Britain's love for arms trade

A country without trade is like a person without friends. Dialogue becomes unnecessary. Communication is non-existent. Amicability ranks second best. With all this, diplomacy has no justification without trade. For Britain, commercial diplomacy has historically provided investment, stability, security and alliances and such a strategy still applies to contemporary diplomatic governance.

Commenting on the February White Paper, British Foreign Secretary William Hague addressed that “business is part of our commitment to inject a new commercialism into the Foreign Office, using our international influence to help British businesses secure new trade opportunities.” To this, he refers to high technology defence exports including the sale of arms, aerospace and security equipment to overseas markets that do not have their own defence industry.

Defence export accounts for about 3% of Britain’s manufacturing exports with a 20% market share in partnership with the US. The arms trade has an annual sale of above £17billion with the biggest customers placing orders worth £13bn. Although these figures are not as big as it was during the Cold War, Britain is seeking to become more competitive by broadening out its capacity to selling defence and security equipment to countries that clearly violate human rights policies.

Under the Coalition Programme, the UK Trade and Investment Defence and Security Organisation (UK TIDSO) reasserts that the government will only permit responsible defence exports that are used for “legitimate purposes, not internal repression”. This policy is based on the EU Common Position on Arms Export adopted in June 1998, which states that export licenses will be refused if there is a risk that defence equipment will be used:

-        -   for aggression and internal repression

-        -  to provoke or prolong an armed conflict

-        -  to assert territorial claim which may lead to war

Unfortunately, there is growing evidence that Britain has and continues to misjudge the risks appropriated to selling arms to allies and partners who break the promise to uphold their end of the bargain. Since the 80s, the UK has dealt extensively with Saudi Arabia totalling £1.7bn with the Al-Yamamah contract considered to be the largest deal made. According to the Financial Times, British export licenses since 2009 have covered submachine guns and tear gas in Bahrain, military components for helicopters in Algeria, hand grenades to Jordan, and machine guns to Egypt. Reports have also uncovered evidence that British defence contractors BAE Systems have sold shotguns to Morocco, tear gas and hand grenades to Saudi Arabia, night vision goggles and body armour to Yemen, and small arms ammunition to Syria.

The UK purposefully attempts to plug the gap in domestic sales in the Middle East as UK TIDSO regards oil-rich states of Algeria and Libya as their priority markets in the region. The agreement to supply Hawk, Tornado and other aircraft and support systems was the UK’s biggest ever export agreements, so the market gap is clearly evident. However, these Middle Eastern countries only elaborate the level of hypocrisy exercised by the government because such licences breach policies to the protection of civilians against internal threats. Official reports show that the British government approved £6.1million in arms export to Libya’s Colonel Muammar Gaddafi’s regime. Yet, we have seen Gaddafi declare war on his own people, using weapons supplied by Britain against civilians and journalists. The UK was surprised that a former ally had broken the lease of their contract but has argued that there was no evidence that British tear gas was used against peaceful demonstrators. To make matters worse, Prime Minister David Cameron was forced to explain why he and his delegation were seen promoting the sale of arms to post-Mubarak Egypt instead of endorsing democracy.

In line with the EU Common Position on Arms Export, the Foreign and Commonwealth Office (FCO) revoked more than 50 arms licenses from Bahrain and Libya since the uprising as a means to protect civilians from aggression and war. However is it not too late to revoke licenses when uprisings and aggression has already begun? Apparently not, because during Tony Blair’s tenure, the government approved military licenses to human rights violators including Sri Lanka, Algeria, Zimbabwe, and Columbia which only exposed the hypocrisy to Robin Cook’s ‘ethical foreign policy’ strategy. In the Human Rights and Democracy Report published in March 2011, the FCO recorded 26 countries with serious human rights concerns including the ones stated above. So why does the government not learn from its mistakes?

As set out in the Strategic Defence and Security Review, the government will promote defence and security exports for ‘good’ commercial reasons which help to build the capacity of British partners and allies, potentially reduce their own acquisition costs and gain comparative advantage in key technologies, skills and know-how. Business seems to take the lead over the moral high ground particularly when considering its national interest and objective. 
According to a government dossier, the UK security export is calculated at £1.5 billion with the value of defence contracts to be £7.2 billion. This makes UK TIDSO one of the leading defence and security industries having licenses with over 96 overseas markets, which helps to secure 300,000 jobs for British people. This means 1.2 million people rely on the arms trade to make a living. 

In his interview with Total Politics, William Hague noted how important it is for Britain to retain a global presence, by using diplomatic networks to support UK business. He said that, “…the expansion of world trade, including our trade with growing economies, is one of our most fundamentally important national objectives… Good trading links and expanding economic links can often go along human rights and rule of law [which is why] …the commercial emphasis that we place in our foreign policy… is fundamentally important”.

In short, defence and security trade is important in connecting Britain to markets in key regions and will continue to be an investment to Britain’s trading infrastructure. Hague says: “You have to have a good legal reason to stop people exporting things…we can’t, just on a whim, say that there’s a whole list of things that we’re not exporting [just because] we don’t like the look of you. We have among the toughest criteria in the world for exports under successive governments”.

The government believe that its trading policy and restrictions are rigorous and fair as it complies with international commitments, but even government ministers have ordered a review into the issuing of arms export licenses. There is no doubt that the government needs to set out how it intends to reconcile potential conflict of interest between promoting arms export and upholding human rights but tighter regulations are required to minimise risk and errors of judgment. Trade is at the heart of diplomatic missions, but the danger of trading defence and security equipment is not knowing who you can trust.

Understanding the Oil Market

With the Middle East and North Africa uprising, the prices of oil in many developed countries have spiked, with critics urging for countries like Saudi Arabia to turn the taps on its oil reserves in order to keep prices reasonable. Others have argued that the world would be a better place without a commodity that pollutes the Earth and causes wars to erupt over vulnerable and scarce resource with only thoughts of capitalist greed and corruption amongst ruling families and political elites. While I agree with both, I read an interesting commentary from Alan Duncan - International Development Minister and adviser on oil supply - in a parliamentarian magazine (The House), which I wanted to share as a means to better educate readers on the complexities of the global oil market.

In his commentary, Alan Duncan addressed how dependent we are on oil in running our daily life, for without the supply of oil, "the world simply would not go round". Amidst the current upheaval in Libya, commentators are looking towards Saudi Arabia to solve the supply problem, but switching from Libyan oil to Saudi oil isn't as simple as possible. Duncan states that there is no such thing as 'the oil market', rather that there are many markets within it, each with their different significance. According to Duncan, there are well over a hundred different qualities of crude oil, each with different characteristics affecting the diet of an oil refinery. Some crudes are heavy and good for making bitumen, others are light and better for making petrol. Some are full of sulphur, whereas others share the runny consistency of washing liquid or hardens like butter. Libyan oil is made up of lighter low-sulphur which cannot easily be substituted for Saudi crude that does not share the same property. Also, many factors - such as shipping costs, insurance rates, demurrage rates (price paid for a ship's delay at port) - affect the prices of crude rather than straightforward supply volumes.

In closing, Duncan warns that we are living in dangerous times and the factors which could influence the price of oil, and hence the unwelcome cost of filling our car at the petrol station, are affected by much more than scarce resource and conflict in the originating countries. And such factors complicate the nature of a simple switch over from one type of oil to another.