlyle Group (UK), Lansdowne House, 57 Berkeley Square,London W1 6ERTel: + 44 (0) 20 7894 1200

BackgroundQinetiQ was formed in July 2001 from the greater part of theDefence Evaluation and Research Agency (DERA). InDecember 2002, a US based private equity firm, the Carlyle

Group, acquired a 33.8% stake in QinetiQ in a part-privati-sation plan. It paid only £42m, despite the fact that theQinetiQ had been valued at £500m.185 It has been claimedthat legal and advisory fees cost UK tax-payers double theCarlyle payment. 186

What it doesQinetiQ is involved in research and development. The com-pany states that ‘in the future [it] will be ideally placed toconduct research and develop solutions for armed forcesaround the globe.’187 QinetiQ says it has expertise in: battle-space information; communications; electronic warfare;guidance and control; materials; platforms; propulsion andpowerplants; sensors and weapons. Despite the company’scivilian applications, the UK MoD remains QinetiQ’s largestcustomer.

Some examples of its work include: developing aphased-array missile seeker, designed to steer a missile’senergy electronically;188 completing a New-GenerationOperations Support and Software architecture demonstra-tion for the UK MoD;189 ‘pioneering’ a new flight control sys-tem which has been accepted for the Lockheed Martin JointStrike Fighter.190 QinetiQ is also heavily involved with BallisticMissile Defence and is one of the UK companies launchingthe new, ‘virtual’, UK Missile Defence Centre.

The Carlyle GroupThe Carlyle Group, established in 1987, is one of the world’slargest venture capital groups. It is the 11th largest US mili-tary contractor although the military sector makes up only7% of its investments.191 The group has nearly 300 invest-ment professionals operating out of offices in 12 countriesto uncover ‘superior opportunities’ in North America,Europe and Asia.192

Former US Defense Secretary Frank Carlucci chairs theCarlyle Group. Other notable people involved with Carlyleare: former UK Prime Minister John Major as Carlyle EuropeChairperson; former US President George Bush Senior asCarlyle Senior Advisor; and former US Secretary of StateJames Baker as Carlyle Senior Counsellor.193 It is clearly anorganisation based on contacts and influence.

Part of QinetiQ’s role is to provide independent advice tothe MoD about military procurement. As such, there shouldbe concern that its independence could be compromisedby Carlyle’s extensive military interests.194

Rafael [Israel]World ranking: 45Total military sales: $760mMilitary sales as % of total sales: 100%Employees: 4,600195

Military products include: missiles, radar and communicationsystems

Rafael Armament Development Authority Ltd, P.O.B 2250,Haifa, Israel 31021Tel: 972 4-879 12 44 (public relations)www.rafael.co.il/web/rafnew

BackgroundRafael was founded in 1948 as Israel’s National Researchand Development Defence Laboratory.196 It remains govern-ment-owned and is one of three companies that dominateIsraeli military production, the other two being IsraelAerospace Industries and Israel Military Industries. Most

31

Rafael manufacturing activity is composed of final assem-bly, testing and simulation. The manufacture of basic sub-systems and components is contracted out. Rafael hasoffices in Australia, Brazil, the Netherlands, South Korea, theUK and the US.197

Rafael in the UKRafael (UK Office), 3/5 Duke Street, London W1M 6BA;Tel: + 44 (0) 207 224 4415

What it makesRafael is Israel’s air-to-air missile specialist and developsmissiles, weapon systems and electronic warfare, radar and

communications systems for land, sea and air. Well-knownproducts include the Derby and Python air-to-air missiles,the David artillery computer, tank-crew protection gear,night-vision equipment, the Popeye (AGM-142) air-to-sur-face standoff weapon and the Gill/Spike anti-tank guidedmissile.198

GlobalSecurity.org has stated that ‘The Rafael operationin Haifa is reportedly the location of a nuclear weaponsdesign laboratory (Division 20), a missile design develop-ment laboratory (Division 48) and a weapons assemblyplant.’ 199

DSEiIndia and Pakistan were invited toDSEi in 1999 and 2001, and haveboth received official invitations for2003. They will be shopping forequipment to target at each otherand there will be a host ofcompanies falling over themselves toprovide it. In addition, PakistanOrdnance Factory will be exhibitingits array of small arms andammunition. Despite the conflictbetween India and Pakistan overKashmir, a nuclear arms race, and amilitary regime taking power inPakistan, there is nothingexceptional about their attendanceat the exhibition. The arms marketdoes not thrive on peace andstability.

The main suppliersBoth India and Pakistan are highlydependent on arms imports andusually rank amongst the highest 15importers.1

Though India still purchases mostof its advanced weapons systemsfrom Russia, it aspires to have astrong indigenous arms industry andincreasingly produces the majorsystems under licence in India. Israelhas become an important supplier,with weapon sales of around $1.5-$2 billion each year compared toover $2 billion worth from Russia.2

Other major suppliers to Indiainclude France, Germany and theUK. India’s arms exports are tiny incomparison to its imports, though ithas recently announced that it isaiming for a significant increase thisyear, to $20m-worth. It has also saidit will soon begin selling missiles to‘friendly countries.’3

Pakistan purchases most of itsequipment from China, though theUS and France have also been

traditional suppliers. It has a lessadvanced military industrial basethan India, focussed on theassembly and modification of majorweapons and the production ofsmall arms and ammunition.4 At theIDEAS 2000 exhibition in Pakistan,General Musharraf called for‘aggressive marketing’ by the newstate-owned arms industry toincrease its arms exports.5 Asked byjournalists about which countriesthey wouldn’t sell to, the showorganiser said, ‘I don’t think we havea problem on that score. MaybeIsrael we wouldn’t like to sellweapons to’.6

UK exportsThe UK government has guidelinesthat should stop arms being soldinto conflict situations (see page 13)but do not. While ministers and thePrime Minister publicly called forcalm and negotiations in response toa dramatic deterioration in relationsbetween India and Pakistan during2001, the sales drive continued andthe value of arms exports increased(see table below). Over the pastthree years UK delegations and

companies have continued to attendarms fairs in both India andPakistan,7 and government ministershave unashamedly and frequentlybeen trying to persuade the Indiangovernment to purchase a billionpounds worth of Hawk jets fromBAE Systems, a deal that is onceagain said to be imminent. Past UKexports to Pakistan have includedsmall arms production equipment, ofparticular concern given Pakistan’swillingness to export around theworld.

1 SIPRI Yearbook 20022 Defense News, ‘Israel may become India’s

top source’,10.3.033 David Isenberg, ‘India aims high for arms

exports’, Asia Times Online, 2.6.03(www.atimes.com/atimes/South_Asia/EF03Df08.html)

4 SIPRI Yearbook 20025 Jane’s Defence Weekly, Pakistan sets up

export bureau to boost sales’, 29.11.006 Guardian, ‘Pakistan enters arms market’,

7.11.007 www.pakdef.info/ideas2002/;

www.ukinindia.com/press/commercial/com_01.asp;www.ukinindia.org/ministerial/lordbach/press/press_01.asp; all accessed 22.8.03

8 Strategic Export Controls Annual Reports for2000, 2001 and 2002

India and Pakistan

India 2002 2001 2000

Number of licencesissued

897 728 699

Value (£) 118.0m 62.5m 64.5m

Pakistan 2002 2001 2000

Number of licencesissued

190 154 88

Value (£) 15.0m 14.0m 6.0m

Table: UK export licence statistics8

32

Collaborations and exportsRafael collaborates with a wide range of non-Israeli compa-nies including BAE Systems, Boeing, General Dynamics,Lockheed Martin, MBDA, Northrop Grumman, Thales andRaytheon.200 Examples include a joint venture withLockheed Martin that allows Rafael to sell its Popeye andPython-4 missiles to the Pentagon; the production of twonew torpedo decoy systems, the Subscut and the Lescut, incooperation with BAE Systems and designed for the UK and

US markets;201 and a joint venture with the EurospikeConsortium to make Gill/Spike missiles for sale in Europe.202

Rafael expects orders worth $600m for Gill/Spike fromEurope and seems likely to get them as the Netherlands,Finland and Poland203 have already ordered the weapon.Gill/Spike is also operational in Singapore.204

Other Rafael exports include the Barak ship-borne anti-missile system to Chile and Singapore,205 Popeye missiles to

The conflict1

In breach of international law, Israelcontinues to occupy Palestinianland. Four major points of dispute –Jewish settlements in the occupiedterritories, the status of Jerusalem,water resources, and the fate of thePalestinian refugees – and ongoingPalestinian suicide bombingscontinue to stand in the way of apeaceful solution. Since thebeginning of the al-Aqsa Intifada inSeptember 2000, Israel’s militaryoperations in the occupied territorieshave included the killing ofPalestinian civilians, extra-judicialexecutions, arbitrary detention anddeportation of prisoners, collectivepunishment, torture, attacks onhospitals and ambulances, curfewsand other restrictions on freedom ofmovement, and the wholesaledestruction of homes. Arms saleshelp Israel to continue thisoccupation, help prolong the conflictand give legitimacy to its actions.

Israel’s military industryIn 2002, Israel passed a militarybudget of $9.8bn, 8.9% of its GDP,ranking fiftieth in the world’s topmilitary spenders.2 Israel also has avibrant domestic military industry –in 2002 it was the twelfth largestmilitary military exporter with maincustomers including Australia,Belgium, Chile, India, Romania,Singapore, Turkey, USA andVenezuela.3 According to the IsraeliMoD, Israeli military firms signed$4bn in new contracts during 2002,a 64% increase on 2001.4 Ifimplemented through actuallydeliveries, it was reported that thislevel of new orders would put Israelin third place among the world’sleading arms-producing nations,behind the US and Russia.5 Israelimilitary industry is well-representedat DSEi with, as of 17 August 2003,Rafael, Oceana IntegratedTechnologies, M-Systems, Israel

Military Industries and its subsidiary,Ashot Ashkelon Industries all due toexhibit.

Military importsIsrael’s arms imports are primarilyfrom the US which provides Israelwith $3bn in annual aid and, in 2001alone, sold Israel $2.95bn of arms.Since September 2001, the IsraeliDefence Force, or IDF, has used US-made Apache and Cobra helicoptersand F-16 aircraft to attackPalestinian homes, buildings andemergency services in the WestBank and Gaza. Germany is Israel’snext biggest arms supplier. Between1996 and 2000 it supplied Israel withweaponry worth $765m. Franceexported major conventionalweapons worth $50m to Israelbetween 1996 and 2000.

The UK’s roleUK government approved armsexport licences increased from£12.5m in 2000 (191 licences issued)to £22.5m in 2001 (277 licencesissued) and then fell again to £10min 2002 (161 licences issued).6

However, actual deliveries increasedsteadily over the three years.Licences granted for 2002 includedassault rifles, weapon day and nightsights, components for combataircraft, components for artilleryrocket control equipment, anti-armour missiles and armoured allwheel drive vehicles. While companydetails are not provided in officialfigures, UK companies that havesupplied arms to Israel and who areexhibiting at DSEi 2003 include: BAESystems, which has provided head-up displays for US-built F16ssupplied to Israel;7 Smiths Group,which has supplied missile triggeringsystems for Apache attackhelicopters;8 and Civil DefenceSupply Ltd which (along with Hiatt &Co Ltd) is involved with Paz

Logistics, an Israeli company thatmarkets UK military goods in Israel.9

In July 2002, to the outrage ofmany, including a good number ofits own backbenchers and the DailyMirror, the UK government allowedthe export of components for F-16fighters being made by LockheedMartin for sale to Israel. Making theannouncement, Foreign SecretaryJack Straw set out new ‘factors’ tobe considered when assessingexport licence applications. In anutshell, where components are tobe exported, the government willlook at the UK’s military industrialrelationship with the country wherethe equipment will be finallyassembled. He effectively confirmedthat there was no such thing as anindependent UK arms industry andabdicated to overseas governments,usually the US, decisions on theend-use of UK components. In thecase of the Head Up Display unitsbound for Israel, he said ‘Anyinterruption to the supply of thesecomponents would have seriousimplications for the UK’s defencerelations with the United States.’ Inother words it would jeopardise theinterests of BAE Systems.

The failure of the UK governmentto implement a full, two-wayembargo, leaves the UK effectivelycondoning Israel’s flagrant disregardfor international law and humanrights. Israeli has been invited toDSEi 2003.

1 Primarily sourced from Mandy Turner, ‘Armingthe Occupation’, CAAT, October 2002

2 SIPRI Yearbook 2003 3 Personal communication from SIPRI, 15.8.034 Defense News, ‘Israel Unveils Improved

Weapon Export Figures’, 16.6.03 5 Defense News, ‘Israel Unveils Improved

Weapon Export Figures’, 16.6.03 6 UK Strategic Export Controls Annual Reports,

2000, 2001 & 20027 The Guardian, 09.07.028 Guardian, May 29th 2002.9 www.palestinecampaign.org;

www.pazlogistics.com cited in Turner, 2002

Israel

33

South Korea,206 and a co-production agreement with Turkeyfor Popeye II missiles.207

Raytheon [US]World ranking: 3Total military sales: $15.3bnMilitary sales as % of total sales: 91%Employees: 76,400208 (approx. 1,750 in the UK) 209

Military products include: missiles, surveillance and targetingsystems

Raytheon Company, 141 Spring Street, Lexington, MA02421, USAwww.raytheon.com

BackgroundRaytheon has four business areas: Missile Defense;Intelligence, Surveillance and Reconnaissance; PrecisionEngagement; and Homeland Security. It is most famous formissiles – as Raytheon says, its ‘range of weapon systemsneeds little introduction. The company is a global leader inthe development and deployment of advanced technologymissile systems and air combat and strike systems.’ 210

Raytheon in the UKRaytheon’s UK subsidiary, Raytheon Systems Ltd, is head-quartered in London and has facilities in England, Scotlandand Northern Ireland.211 Raytheon weapons in use by the UKinclude Paveway II and Paveway III bombs, AMRAAM air-to-air Missiles and Tomahawk cruise missiles. RaytheonSystems Ltd provides integration and support for these. TheUK MoD recently selected Raytheon to provide thePaveway IV precision-guided bomb, a deal worth more than£300m including aircraft integration.212

Raytheon Systems Ltd, 80 Park Lane, London W1K 7TR;Tel: + 44 (0) 20 7569 5500; www.raytheon.co.uk

What it makes

Missiles for the ‘free world’Probably the best known of its long inventory of missiles arethe Stinger family of surface-to-air missiles and theTomahawk cruise missile. However, there are plenty moreexamples including Paveway bombs, Javelin anti-tank mis-siles, Joint Standoff Weapons, Sidewinder and AIM-120 air-to-air missiles and Maverick air-to-ground missiles.213 TheMaverick guided missile has been in service with the US AirForce since 1972214 and, according to Raytheon, ‘is the mostwidely used precision-guided missile in the free world’.215

Since 1999, both the Tomahawk cruise missile and theAGM-154A Joint Standoff Weapon have been used againstYugoslavia, Afghanistan and, most recently, Iraq. Both ofthese missiles can be equipped to deploy cluster submuni-tions.216

Radar and targetingRaytheon also specialises in radar, surveillance and target-ing systems. These are in use on most US-produced com-bat aircraft including the Special Forces AC-130U and AC-130H airborne gunships.217 One group of such systems isreferred to as the ‘Terminator family of targeting systems’which is in use in the F-18 Hornet fighter and the GlobalHawk unmanned aerial vehicle.218

Ballistic Missile DefenseRaytheon is one of the big four Ballistic Missile Defense(BMD) companies and has extensive involvement in each ofthe four main segments of the programme (boost, mid-course, terminal and sensors).219 Its involvement includesproduction of the Standard Missile-3, being systems inte-grator for the (Patriot) PAC-3 system and prime contractorfor the ‘Exoatmospheric Kill Vehicle’ and both the X-bandand Upgraded Early Warning Radars.

ExportsRaytheon exports billions of dollars worth of military equip-ment each year. In 2002 its total exports amounted to $2.6billion.220 Its client list includes Israel, Egypt, Saudi Arabia,Turkey, Indonesia, Malaysia, Oman, Singapore, Greece,Taiwan and South Korea.221 The AIM-120 air-to-air missilealone has been sold to more than 20 countries, including‘recent controversial offers’ to Thailand and the United ArabEmirates. 222

Rolls-Royce [UK]World ranking: 17Total military sales: $2.2bnMilitary sales as % of total sales: 24%Employees: 37,000 (22,000 in UK) 224

Military products include: aero engines and marine propulsionsystems

Rolls-Royce plc; 65 Buckingham Gate, London SW1E 6ATTel: + 44 (0) 20 7222 9020www.rolls-royce.com

What it makesRolls-Royce is the world’s second largest military aeroengine manufacturer, powering approximately 25 per cent ofthe world’s military aircraft. Less well known is the fact thatit is also a major producer of marine propulsion systems. Ithas equipment installed on 2,200 warships and powers allof the UK’s nuclear submarines. In 1999 Rolls-Royce pur-chased Vickers for its marine propulsion systems. Howeverit was keen to offload the non-core armoured vehicle andtank elements of the business and in September 2002 soldVickers Defence Systems to Alvis.

Rolls-Royce’s results for 2002 show a substantial shifttowards the military market. Engine deliveries for civil aero-space fell by 37 per cent over the year while military enginedeliveries increased by 32 per cent. The trend seems set tocontinue with Rolls-Royce anticipating steady growth in themilitary market, not least because of ‘increasing regionaltensions in many parts of the world.’225

ExportsRolls-Royce does not just sell its engines to prime contrac-tors such as BAE Systems, Boeing and Lockheed Martinand leave it there; an important part of its service is the sup-port given ‘right up to the front line to the 100 armed forcesand 30 navies who use our engines to power their aircraft,helicopters, ships and submarines.’226

Some of the more famous aircraft to carry Rolls-Royceengines include the Jaguar, Harrier, Tornado and Eurofightercombat aircraft, and Apache and Tiger attack helicopters.All BAE Systems Hawk jets use Rolls-Royce Adour engines.Hawks have been sold around the world including to SaudiArabia, Oman, Bahrain, UAE and Kuwait in the Middle East,

34

Indonesia, Brunei, Malaysia and South Korea in Asia, andSouth Africa, Kenya and Zimbabwe in Africa.

SAAB [Sweden]World ranking: 25Total military sales: $1.4bnMilitary sales as % of total sales: 75%Employees: 14,000229

Military products include: fighter aircraft, missiles, electronics

SAAB AB, P.O. Box 70365, 10724 Stockholm, SwedenTel: + 46 8 463 0250www.saab.se

BackgroundSAAB AB of Sweden, founded in 1937, is an aerospace andmilitary company, now separate from the General Motors-owned car manufacturer. SAAB has been making jet aircraftsince the late 1940s and is now 35%-owned by BAESystems.

SAAB in the UKSAAB has a number of contracts with the UK armed forces,including the supply of laser weapon simulators for theApache attack helicopter.230 However, SAAB’s most obviousinterest in the UK is via Gripen International, the BAESystems/SAAB 50:50 joint venture.

Gripen International (UK Office), Warwick House, P.O. Box87, Farnborough Aerospace Centre, Farnborough,Hampshire GU14 6YU; Tel: + 44 (0) 1252 373 232;www.gripen.com

What it makes The SAAB Group includes SAAB Aerospace which manu-factures aircraft, aircraft subsystems including avionics andelectronic warfare systems, and SAAB Bofors which pro-duces infantry weapons, underwater systems, and missilesand missile systems.

Gripen fighter aircraftGripen International is a Swedish registered company with acore staff of 70 employees.231 It is headquartered inStockholm and has offices or representation in Austria,Brazil, Czech Republic, Hungary, Poland, South Africa, the

The 1999 dealThe government of South Africa iscurrently purchasing warships andmilitary aircraft to the value of $4.8billion from UK and other Europeansuppliers: from the UK, 24 BAESystems Hawk trainer aircraft and 4GKN Westland Super Lynx navalhelicopters; from Sweden, 28 SAABGripen fighters, in which BAESystems has a half share; fromGermany, 3 submarines and 4surface warships, variouslydescribed as corvettes and frigates;from Italy, 30 Agusta utilityhelicopters. A similar procurementpackage for the Army, includingmain battle tanks and hundreds ofother armoured vehicles, has beendeferred but is expected to goahead before long.

Some of the usual objections toarms-trade activities do not applyhere. South Africa is a democracywhich is entitled to make its ownchoices and it is not at war or likelyto be at war. Nevertheless there aregrounds for deep concern about thetransaction and especially about theUK’s part in it. South Africa urgentlyneeds to spend money on thedevelopment of civil industry, watersupplies, education, housing andhealth, above all on mitigation of thecatastrophe that is AIDS. On theother hand, it faces no military

threat, and peace-keeping in Africaneeds troops and light equipment,not warships, fighter planes andtanks. The sheer inappropriatenessand expense of most of thepurchases naturally led to allegationsof corrupt inducements and theimprisonment of Tony Yengeni, theANC’s Chief Whip at the relevanttime, for fraud.

The deal was not concluded untilSeptember 1999, after five years ofanxious debate within the countryand the government. The balancewas eventually tipped in favour ofthe militarists by two factors: theeasy financial terms which SouthAfrica was able to negotiate in aglobal buyers’ market (including UKExport Credits GuaranteeDepartment loans) and the promiseof ‘offset’ expenditures (counter-purchases and ‘industrialparticipation’) amounting, highlyoptimistically, to more than twice thevalue of the purchases.

The sellersThe vendor companies benefitedfrom both the actual sales and theopportunity to gain effective controlover the South African arms industryto help secure future business.

The vendor governments,especially that of the UK, did notmerely help to lubricate the

contracts but actively promotedthem. South Africa’s decision torearm was in part the result ofsustained external pressure,culminating in a visit by Tony Blair toPretoria in January 1999 which issaid to have clinched the deal.London’s motives (and doubtlessBerlin’s and Rome’s) were thosewhich have so long sustained thearms export trade. The jobsargument, though carryingconsiderable public-relations weight,has little economic validity. Moreimportant is the deep-seatedconviction that a flourishing armsindustry is a badge of nationalstatus.

So the deal supports the mutualinterests of the European and SouthAfrican politico-military-industrialcomplexes. The real needs of theSouth African people do not figure.

DSEiDSEi will play host to BAE Systems,SAAB, AgustaWestland and 36South African companies. A SouthAfrican delegation has been officiallyinvited, as it was in 1999 and 2001.

1 Primarily sourced from Chris Wrigley, ‘TheSouth Africa deal: a case study in the armstrade’, CAAT, June 2003

South Africa1

35

UK and the US.232 Gripen International acts as a prime con-tractor and is, with BAE Systems, responsible for marketing,selling and supporting the Gripen fighter aircraft worldwide.

The Gripen fighter is in service with the Swedish Air Forceand has been selected by South Africa and Hungary. A saleto the Czech Republic was cancelled after the seriousfloods of summer 2002. The deal had been the subject ofUS government allegations of corruption (see page 15).

The Gripen was displayed at the 2003 Paris Air Show,with a weapons package reported to include Rafael mis-siles.233

Smiths Group [UK]World ranking: 31Total military sales: $1.1bnMilitary sales as % of total sales: 25%Employees: 33,000 (9,200 in the UK) 234

Military products include: aircraft components, chemical andbiological agent detectors

Smiths Group plc, 765 Finchley Road, London NW11 8DSTel: + 44 (0) 20 8458 323www.smiths-group.com

BackgroundSmiths is a wide-ranging group with Aerospace, Medical,Sealing Solutions and Industrial businesses. Its militarywork is concentrated in the dominant Aerospace business,which includes a rapidly expanding ‘Detection’ section, pro-ducing devices to detect explosives, narcotics and biologi-cal and chemical agents. Though a UK-based company,nearly 50% of its production is in the US, with 29% in theUK, 15% in the rest of Europe and 7% elsewhere.235

What it makesSmiths Group, through its Aerospace business, is a first-tiersupplier to UK and US aircraft and engine manufacturers. Itproduces ‘integrated aerospace systems, including elec-tronic and actuation systems and components for civil andmilitary aircraft. Also equipment for land, naval and marineand other defence applications.’236 Gun pods for Hawk jets,gun-turret actuators for Apache attack helicopters andcockpit control panels for the B-2 bomber, F-16 fighter andthe A-10A ‘tank-buster’ provide a few examples of theirproducts.237

The proportion of Smiths’ work that is military is steadilyincreasing. Smiths’ 2002 Annual Review states that thereduction in civil aircraft production ‘was counterbalancedby rising requirements for our military aerospace and detec-tion products. We have established strong market positionsin both military and detection and expect sales to growstrongly over the next few years.’238 The Annual Review goeson to state that ‘the biggest business win of the year wasthe F-35 fighter aircraft [the Joint Strike Fighter], where wehave secured business worth around $1m per plane... Morethan 3,000 F-35s are planned to be built and the programmeshould make a major contribution to the division’s long-termgrowth.’ The Joint Strike Fighter (JSF) is set to replace theF-16, the most numerous western fighter in service, and isanticipated to be exported around the world. Israel andTurkey are already formally involved in the programme, evenbefore the aircraft is ready for production.

Arms exports are widely perceived as a vast moneyearner for the UK. But this is not the case. The UKgovernment provides subsidies through a whole rangeof dedicated services in support of arms deals. Theserange from government ministers travelling the world topush arms exports, through financial support forindividual deals, to the Defence Export ServicesOrganisation (DESO) and direct support for armsexhibitions such as DSEi. Some subsidies are a matterof official record and some, due to commercialconfidentiality, are rendered almost unquantifiable.However, CAAT has estimated that the level of subsidyprovided to the UK arms industry for exports is aroundthree quarters of a billion pounds per year.1

The main areas of subsidy are:Marketing and Promotion: Marketing support includeseverything from the costs of DSEi and DESO, to the useof military personnel and defence attachés to supportbids for weapons contracts. In addition, high-levelofficial visits from the Prime Minister downwards,support companies trying to win contractsFinancing: Financing comes through export creditguarantees organised by the Department of Trade andIndustry’s Export Credits Guarantee Department(ECGD). These guarantees underwrite arms paymentswith tax-payers’ money – essentially providing cheapinsurance cover for exporters. While guarantees areavailable to any sector, more and more cover is going toarms companies. While only about 2% of exports aremilitary, these claimed 50% of ECGD cover last year.MoD procurement: When a contract for equipment forthe UK armed forces comes up, it is often possible tobuy cheaper (and arguably better) military equipmentfrom abroad. However, government ministers often ‘buyBritish’, helping companies sell their equipment abroad.In July 2003, BAE Systems sources were reported assaying that export orders were ‘a vital factor’ in therecent decision by the government to buy BAE SystemsHawk jets.2 The Treasury had estimated that openingthe bid to competition from other companies wouldsave the UK tax-payer £1 billion. Choosing moreexpensive equipment in order to support exports is adirect subsidy to the arms trade. Research and Development: The UK government’sbudget for military R&D is approximately £2.5 billion.This spending supports exports as well as domesticprocurement and the MoD is supposed to charge a levyon exports to recoup some of the costs. However, thelevy is drastically watered down to ‘what the market willbear’. The difference between the actual levy incomeand a realistic levy amounts to a subsidy of severalhundred million pounds.

Given the 70,000 employees estimated to be workingon military exports,3 a subsidy of three quarters of abillion pounds amounts to nearly £11,000 for each job,each year!

1 CAAT, ‘Subsidies factsheet’, February 20022 Times, ‘Cabinet battle over British jet contract’, 31.7.033 MoD, ‘UK Defence Statistics 2002’, The Stationery Office, 2002

Arms export subsidies

ExportsIn 2002, Smiths received unwelcome attention amid thegrowing concern over Israeli activities in the OccupiedTerritories – it was reported by the Guardian that missiletrigger systems made by Smiths Group were used in US-made Apache attack helicopters supplied to Israel.239

However, such revelations are rare – not because Smiths’equipment is not being used by oppressive regimes or inregions of conflict or tension, but because we generally hearonly about the company that markets the completeweapons system. Smiths’ military involvement is far lesswidely known than its size merits.

Thales [France]World ranking: 7Total military sales: $7.7bnMilitary sales as % of total sales: 66%Employees: 65,000240 (14,000 in the UK) 241

Military products include: missiles, avionics, naval systems,radar, optronics

Thales, 173 Blvd Haussmann, 75008 Paris, Cedex 08, FranceTel: + 33 1 53 77 80 00

www.thalesgroup.com

BackgroundIn 1998, the French government arranged for the reorgani-sation of Thomson-CSF, Alcatel, Dassault Electronique andAerospatiale, to consolidate the military electronics busi-nesses under Thomson-CSF. In June 2000 Thomson-CSFacquired Racal Electronics for £1.3bn, which both increasedits focus on military electronics and established a majorpresence in the UK, and in December 2000 it agreed to forma joint venture with Raytheon of the US (Thales-RaytheonSystems). That same month, Thomson-CSF adopted thename of Thales, an ancient Greek philosopher, in a move tochange perceptions of the rapidly expanding company.

Thales Group is France’s largest military company. It has65,000 employees worldwide, half outside France, with apresence in nearly 50 countries and industrial operations in30.242 The French government holds a 33% stake in Thales,Alcatel SA, the French telecommunications equipment pro-ducer, owns 16% and Dassault Aviation owns 6%.

Thales in the UKThales has swallowed up such familiar names as Racal,Thomson Marconi Sonar, Shorts Missile Systems, Thorn,Avimo and Pilkington Optronics,243 and is now the UK’s sec-ond largest military supplier. It is involved with the UK’s newaircraft carrier programmes, is to provide sonar suites forthe Astute class submarine and it states that ‘our advanced

36

Transparency International (UK)estimates that ‘the official armstrade accounts for 50% of all corruptinternational transactions’ andconsiders that ‘a conservativeestimate of the level of commissionspaid is 10%’.1 It needs stressing thatthis refers to the ‘official’ arms trade.What is happening at DSEi is theofficial arms trade. What thegovernment promotes is the officialarms trade.

Arms deals often involve hugesums of money and are alwaysshrouded in secrecy. Thiscombination renders them liable tocorruption. Corrupt payments cangenerate a demand for weaponrywhere none should exist, potentiallydiverting resources from socialneeds, including health anddevelopment.

Though there appears to be littlewill to investigate allegations ofcorruption, they seem to keepcropping up. In just the past yearBAE Systems alone has faced foursets of allegations involving dealswith South Africa,2 the CzechRepublic,3 Qatar4 and India.5 Thecompany denies the allegations.

The official UKgovernment position?A Defence Export ServicesOrganisation (DESO) webpage,dated 1st March 1999 but stilldisplayed in December 2002, had asection entitled ‘SpecialCommissions’ which said that allrequests to give commissionsshould be referred to DESO whichwould confirm whether suchpayments could be made.6

The Export Credits GuaranteeDepartment (ECGD) is not exactlycritical of commissions either. Inresponse to a parliamentaryquestion on 9th June 2003 about theECGD and BAE Systems’ deal withSouth Africa, Trade & IndustrySecretary Patricia Hewitt said, the‘ECGD’s application processrequires certain details of agents’commission to be disclosed toECGD in order that it can follow itsdue diligence procedures. In thiscase such due diligence procedureswere followed and no irregularitieswere detected. For reasons ofcommercial confidentiality specificdetails of the commission paidcannot be revealed.’7

What does all this mean? DESOand the ECGD should explain thedifference between ‘commissions’

and ‘bribes’ and how these relate toother obscuring terms such as‘facilitation payments’.

SecrecyCorruption thrives in conditions ofsecrecy and the only way to addressit is to open up the world of armsdeals. Arms export licences need tobe made available for comment inadvance of deals, allegations ofcorruption need to be thoroughlyinvestigated and, as an easy firststep, the National Audit Officeinvestigation into the massive SaudiArabian deals of the 1980s shouldbe released (the Public AccountsCommittee decided not to publishthe report, despite the fact that mostof its members were not evenallowed to read it!).

Unfortunately, the governmentsupport for DSEi and the secrecysurrounding it does not give muchgrounds for optimism.

1 www.transparency.org/pressreleases_archive/2002/2002.04.25.armstrade_tiuk.html, accessed 16.8.03

2 Guardian, 30.6.033 Guardian, 12.6.034 Observer 2.6.02; Private Eye 4.4.035 Sunday Times, 6.7.036 Guardian, 13.6.03; Susan Hawley, ‘Turning a

Blink eye’, The Cornerhouse, June 20037 Hansard, 9.6.03

Corruption

missile electronics products are used in almost every UKmissile.’244

Thales UK plc (Thales Defence Ltd), 2 Dashwood LangRoad, The Bourne Business Park, Addlestone, WeybridgeSurrey KT15 2NX; Tel: + 44 (0) 1932 824 800;www.thalesgroup.co.uk

What it makesThales is divided into three business areas: Aerospace,Defence and Information Technology & Services (IT&S).

Aerospace provides for both civil and military markets. In itsDefence business, Thales claims to be ‘present on all typesof air, sea and ground military platforms’.245 And in its IT&Sbusiness, ‘We create incremental value from dual-use tech-nology developed in our Aerospace and Defence sectorsand put it to work for customers in the IT&S segment. Thesecost-effective products are then re-injected back into theDefence and Aerospace sectors.’246

Thales places a strong emphasis on military electronicsand missiles, hence its tie-up with Raytheon. Avionics alsofeatures highly as do naval systems including radar, tracking

37

The UK government is giving its fullsupport to DSEi, it dedicates the 600staff of the Defence Export ServicesOrganisation (DESO) to helpingcompanies export arms, it providesfinancial support for arms exports,its ministers and the prime ministeruse overseas visits to push armsdeals, and government controls onarms export (not to say domesticprocurement rules) appear flexible inthe extreme.

Such enthusiasm implies thatthere must be a very good reasonfor exporting arms, but what is it? The usual justifications revolvearound the financial benefits(implicitly ‘jobs’), foreign policy, andprotecting the UK’s military industrialbase. However, each of these isflawed. The subsidies provided forarms exports and the few jobsinvolved undermine the presumedfinancial arguments; the willingnessto export to almost anyone,including both sides of a conflict,undermines any strategic argument;and the existence of an independentmilitary industrial base must be athing of the past if a Frenchcompany, Thales, is the UK’s secondbiggest arms supplier and more than80% of BAE Systems sales areoutside the UK.

So what does that leave in theway of possible reasons? Is theanswer simply a combination of thedesire of our leaders to strut theworld stage as military players andthe massive influence of the armscompanies? Possible elements ofthe latter are discussed below.

Influencing thegovernmentCompanies can try to affectgovernment thinking by employinglobbying companies, directlyapproaching politicians, mobilisingunions and making donations or

sponsoring party events orgovernment projects. For big deals,they can use media pressure andthreats of job losses, as BAESystems blatantly and successfullydid to win the trainer aircraftcontract in July 2003.Advisory bodies: There are also aplethora of government advisorybodies that can be used - ways inwhich favoured individuals,organisations or companies can feedinto government thinking. Bodiessuch as the National DefenceIndustries Council, the NationalDefence and Aerospace SystemsPanel and the Aerospace Innovationand Growth Team are primarily madeup of arms company representativestogether with a sizeable contingentof ministers and/or civil servants andthe occasional academic or unionofficial. It would be surprising if suchbodies did not makerecommendations based on theneeds and desires of the armscompanies (though of course we donot know as their discussions and,usually, their conclusions areprivate).

The advisory body system is alsouseful in Europe. The STAR 21 groupwas set up to analyse the state ofthe European aerospace industryand assess its long-term policyneeds. It consisted ofrepresentatives of seven Europeanarms companies, two MEPs, the EUHigh Representative and,astonishingly, five EuropeanCommissioners! Unsurprisingly itcalled for more money. A similarbody exists for naval manufacturers.The existence of these high-poweredbodies appears to have coincidedwith a move from member statestowards unprecedented centralEuropean Union funding for militaryResearch & Development spending.

DESO: Heads of DESO areseconded from arms companies,giving the industry a direct voice intothe very heart of government. Theyare tasked with co-ordinatinggovernment support for armsexports. The current incumbent, AlanGarwood, was seconded from BAESystems.Personal contacts: though oftenhard to identify, personal contactsare perhaps the most importantpiece of the jigsaw. The revolvingdoor still exists and some high-profile MoD ‘revolvers’ include:Michael Portillo (Secretary of Statefor Defence, 1995-97) who becamea non-executive director of BAESystems, a company he pushedcontracts for whilst in office; RogerFreeman (Minister of State forDefence Procurement, 1994-95) whobecame the Chairman of Thales plc;and Jonathan Aitken (Minister forDefence Procurement, 1992-94) whoobviously became very confusedabout his role vis-à-vis armscompanies. He went to prison forperjury after attempting to concealhis role in sales of weapons from UKcompanies to Saudi Arabia.2

Tony Blair is an enthusiasticsupporter of arms exports. He haspersonally lent his support to BAESystems sales drives including toIndia, South Africa and the CzechRepublic, and has supported licenceapplications for highly controversialdeals to Zimbabwe and Tanzania.The Observer has quoted ‘anindustry insider’ as saying that DickEvans (BAE Systems’ Chairman) is‘one of the few businessmen whocan see Blair on request.’3

1 Primarily sourced from CAAT, ‘The PoliticalInfluence of Arms Companies’, April 2003

2 www.guardian.co.uk/aitken/Story/0,2763,208518,00.html, accessed 10.2.03

3 Observer, 18.3.01

Company influence1

38

and weapons, and optronics including lasers, night visionand precision guidance. Its activities range from deliveringonboard computers for GIAT Industries’ Leclerc tank to acooperation agreement with MBDA to produce seekers forthe Aster, Mica and Meteor missiles, to supplying the inte-grated communications system for the French-ItalianHorizon frigates.

ExportsIn 2002, 23% of Thales’ revenues came from France, 13%from the UK, 19% from ‘Other Europe’, 13% from Asia-Pacific, 16% from the Middle East, 10% from North America

and 6% from the ‘Rest of World’.247 Thales is prime contrac-tor for the Sawari 2 programme, which involves supplyingthree frigates to Saudi Arabia equipped with the Arabelmulti-function anti-air fire control radar and Aster missilesystem.248 In Indonesia and Japan, Thales has won con-tracts for maritime patrol systems. Thales is prime contrac-tor for electronic warfare systems for naval vessels and wasselected by Brunei for its Waspada ships and by the UK forType 45 destroyers.249 Shorts Missile Systems, which is nowowned by Thales, has delivered over 60,000 missiles to 56armed forces worldwide.250

The arms industry has changedradically since the end of the ColdWar, primarily due to the reduction inmilitary spending during the early-mid 1990s (military spending hasbeen growing again since 19981) andwidespread company privatisations.Military industry is no longercomprised of discrete companies,but of ‘a labyrinth of licensedproduction, joint venture,conglomerates, strategicpartnerships, and Co-operativeArmament Programmes.’2

Western companies outside theUS are torn between globalaspirations and dependence on their‘home’ governments for preferentialtreatment. BAE Systems is a primeexample. It is desperate to be aninternational company (though beinga US one would do) and droppedthe ‘British’ from its nameaccordingly. Its shares are now heldprimarily outside of the UK and ithas acquired parts of LockheedMartin to provide access to USspending. However, it still expects toreceive exactly what it wants fromthe UK government and demandspolitical favour on the basis of itshistory and of UK jobs. The presentgovernment is willing to oblige,though the demise of the nationalmilitary industrial base may one daybecome too obvious for this positionto be sustained.

ExportsCorporate manoeuvrings are not justabout dividing up US and Europeandomestic markets. The globalizationof production has an impact onfurther exports in two main ways:

Companies in industrialisingcountries are purchased or pulledinto partnerships to provide botha cheaper source of labour andan additional, almost guaranteed,home market. The country mightalso have fewer export controls,providing a further source ofincome.Companies demand reducedexport controls to help their newcross-border collaborations tofunction, and then it is only asmall step to restructuring exportcontrols for further afield. A primeexample of this is the so-called‘Six Nation FrameworkAgreement’ between France,Germany, Sweden, Spain, Italyand the UK. One purpose of theAgreement is to reduce the exportcontrols between the sixcountries but, for each individualarms programme, participants willagree a list of ‘permitteddestinations’ to which theequipment can be sold. The listswill be kept secret and are likelyto permit exports according to thelowest common denominator – itis hard to see countries like

Germany or Sweden maintainingtheir traditionally more restrictiveexport policies against pressurefrom, say, France or the UK.

DSEiArms fairs have changed in parallelwith the arms industry. The RoyalNavy and British Army EquipmentExhibitions, forerunners of DSEi,used to be showcases for domesticarms producers. But now over 400of the 1000 exhibitors at DSEi arenon-UK. There are companies fromIsrael, Turkey, Pakistan, Bulgaria,Romania, Russia and Singapore, aswell as many from South Africa,Europe and the US. As an MoDletter has stated, the ‘move to theprivate sector with the launch ofDSEi in 1999 reflected theincreasingly transnational nature ofthe defence equipment industry’.3

DSEi has become a centre for, and asymbol of, the international,globalizing arms trade, where salesare being arranged on UK soil thatare not subject to UK licensingarrangements.

1 SIPRI Yearbook 20022 Christopher Wrigley, ‘The Arms Industry’,

CAAT, March 20013 Letter from Dr Lewis Moonie MP, MoD,

29.7.02

Globalization of the arms industry

39

1 Alvis Group company literature, April 20032 www.alvis.plc.uk accessed 15.6.033 www.alvis.plc.uk accessed 15.06.034 Supplement to Jane’s Defence Weekly, 19 February 20035 www.alvis.plc.uk, News Release, 3 July 20026 Mark Phythian, ‘The Politics of British Arms Sales since 1964’,

Manchester University Press, 2000. p.1837 Supplement to Jane’s Defence Weekly 19 February 20038 Nicholas Gilby, ‘Arms Exports to Indonesia’, CAAT, October 19999 www.arsenal-bg.com/profile.htm, accessed 14.08.200310 Jane’s Defence Weekly, ‘Bulgaria Doubled Arms Exports in Late 2001’,

10.04.0211 Jane’s Defence Weekly, 10.04.0212 www.iht.com/IHT/PG/98/pg081198a.html accessed 24.07.2003

(International Herald Tribune)13 Human rights Watch, ‘Bulgaria; Money Talks’, April 1999

(www.hrw.org/reports/1999/bulgaria/)14 www.saferworld.co.uk/Bulgaria.pdf accessed 11.08.200315 www.times-archive.co.uk/news/pages/sti/98/05/17/stifocnws02002.html?

1621558 accessed 15.08.200316 www.saferworld.co.uk/Bulgaria.pdf accessed 11.08.2003 17 www.saferworld.co.uk/Bulgaria.pdf accessed 11.08.200318 www.baesystems.com/facts/plc.htm, accessed 19.8.0319 BAE Systems Annual Report 2002. Estimated using the geographical

origin of sales20 The Guardian, ‘BAE splits joint venture’, 8.8.0321 CAAT, BAE Systems Alternative Report 2002, April 200222 www.baesystems.com/ocs/intpartners/mbda.htm, accessed 22.8.0323 BAE Systems news release, 1.8.0324 www.baesystems.com/ocs/rodefence/index.htm, accessed 28.8.0325 www.baesystems.com/ocs/others/rodefence/index.htm, accessed

15.7.0326 Dan Fahey, ‘Science or Science Fiction? Facts, Myths & Propaganda in

the Debate over Uranium Weapons’, 12.3.0327 Financial Times, ‘£1.2bn gap in warship projects, warns BAE’, 14.7.0328 Financial Times, ‘BAE wins argument for keeping private finance out of

£10bn Hawk jet contract’, 28.6.0329 Guardian¸ ‘Wrangling ends with order for Hawks’, 31.7.03.30 Times, ‘Cabinet row over jet deal threatens BAE jobs’, 17.7.0331 Times, ‘“No favours” for BAE over RAF planes contract’, 26.6.0332 Guardian¸ ‘Wrangling ends with order for Hawks’, 31.7.03.33 The Guardian, ‘UK inquiry into jet parts for Mugabe’, 8.11.0234 United Nations Security Council, ‘Final Report of the Panel of Experts on

the Illegal Exploitation of Natural Resources and Other Forms of Wealth ofthe Democratic Republic of Congo’, October 2002. Point 56.(www.reliefweb.int/w/rwb.nsf/vID/706B89B947E5993DC1256C590052B353?OpenDocument, accessed 27.08.03)

35 The Guardian, ‘BAE “paid millions” to win Hawk jets contract’, 30.6.0336 The Guardian, ‘US accuses British over arms deal bribery bid’, 12.6.0337 Sunday Times, ‘India may snub BAE in £1bn Hawk deal’, 6.7.0338 Chemring Group plc, Annual Report, 2002 39 Calculated from Chemring Group 2002 Annual Report. Total sales £96.3m

(2002).40 Chemring Group plc, Annual Report, 200241 ww7.investorrelations.co.uk/chemring/index.jsp (‘Corporate Profile’),

accessed 16.8.0342 Chemring Group plc, Annual Report, 200243 Chemring Group plc, Interim Report, 200344 Chemring Group plc, Interim Report, 200345 www.pwdefence.com/history.htm, accessed 26.3.0346 www.pwdefence.com/products.htm, accessed 16.8.0347 Chemring Group plc, Annual Report, 200248 Chemring Group plc, Interim Report, 200349 www.pwdefence.com/c_profile.htm, accessed 16.8.0350 www.bbc.co.uk/radio4/today/reports/archive/features/landmines.shtml,

accessed 28.8.0351 Landmine Action, ‘Attempt to sell illegal landmines’ – new evidence

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accessed 15.08.200356 www.southafricanemb.se/ssda1.htm57 www.denel.co.za/ accessed 16.8.0358 www.southafricanemb.se/ssda1.htm accessed 16.8.0359 www.hrw.org/worldreport99/arms/arms4.html accessed 7.08.200360 Jane’s Defence Weekly 7.03.200261 EADS Annual Report 200262 www.vredesactie.be/html/EADS_report_eng.htm, accessed 24.8.0363 http://www.eads.com/eads/en/index.htm, accessed 27.08.0364 www.mbda.net/ehistoire.html, accessed 15.07.03 65 www.eads.com/eads/en/index.htm, accessed 15.07.03 66 http://www.mbda.net/een_bref.html, accessed 24.08.0367 http://www.baesystems.com/ocs/intpartners/mbda.htm, accessed

22.8.0368 Joint press release of EADS, Sukhoi, MBDA and Rosoboronexport,

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accessed 27.8.0377 www.worldpolicy.org/projects/arms/reports/smallarms.htm#fn, accessed

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27.8.0379 www.worldpolicy.org/projects/arms/reports/smallarms.htm#fn, accessed

8.8.200380 www.parliament.the-stationery-

office.co.uk/pa/cm200203/cmselect/cmdfence/474/474ap11.htm,accessed 27.8.03

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accessed 26.8.0387 www.nrdc.org/nuclear/nuguide/ngonucl.asp, accessed 6.8.0388 www.globalsecurity.org/military/systems/aircraft/systems/gau-8.htm,

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GKN Annual Report 200294 www.gknplc.com/businesses/aerospace/agusta/main.asp, accessed

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211 www.raytheon.co.uk/about_raytheon/business_units/index.htm?menu=business_units, accessed 13.08.03

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41

225 www.rolls-royce.co.uk/defence/outlook/defence_market.htm, accessed10.8.03

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accessed 13.08.03

Campaign Against Arms Trade (CAAT)11 Goodwin Street, London N4 3HQ, UKtel 020 7281 0297 fax 020 7281 4369email enquiries@caat.demon.co.ukwebsite www.caat.org.uk

The Campaign Against Arms Trade is workingfor the reduction and ultimate abolition of theinternational arms trade, together withprogressive demilitarisation within arms-producing countries

£3.00ISBN 0 9543329 3 8