Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



Andrew Lansley

  20. Can I follow up what Rachel Squire was asking about? Looking at the Annual Report, it becomes obvious that India and Pakistan really are two countries for which there has been a relatively large number of refusals. So it begs the question in my mind: if you are proceeding on a case-by-case basis, trying to operate against criteria, but leading to a significant number of such refusals as compared to any other country. Does that not indicate that there is a certain lack of understanding on the part of those in the defence industry essentially on what the criteria are and how they are being applied? Would it not point to a moving on to say that there has to be a more consistent position here, there has got to be something more explicit by way of explaining the Government's approach to such applications?
  (Mr Straw) Mr Dowse has just whispered into my deaf ear, but I managed to catch it, nonetheless, that quite a lot of these refusals are for dual use, which by definition are bound to involve questioning not just about the goods themselves but also about their use. That is where it becomes rather more argumentative, although I think the system works very well. At any one time, the number of refusals as a proportion of the total number of applications does vary according to local circumstances specifically. It may be, Mr Lansley, that over a period there are certain lessons to be drawn about how the criteria are applied or drafted from a high number of refusals or the need better to brief potential exporters. I accept that. This whole thing is an iterative process. It is also a new process and, as I say, it is a remarkable improvement, I think, on what was there before just a few years ago. There is a degree of transparency. So we are saying this in an iterative area where we are developing systems and trying to improve them all the time.

  21. Do you not draw a conclusion from this, notwithstanding the point about dual use, that in relation to other countries, where presumably there will also from time to time be similar proportions of potential dual use items, there is a particular characteristic in India and Pakistan, even if they do not necessarily lead to a more explicit position which I will anticipate in advance. Precisely what mechanism are you using to make sure—
  (Mr Straw) There is other background which I can give you in private session about this. To pick up Rachel Squire's question, because self-evidently there is potential for conflict between India and Pakistan, and there has been a significant degree of tension between the two countries which at any one time has varied from significant to high and back to significant, we have to look very carefully at the applications. So I do not think it is intrinsically a surprise that there is a high proportion of these countries. Indeed, I think it would be odd if that were not the case.

Mr Howarth

  22. Could I just ask you, Secretary of State, in seeking to achieve regional stability and taking into account that factor when assessing whether you should approve a UK defence export, do you take into account also the activities of exporters from other countries who might, in the event of our withdrawing from that competition, if you like, substitute us?
  (Mr Straw) The answer to that is that the criteria are the criteria. They are laid down and provided by Ministers but they have been put before Parliament and under the new Bill there will be a more formal process for their approval, and so we have to apply them. That, as it were, is that. If you are judging what is going to happen if you do something, then obviously you have to take account of the likely possibilities. One of the likely possibilities, if country X does not make a supply, is that country Y could. That cannot be a decisive factor in this because on that basis, since you could always argue that there is always a country which is going to apply the criteria less stringently than you or apply no criteria, you end up effectively watering down the criteria altogether and you are saying that it is the country whose behaviour is the worst which should dictate the standard for everybody else. By definition, you cannot do that. This is a common problem in all areas of international operation, but within the more reasonable parameters than perhaps the ones I have described, those possibilities are bound to be taken into account in judging regional stability.

  23. If you take Taiwan, for example—and I know we are talking about India and Pakistan here—we have a ban on aircraft exports but the French are perfectly happy to do so. I would have thought that would be a rather good market for us.
  (Mr Straw) We make our judgments, and this underlines the point that I made earlier, without going into that detail. I am not familiar, without looking at my file, with the exports or non-exports to Taiwan. That underlines the point I make, which is that, if you have criteria, you have to apply them. However, there is a background which you need to take into account.

Sir John Stanley

  24. Foreign Secretary, in your written answer on 13 December last year, column 974, you indicated how you were responding to UN Security Council Resolution 1373 on terrorism and its implications for the UK Government arms exports policy. You indicated a number of conclusions by way, in effect, of amendments to the policy which you had been following previously. The question I want to put to you is that, having I think entirely sensibly made a number of changes as far as the UK is concerned, do you not agree that the existing EU Code of Conduct for arms exports should not itself be amended quite substantially to take into account the threat from terrorist organisations like Al-Qaeda, particularly their evident intention, as has come out from what has been uncovered in Afghanistan, to try to obtain access to weapons of mass destruction?
  (Mr Straw) The answer, Sir John, is "probably", and it is something we need to look at. May I make a point about this, that once 1373 was, as it were, international law, I took the initiative myself to say that we should review inside the Department whether the consolidated criteria were consistent with the obligation in international law imposed on us and every other member of the United Nations by 1373. I was not certain that they were. I think this was triggered in my mind by one particular case that came before me in the subsequent weeks. What I concluded, in the end, was that the criteria themselves did not need amendment, for reasons which I set out. I think they are pretty robust. As I say in the third paragraph of my answer: I believe there is no need to amend the consolidated criteria for us to comply fully with the terms of the UNSCR 1373, but I then set out why I thought, nonetheless, although I was not amending the criteria, I should draw to the House's attention and to the public attention that this was an additional factor which we had to take account, although as it happens I thought the drafting of the criteria was robust enough for the two to fit together. On the EU point, I will come back to the Committee and let Mr Berry, if I may, have a letter about this. It is a point which I have not raised with the EU and I should have done.

  25. It is the EU point I am raising with you and I just want to put it to you, Foreign Secretary, that the EU Code of Conduct is very much couched in terms of conventional weapons and I would suggest we have got to go wider than that now. We have to take into account the evidence that Al-Qaeda cells were operating in a number of EU countries, and indeed Al-Qaeda people have been involved in the campaign in Afghanistan. I believe there is a total of five British citizens who are in Guantanamo Bay at the moment, so every country in the EU has a potential Al-Qaeda dimension. Given also the way in which Al-Qaeda is clearly thinking in terms of possible weapons of mass destruction, does this not call quite urgently for a thorough-going look at the EU Code of Conduct in the light of events since 11 September?
  (Mr Straw) In view of what you have said, I will look at the EU Code. I hear what you said, Sir John. I will give it a thorough look and report to the Committee about it. Can I ask Mr Dowse if he has other points to add?
  (Mr Dowse) I can just add one or two points. First of all, so far as the EU Code is concerned, certainly there is a number of references to the need to guard against diversion of weaponry to terrorists and issues of that sort. As far specifically as weapons of mass destruction are concerned, all members of the EU are members of a number of multilateral export control regimes. The Australia Group already deals with chemical and biological material; the Missile Technology Control Regime; and the Nuclear Suppliers Group. All these international export control regimes have, since 11 September, been undergoing a process of looking at their control lists, looking at their aims and objectives, amending where necessary these lists and aims and objectives, with a particular focus on the need to guard against terrorism. They have tended up till now to be focussed on states and the proliferation and seeking of weapons of mass destruction. They are now looking as well at the issue of non-state actors, such as terrorist groups. In that sense, the EU, as members of all these regimes, is very actively engaged in this.

Donald Anderson

  26. It is not just a question of guarding against terrorism, but looking at those members of the coalition for whom one might have a rather warmer response because of the role they are playing in the current war against terrorism and the criteria themselves really do not need amending because they are couched in very general terms. Can the Secretary of State give examples of areas where countries which are being particularly helpful in the war against terrorism are likely to have now a warmer response? One thinks of areas like, for example, Uzbekistan, the Kyrgyz Republic and Tajikistan, where perhaps the interpretation may be a little kinder?
  (Mr Straw) I do not think, if I may say so with respect, warmer or kinder interpretations, as it were, because they were not quite so much on our side, is what is called for. What we have to have is a consistent application of these criteria and the EU Code. Where a country itself has changed its own approach, then for sure the decisions which are likely to follow in respect of export licences to that country are themselves going to be changed. They may not be changed from yes to no but if the circumstances change, then obviously their consideration will change. The best example of all to give is Afghanistan itself, which moved from being a pariah in respect of which no arms exports were licensed by the UK, or most other members of the civilised world, to a country where we are actively supporting the interim authority.

  27. They are awash with weaponry.
  (Mr Straw) I cannot recall having received any application for a licence for them. I was not saying that, but they are awash with small arms, certainly.

Tony Worthington

  28. Can you bring us up to date on the Tanzanian Air Traffic Control system? The version that I heard was that it had been approved on 21 December but there are still reports in the newspapers about continuing developments. Before we go on to questions, that would be helpful.
  (Mr Straw) Since I rather anticipated, Mr Worthington, that there might be a question about it, and I am happy to take further questions afterwards, I have a short statement which I thought might be helpful to the Committee. Do not take too much notice of the first sentence. It is not Government policy to discuss licensing details with the Committee before they have been published in our Annual Reports nor to comment on individual cases. However, given the level of interest in the supply of air traffic control equipment to Tanzania and the fact that information is already in the public domain—put there other than by the British Government—I should like to make a statement on this case. I can confirm that in December 2001 Her Majesty's Government approved two licence applications for the export of air traffic control equipment to Tanzania. These export licence applications were carefully considered against the consolidated EU and national export criteria. This included careful consideration of whether the proposed export could seriously undermine Tanzania's economy or seriously hamper Tanzania's sustainable development contrary to Criterion Eight of the consolidated criteria. The Government's decision to approve the export licences stands. However, this in itself does not oblige Tanzania to continue with the purchase and the final decision must be for them. I would just like to underline two points here. First of all, it is well known to members of the Committee but I think some members of the public outside might be forgiven for thinking otherwise: this is not directly about British Government aid; it is about whether we approve or not a licence for the sale of an air traffic control system, which in itself is a private transaction, or would be a private transaction, between the Government of Tanzania and the contractor, who happens to be a British contractor. That is the first point. The second point is: as with all export licences for arms, military equipment or dual-use equipment, which is what we are talking about here, this is permissive. It requires nobody to do anything, but if they want to do it, then they have permission. I will continue with the remainder of this statement. We have good bilateral relations with Tanzania. As one of their major development partners, we remain committed to working with the government to promote growth and to reduce poverty. Our bilateral development assistance programme stands at around £65 million a year. This goes towards strengthening economic and political governance, to improving public services, including health and education, and in helping to provide key infrastructure, such as water and roads in rural areas.

  29. Can I say how I interpret that? The critics of the approval of these licences are being proved right by the reconsideration of that contract for the Tanzanian Government. The World Bank and the International Civil Aviation Organisation, both of whom were critical of the £28 million deal when a £10 million air traffic control system would have been approved by the World Bank, are edging towards where that is what is going to occur. Is that a wrong interpretation?
  (Mr Straw) It is not for me to make that judgment in this particular case. What we had to do, Mr Worthington, was to make a judgment on the basis of our law and our criteria and that alone for these purposes. There are other decisions which are made elsewhere within government about this, but this is a discrete function. I might also add that amongst the other factors we were able to take into account when a decision was made about this just before Christmas, as I recall, was the fact that the HIPC Completion Point had been reached for Tanzania on 27 November of last year. It had been reached and the IMF had given it at that point, knowing about this particular proposition. As to value for money, part of that is set out in the arguments which the Government of Tanzania made. That is a matter for them, not for me. There are other matters, Mr Berry, which I am happy to go into in detail but it would have to be in private session. I will try and answer other questions.


  30. Could I ask a simple question on the use of the Criterion Eight, and I do not see why this cannot be in public. Criterion Eight, the so-called development criterion, specifically refers to taking information from certain bodies such as the World Bank, and the World Bank is specifically mentioned. Is it the case that the decision to grant the licence was taken, having considered the World Bank's view on this issue?
  (Mr Straw) Again, in terms of the detail, I would need to go into the detail when we go into private session, but in terms of the overall context in which we made our decision, we had a huge amount of information before us when we came to make the decision and that obviously included the decisions which had been made by international organisations. As for the IMF in respect of the HIPC Completion Point and so far as the examination by the International Civil Aviation Organisation, we were aware that from their point of view there was this further examination that would take place. That was another hurdle, a separate hurdle, that Tanzania for their own purposes would require to pass. As I have said, what we had to do was to make a judgment on the basis of these criteria.

  31. You have heard that the view of the International Civil Aviation Organisation would influence the view of the World Bank. That was known.
  (Mr Straw) Yes. There is a series of different hurdles here.

Tony Worthington

  32. The International Civil Aviation Organisation had already pronounced on this particular system that had been bought and said the system is not suitable to support civil terminal air traffic control equipment; it was old-fashioned and being superceded by solid state equipment. There was doubt about the spares. The point was that additional equipment would be required to render it useful for civil air traffic control. That is what the International Civil Aviation Organisation had already said because Tanzania had gone for a joint military and civil system. The World Bank had already said that £10 million could buy what was needed and here was a £28 million system that was not going to do the job.
  (Mr Straw) I can go into more detail about this in the private session. Our job is not to stand in the shoes of the Government of Tanzania. They have their own debates about what system is likely to give them the best value for money, their own debates about the suitability of this system as opposed to other systems. That, as I discovered in the course of about three months whilst I was personally seeing all the papers on this, is a matter of considerable argument. That is a matter for them. The question before us was: would this application meet the criteria, including specifically Criterion Eight? We made a judgment in respect of that. I believe the judgment was right at the time; I believe it is right now.

  33. I take the point about standing in the shoes of the Tanzanian Government. Could you explain the 680 procedure, the Arms Working Party procedure, where government departments give a nod and a wink to proposals and basically say, "You will be all right; you will get approval for this" or "you will not get approval". There have, I think, been thousands of such 680 proposals over the last 10 years, about five of which in fact the government has turned down in the end for export licences. What was said was that the Government had approved this scheme, had approved the air traffic control system, and that it was there in crates, having been built on the Isle of Wight at a time when Ministers were then considering whether to give it approval or not. That was what the public record was saying. Is that accurate?
  (Mr Straw) Tim Dowse will explain the 680 procedure.
  (Mr Dowse) On the 680 procedure, that is essentially an MOD approval which gives an exporter approval to market a system. It is made very clear when an F680 is issued that approval to market does not—absolutely and underlined—mean that a licence will necessarily be forthcoming. It has to make that very clear because, of course, for many defence exports the marketing process and the seeking of a contract can take years, and indeed with the Tanzanian case it took many years to move from the beginning of the marketing until contract. Circumstances can change in that time. It is entirely possible that an approval to market may not, when the time for contract comes, result in approval of a licence. So it does not carry that implication.
  (Mr Straw) Mr Worthington, if you are asking me if I knew whether or not this was part-manufactured and did I take that into account, the answer to both questions is "no". I have no idea whether this equipment had been part-manufactured and I do not want to know because it is not remotely a relevant criterion. If a manufacturer, as it were, takes a risk through an F680, or in any other way, about getting a licence, that cannot possibly be a relevant consideration for the Committee. We have to look at the application and then make a decision on the basis of the criteria.

  34. Finally, the point is that you say that the Government takes into account sustainable development criteria, Criterion Eight, and here is a situation of an air traffic control system which would take one-third of Tanzania's education budget in a country that was subject, as you say, and the government came to realise, to the HIPC procedure. The fact is that it had already in effect been approved, is it not?
  (Mr Straw) That is not the case. I am sorry, it is simply not the case. Whatever side of the argument you may be on, let us be clear about this, that neither I nor any other Minister is going to get involved in a process which is a charade, and neither was I. There was no question in the consideration that was given to this but that we sought to apply the criteria. Mr Worthington, I am not going to be party to a set of circumstances of licensing where an additional criterion not made available to Parliament is introduced, namely that the company has already spent some money and they would like to sell them, because that is not the criterion and it would wreck the whole system.

  35. Foreign Secretary, can you give me an example where Criterion Eight has been the ground on which an export licence has been turned down?
  (Mr Straw) I will, with notice; I am very happy to do that. I gather the answer is that there has not been. Mr Worthington, that does not mean that the criteria are not criteria that are worth having, not remotely.

Tony Baldry

  36. Her Majesty's Government is, of course, a collective government and it would therefore be reasonable to infer that it is the decision of the Secretary of State for International Development to suspend bilateral development aid to Tanzania pending Tanzania's decision as to whether or not they wish to pursue this particular purchase.
  (Mr Straw) We are indivisible in government.

Mr Howarth

  37. Secretary of State, could you tell us at what point ECGD support for this project was given?
  (Mr Straw) I have no idea and it is not a relevant criterion, with respect. I have not the faintest idea.

  38. The point I am getting at is that this project is a beneficiary, as I understand it, of an export credit guarantee, a loan which in popular parlance is a soft loan, and that would not be approved, other than by the British Government. What I am trying to say is that this is a project that has had two-fold consideration by the United Kingdom Government, both by your Department and also by ECGD
  (Mr Straw) As you understand, ECGD is not directly the responsibility of our office. I will seek information on that and write to the Committee.

  39. May I say that I entirely applaud the decision you made to grant this export licence. I quite understand it is permissive and it is a matter for the Tanzanian Government. I have no doubts that you are aware that the Tanzania Government has issued a statement saying that it is pleased by the decision of the British Government to issue a licence to BAe Systems to sell the radar—and BAe Systems of course is in my constituency: "Tanzania is grateful for the British Government decision and it is the right decision given at the right time". Perhaps I could ask you one final question, Secretary of State: have you ever flown in a civil airline over Africa?
  (Mr Straw) I have flown in a DC10 over Africa. Yes, I have, on a number of occasions.

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